There’s a lot riding on Boeing’s tentative deal with machinists union
There’s a lot riding on Boeing’s tentative deal with machinists union
Boeing has reached a tentative deal with the International Association of Machinists and Aerospace Workers, which has been on strike for five weeks now.
The proposed contract includes a 35% pay raise over the next four years, a one-time $7,000 ratification bonus and higher retirement contributions, among other things. It does not bring back traditional pensions, which workers have been pushing for.
The union has yet to ratify the new contract — that vote will happen Wednesday. And there’s a lot riding on it for Boeing, and the industry.
It has been a rough year for Boeing. The first week of January, you might remember, a door plug blew out of an Alaska Airlines 737 Max jet in midflight. Not exactly an auspicious start to a new year.
Meghna Maharishi, an airline reporter at Skift, said things haven’t really improved since.
“Boeing has had a ton of other issues with all of its aircraft programs,” she said. That includes issues with production and quality control, delivery delays and federal scrutiny.
“So many issues that have been causing it to lose money,” she said. “And I think the strike has just magnified all the other issues at Boeing.”
Going into the strike, Mike Dunlop, an aviation analyst, said Boeing was already in a bad financial spot. It hadn’t turned a profit since 2018.
“They’ve just got a real leaky sieve,” he said. “The company is in a very, very difficult financial state right now.”
The strike has now cost it $1 billion, according to one estimate. Maybe more.
Plus, it’s not just costing Boeing, said Richard Aboulafia at AeroDynamic Advisory.
“It’s been devastating, particularly to the suppliers that have been beaten up badly over recent years,” he said, between Boeing halting production of the Max jet and COVID-related shutdowns and supply chain issues.
“And just when the great cash machine that is 737 production and other production got going, all of a sudden, this happens and further derails things. So it’s been very damaging,” he said.
If workers in the machinists union vote to ratify the new contract and the strike ends after these five or so weeks, Aboulafia said Boeing should have a chance to recover.
But if not?
“They just continue to lose money,” he said. “And that just gets more and more damaging.” Especially for a company that is already in a precarious financial position.
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