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Shares of Boeing Co. fell 3% on Thursday after major supplier Spirit AeroSystems Holdings Inc. suspended factory operations following a strike vote.
Spirit
SPR,
said its workers voted for a strike after rejecting a four-year contract offer. The current contract expires on Friday. Shares of Spirit dropped 11%.
“We continue to monitor the situation and support our valued supplier,” a Boeing
BA,
spokesperson said in a statement provided to MarketWatch.
For Spirit, which makes the fuselage and other components for Boeing jets, the ongoing labor dispute is “a material issue” in the near term, RBC analyst Ken Herbert said in a note Thursday.
“The understanding was that the contract offer was Spirit’s best and final offer to its workforce,” Herbert said.
With the strike affecting Boeing as well as European jet maker Airbus
AIR,
Spirit will likely feel “increased pressure to get a contract signed as soon as possible. We believe investor sentiment is likely to further weigh on [Spirit] given the recent setbacks with the 737 Max production, and now the worker strike,” the analyst said.
In April, Spirit alerted Boeing about a manufacturing problem related to fittings in the Max jet fuselage that affected undelivered 737 Max airplanes both in production and in storage, although it was not a flight-safety issue.
Boeing is Spirit’s largest customer, accounting for about 65% of its commercial-segment net revenues last year, according to Spirit’s most recent 10-K filing.
Shares of Boeing have gained 8% so far this year, compared with an advance of around 14% for the S&P 500
SPX,
Spirit’s stock has dropped 10% in the same time frame.
