Boeing Workers Strike: Production Halted After Contract Rejection

Boeing factory workers went on strike after midnight on Friday, halting production of the company's best-selling airplanes after staff overwhelmingly rejected a new labor contract.

The strike, which began on September 13, 2024, marks the first time Boeing workers have walked off the job since 2008.

The workers, represented by the International Association of Machinists and Aerospace Workers (IAM), voted 94.6% against a tentative agreement that Boeing and the union had unveiled Sunday.

Boeing's Financial Impact and Concerns

The strike has a significant financial impact on Boeing, which has been struggling to ramp up production and restore its reputation following safety crises.

Boeing's CFO, Brian West, warned that the strike would impact airplane deliveries and production, but declined to provide specific financial impact estimates.

Credit-ratings agencies Moody's and Fitch warned Boeing that a lengthy strike put it in danger of downgrades, sending shares of the company down nearly 4% on Friday.

Jefferies aerospace analyst Sheila Kahyaoglu estimated a 30-day cash impact from a strike could be a $1.5 billion hit for Boeing.

Key Points of the Rejected Contract

The tentative proposal included 25% wage increases over four years and other improvements to health-care and retirement benefits, though the union had sought raises of about 40%.

Workers had complained about the agreement, saying it didn't cover the increased cost of living.

The agreement, if approved, would have been the first fully negotiated contract for Boeing machinists in 16 years.

The strike highlights the ongoing challenges Boeing faces in balancing the needs of its workers with the need to restore its financial health and reputation.

Boeing's Response and Efforts to Negotiate

Boeing expressed disappointment with the rejection and strike, but said they want to get back to the table to negotiate a new deal that's good for its people, their families, and the community.

CEO Kelly Ortberg, who has been in the top job for five weeks, had urged workers to accept the contract and not to strike, saying that it would jeopardize the company's recovery.

The company's leaders are now focused on conserving cash and negotiating a new agreement with the union.

Government and Airline Reactions

The White House has expressed concern about the strike and encouraged both sides to reach a solution through good-faith negotiations.

The Federal Aviation Administration (FAA) said it would maintain oversight of Boeing's production lines during the strike, ensuring safety and compliance with regulations.

Southwest Airlines, which only has Boeing planes, has already reduced its delivery expectations from Boeing for the year, citing the impact of the strike and production delays.

Boeing's Challenges and Outlook

The strike comes at a difficult time for Boeing, which is facing production challenges and financial pressures.

The company has burned through about $8 billion so far this year and has mounting debt.

Production has fallen short of expectations as the company works to stamp out manufacturing flaws and faces other industrywide problems such as supply and labor shortages.