Boeing Shares Rise as Employees Prepare to Vote on New Contract

Boeing Co. (NYSE: BA) shares saw a significant uptick on Friday as striking employees are set to vote on a new contract proposal on Monday, November 4. This anticipated decision could mark the end of a protracted strike.

What You Should Know: According to reports from Aviation Daily, Boeing has reached a tentative agreement with the International Association of Machinists (IAM). This deal could potentially resolve a strike that has lasted for 49 days. Union representatives are recommending this agreement, which proposes a substantial 38% wage increase over a four-year period. The wage increase plan includes a 13% raise in the first year, followed by 9% in the second and third years, and 7% in the final year.

Alongside the wage increases, workers would benefit from a $12,000 ratification bonus and enhanced contributions to their 401(k) retirement plans. Importantly, Boeing has also committed to ensure that any new aircraft production will occur in the Puget Sound area of Washington, which is a significant consideration for union members.

This new agreement follows the rejection of two earlier proposals by union members, the last of which included a slightly lower 35% wage increase in October. While the union's initial demands also sought to restore pensions, the new proposal emphasizes wage hikes and bonuses, leaving pensions unchanged. If this agreement is approved, Boeing anticipates reopening its production facilities as soon as November 6, with a gradual return to full staffing over the following weeks.

The ongoing strike and subsequent production delays have created challenges for Boeing's suppliers. Some, like Spirit AeroSystems, are already starting to implement employee furloughs due to the ripple effects from the strike. Boeing's CEO, Kelly Ortberg, has highlighted the need for a cautious restart of production, citing existing challenges related to production stability and compliance with FAA safety regulations.

Additional Information: Boeing's stock rating remains on S&P's CreditWatch list. This is primarily due to a larger-than-expected equity issuance, which is intended to mitigate projected cash flow deficits through 2025. However, S&P has indicated that Boeing's ability to adapt to further cash flow pressures is limited, pointing to ongoing risks associated with the strike and the subsequent operational challenges that lie ahead.

Boeing's Stock Performance: On Friday, shares of Boeing were up by 3.5%, trading at $154.59, according to data from Benzinga Pro.

Looking Forward:

• Potential Impact of New Contract on Employment

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