Employees to Vote on New Contract Proposal
Boeing employees are expected to vote on a new contract proposal on Monday, November 4th, potentially ending a 49-day strike. The proposed agreement, recommended by the International Association of Machinists (IAM), includes a significant wage increase, ratification bonus, and improved retirement benefits.
The proposed agreement offers a 38% wage increase over four years, with 13% in the first year, followed by 9% in each of the next two years, and 7% in the final year. Additionally, workers would receive a $12,000 ratification bonus and improved 401(k) contributions. Importantly, Boeing has also committed to locating any new aircraft production in the Puget Sound region of Washington, a key concession for the union.
This deal comes after union members previously rejected two offers, including a 35% wage increase in October. The initial union request included a 40% wage increase and pension restorations, but the new deal focuses on wage hikes and bonuses, while pensions remain unchanged.
If approved, Boeing expects production facilities to gradually reopen as early as November 6th, with full staffing anticipated over the following weeks. The strike and production delays have impacted Boeing's suppliers, with some, like Spirit AeroSystems, already implementing employee furloughs.
Boeing CEO Kelly Ortberg emphasized the importance of a careful restart process, citing ongoing issues with production stability and meeting FAA safety standards.
Despite the potential end of the strike, Boeing's rating remains on S&P's CreditWatch following a larger-than-anticipated equity issuance. While this helps offset projected cash flow deficits through 2025, S&P noted Boeing's limited flexibility for further cash flow pressures and cited ongoing strike-related and post-strike operational risks as areas of concern.
On Friday, November 4th, BA shares were up 3.5% at $154.59.