Boeing's stock has seen a decline as of early Friday following a unanimous rejection of a tentative labor agreement by members of the International Association of Machinists and Aerospace Workers (IAM). The voting process revealed that approximately 95% of Boeing employees within the IAM's districts 751 and W24 turned out on Thursday to vote against the proposed contract, and an overwhelming 96% expressed their desire to strike.
Reports indicate that over 30,000 workers commenced walkouts from Boeing's facilities located in Seattle and Portland on Friday. In a statement, Boeing acknowledged the strong disapproval from its workforce, stating, “The message was clear that the tentative agreement we reached with IAM leadership was not acceptable to the members.
We remain committed to resetting our relationship with our employees and the union and we are ready to get back to the table to reach a new agreement.” Following this announcement, shares of Boeing experienced a 3% dip in premarket trading. The IAM union, which had previously endorsed the tentative agreement, indicated that its negotiation team would now begin strategizing the next steps to secure a more favorable agreement that aligns with the preferences of its membership.
The proposed contract was a four-year agreement that had been reached on Sunday between the two IAM districts. It outlined a general wage increase of 25% over the contract duration, alongside contributions from Boeing to its employees' retirement funds, and reductions in healthcare cost shares among various benefits.
Additionally, the company pledged a $3,000 lump-sum payment to employees within a month and a commitment to manufacture its next new airplane in the Puget Sound area, contingent upon the ratification of the deal by Thursday. However, the strikes initiated by the workers are expected to have significant implications for Boeing's financial stability, affecting cash balances, future margin potential, and overall cash generation.
Truist Securities provided insights in a client note stating, "We are currently assuming the duration of the strike will be short, will primarily impact Boeing, and should not have a material impact on the overall supply chain.” Nevertheless, the brokerage firm further cautioned that an extended strike could impede Boeing's ability to finance and finalize its anticipated $8.3 billion acquisition of Spirit Aerosystems.
As of the latest trading data, Boeing's shares stood at $157.90, reflecting a change of -$4.87, which translates to a percentage drop of -2.99..