Ahead of a crucial vote, Boeing Co. BA faces potential disruptions in its aircraft production as workers decide on a strike.
What Happened: Boeing is awaiting the results of a crucial vote on Thursday by 33,000 aircraft assembly workers. The vote will determine whether they will strike and halt production of the company’s top-selling planes, reported the Associated Press.
Members of the International Association of Machinists and Aerospace Workers are voting on a contract proposal that includes a 25% pay increase over four years. If rejected and two-thirds vote to strike, the work stoppage will commence on Friday at 12:01 a.m. PDT.
New CEO Kelly Ortberg made a last-minute appeal to workers, emphasizing that a strike would jeopardize Boeing’s recovery and erode customer trust. Despite this, IAM District 751 President Jon Holden predicted a strike, noting widespread dissatisfaction among workers.
Voting is taking place at union halls in Washington state, Portland, Oregon, and other locations, with results expected Thursday night. A strike would halt production of the 737 Max, 777, and 767 models at factories in Everett and Renton, Washington, but not the 787 Dreamliners built in South Carolina.
Aerospace analyst Cai von Rumohr suggested a strike could last until mid-November, costing Boeing up to $3.5 billion in cash flow. Union negotiators recommended the contract, but many workers remain unhappy with past concessions on pensions, health care, and pay, according to the report.
Why It Matters: The potential strike comes at a critical time for Boeing, which has been grappling with production delays and quality control issues. On Wednesday, Boeing reported a six-month delay in a key production milestone for its 737 MAX, pushing the target to March 2025. This delay follows earlier disruptions due to a manufacturing defect that affected 737 MAX production.
Adding to the tension, a tentative labor agreement announced on Sunday, sparked anger among union workers. The agreement, which includes a 25% wage increase, failed to address workers’ demands for better pensions and healthcare benefits, leading to widespread dissatisfaction.
Moreover, Boeing’s shares saw a boost following the tentative deal, but the sentiment remains cautious pending the vote’s outcome.
Price Action: Boeing’s stock closed at $161.33 on Wednesday, up 0.79%. In after-hours trading, the stock dipped 0.22%. Year to date, Boeing’s stock is down 35.92%, according to data from Benzinga Pro.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
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