Boeing and the International Association of Machinists and Aerospace Workers Union have a tentative agreement to avoid a strike at the aircraft maker’s key Washington facilities.
That should help the stock on Monday.
On Sunday, Boeing announced it had reached a tentative agreement with the union covering some 33,000 workers in the Pacific Northwest, where the company builds 737 MAX and 777 jets.
The existing labor contract expires on Sept. 12. Union membership will still have to ratify the new contract.
“We have reached a tentative agreement with the union on a historic offer that takes care of you and your family,” said Boeing Commercial Airplanes CEO Stephanie Pope in a video message to employees. “The contract offer provides the largest-ever general wage increase, lower medical cost share to make healthcare more affordable, greater company contributions toward your retirement, and improvements for a better work-life balance.”
The tentative agreement includes a general pay increase of 25% over the four-year contract, and average wage increases of 33% for the period because of seniority increases. Employees also earn a $3,000 ratification bonus if the contract is approved by Sept. 12.
The roughly 7% average annual wage gains are similar to what other unions have won in recent negotiations and help workers offset inflation experienced since the Covid-19 pandemic.
The size of the wage gains shouldn’t surprise investors. And a new contract, with no strike, is one less thing for investors to worry about.
Coming into Monday trading, Boeing stock was down about 40% so far this year. Quality and production problems have plagued the company, and the stock, for years. Boeing shares were above $400 early in 2019 before the second tragic 737 MAX crash that grounded the jet worldwide between March 2019 and November 2020.
New CEO Kelly Ortberg was just hired this summer from outside the company to make headway on all the issues.
A new labor contract is a good start.
Separately, Boeing’s partly reusable spaceship, Starliner, successfully returned to Earth from the International Space Station early Saturday morning Eastern time. Starliner returned without its crew after the mission ran into technical difficulties. NASA is going to have SpaceX bring back the two astronauts that Boeing ferried to the ISS in June, but not until early 2025.