The 49-day strike at Boeing could be nearing its end, as workers are set to vote on a new contract proposal on Monday, November 4th. The company announced a tentative agreement with the International Association of Machinists (IAM), a deal that has the potential to significantly impact both Boeing’s operations and its stock price.
The union-recommended agreement offers a substantial 38% wage increase over four years. Workers would see a 13% bump in the first year, followed by 9% in each of the next two years, and 7% in the final year. In addition to the wage increase, the deal includes a $12,000 ratification bonus and improved 401(k) contributions.
One of the key concessions from Boeing was a commitment to locating any new aircraft production in the Puget Sound region of Washington. This was a significant demand from the union, and its inclusion in the agreement demonstrates the company’s willingness to meet their concerns.
This tentative deal comes after two previous proposals were rejected by union members. The initial union request sought a 40% wage increase and pension restorations, but the new deal focuses on wage hikes and bonuses while leaving pensions unchanged.
If the new contract is approved, Boeing expects production facilities to gradually reopen as early as November 6th, with full staffing anticipated over the following weeks. The strike and subsequent production delays have had a ripple effect, impacting Boeing’s suppliers, with some, like Spirit AeroSystems, already implementing employee furloughs.
Boeing CEO Kelly Ortberg highlighted the importance of a careful restart process, acknowledging ongoing challenges with production stability and ensuring compliance with FAA safety standards.
While this tentative agreement is a positive development, Boeing still faces financial challenges. The company’s rating remains on S&P’s CreditWatch following a significant equity issuance designed to offset projected cash flow deficits through 2025. S&P expressed concern over Boeing’s limited flexibility in addressing further cash flow pressures and cited ongoing strike-related and post-strike operational risks as potential areas of concern.
Despite these challenges, Boeing shares experienced a surge on Friday, closing up 3.5% at $154.59. The potential resolution of the strike and the prospect of resuming production have boosted investor confidence. The coming week will be crucial as workers cast their votes, and the outcome will significantly impact both Boeing’s future and the broader aviation industry.
