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The
proposed four-year contract was hailed by the union as the best
it had ever negotiated. It is also an early win for new Boeing
CEO Kelly Ortberg, who is tasked with turning around the
struggling planemaker.
As part of the agreement, Boeing has committed to building a
replacement for its workhorse 737 at its Pacific Northwest
facilities, if the project is started during the four-year
period of the labor contract, though the planemaker has not yet
announced the new jet.
The terms include a general wage increase of 25% over four
years, below the 40% wage hike demanded by the International
Association of Machinists and Aerospace Workers (IAM) union,
signaling its recognition of Boeing's difficult financial
position.
The wage hikes are tiered with the new and senior workers
getting the largest share to boost retention, TD Cowen analysts
said.
The financial terms of the labor deal seem acceptable to Boeing,
J.P.Morgan analyst Seth Seifman said in a note.
However, Seifman noted workers could still vote down the deal.
There will be two votes on Thursday - one on the contract, which
requires 50% to pass, and the second on whether to strike, which
requires two-thirds approval.
"Workers have leverage and a highly unscientific sample of views
on social media suggests dissatisfaction with the contract terms
among some union members," Seifman added.
Jefferies analyst Sheila Kahyaoglu estimated a roughly $900
million hit to cash from the proposed wage increases.
The early agreement is a boost for Boeing as it tries to restore
investor and customer faith, navigate regulatory scrutiny and
ramp up production of its 737 MAX after a door plug on a
near-new MAX blew off a jetliner while in mid-air in early
January.
Since that incident, Boeing's stock price has cratered 37%,
compared to a 7.7% rise in the blue-chip Dow index.
(Reporting by Medha Singh and Abhijith Ganapavaram in Bengaluru;
Editing by Savio D'Souza and Shounak Dasgupta)
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