Boeing Co. (BA) is facing a potential production disruption as its workers prepare to strike following the rejection of a proposed labor contract. Over 30,000 employees in Seattle and Oregon voted overwhelmingly against the tentative agreement, with 94.6% rejecting the deal and an even higher 96% voting in favor of a strike. The union, represented by the International Association of Machinists and Aerospace Workers (IAM), cited issues like “discriminatory conduct, coercive questioning, unlawful surveillance, and unlawful promise of benefits” as reasons for the strike.
While the rejected proposal offered a 25% wage increase and improvements to healthcare and retirement benefits, the union sought approximately 40% raises, arguing that the offer did not sufficiently address the rising cost of living. Boeing CEO Kelly Ortberg, who took over the role just five weeks ago, urged workers to accept the contract to avoid hindering the company’s recovery efforts.
The strike comes at a critical juncture for Boeing, which has been grappling with production delays and quality control issues. The company reported delivering 40 commercial jets in August, an improvement from the previous year, but continues to face challenges related to manufacturing defects affecting its 737 MAX production. On Tuesday, Boeing informed suppliers of a six-month delay in reaching a key production milestone for the 737 MAX, pushing the target to achieve a monthly output of 42 jets to March 2025, instead of the previously planned September. The labor unrest adds another layer of complexity to Boeing’s existing challenges.
The financial impact of the strike will depend on its duration. Jefferies aerospace analyst Sheila Kahyaoglu estimates that a 30-day strike could cost Boeing $1.5 billion. The strike underscores the dissatisfaction among union workers, who were seeking higher wage increases and better pensions. This sentiment was reflected in the overwhelming rejection of the contract and the strong vote in favor of a strike.
Boeing’s stock closed at $162.77 on Thursday, up 0.89%, but dipped 0.17% in after-hours trading. The stock has experienced a significant decline of 35.35% year-to-date, according to Benzinga Pro. The potential disruption caused by the strike adds further uncertainty to the future of Boeing’s recovery and its ability to regain momentum in the face of ongoing challenges.
