More than 3,200 Boeing (BA 0.64%) workers at the company's St. Louis-area defense factories went on strike Monday after the International Association of Machinists and Aerospace Workers (the IAM Union) rejected a modified contract offer from the company.
The IAM Union members help build and maintain military aircraft and defense systems, including the F-15EX fighter jet and the MQ-25 Stingray autonomous aerial refueler. According to a report in The New York Times, the last time this local IAM chapter went on strike was in 1996. That walkout lasted 99 days.
Boeing stock is up 25% this year, as investors are seeing signs of progress in the company's turnaround plan. However, it's reasonable to wonder if a prolonged work stoppage in Boeing's defense operations would pose a significant setback to the company's recovery efforts.
Image source: Getty Images.
How important is Boeing's defense business?
Historically, commercial airplane sales have generated the biggest chunk of Boeing's revenue. But in recent years, a series of quality control lapses and production setbacks -- most notably the 737 MAX crisis -- have taken a toll on Boeing's commercial business. As a result, Boeing's defense, space, and security (BDS) division was the largest contributor to the overall revenue mix in 2024.
The table below shows how the BDS division has become a more important part of Boeing's revenue mix since 2017.
|
Year |
Total Revenue |
Commercial Airplanes |
Defense, Space, and Security |
Global Services |
|---|---|---|---|---|
|
2017 |
$94 billion |
$58 billion |
$20.6 billion |
$14.6 billion |
|
2018 |
$101.1 billion |
$60.7 billion |
$23.2 billion |
$17 billion |
|
2019 |
$76.6 billion |
$32.3 billion |
$26.1 billion |
$18.5 billion |
|
2020 |
$58.2 billion |
$16.2 billion |
$26.3 billion |
$15.5 billion |
|
2021 |
$62.3 billion |
$19.5 billion |
$26.5 billion |
$16.3 billion |
|
2022 |
$66.6 billion |
$25.9 billion |
$23.2 billion |
$17.6 billion |
|
2023 |
$77.8 billion |
$33.9 billion |
$24.9 billion |
$19.1 billion |
|
2024 |
$66.5 billion |
$22.9 billion |
$23.9 billion |
$20 billion |
Data source: Boeing.
In the second quarter of 2025, the BDS division generated $6.6 billion in revenue, which was nearly 30% of Boeing's overall quarterly revenue. However, commercial airplane sales accounted for 48% of overall Q2 revenue, as Boeing ramps up production of the 737 MAX -- its most popular jet -- and the 787 Dreamliner.
Assuming Boeing continues to make progress stabilizing production of its commercial jets, the revenue mix going forward should start to look more like it did in 2017 and 2018, when its commercial business carried the bulk of the load.
Still, BDS has been a steady contributor, and it's notched some big wins this year. In March, the U.S. Air Force selected Boeing to build its next-generation fighter jet, the F-47. A few weeks ago, the U.S. Space Force awarded Boeing a $2.8 billion contract to develop two satellites for space-based nuclear command, control, and communications.
Boeing is expanding its St. Louis operations to support production of the F-47. Because the contract was just inked in March, though, it's unlikely that the machinists strike will have an impact on the F-47 program.
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Key Data Points
Boeing is in a stronger position to weather this storm
Last September, 33,000 IAM Union members at Boeing's Seattle-area facilities went on strike, bringing production of the 737 MAX and 777 to a halt. According to an estimate by Anderson Economic Group, the 53-day machinists strike cost Boeing and its shareholders at least $5.5 billion in lost earnings.
That strike couldn't have come at a worse time. Boeing was still reeling from an incident earlier in the year involving a poorly installed fuselage panel on a 737 MAX, which blew out during an Alaska Airlines flight. Based on its history of quality-control issues with the 737 MAX, the company was facing the possibility of criminal prosecution for two fatal crashes in 2018 and 2019.
Boeing is in a much stronger position today. In late May, the Department of Justice and Boeing came to terms on a non-prosecution agreement. Meanwhile, Boeing is ramping up commercial airplane production. Commercial jet deliveries skyrocketed 63% higher in the second quarter compared to the year-ago period. At the same time, Boeing's balance sheet is getting healthier, and management expects the company to generate positive free cash flow by the fourth quarter of this year.
That might be why Boeing CEO Kelly Ortberg didn't seem overly concerned about the strike when the subject came up during the company's Q2 earnings call. He quickly noted that "the order of magnitude of this is much, much less than what we saw last fall."
"I wouldn't worry too much about the implications of the strike," Ortberg told analysts. "We'll manage our way through that."
Final thoughts
If there's one reason investors shouldn't be overly concerned about the impact of this strike, it's the rebound in Boeing's commercial airplane production. Through the first half of 2025, commercial deliveries were up 60% compared to the year-ago period. Commercial airplane revenue comprised 45% of Boeing's total first-half revenue, while BDS accounted for 31%.
If Boeing can continue to ramp up commercial jet production, it should help mitigate any negative impact from the machinists strike in St. Louis. That said, investors might want to keep an eye on the situation.
