Boeing's 737 program is accelerating to its fastest pace in years, but a potential engineer strike threatens to derail the ramp-up.
Geri
Boeing ramps 737s to 47 monthly as engineers authorize October strike
Boeing's 737 output is ramping to 47 aircraft a month, its fastest pace in years, as engineers authorized a strike that could begin Oct. 6.
"We are now implementing our strike contingency plan and diverting the dollars we had wanted to invest in our SPEEA-represented team to prepare for a potential strike," said Ben Nimmergut, Boeing's vice president and functional chief engineer for production engineering.
The two SPEEA units representing about 17,000 engineers and technical workers rejected Boeing's contract offers Aug. 21, with the professional unit voting 64 percent against and the technical unit 72 percent against. The units authorized a strike with approximately 88 percent and 90 percent support. The current contracts expire at midnight Oct. 6.
A walkout would stall the engineering support the production ramp-up depends on, and likely the 737-10 certification work still outstanding, exactly when Boeing is trying to prove it can sustain a pace of 47 per month. Boeing shares trade at about $210, roughly 17 percent below their 52-week high of $254.35.
A faster 737 line, at last
Boeing delivered 171 commercial aircraft in the second quarter, a 14 percent increase from 150 a year earlier, and revenue rose 8 percent year over year to $24.6 billion. Free cash flow swung to a positive $631 million from an outflow of $200 million in the same quarter a year earlier. The company still does not generate positive net income — its non-GAAP core loss of $0.76 per share narrowed from a loss of $1.24 a year earlier. The balance sheet holds $45.9 billion in consolidated debt, more than double the $20 billion in cash and marketable securities on hand.
Boeing's order backlog hit a record $715 billion in the quarter, including over 6,200 commercial aircraft. Demand is not the constraint. Building and delivering fast enough is. The Federal Aviation Administration limited 737 production to 38 per month in January 2024 following the door plug accident on a nearly new MAX 9. It raised the limit to 42 last October, approved the move to 47 this past spring, and Boeing began the ramp-up to that pace in the second quarter.
What a strike would halt
SPEEA members do not assemble aircraft — Boeing's factory workforce belongs to a different union. But their work underpins everything the production increase needs. Engineering supports production, deliveries, and the certification work Boeing expects to finish this year. The FAA certified the smallest MAX variant, the 737-7, on Aug. 3, and Boeing says the larger 737-10 is next.
Leeham News reported that SPEEA and Boeing will meet Monday to restart talks, after the union spent the week surveying its members on what a better offer needs. Still, not all signs point in that direction: Boeing has posted job openings for replacement engineers and technicians, according to the same outlet.
No strike can occur while the current contracts remain in effect, and they expire at midnight Oct. 6. That leaves more than five weeks, and both sides say they want a deal. But the recent precedent is uncomfortable. In 2024, more than 32,000 Boeing machinists went on strike in September after rejecting a tentative agreement, and the strike lasted more than seven weeks before a much richer contract ended it.
The delivery shortfall is systemic across the industry. American Airlines' senior vice president of network and schedule planning, Brian Znotins, said this week that "Boeing and Airbus are really letting us down," noting that American planned for 13 newly delivered aircraft in 2026 but received only five. Boeing has routinely warned airline customers that delivery timelines on both 737 MAX and 787 Dreamliner aircraft are slipping by three to six months or more.
An engineers' strike would not likely directly halt the assembly lines as the machinists' strike did. But investors shouldn't find much comfort in that. A walkout would stall the engineering support the production ramp-up depends on, and likely the 737-10 certification work still outstanding, exactly when Boeing is trying to prove it can sustain a pace of 47 per month.
At about 1.74 times sales, the recovery arguably has to stay on schedule. And the next five weeks at the negotiating table will decide whether it does. Until Oct. 6, the delivery increase and contract talks are the same story.
This article is for informational purposes only and does not constitute investment advice.
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