Boeing Strike Would Hurt, but How Much?
Secondly, "I think Boeing is calculating that a strike is not necessarily the worst scenario," says Bill Swelbar, a research engineer in MIT's International Center for Air Transportation, and a labor consultant. "They have said 'Here's my final offer, this is what I can live with, figure out if you can live with it."
The tactic may reflect a new approach to collective bargaining, one that follows on the bankruptcy strategy -- utilized in recent years by airlines -- that left little room for negotiating, Swelbar says. At US Airways (LCC), for example, unions were told that they could either accept contract offers, or potentially be forced to accept even harsher terms likely to be approved by a bankruptcy judge.
"This could be a point where pattern bargaining changes," Swelbar says. "Boeing is saying that the traditional form of labor leverage is not going to produce anything better than what they are offering."
Swelbar says Boeing's primary concerns include a comparison of its costs with costs at Airbus, its only major competitor. Several months ago, Airbus suffered as the dollar weakened against the Euro, but more recently the dollar has been strengthening."Ultimately, their costs converge," Swelbar says. Boeing's defense side would be unaffected by a strike. Boeing Integrated Defense Systems is expected to produce 2008 revenues of $32 billion to $33 billion, slightly less than half of the company's total. "From an [airline] customer relations standpoint, you wouldn't want to strike, but financially, Boeing can take a strike," Hamilton says. As for Wall Street, he says, "small investors will see their shares fall and might be unhappy, but analysts might rally behind management."
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