Boeing’s US west coast factory workers have accepted a new contract offer, ending a bitter seven-week strike that halted most jet production and deepened a financial crisis at the troubled aircraft manufacturer.
The workers’ union said on Monday that members voted 59% in favour of the new contract, which includes a 38% pay rise spread over four years, easing pressure on the new Boeing chief executive, Kelly Ortberg, after two previous offers were voted down in recent weeks.
“This is a victory. We can hold our heads high,” the union’s lead negotiator, Jon Holden, 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 is 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. Before that happened, Boeing had been trying to ramp up production after years of crisis after two fatal crashes and the coronavirus pandemic.
Boeing shares rose by 1.9% in pre-market trading.
In a message to Boeing employees, 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.”
About 33,000 machinists who work on the bestselling 737 Max jet, as well as the 767 and 777 wide-body airliners, have been on strike since 13 September. The dispute is likely to affect US economic growth as Boeing is the US’s largest exporter.
The strike also contributed to a steep decline last week in the final US jobs numbers before Tuesday’s US presidential election. The data – also heavily affected by hurricanes – showed a drop of 44,000 in people employed in the transport equipment manufacturing sector, suggesting that the effects of the strike had spread through the supply chain.
Joe Biden, the first US president to join a union picket line, on Tuesday congratulated the company and the union for reaching a deal, after direct mediation in the dispute by the White House.
“Over the last four years, we’ve shown collective bargaining works,” Biden said in a statement. “Good contracts benefit workers, businesses, and consumers – and are key to growing the American economy from the middle out and the bottom up.”
The end of the strike will also be a relief to Boeing’s airline customers. Ryanair, Europe’s largest airline, on Monday cut back its forecasts for growth in passenger numbers, blaming delays in Boeing’s deliveries.
The Ryanair chief financial officer, Neil Sorahan, said that the company did not expect to receive new Boeing planes until January or even February, because of the time it takes to restart complex supply chains.
The company had initially offered a pay rise of 25%. The workers had demanded a 40% wage increase and the restoration of a defined-benefit pension they lost a decade ago for a less generous 401(k) retirement plan.
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“I’m ready to get back to work,” said David Lemon, a worker in equipment calibration certification in Seattle who voted in favour of the contract.
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 its next aircraft 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 output and boost cashflow, with 737 Max output expectedin the single digits each 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 12 November, 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 about $100m a day in lost revenue, analysts said, prompting the manufacturer to raise $24bn from investors last week – the most equity ever raised by a US company – in an attempt to preserve its investment-grade credit rating.
S&P Global Ratings, the rating agency, last week said the post-strike ramp-up of production posed a key risk to Boeing’s finances.
The pay increase may add $1.1bn to Boeing’s wage bill over the four years, while a $12,000 ratification bonus for each union member could result in a further $396m in outflows, according to analysts at Jefferies.