A tentative labor agreement between Boeing Co. BA and one of its largest unions has left many workers dissatisfied, ahead of the crucial vote.
What Happened: The International Association of Machinists and Aerospace Workers, representing over 32,000 employees in the Pacific Northwest, announced the deal with Boeing on Sunday, reported Reuters. The announcement boosted Boeing’s shares on Monday.
Jon Holden, president of IAM’s district 751 and lead negotiator, stated that workers are upset, hoping for higher wage increases and better pensions. The union members are set to vote on the deal on Thursday, with the possibility of a strike looming.
“They’re angry,” Holden said according to the report, expressing his belief that it was the best deal the union could secure through negotiations.
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The proposed four-year contract includes a 25% general wage increase and a commitment from Boeing to build its next commercial airplane in Seattle, provided the program launches within the contract period.
Holden mentioned that many members were expecting a 40% pay rise and the reinstatement of the defined-benefit pension plan lost a decade ago. If the deal is rejected and a strike ensues, it could challenge new Boeing CEO Kelly Ortberg, according to the report, who recently took office with a mandate to improve safety and production of the 737 MAX.
Why It Matters: The tentative agreement comes at a critical time for Boeing Co., which has been navigating several challenges. On Monday, Boeing shares rose nearly 3% in pre-market trading following the announcement of the preliminary agreement, potentially averting a strike that could disrupt operations.
However, the company has been facing financial hurdles. Last week, Wells Fargo suggested that Boeing might need to delay its annual free cash flow target of $10 billion by two years to 2027-'28 and come up with $30 billion before it can start designing a new aircraft. This led to a downgrade of Boeing’s stock from Equal-Weight to Underweight.
Safety concerns have also been a significant issue for Boeing. A recent survey revealed that travelers are increasingly considering the type of aircraft before booking flights due to growing concerns about aircraft safety.
Price Action: Boeing closed at $162.91 on Monday, up 3.36% for the day. After-hours trading, the stock dipped slightly by 0.0061%. Year to date, Boeing has declined by 35.29%, 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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