Boeing union approves new contract, ending costly strike

Members of Boeing's largest union approved a new contract Monday, ending a weekslong strike that was one of the country's most financially damaging work stoppages in decades.

The contract was endorsed by 59 per cent of those voting, according to the union, the International Association of Machinists and Aerospace Workers. The union represents about 33,000 workers, most of whom make commercial airplanes in the Seattle area. More than three-quarters of the members voted on the contract.

The union said its members, who had resoundingly voted down two previous contract offers from Boeing, could return to work as soon as Wednesday but must be back by Nov. 12. The strike began Sept. 13, after the union rejected the company's first proposal.

"You stood strong, you stood tall and you won. This is a victory," said Jon Holden, the president of District 751 of the Machinists union, which represents the vast majority of the workers covered by the contract.

The new contract will raise wages more than 43 per cent cumulatively over the next four years, an improvement over the two previous offers. The first proposal would have raised wages just over 27 per cent.

Union leaders and Boeing had urged the workers to approve the deal. The union's leadership had warned that future offers from the company could have worse terms than this proposal.

In a statement, Boeing CEO Kelly Ortberg said he was "pleased" that the agreement had been reached. "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."

Ortberg, who joined the company in August, is trying to restore Boeing's reputation and business after multiple setbacks in recent years. Last month, he announced plans to cut about 17,000 jobs, or 10 per cent of Boeing's global workforce, and make other changes.

Boeing recently reported that it lost more than $6.1 billion in the three months that ended in September. Last week, it raised more than $21 billion by selling shares to investors, an effort to strengthen its financial position and stave off the loss of its investment-grade credit rating. Moody's Ratings and Fitch Ratings described the fundraising as a positive step but said they were still reviewing whether to downgrade Boeing's credit rating to "junk" status, which could raise its borrowing costs.

The contract talks were contentious because workers had grown frustrated with the company's management. Many were still angry over labor negotiations a decade ago, when the union agreed to let Boeing freeze a pension plan that included guaranteed monthly retirement payouts.

Even though the company was unlikely to agree to restore that pension, workers pushed for better benefits elsewhere in the contract to make up for that concession.

Officials in the Biden administration had closely monitored the negotiations, which began in March. After talks broke down last month, officials helped to bring the two sides back to the table. Both Boeing and the union thanked the acting labor secretary, Julie Su, who made three trips to Seattle, for helping to facilitate the discussions that resulted in the deal.

In a statement, President Joe Biden congratulated Boeing and the union. "Good contracts benefit workers, businesses and consumers," he said.

In addition to the increase in wages, the new contract also includes a $12,000 ratification bonus, which is four times as much as the bonus in the initial offer. The deal calls for improved retirement benefits and a commitment by Boeing to build its next commercial airplane in the Seattle region.

"We've never gotten that before. They've never given us a commitment for an airplane program before it's launched, before it's designed," Holden said at a news conference after the results were announced.

Boeing has said the average annual pay of machinists will rise to more than $119,000 by the end of the contract, up from nearly $76,000 today, after those raises and other benefits are taken into account.

The walkout's financial toll rivals ones involving workers at General Motors in 1998 and at UPS in 1997, according to an analysis by Anderson Economic Group, a research and consulting firm in Michigan.

Boeing had suffered at least $5.5 billion in lost earnings in the first six weeks of the strike, according to the firm. The total economic fallout, including its effect on Boeing's suppliers and customers, was more than $9.6 billion.

In response to the strike, Boeing took several cost-cutting measures, including pausing some spending and issuing temporary furloughs for tens of thousands of other employees. Some of the company's suppliers have taken similar measures.

The contract replaces a 2008 agreement reached after a two-month strike that was modified and extended multiple times since. That strike contributed to a decline in Boeing's revenue of about $6.4 billion that year because the company delivered 104 fewer planes than expected.

Most of the striking workers were based at factories in the Seattle area, where Boeing makes several commercial airplanes, including its most popular jet, the 737 Max. The Max accounts for three-fourths of the 6,200 planes Boeing has on order, but production is far short of the company's target because of a crisis that began in January when a panel blew off a Max plane during an Alaska Airlines flight.

That episode renewed concerns about the quality and safety of Boeing planes five years after two fatal crashes involving the Max. In response to the panel blowout, the Federal Aviation Administration capped Max production to 38 planes per month. Production was well below that number before the strike.