Economy

Boeing, labour union reach tentative deal to end strike: What happens now?

Boeing and its labour union have reached a tentative agreement that could end the monthlong strike, which has halted production of key aircraft such as the 737 MAX and 777.

The strike involved around 33,000 workers, who walked off the job on September 13 after rejecting a previous proposal that included a 25% wage increase over four years.

The new proposal offers a 35% base wage increase by 2028, with an immediate 12% raise to help offset inflation.

If approved, hourly wages for experienced workers could reach $70 by the end of the contract, amounting to approximately $140,000 annually, excluding overtime or bonuses.

Bonus payouts and 401(k) contributions included in the proposal

The agreement also features a $7,000 ratification bonus. While the union sought a return to defined benefit pensions, Boeing opted for a one-time $5,000 contribution to employee 401(k) plans.

Additionally, the company will match employee contributions up to 8% of annual pay and make an automatic 4% contribution to 401(k) plans.

Acting Labour Secretary Julie Su played a key role in helping both sides break the stalemate, enabling the union to reach a negotiated proposal. In a statement, the union wrote on X (formerly Twitter),

With the help of Secretary Su, we have received a negotiated proposal and resolution to end the strike.

Boeing welcomed the development, stating, “We look forward to our employees voting on the negotiated proposal.”

Boeing shares set to react after capital raise plan

The strike has weighed heavily on Boeing, which has not posted a full-year profit since 2018.

The company’s shares closed at $155 on Friday, down 41% this year, compared to $163 before the strike.

Investors are expected to respond positively to the deal when trading resumes on Monday, as the end of the strike clears the way for Boeing’s planned capital raise.

Boeing recently filed paperwork with the Securities and Exchange Commission (SEC) to raise up to $25 billion through a mix of stock and debt securities.

Analysts anticipate a $10 billion to $15 billion stock sale, which will help strengthen the company’s balance sheet and maintain its investment-grade credit rating.

Workforce cuts and increased labour costs on the horizon

While the wage increases are expected to raise Boeing’s annual labour costs by around $1.4 billion, the company has announced plans to cut 17,000 jobs.

The layoffs aim to generate savings of about $2 billion annually. Boeing hopes these cost-saving measures, coupled with the capital raise, will restore its financial stability after years of challenges.

The company’s financial strain has been exacerbated by rising long-term debt, which increased by more than $40 billion since 2018 following the grounding of the 737 MAX.

As operations resume, Boeing will need to manage higher labour costs and meet delivery schedules to satisfy investors and stabilize profitability.

Investor focus shifts to vote outcome and financial performance

The union members are set to vote on the agreement, which will determine whether Boeing can resume operations without further disruptions.

If approved, the deal could mark a turning point for the company, enabling it to proceed with its financial recovery plans and meet delivery timelines.

The post Boeing, labour union reach tentative deal to end strike: What happens now? appeared first on Invezz

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