Berliner Boersenzeitung - Boeing union approves contract, ending over 7-week strike

The International Association of Machinists and Aerospace Workers (IAM) District 751 said it had ratified the offer by a vote of 59 percent after rejecting two prior offers.

The move will send some 33,000 Seattle-area employees back to work and restore operations at two major assembly plants after what became the costliest strike this century, at a time when Boeing is trying to recover from multiple setbacks.

The contract includes a 38 percent wage hike, a $12,000 signing bonus and provisions to lift employer contributions to a 401K retirement plan and contain health care costs.

But it does not restore Boeing's former pension plan that had been sought by older workers.

Jon Holden, head of the Seattle union, described the agreement as a win for workers who were determined to make up for more than a decade of stagnant wages.

"It's time for us to come together. This is a victory," Holden said. "The strike will end and now it's our job to get back to work and start building the airplanes, increase the rates and bring this company back to financial success."

Holden called the struggle to restore the pensions a "righteous fight," adding, "we'll continue working on that issue, retirement security, for the rest of our lives."

Boeing CEO Kelly Ortberg welcomed the ratification, adding that management and workers must work together as "part of the same team," according to a company statement.

"We will only move forward by listening and working together," Ortberg said. "There is much work ahead to return to the excellence that made Boeing an iconic company."

The news was also cheered by President Joe Biden, who congratulated the union on the wage hike and provisions that "improves workers' ability to retire with dignity," according to a White House statement.

Boeing staff can return as soon as November 6 and must be back on the job by November 12, the IAM said on social media platform X.

- Turnaround mode -

The strike had exacerbated Boeing's already precarious outlook after a January incident in which a fuselage panel blew out mid-flight on a 737 MAX operated by Alaska Airlines.

There were no major injuries, but the episode plunged Boeing back into crisis after two earlier fatal MAX crashes, with US air safety regulators limiting production output until the company got its house in order.

In March, Boeing announced a management shakeup that included the exit of CEO Dave Calhoun, who was replaced in August by former Rockwell Collins chief Ortberg.

Ortberg has cautioned that a turnaround at Boeing would take time given travails that also include major cost management problems in defense contracts and problem-filled space missions.

In October, as Boeing reported a whopping $6.2 billion quarterly loss, Ortberg described the need for a "fundamental culture change" and said he was reviewing the company's portfolio with an eye towards shrinking its mission in order to restore excellence.

But the IAM strike had threatened the new CEO's efforts.

Third Bridge analyst Peter McNally said the end of the strike was a positive, but that Boeing's "road ahead is long and complex."

With the strike over, Boeing has gotten past two major overhangs following last week's successful push to raise more than $20 billion in capital, said a note from UBS.

The focus now shifts to Boeing's prospects for lifting commercial plane production and returning to a cash flow positive.

"Supply chain will be a key watch item given choppiness even before the strike resulted in stop-orders for many suppliers," UBS said.

The IAM strike had been driven by worker exasperation after more than a decade of near stagnant pay -- a problem exacerbated by higher inflation in recent years and higher living costs in the Seattle region, a growing tech hub.

The strike recently surpassed the 2023 United Auto Workers strike against Detroit carmakers to become the costliest in the 21st century, according to Anderson Economic Group, which estimated the total economic hit at $11.6 billion.

Shares of Boeing fell 0.8 percent in morning trading.

(K.Lüdke--BBZ)