Boeing: Higher Labor Costs Will Not Kill Profits

Summary:

• Boeing’s new labor agreement includes a 38% pay increase, causing a $1.2 billion rise in labor costs, but Boeing can still maintain profitability.
• Despite margin pressures, Boeing can offset increased labor costs through debt reduction, cost-cutting, and passing costs to customers, ensuring continued profitability.
• The margin impact on Boeing 737 MAX and 787 programs is manageable, with a modest sales price increase and no significant profit reduction.
• Boeing’s ability to absorb labor cost increases without impairing cash flow or profits demonstrates its financial resilience and effective cost management strategies.

Boeing (NYSE:BA) has reached a labor agreement with the union representing 33,000 workers. The deal includes a 38% increase in pay. A recurring question I have received from readers is whether Boeing will still be able to make money on

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