Boeing Co. (BA) faces a continued work stoppage as striking machinists overwhelmingly rejected the company’s latest offer in a vote tallied late Wednesday. The proposed labor deal, which aimed to end the strike that has already cost Boeing an estimated $2 billion over the past five weeks, was met with strong opposition from union members.
According to the International Association of Machinists and Aerospace Workers (IAM), a staggering 64% of members who cast ballots on Wednesday voted against the tentative agreement. IAM District 751 President Jon Holden expressed the union’s stance, stating, “Our members deserve more and have spoken loudly. We have made tremendous gains in this agreement. However, we have not achieved enough to meet our members’ demands.”
While Boeing CEO Kelly Ortberg expressed optimism during an earnings call on Wednesday, hoping for union acceptance, the news of the rejection throws a wrench into the company’s plans. Ortberg acknowledged the strike as the company’s primary challenge, emphasizing their efforts to find a solution that benefits both Boeing and its employees.
Despite offering wage increases of 35% over four years, enhanced 401(k) contributions, and a $7,000 bonus, Boeing’s proposal failed to address the union’s key demand: the restoration of pension benefits. “The loss of the pension is still right at the heart of this for many,” Holden emphasized.
Financial analysts at BofA Securities estimate the strike is costing Boeing approximately $50 million daily due to the halt in production. They project a financial impact of nearly $3 billion if the strike continues for the average duration of 58 days. BofA highlights the escalating risks of losing talent and delays in recovery as the strike reaches the 40-day mark, urging Boeing to prioritize a swift resolution.
Although an exact date for resuming negotiations has not been announced, both sides have expressed optimism about returning to the negotiating table. Holden expressed a belief that progress can be made by resuming discussions soon, emphasizing the need to address the union’s concerns after ten years of sacrifices.
Meanwhile, Boeing shares traded 1.36% lower at $154.93 at the time of publication Thursday, reflecting the uncertainty surrounding the strike and its potential impact on the company’s future. The ongoing negotiations remain a key factor in determining Boeing’s path forward and its ability to navigate the challenges of a prolonged work stoppage.