Boeing is facing a significant challenge as its machinists’ union has rejected the company’s latest contract proposal, prolonging a costly strike that is costing an estimated $1 billion monthly.
The strike, which began in mid-September, involves approximately 33,000 members of the International Association of Machinists and Aerospace Workers (IAM). This union, Boeing’s largest, is advocating for a 40 percent salary increase over the next three to four years, aiming to resolve what they describe as a decade of stagnant wages and to enhance employee benefits.
This past Wednesday, a vote resulted in 64 percent of IAM members opting to continue the strike after Boeing’s recent offer was turned down. IAM District 751 President Jon Holden stated that this decision reflects the workers’ commitment to reclaiming what they believe has been withheld by the company for over ten years.
According to financial analytics firm S&P Global, the ongoing strike is costing Boeing over $1 billion a month, despite the company implementing various cost-saving strategies since the strike started.
Lindsey Wasson/AP Photo
The rejected proposal included a 35 percent pay increase, alongside better health and retirement benefits. However, it did not address the employees’ request for the reinstatement of a defined-benefit pension plan that Boeing eliminated a decade ago.
The strike has intensified the existing production challenges Boeing is facing, disrupting the assembly of crucial aircraft models such as the 737 MAX, 767, and 777.
This situation has strained Boeing financially. In its most recent financial report, the company disclosed a quarterly net loss of $6.17 billion. In response, CEO Kelly Ortberg announced plans to cut 17,000 jobs and is looking to raise up to $35 billion through stock offerings and loan agreements.
Boeing’s credit profile has been downgraded by S&P, alongside Moody’s and Fitch, placing it at the lowest investment grade, raising concerns that any further downgrade could see it classified as “junk” status.
Before the financial results were made public, Ortberg emphasized that the company is “feverishly working” towards finding a resolution that accommodates both Boeing and its employees’ needs. However, he acknowledged that the firm is at a “crossroads,” indicating a loss of trust in the company, excessive debt burdens, and significant performance issues that have disappointed many customers.