Bank of America now says the strike at GM will cost the automaker $3.25 billion - its biggest estimate yet
- The six-week-long strike of more than 48,000 General Motors workers could cost the company more than $3 billion - the largest estimate yet - according to a new analysis from Bank of America Merrill Lynch.
- The firm's analysts expect the automaker to take a $750 million hit to operating income in the third quarter, and another $2.5 billion loss in the fourth quarter.
- The number is derived from an estimated total loss of production of a little less than 350,000 vehicles and a contribution margin per vehicle between $10,000 and $12,000, according to the firm's analysis.
- Shares of GM rose as much as 2.5% on Wednesday after the United Auto Workers union announced the two parties had agreed on a proposed tentative labor deal.
- Watch GM trade live.
The United Auto Workers strike could cost General Motors as much as $3.25 billion - the largest estimate yet - according to a new analysis from Bank of America Merrill Lynch.
The strike, which is closing in on its sixth week, could cost GM $750 million in operating income for the third quarter and another $2.5 billion during the fourth quarter, the firm's analysts wrote in a note to clients on Thursday.
The figure comes from an estimated total loss of production of a little less than 350,000 vehicles and a contribution margin per vehicle between $10,000 and $12,000, according to the firm's analysis.
The estimate is also based on the assumption that a tentative deal that was announced on Wednesday will be ratified by next week, BAML said.
Based on the updated forecast, the bank also slashed its 2019 earning's per share estimate to $4.95, from $6.85.
About 48,000 GM workers began striking in mid-September due to disagreements over pay, healthcare costs, and automaker's use of temporary workers.
The UAW GM National Council was scheduled to meet privately on Thursday to vote on a proposed labor deal that would end the strike.
Shares of GM are up about 8% year-to-date.
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