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Technology Stocks : Boeing keeps setting new highs! When will it split? -- Ignore unavailable to you. Want to Upgrade?

To: P.M.Freedman who wrote (2431)	8/31/1999 5:55:00 AM
From: Neil H	Read Replies (1) \| Respond to of 3764

Monday August 30, 5:44 pm Eastern Time Boeing pact seen as shrewd move by aircraft maker By Chris Stetkiewicz NEW YORK, Aug 30 (Reuters) - Boeing Co.'s (NYSE:BA - news) tentative contract deal with its biggest union will help the aerospace giant slim down and fend off challenges from hard-charging European rival Airbus Industrie , analysts said. Union leaders claimed near-total victory in protecting a generous health plan, winning wage and pension gains and boosting job security for the 44,000 Boeing employees represented by International Association of Machinists and Aerospace Workers. But Boeing, in a pact struck Saturday, retained the right to shift work to cheaper outside producers and to lay off workers in the face of weak demand for commercial planes -- critical tools in its drive to shed excess capacity and speed up airplane production. ``Getting rid of people at Boeing is an important part of getting where they need to be,' said Joe Campbell, an analyst at Lehman Brothers. ``There are too many people there. The number of airplane (deliveries) is going down and Boeing is doing things they should have other people do -- things Airbus is having other people do.' Investors appeared to welcome the deal, boosting Boeing stock 87.5 cents to close $44.81 on the New York Stock Exchange on a day when the Dow Jones Industrial Average dropped 1.59 percent. The company will apparently avoid a repeat of the costly 69-day strike that preceded the last machinists' contract in 1995 and has taken a big step toward cutting costs and shoring up its battered bottom line, analysts said. ``Boeing has retained the ability to move forward with sustainable productivity improvements that are going to take the company to the next level of earnings. A strike would've pushed off the realization of those things,' said analyst Chris Mecray at DB Alex Brown. Under the pact, Boeing guaranteed that it would not lay off workers as a result of subcontracting work or shifting it to other Boeing plants. The deal, which must be ratified by union members in a vote on Wednesday, also gave workers an 11 percent pay raise over three years and a 10 percent signing bonus. Boeing's earnings will not suffer much from the pay raise and the company can now proceed with much-needed layoffs and outsourcing, analysts said. Boeing has already cut its overall payroll to 206,700 from a peak of 238,600 last year and plans to shed another 20,000 jobs by the end of 2000 as its commercial jet deliveries slide from a record 620 this year to a projected 480 next year. ``This contract is not going to save the guys getting layoff notices,' said analyst Pierre Chao at CS First Boston. ``All it says is they'll make every effort to lower costs together and they'll give the unions the first shot at lowering costs before they outsource work or move it.' Still, Boeing Chief Executive Phil Condit did gamble a bit with his last-minute, strike-averting offer, which asks the union to take a bigger role in cutting costs and boosting productivity in exchange for a friendly contract. Boeing executives appeared determined to reach a deal now and avoid a strike, analysts said. ``I was surprised,' Chao said. ``This was an extremely bold move by management and an extension of an olive branch to the union. They've got a major transformation project here and they need the labor force to buy into it.' Under a new management team, including Chief Financial Officer Debby Hopkins and commercial airplane boss Alan Mulally, Boeing is grinding through productivity enhancements like those made by bloated U.S. manufacturers in the 1980s. Analysts compared Boeing's fat-cutting to that of U.S. car makers in the 1980s or the wrenching job cuts at industrial giants AT&T Corp. (NYSE:T - news) and International Business Machines Corp