Boeing Defense Workers Just Went on Strike. Should Investors Be Concerned?

Core Viewpoint - Boeing's defense business is becoming increasingly vital as the company faces challenges in commercial airplane production, highlighted by a recent strike involving over 3,200 workers at its St. Louis defense factories [1][3]. Group 1: Importance of Defense Business - The IAM Union members are crucial in building and maintaining military aircraft and defense systems, such as the F-15EX and MQ-25 Stingray [2]. - Historically, commercial airplane sales have been the primary revenue source for Boeing, but recent quality control issues and production setbacks have shifted the revenue mix, making the defense, space, and security (BDS) division the largest contributor in 2024 [5][6]. - The BDS division's revenue has increased significantly since 2017, with total revenue in 2024 projected at $66.5 billion, of which BDS is expected to contribute $20 billion [7][8]. Group 2: Recent Developments and Financial Performance - Boeing's stock has risen 25% this year, indicating investor confidence in the company's turnaround plan, although a prolonged strike could hinder recovery efforts [3]. - In Q2 2025, the BDS division generated $6.6 billion, accounting for nearly 30% of Boeing's overall quarterly revenue, while commercial airplane sales made up 48% [8]. - Boeing has secured significant contracts, including a $2.8 billion deal with the U.S. Space Force for satellite development and a contract to build the next-generation F-47 fighter jet [10][11]. Group 3: Historical Context and Current Position - A previous strike in September 2022 cost Boeing an estimated $5.5 billion in lost earnings, but the company is now in a stronger position with a healthier balance sheet and expectations of positive free cash flow by Q4 2023 [12][14]. - The company has ramped up commercial airplane production, with deliveries increasing by 63% in Q2 compared to the previous year, and commercial revenue comprising 45% of total first-half revenue [14][15]. - The CEO expressed confidence in managing the current strike's impact, suggesting that the scale of this disruption is significantly less than previous strikes [15].