Boeing has successfully averted a potential crippling strike by reaching an agreement with its largest union, the International Association of Machinists and Aerospace Workers (IAM). The deal, which covers 33,000 workers, includes significant pay raises and a commitment to build the next commercial airplane in the Seattle area, marking a major win for Boeing’s newly appointed CEO, Kelly Ortberg.
Under the four-year contract, workers will receive a 25% pay increase, resulting in an average wage increase of 33% due to seniority step increases. This is less than the 40% the union initially demanded during negotiations. The agreement also includes $3,000 lump sum payments and a reduced share of health care costs for workers.
The proposed agreement represents an early success for Ortberg, who took over as CEO last month. Boeing is currently facing a quality crisis and intense scrutiny from regulators and customers, following an incident in January where a door plug on a near-new MAX jetliner blew off mid-air.
While the union initially sought a 40% raise in their first full negotiation with Boeing in 16 years, they achieved other significant gains, including a greater role in ensuring the safety and quality of the production system. The IAM union local representing the Boeing workers described the agreement as “the best contract we’ve negotiated in our history.”
Boeing has committed to producing its next commercial airplane program in the U.S. Pacific Northwest, provided the deal is ratified by members by Thursday and the program is launched during the life of the agreement. However, the timing of Boeing’s next aircraft launch remains unclear.
The agreement has been met with positive reactions from industry experts, with aerospace analyst Richard Aboulafia highlighting the importance of improving labor relations and focusing on future programs for Boeing. “Changing the culture starts with a different attitude towards labor and towards the future with new product development,” Aboulafia stated.
The negotiations drew attention from the Biden administration, with Labor Secretary Julie Su urging both parties to reach a “fair contract” in a recent interview. Su reportedly spoke with both Ortberg and union local head Jon Holden during the negotiations.
The Boeing workers, responsible for producing the widebody 777 and 767 models alongside the MAX, had voted in favor of a strike mandate in July. The Federal Aviation Administration (FAA), which temporarily barred Boeing from increasing production of the 737 MAX after the door panel incident, has increased its oversight of the company. FAA Administrator Mike Whitaker is scheduled to visit Seattle later this month to meet with Ortberg and receive an update on Boeing’s quality improvement plans.
With this agreement, Boeing can now focus on addressing its quality concerns and restoring confidence among regulators, customers, and the public. The deal also represents a positive step towards improving labor relations within the company and setting a foundation for future success.
