HeraldNet: Boeing gambles big



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Aerospace Blog

August 26, 2008

Boeing gambles big

Posted at 7:24 am by Michelle Dunlop

A multi-billion dollar corporation like Boeing can hang with the high-rollers.

But lately, Wall Street worries that Boeing might be involved in too many high stakes games at the same time.

Even before the market opened this morning, Boeing’s shares were expected to drop as a result of growing concerns about the company’s gambles with its Machinists union, its 787 program and the U.S. Air Force tanker program.

Today, we should see how Boeing responds to the demands of its Machinists – the men and women who build Boeing commercial jets. The union has threatened to strike on four issues at the bargaining table. Boeing has backed down on only one. Keep in mind, the Machinists walked out three years ago on some of those same issues, and they weren’t holding nearly as good of cards as they are this time around.

The company is expected to present its second full offer to the union today. The Machinists will vote on Sept. 3 on the offer and could walk out at midnight. A strike means further delays to Boeing’s 787 Dreamliner.

Boeing bet big on a new global production system, banking on partners around the world to deliver parts on time for the mostly composite material jet. That didn’t happen, and Dreamliner deliveries to customers have been delayed by 20 months on average.

Boeing is also “playing chicken” with the Pentagon and its competitor for a lucrative U.S. Air Force aerial refueling contract. That’s how analyst Paul Nisbet, with JSA Research, described Boeing’s threat to pull out of the competition against Northrop Grumman and EADS. Boeing says it wants six months to devise a bid for the latest go-round of this long-running competition. We could find out this week whether the Defense Department blinks.

I’m betting it’s going to be an interesting week.

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