SEATTLE — Boeing has decided to withdraw a contract proposal that included a 30% pay increase over the next four years for workers currently on strike, following a breakdown in negotiations.
The aerospace giant stated that it had enhanced its earlier offer for union workers regarding take-home pay and retirement plans over a two-day discussion period.
However, Boeing expressed disappointment, claiming that the union did not give serious consideration to their proposals. Instead, the company accused the union of making unreasonable demands that were not feasible for maintaining competitiveness.
“In light of this situation, we believe that further negotiations are pointless, and thus, our offer has been retracted,” Boeing announced in an official statement.
In response, the union indicated it had consulted its members after Boeing’s latest offer, which ended up being overwhelmingly rejected.
The International Association of Machinists and Aerospace Workers District 751 communicated to its members that their negotiating committee tried to engage with several priorities that could have led to a viable offer, but claimed the company was unyielding in their stance.
Furthermore, the union had previously raised concerns about Boeing’s decision to publicly disclose its recent offer to around 33,000 striking workers without first negotiating with union representatives.
Boeing’s latest proposal was more favorable than the initial offer that had been widely rejected when the workers initiated the strike on September 13.
While the first offer included a 25% salary increase, the union had originally sought a 40% raise over a three-year period.
Boeing had projected that the average annual salary for machinists would increase from the current $75,608 to $111,155 by the conclusion of the four-year contract term.
The union represents factory employees who are involved in assembling some of Boeing’s most popular aircraft.
As the strike continues, Boeing is contending with various other challenges, including the halting of production for its 737, 777, and 767 models.
Meanwhile, work on the 787 aircraft is still in progress, being conducted by nonunion workers located in South Carolina.
S&P Global Ratings has placed Boeing Co. on its “CreditWatch Negative” list due to the heightened financial risks associated with the ongoing strike.
The ratings agency has estimated the company could face approximately $10 billion in cash outflows in 2024, attributed to working capital requirements for manufacturing process improvements and strike-related expenses.
The inclusion on S&P’s CreditWatch signifies a heightened risk of a credit downgrade, potentially increasing the company’s borrowing costs.
Following this announcement, Boeing’s stock price, headquartered in Arlington, Virginia, saw a nearly 3% drop at the market’s opening on Wednesday, bringing the total decline to 41% for the year.
