Boeing workers have overwhelmingly rejected a proposed 35% salary increase over four years, contributing to an ongoing strike that began in mid-September. Despite a $7,000 one-time payment offer, the absence of a reinstated pension plan left workers dissatisfied. The strike has already cost Boeing approximately $4.35 billion and has affected its suppliers, like Spirit AeroSystems, which reported a $217 million loss and is facing potential layoffs. Boeing’s financial troubles deepen, recording a $6.17 billion loss in the last quarter.
Boeing workers have decisively turned down an enhanced offer that included a 35% salary increase over a four-year span. As a result, the strike persists, exerting escalating financial strain on the company.
Despite the proposed 35% wage hike, workers represented by the IAM union voted 64% against the offer during a recent tally. The revised proposal included a one-time bonus of $7,000 and promised to maintain bonus payments that were previously slated for elimination. However, a much-desired return to a pension plan was notably absent.
IAM District President Jon Holden stated, “After ten years of cutbacks, we need to catch up, and we hope to reopen negotiations swiftly. This is democracy in action, proving that a company faces repercussions when it mistreats its workforce year after year.”
Boeing Faces Ongoing Strike
The strike that began in mid-September is still in effect. According to management consultants at Anderson Economic Group, the total economic impact of the strike is estimated at $7.6 billion, with $4.35 billion directly affecting Boeing and nearly $2 billion impacting its suppliers. The strike has nearly halted production of the Boeing 737 Max and 777 models.
As the industrial action continues, Boeing’s financial outlook is expected to deteriorate further. The company was already in a precarious position prior to the strike, grappling with multiple issues, particularly concerning aircraft safety.
Due to Boeing’s troubles, Lufthansa is compelled to extend the use of older aircraft and is reassessing its flight schedule.
Third Quarter Results
Recently, Boeing announced a plan to reduce its workforce by 10%. Although CEO Kelly Ortberg did not specify the exact number of job cuts, historical data indicates that the firm employed over 170,000 people at the turn of the year. Ortberg emphasized that the adjustments are necessary to align with the current financial situation.
The company reported a staggering loss of $6.17 billion for the third quarter. Revenue decreased by 1% to $17.84 billion during the same period. Consequently, Boeing’s stock price fell 1.8%, closing at $157.06 on the New York Stock Exchange; shares have already dropped approximately 15% over the last three months.
Challenges for Spirit AeroSystems
Boeing’s key supplier, Spirit AeroSystems, is also facing financial challenges due to the ongoing strike. The supplier recorded a net loss of $217 million in the last quarter and was forced to utilize its entire credit line of $350 million. As a result, its cash reserves dwindled to just $218 million, leading to a 4% drop in stock price during after-hours trading.
Spirit AeroSystems announced that it would place 700 workers on mandatory leave for 21 days and warned of potential layoffs if the strike continues. The company attributed its financial troubles to the Boeing workforce’s industrial action, but Boeing has yet to comment on the situation.