More than 33,000 union workers will start to vote on Thursday for measures that could bring Boeing’s airplane production to a halt with a massive strike. Boeing’s U.S. West Coast factory workers stood in long lines to vote on a much-criticized new contract. Some Boeing union workers loudly calling for a strike, piling pressure on the planemaker. This is as Boeing wrestles with chronic production delays and mounting debt.
A potential Boeing union strike could start on Friday, which would be a big early blow to new CEO Kelly Ortberg, .
Boeing contract vote
Roughly 30,000 workers who produce Boeing’s 737 MAX, 767 and 777 jets in the Seattle and Portland areas are voting on their first full contract in 16 years.
Polling will close at 6 p.m. PT and the result will be announced this evening, the International Association of Machinists and Aerospace Workers (IAM) said. If a Boeing workers strike is sanctioned, it could start at midnight.
Boeing contract negotiations
The proposed contract includes a general wage increase of 25%, a $3,000 signing bonus. A pledge to build Boeing’s next commercial jet in the Seattle area, provided the program is launched within the four years of the contract.
Although the IAM leadership recommended on Sunday that members accept the deal, some workers have responded angrily, with many calling for the originally demanded 40% pay rise and lamenting the loss of an annual bonus.
Boeing workers strike threat
On Thursday, a line of workers waiting to vote outside the union’s offices in Renton. Some held signs and others chanted “strike”. Several Boeing workers said they were voting to strike, and were confident the bulk of union members would do the same.
Under complicated union rules, two thirds must vote in favor of a strike for the action to begin. With anything less than that, the contract will go into effect.
Workers have been protesting all week in Boeing factories in the Seattle area that assemble Boeing’s MAX, 777 and 767 jets.
Boeing stock update
Boeing shares closed up 0.9% on Thursday. They are down 36% this year on concerns over safety, production and a $60 billion debt burden. A strike would deepen the financial pain and add to delays in delivering planes to airlines already struggling with capacity shortages.
S&P Global Ratings said an extended strike could delay the planemaker’s recovery and hurt its overall rating. Both S&P and Moody’s rate Boeing one notch above junk status.
Duration of strike
The time line of a potential strike is not clear. A long strike would weigh on Boeing’s financials. Also it will burden airlines which depend on the planemaker’s jets and suppliers who manufacture parts and components for its aircraft.
Union strike expensive for Boeing
According to a note from TD Cowen, a 50-day strike could cost Boeing an estimated $3 billion to $3.5 billion of cash flow. The Boeing workers’ last strike in 2008 shuttered plants for 52 days and hit revenue by an estimated $100 million per day.
Strike could delay Boeing deliveries
Michael O’Leary, CEO of Boeing customer Ryanair, said that a strike could further delay aircraft deliveries, but added he believed that if it happened, it would be short. “We would like to see the labor agreement sorted.”
On Wednesday, Ortberg sent a letter to workers, urging them to approve the deal.
“A strike would put our shared recovery in jeopardy, further eroding trust with our customers and hurting our ability to determine our future together,” the letter said.
