Boeing and its largest union said Sunday they reached a tentative agreement on a new contract that, if ratified, will avoid a strike that threatened to shut down aircraft production by the end of the coming week.
Boeing said 33,000 workers represented by the International Association of Machinists and Aerospace Workers would get pay raises of 25% over the four-year contract, with average wages rising 33% due to seniority step increases. That is less than the 40% the union had demanded during negotiations.
But the company agreed with a key union demand to build its next plane in Washington state, presumably by union members.
Workers also would get $3,000 lump sum payments and a lower share of health care costs, Boeing said.
“Negotiations are a give and take, and although there was no way to achieve success on every single item, we can honestly say that this proposal is the best contract we’ve negotiated in our history,” Jon Holden, president of IAM District 751, the machinists’ union outpost at Boeing, said in a statement posted on the union website.
The union’s bargaining committee is recommending that members ratify the contract, Holden said.
The president of Boeing’s commercial airplanes division, Stephanie Pope, said Sunday in a video for employees that the proposed contract includes the company’s largest-ever general wage increase. She said the promise to build Boeing’s next new airliner in the Puget Sound area means job security for generations to come.
The proposed contract is contingent on union members ratifying it by late Thursday night Pacific time, after which the union was threatening to strike.
The union has scheduled a two-part election for Thursday, with workers voting whether to accept the contract, and whether to authorize a strike if they reject the offer. Voting will occur at about a half-dozen locations in Washington state and one in California.
A strike would have added to the headwinds facing Boeing, which is hurtling toward a sixth straight money-losing year and just hired a new CEO to turn things around.
The new chief executive, Kelly Ortberg, will try to reverse $27 billion in losses since the start of 2019. His assignment includes fixing problems in Boeing’s aircraft-manufacturing process, gaining regulatory approval for the long-delayed 777X jumbo jet, limiting damage from over-budget government contracts, paying down $45 billion in net debt, and absorbing Spirit AeroSystems, the money-losing key supplier that Boeing just bought for $4.7 billion.
Ortberg has sounded conciliatory toward the machinists’ union.
“He understands that they are basically contentious relationships with the union, and he wants to make those relationships better,” TD Cowen aerospace analyst Cai von Rumohr said.
