Boeing Co. BA faces potential disruptions in its aircraft production as workers decide on a strike.
What Happened: Over 30,000 Boeing employees are set to strike on Friday after rejecting a proposed labor contract, reported CNBC.
Workers in Seattle and Oregon voted 94.6% against the tentative agreement, which was presented by Boeing and the International Association of Machinists and Aerospace Workers. The vote to strike was even higher, at 96%, far surpassing the two-thirds majority needed for a work stoppage.
“We strike at midnight,” declared IAM District 751 President Jon Holden during a press conference. He described the action as an “unfair labor practice strike,” citing issues such as “discriminatory conduct, coercive questioning, unlawful surveillance, and unlawful promise of benefits.”
The rejected proposal included a 25% wage increase and enhancements to health-care and retirement benefits. However, the union had aimed for approximately 40% raises, arguing that the offer did not adequately address the rising cost of living.
Boeing CEO Kelly Ortberg, who has been in his role for only five weeks, had urged workers to accept the contract to avoid jeopardizing the company’s recovery efforts.
The financial impact of the strike will depend on its duration, with Jefferies aerospace analyst Sheila Kahyaoglu estimating a 30-day strike could cost Boeing $1.5 billion.
Why It Matters: The strike comes at a critical time for Boeing, which has been grappling with production delays and quality control issues. On Wednesday, Boeing reported that it delivered 40 commercial jets in August, an improvement from the same month last year. However, the company is still dealing with the aftermath of a manufacturing defect that affected its 737 MAX production.
Moreover, on Tuesday, Boeing informed suppliers of a six-month delay in reaching a key production milestone for its 737 MAX. The new target is to achieve a monthly output of 42 jets by March 2025, instead of the previous goal of September.
The labor unrest adds another layer of complexity to Boeing’s challenges. On Monday, union workers expressed dissatisfaction with the tentative labor agreement, hoping for higher wage increases and better pensions. This sentiment was reflected in the overwhelming rejection of the contract and the high vote to strike.
Price Action: Boeing’s stock closed at $162.77 on Thursday, up 0.89%. In after-hours trading, the stock dipped 0.17%. Year-to-date, Boeing's stock has decreased significantly by 35.35%, according to data from Benzinga Pro.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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