04:25 PM EDT, 09/16/2024 (MT Newswires) -- Boeing ( BA ) could see a cash headwind of nearly $7.96 billion if the ongoing labor strike continues through the end of the year, UBS Securities said in a note e-mailed Monday.

Late last week, members of the International Association of Machinists and Aerospace Workers unanimously rejected a tentative labor deal between the plane maker and the union. More than 30,000 employees began to walk out of Boeing's ( BA ) facilities in Seattle and Portland Friday, according to media reports.

If the strike spans a few weeks, the company is unlikely to see any cash impact or disruption to deliveries this year, UBS said. A strike spanning one to months is expected to lead to a 50% reduction in the company's September-to-December deliveries, with a cash headwind projected at $3.98 billion. If the strike continues for more than two months, Boeing ( BA ) is likely to see "little to no" deliveries from September to December, resulting in a cash flow impact at $7.96 billion, according to the note.

"We are not adding back the 15% direct labor that in theory wouldn't be paid in a strike," UBS analyst Gavin Parsons said, adding that this could cushion the third scenario by roughly $1 billion. "There could also be negative implications for the defense business, if fuselage deliveries intended for military aircraft use are delayed," Parsons wrote.

Boeing's ( BA ) cash balance is seen remaining above $8 billion even if the strike continues for up to two months, though this could need a liquidity raise given the company's target $10 billion floor, according to the note. UBS said its discussions with investors suggest a roughly $10 billion liquidity raise is likely.

Boeing ( BA ) shares closed 0.8% lower on Monday, and have lost 40% in value so far this year.

"With near-term liquidity concerns, we would expect pressure on the stock until a deal is signed, but that once complete, Max production will resume ramping and the company can return to positive cash flow generation," Parsons said.

Boeing ( BA ) has announced several cost-cutting measures, including making "significant reductions" to supplier spending and halting most purchase orders for 737 Max, 767 and 777 jets, CNBC reported Monday, citing a note sent to employees by Chief Financial Officer Brian West. "We are also considering the difficult step of temporary furloughs for many employees, managers and executives in the coming weeks," West reportedly said.

Boeing ( BA ) didn't respond to MT Newswires' request for comment on the report.

On Friday, West said at a conference that the strike will affect the company's production and deliveries, as well as "jeopardize" its recovery, according to a Capital IQ transcript.

Also on Friday, Moody's placed the company's credit ratings on review for downgrade. Separately, Fitch Ratings said that an extended strike could have "a meaningful" operational and financial impact on Boeing ( BA ) and raise the risk of a downgrade.

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