04:11 PM EDT, 08/22/2024 (MT Newswires) -- Boeing ( BA ) faces potential near-term risks from the upcoming expiration of the union labor contract with 32,000 IAM 751 members on Sept. 13, UBS said in a note Thursday.

In the event of a strike, UBS outlines three potential scenarios, with the worst-case scenario involving an over two-month-long strike, potentially halting deliveries of key aircraft models like the Max, 777, and 767, leading to severe financial repercussions.

A failure to reach an agreement could lead to a strike, significantly impacting aircraft deliveries and creating an $8 billion cash flow headwind, the investment firm said.

Boeing's ( BA ) free cash flow estimates for 2024 to 2028 could be affected by wage increases, with an up to 6% potential impact depending on the scale of union wage increases, ranging from a 14% step-up to a 40% step-up, UBS said.

Despite these risks, UBS notes that even if a strike does not occur, Boeing ( BA ) will likely still face higher wage costs, leading to an estimated $1 billion increase in annual union wages by the end of the decade.

UBS had a buy rating for Boeing ( BA ) with a price target of $240.

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