New York CNN —
A tentative agreement has been reached to end a five-week strike at troubled aircraft maker Boeing Co., the union announced to its 33,000 striking members early Saturday.
The agreement still needs to be ratified by a majority of the general membership of the International Association of Machinists before it can enter into force and workers can return to work. The union is scheduled to vote on Wednesday.
The strike was a major blow to the company, which remains a key component of the U.S. economy despite recent problems. Boeing is America’s largest exporter, contributing an estimated $79 billion annually to the economy and directly and indirectly supporting 1.6 million jobs with 10,000 suppliers located in all 50 states. The strike comes just a month after new CEO Kelly Ortberg took over. He has said he wants to “reset” the troubled relationship between the union and the company.
Businesses have already almost unanimously rejected a previous interim agreement, prompting the company to go on strike for the first time in 16 years. But a statement from the union said the new proposal was worth putting members to a vote.
The union said the proposal would increase wages by 35% over the four-year contract period. It would also increase company contributions to union members’ 401(k) plans, although it would not restore the traditional pension plans stripped from union members a decade ago. Many union members had expressed anger over the loss of pensions.
The union has acknowledged that Acting Labor Secretary Julie Hsu brokered the agreement through indirect negotiations between the union and management. Hsu was also negotiating an end to a strike by the International Longshoremen’s Association at dozens of ports on the East Coast and Gulf Coast earlier this month, following a three-day strike earlier this month.
“We look forward to our employees voting on this negotiated proposal,” Boeing said in a statement. The brief comment appears to indicate an awareness that approving the agreement could provoke opposition from union members who have maintained a rocky relationship with company management.
Standard & Poor’s estimates that the company is losing an estimated $1 billion a month due to the strike, on top of its ongoing losses. The company also announced plans to cut approximately 17,000 of its 171,000 employees, or 10% of its global workforce. The strike has halted production of nearly all commercial jets, and the company receives most of its money from the sale of aircraft as they are delivered.
But the company’s problems go far beyond the impact of the strike. The airline has suffered setback after setback for more than five years, since two fatal crashes of its best-selling 737 Max planes in late 2018 and early 2019 led to a 20-month grounding. Since then, the company has reported losses of more than $33 billion and already announced it would report an even larger loss on Wednesday for the just-completed quarter, most of which was made before the start of the strike on September 13. This occurred in
The union’s statement stopped short of endorsing the proposal that members plan to vote on. He said only that it “contains some important improvements” and that it is “worthy of presentation to members and worthy of consideration.” Union leaders approved a previous interim agreement, which they claimed was the best ever reached with Boeing, but was overwhelmingly rejected by 95% of rank-and-file union members. I just saw it.
If the proposal was rejected, wages would have increased by 25% over the life of the contract. The 401(k) contribution improvements would also have been small, and the signing bonus would have been only $3,000. This offer includes a $7,000 signing bonus.
A week after the deal was rejected, Boeing improved its offer to a four-year contract with 30% wage increases, calling it its best and final offer. He said the union’s demands for even larger pay increases were “far beyond what we can accept in order to remain competitive as a company.”
Despite its financial problems, Boeing has been able to pay its union members significantly higher wages. That’s because worker pay and benefits are only a fraction of the cost of manufacturing the planes, which sell for tens of millions of dollars each. more. Most of the funding will go to raw materials and suppliers that provide many of the parts already assembled, including the plane’s fuselage. The final rally will be held by 33,000 striking workers.
And Boeing is unlikely to be forced out of business by the current financial crisis. Boeing and European rival Airbus are the only companies making the full-size jets needed by the global airline industry. Its status as part of a duopoly essentially guarantees its survival.
For more than five years, Boeing has dealt with one problem after another, from embarrassing to tragic to financially devastating. The company has suffered two fatal crashes, grounded its best-selling plane for 20 months, and prompted federal government regulations on aircraft quality and safety after a door plug blew off an Alaska Airlines jet in January. Numerous studies have been conducted. The planes left the Boeing factory with the bolts needed to hold them in place removed. The company has agreed to plead guilty to defrauding the Federal Aviation Administration during the initial certification of the 737 Max.
This story has been updated with additional context and development.
