Boeing and its largest union have announced on Sunday that they have reached an agreement on a new contract, potentially avoiding a strike that could have halted aircraft production by the end of the upcoming week. The contract involves pay raises of 25% over four years for the 33,000 workers represented by the International Association of Machinists and Aerospace Workers, with average wages expected to increase by 33% due to seniority step raises. While this is less than the 40% demanded by the union during negotiations, the agreement does include a provision to build Boeing’s next aircraft in Washington state, likely by union members.
In addition to the pay raises, workers will also receive $3,000 lump sum payments and a reduction in health care costs. Boeing has agreed to contribute up to $4,160 per employee to their 401(k) plans. However, the union’s request to reinstate a defined-benefit pension plan that was terminated in 2014 was not granted. Jon Holden, president of IAM District 751, described the proposal as the best contract negotiated in their history, and the union’s bargaining committee is recommending that members ratify the contract.
The proposed agreement hinges on union members ratifying before midnight on Thursday Pacific time to avoid a potential strike. The union has scheduled an election for Thursday to vote on accepting the contract and authorizing a strike if the offer is rejected. A strike could have added to the challenges facing Boeing, which has seen financial losses and recently appointed a new CEO, Kelly Ortberg, to address the company’s struggles.
Ortberg aims to address the $27 billion in losses since the beginning of 2019, along with various operational and financial challenges Boeing is currently facing. He has shown a willingness to improve relations with the machinists’ union, understanding the importance of strengthening those ties. A strike at Boeing would not directly impact consumers, but it would disrupt airplane production, affecting the company’s cash flow significantly. Previous strikes at Boeing have led to substantial financial losses, and analysts estimate that a potential strike in 2021 could cost the company billions of dollars given its current financial situation.
Boeing remains one of the world’s major players in the airline manufacturing industry, with a substantial backlog of orders valued at over $500 billion. Despite its financial struggles in recent years, Boeing’s position in the market remains strong, alongside its main competitor Airbus.
