INTERNATIONAL NEWS: Boeing Workers Strike After Rejecting 25% Pay Increase, Further Complicating Company’s Recovery

Boeing Workers Strike After Rejecting 25% Pay Increase, Further Complicating Company’s Recovery

INTERNATIONAL NEWS: Boeing Workers Strike After Rejecting 25% Pay Increase, Further Complicating Company's Recovery

Boeing workers have gone on strike after rejecting a tentative agreement that proposed a 25% pay increase. Nearly 95% of the union members voted against the deal, reflecting widespread dissatisfaction with the terms negotiated between union leaders and Boeing. The strike, which began at midnight Pacific Time on Friday, involves over 30,000 workers from Boeing’s production facilities in the Seattle and Portland areas. These workers are responsible for manufacturing major aircraft, including the 737 Max and 777.

This strike represents a significant setback for Boeing, a company already struggling to recover from deep financial losses and reputational damage following a series of safety failures. Two fatal crashes involving the 737 Max model have been particularly damaging to Boeing’s public image. The company’s new chief executive, Kelly Ortberg, who took office just a month ago, faces a tough challenge as he works to resolve these issues and steer Boeing back on track.

Jon Holden, president of the International Association of Machinists and Aerospace Workers (IAM) District 751, voiced the union’s stance following the vote, emphasizing the workers’ clear rejection of the agreement. “Our members spoke loud and clear tonight,” Holden stated. Boeing responded by acknowledging the union’s position, noting that the proposed agreement was not accepted by its members. The company remains committed to renegotiating and hopes to return to the bargaining table soon to reach a more favorable deal.

The rejected deal included not only the 25% pay rise over four years but also a promise by Boeing to build its next commercial aircraft in the Seattle area, provided the project begins during the duration of the contract. Union members, however, were targeting more significant improvements, initially advocating for a 40% pay increase. The pay package, therefore, fell short of their expectations, contributing to the strike action.

Boeing’s CEO, Kelly Ortberg, made an urgent appeal to the workers before the vote, warning them that a strike would put the company’s recovery efforts at risk. His warning, however, failed to sway the majority of union members. The current contract between Boeing and the union, which was extended in 2014, expired at midnight on Thursday, making it imperative for both sides to reach a new agreement as soon as possible.

The financial implications of the strike could be severe. The last significant walkout by Boeing workers occurred in 2008, lasting for eight weeks and costing the company about $1.5 billion per month, according to credit rating agency Moody’s. As Greg Waldron, Asia Managing Editor at FlightGlobal, highlighted, “It’s never a good time for a strike, at least from the perspective of management, but the current situation makes it even more problematic.” He added that airline executives who have 737 Max planes on order will closely monitor the strike’s duration and its potential impact on deliveries.

Boeing has also been dealing with ongoing legal and regulatory challenges. In July, the company agreed to plead guilty to fraud charges and paid a $244 million criminal fine related to the fatal crashes of two 737 Max aircraft more than five years ago. Additionally, Boeing is facing lawsuits following a mid-air incident in January involving a new plane flown by Alaska Airlines, in which a door plug blew out.

On top of the legal issues, Boeing has had to slow down its production due to a 737 Max production cap imposed by the U.S. Federal Aviation Administration (FAA). This has further strained the company’s operations and contributed to its financial difficulties.

As the strike continues, Boeing is under immense pressure to resolve the conflict quickly to avoid further financial losses and maintain its production schedule. Both the union and Boeing are expected to return to the negotiating table in hopes of reaching a deal that satisfies the workers’ demands while ensuring the company’s long-term stability.