Boeing’s stock is flying high today after the company reached a tentative agreement with a union representing over 32,000 workers, potentially averting a strike that was set to begin as early as September 13th. The deal, which includes a significant 25% wage increase and a commitment to build the next commercial airplane in the Seattle area, marks a major victory for new Boeing CEO Kelly Ortberg.
This agreement could prevent a significant disruption in production, as the union initially proposed a 40% wage increase and other demands that included reduced healthcare costs, a restored defined-benefit pension plan, eased overtime rules, and a commitment to build Boeing’s next aircraft in the Puget Sound region.
While the deal represents a positive development for Boeing, there’s still a risk of rejection by union members. Analyst Ronald J. Epstein from B of A Securities points out that strong support for the pension and wage increase among union members could still lead to a rejection of the agreement.
Despite the potential for rejection, Epstein views this as a meaningful positive development for Boeing, along with the successful return of the Starliner spacecraft to Earth on Friday. These events are expected to improve sentiment around the company and support Ortberg’s efforts to advance Boeing’s position.
Investors seeking exposure to Boeing can do so through ETFs like the iShares U.S. Aerospace & Defense ETF (ITA) and Gabelli Commercial Aerospace and Defense ETF (GCAD).
Boeing’s shares closed up 3.59% at $163.28 on Monday, reflecting the market’s positive reaction to the news. This deal could have significant implications for the aerospace industry, particularly if it prevents further delivery disruptions.
