Boeing workers to go on strike as union rejects labor deal; shares fall premarket

Investing.com -- More than 30,000 Boeing (NYSE:BA ) workers are set to go on strike after the company’s factory employees in the US Pacific Northwest voted for a work stoppage over demands for higher pay, presenting more challenges for the aerospace giant. 

Shares in Boeing dipped by over 3% in premarket US trading on Friday.

The strike is set to commence from midnight, Pacific time (0700 GMT), Friday and is the company’s first major labor action since 2008. Reports from local media outlets in Washington showed 96% of members of Boeing's biggest labor union voted in favor of the strike, with members stating that the pay and benefits offered by the company in recent negotiations were not enough to live on.

Boeing has said workers had made clear that a tentative deal reached earlier this month was "not acceptable," adding that it is "ready to get back" to the negotiating table.

The strike represents another major headwind for the planemaker and its new Chief Executive Officer Kelly Ortberg. The company is struggling to restore its reputation in the wake of more quality issues with its jets. Scrutiny of Boeing was rekindled this year after a door panel blew off a 737 MAX jet in January, while a failure in its Starliner spacecraft stranded two astronauts aboard the International Space Station.

Boeing’s last strike in 2008 cost the company roughly $1.3 billion in staggered production and higher wages.

In a note to clients, analysts at Jefferies said that the "key question now" is on the potential duration of the strike given the gap between the wage hikes agreed in the tentative deal and the higher compensation demanded by workers.

They added that an elongated work stoppage represents a "risk" to 737 MAX production levels in particular. Output of the aircraft was already capped at 38 jets per month by the US Federal Aviation Administration earlier this year as part of a drive to ensure Boeing safety processes were adequate.

Ambar Warrick contributed to this report.

Source: Investing.com