On November 1, 2024, Boeing shares experienced a significant uptick, climbing 3.5% in early trading, fueled by optimism surrounding the potential end to a seven-week strike that has severely disrupted its jet production. This surge in stock value came in response to the news that the International Association of Machinists and Aerospace Workers (IAM) District 751 had endorsed a new contract proposal from Boeing. This offer, set for a vote on Monday, presents a 38% wage increase over four years, an increase from the previously offered 35%.
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The strike, which commenced on September 13, involved around 33,000 workers, primarily at Boeing's facilities in the Seattle area. The industrial action has halted the production of Boeing's best-selling 737 MAX, as well as the 767 and 777 widebody aircraft, leading to a reported $6 billion loss in the third quarter. The financial strain is evident, with the strike not only affecting Boeing's financial health but also its ability to meet delivery schedules, thereby complicating the turnaround efforts under CEO Kelly Ortberg.
The new offer from Boeing includes a $12,000 ratification bonus, a move aimed at sweetening the deal for the workers. However, it does not restore the defined-benefit pension plan, a significant demand from the workers. This compromise reflects negotiations where both sides have had to moderate their initial expectations; the union had initially sought a 40% wage increase, while Boeing's earlier offers were less generous.
This latest proposal has been put forward after two previous offers were rejected by the union members on September 12 and October 23, indicating a strong resolve among the workers for better terms. The endorsement by IAM District 751 leadership signals a potential shift towards resolution, driven by the mutual interest in returning to work and the economic pressures that a prolonged strike exerts on both the company and its employees. The stock market's positive reaction underscores investor confidence in the possibility of ending the strike, which would allow Boeing to resume normal operations. Analysts point out that while the wage increase might put pressure on Boeing's margins, the resumption of production is critical for maintaining market share and fulfilling backlogged orders. The outcome of Monday's vote could thus be pivotal for Boeing's immediate financial future and its strategic positioning in the competitive aerospace sector.