Titanium Producers ATI and Howmet Adjust Outlook Amid Boeing Strike Fallout

Howmet Aerospace

The recent strike at Boeing has caused significant disruptions in the aerospace supply chain, prompting titanium producers ATI and Howmet Aerospace to temper their growth forecasts for the next two quarters. The strike, which halted production of critical aircraft programs such as the 737 MAX, 767, and 777, has delayed shipments and forced adjustments in the titanium industry.

Supply Chain Challenges from the Strike

Boeing's machinists, numbering over 32,000, began their strike on September 13, only returning to work after approving a new contract on November 4. While all workers were scheduled to resume duties by November 12, Boeing noted that ramping up production would require time to retrain and recertify employees and stabilize disrupted supply chains.

The strike exacerbated Boeing's existing struggles with constrained production rates for the 737 MAX, which was already operating below the federally allowed cap of 38 aircraft per month. By August, output was down to 31 aircraft per month before all manufacturing came to a halt.

Impact on ATI and Howmet Aerospace

Both ATI and Howmet reported disruptions in titanium shipments during the third quarter. Some distributors and machine shops canceled orders or deferred deliveries into late 2024, particularly affecting ATI. Howmet, on the other hand, decided to scale back its shipments to Boeing, closely monitoring labor action developments.

• ATI revised its 2024 adjusted earnings guidance to $700 million-$710 million, down from its August estimate of $720 million-$750 million.
• Howmet adjusted its baseline revenue forecast for 2024 to $7.41 billion, slightly below its previous forecast of $7.44 billion in July.

Despite these setbacks, Howmet's Q3 profit surged by 77% year-on-year to $331 million, with revenues climbing 11% to $1.8 billion. ATI saw a modest 1% increase in profit to $83 million, although revenues dipped by 4% to just under $1.1 billion.

Outlook for Recovery

Both ATI and Howmet anticipate a gradual recovery as Boeing ramps up its supply chain operations and addresses workforce and production challenges. ATI estimates modest growth in the coming quarters, while Howmet is aligning its expectations with Boeing's adjusted output levels.