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Boeing, a leading American multinational corporation that specializes in aerospace and defence, faced a labor strike that involved over 3,000 members of the IAM in St. Louis, Missouri. The strike severely impacted the production of military aircraft and commercial jet parts. During this incident, Alaska Air's stock price rose by 2.03%. However, the reason for the growth of this stock is not yet clearly understood.
Not even a year has passed since the previous strike by commercial jet workers took place. According to the Reuters report, the workers were offered a 20% wage increment alongside a ratification bonus of $5000, which accounts for an overall 40% increment in wage over four years. This deal was rejected by the workers, saying that it was similar to the company’s previous offer.
Alaska Air’s stock rise has stirred investors around the world. There are mainly two possible reasons why investors are so optimistic about this stock. Firstly, they might see Alaska Air as less susceptible to Boeing’s ongoing production issues. This is because they can diversify their fleet by including aircraft from Airbus and Embraer.
Secondly, Alaska Airlines has been focusing on its network growth and prioritising efficiency. According to AInvest, this makes it one of the most attractive options to invest despite a crisis like the present one. There could be a few other reasons as well, but these are the most probable reasons for the 2.03% increase in Alaska Air's share price.
Boeing has seen multiple labor strikes in the past few years, which have significantly impacted its production. There were manufacturing defects like improperly drilled holes in 737 MAX aircraft and fuselage gaps in 777 and 787 models. Apart from these, there have also been flaws in the supply chain. For example, there were incorrectly joined composite materials in the 787 Dreamliner.
The two fatal crashes of Boeing 737 MAX in October 2018 and March 2019 further exposed the critical issues with the Maneuvering Characteristics Augmentation System (MCAS).
Also Read: Boeing Q2 Revenue Soars 35%, Stock Up 2% in Pre-Market Trading
Due to these incidents, Boeing has lost a greater part of its market share to its rival, Airbus. Airbus now dominates around 60% of the total market share. It suffered significant financial losses in the past few years. And presently, the worker strikes and reputational damage have minimized sales of new aircraft. Investors have now become optimistic about Alaska Air stocks, and as a result, its share price has grown by 2.03%.
