(Bloomberg) — Boeing Co. and its largest union said they’ve hammered out a landmark deal to potentially avoid a strike that would risk crippling the already troubled US aircraft manufacturer.
Most Read from Bloomberg
The offer includes a 25% wage increase over four years, a $3,000 bonus and a commitment to build Boeing’s next plane in the Seattle area, the two sides said in separate statements.
The breakthrough emerged after a marathon bargaining session, with a strike vote looming after the current contract expires at midnight Sept. 12. The accord promises to be a significant victory for new Boeing Chief Executive Officer Kelly Ortberg and his pledge to reset long-contentious labor relations. But it’s too soon to know if workers will go along with the accord or buck their leadership, with anti-management sentiment still running high on the factory floor.
“The contract offer provides the largest-ever general wage increase,” Commercial Airplanes President and CEO Stephanie Pope said in a video message to employees. “Just as important, this contract deepens our commitment to the Pacific Northwest,” said Pope, who is also Boeing’s chief operating officer. “Boeing’s roots are here in Washington.”
‘Tough Position’
Officials from Boeing and the International Association of Machinists and Aerospace Workers have been holed up in a Seattle hotel for almost a month trying to find middle ground on issues spanning wages, retirement benefits, job security, and health care. The talks are the first full-scale negotiations in 16 years between the company and the union local representing 33,000 mechanics and factory workers in Washington and Oregon.
Boeing’s wage offer would work out to a 33% pay boost when including “progression,” the pay bumps that occur at regular intervals the longer workers stay on the job. Still, it’s less than the 40% raise that union leaders had sought at the outset of talks in March.
“Financially, the company finds itself in a tough position due to many self-inflicted missteps,” Jon Holden, president of IAM District 751, and Brandon Bryant, president of district W24, said in a joint statement to members. “It is IAM members who will bring this company back on track.”
Credit Rating
If workers balk at the company’s offer, Boeing faces a walkout that could shut down its Puget Sound factories, jeopardizing efforts to boost jetliner output. The planemaker faces a cash squeeze after burning through more than $8 billion in cash during the first six months, following a near-catastrophic accident in early January on a 737 that exposed manufacturing shortfalls at the company at set of a cascade of sweeping measures, including a change of leadership.
While Boeing is wary about preserving fiscal discipline, the costs of a work stoppage far outweigh those of maintaining labor peace. The company’s credit rating is on the edge of being cut below investment grade, and output of the 737 model has been capped by regulators until Boeing can get production back in order. The company hasn’t reported an annual profit since 2019.
–With assistance from Danny Lee.
(Updates with wage detail, comment from union leaders)
Most Read from Bloomberg Businessweek
©2024 Bloomberg L.P.
