Boeing strike ends as workers accept new contract
By Dan Catchpole and Allison Lampert
SEATTLE (Reuters) -Boeing's U.S. West Coast factory workers accepted a new contract offer on Monday, their union said, bringing an end to a bitter seven-week strike that halted most jet production and deepened a financial crisis at the troubled planemaker.
The union said members voted 59% in favor of the new contract, which includes a 38% pay rise spread over four years, easing pressure on new Boeing (NYSE:BA ) CEO Kelly Ortberg after two previous offers were voted down in recent weeks.
"This is a victory. We can hold our heads high," Jon Holden the union's lead negotiator, told members after the results were announced. "Now it's our job to get back to work."
The end of the first strike in 16 years by Boeing's largest union provides welcome relief for a company that has lurched from one setback to the next since a door panel blew off a near-new 737 MAX plane in mid-air in January.
In a message to Boeing employees after the vote, Ortberg said he was pleased the union had ratified a deal.
"While the past few months have been difficult for all of us, we are all part of the same team," he said. "We will only move forward by listening and working together. There is much work ahead to return to the excellence that made Boeing an iconic company."
Around 33,000 machinists who work on the best-selling 737 MAX jet, as well as the 767 and 777 widebodies, have been on strike since Sept. 13, demanding a 40% wage increase and the restoration of a defined-benefit pension they lost a decade ago for a 401(k) retirement plan.
"I'm ready to get back to work," said David Lemon, a worker in equipment calibration certification in Seattle who voted in favor of the contract.
He calculated that the pay hike and a 4% bonus - the guaranteed minimum annual payout to the reinstated incentive plan - amounted to the 40% increase they'd gone after. "We got there," he said.
The old pension will not be restored, but workers received a bump to company matching contributions for their 401(k) plans.
Boeing also promised to build the next airplane in the Seattle area. "They've never given us a commitment" to a new airplane before launch, Holden said.
It will now take weeks to ramp up plane production and boost cash flow, with 737 MAX output expected to languish in the single digits per month for some time, according to two people briefed on the matter, far short of the 38 a month targeted before the strike.
Workers can start returning to building planes from Wednesday and must be back to work by Nov. 12, the International Association of Machinists and Aerospace Workers (IAM) said, although Boeing has warned that some people will have to be retrained due to the prolonged period away from the factory floor.
The strike was costing Boeing around $100 million a day in lost revenue, analysts said, prompting the planemaker to raise $24 billion from investors last week in a bid to preserve its investment-grade credit rating.
Ortberg now needs to reset relations with machinists in the Pacific Northwest who have used the strike to vent anger built up over a decade when wages have lagged inflation and the cost of living in the Seattle area has soared.
Holden said while there was hard bargaining, workers can rebuild the relationship with Boeing leadership.
Boeing has said the average annual machinists' pay at the end of the new four-year contract will be $119,309, up from $75,608 previously.
The pay increase may add $1.1 billion to Boeing's wage bill over the four years, while a $12,000 ratification bonus for each union member could result in another $396 million in outflows, according to analysts at Jefferies.
More than 26,000 union members voted, putting turnout near 80%. Many union members have been angry at Boeing over the previous contract, explaining in part the multiple rejection of contract offers.
Source: Investing.com
