Boeing reaches tentative agreement with IAM union
Boeing reached a deal with its 32,000 workers belonging to the International Association of Machinists and Aerospace Workers union.
Boeing Co.
$155.55
11:10 16/09/24
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41,622.08
04:30 15/10/20
Under the terms of the agreement, IAM 751 union members were set to receive a 25% gross pay boost over the next four years.
The deal would be put to a vote by the union's members on 12 September, although union president, Jon Holden, had already endorsed the deal.
The airplane manufacturer also committed to building its next commercial aircraft model in the Pugent Sound area if it were launched during the life of the four-year contract.
Also included was a greater say for unions in the safety and quality of the production system, together with improved retirement benefits and additional company paid retirement benefits.
Boeing finance director Brian West was scheduled to speak at the Morgan Stanley Laguna Conference on 13 September.
The news came amid fears that possible strike action could cripple the jetmaker, pushing back production plans at a time when cash flows were already at a critical level after successive severe lapses in the quality of its planes.
Nevertheless, it was a significant win for its new chief executive officer, Kelly Ortberg, who had acted quickly to get staff onside after nearly two decades of labour tensions and disputes, knowing full well that the company's future depended on it.
The company was also facing the risk of possible downgrades of its debt ratings, which in turn would further complicate a potential capital increase expected by some analysts.
Analysts at Bank of America said that the agreement reduced the risk of a negative vote and subsequent strike "significantly".
Nonetheless, they did not rule out that possibility, given the "strong member sentiment" among workers around a return to defined pensions and a 40% gross salary increase, such that "some risk" remained.
"If the deal is accepted, we see this as a benefit for the industry overall and would help avoid further OEM delivery disruption. We maintain our Neutral rating, as the vote to accept the new deal remains to be determined."
BofA had a $200 target price on shares of Boeing.