The 7-Week Boeing Strike Has Come To A Complete Stop
Alexander Mitchell - Contributing Editor | Simple Flying
On Monday, November 4th, 2024, machinists employed by American manufacturer
Boeing approved a new labor deal, ending a seven-week strike that significantly slowed the company's production processes. With assembly lines halted, many of Boeing's woes continued, and the company fell even further behind on delivery timelines.
This new deal included a major concession, as it increased wages by 38% for machinists over the next four years and also demanded a list of other improvements. The new arrangement comes as positive momentum for Kelly Ortberg, the new CEO of Boeing who was brought on board to help the airline navigate through its extensive financial, safety, and manufacturing challenges.
The company could be well on the path toward recovery, with production set to come back on track and more than $20 billion in additional capital raised last year in the sale of shares. Financial analysts at CNBC, among others, have warned that the Seattle-based planemaker will likely need to spend money throughout 2025.
Not the first major change to occur at the company in recent weeks
This is not the first major piece of organizational news to reach headlines from Boeing in the last few weeks. Last month, CEO Ortberg announced that he would be eliminating around 17,000 jobs at the company, many of which would be in managerial or executive roles to cut down on operational costs.
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With higher salaries for those working in critical technical roles, it would be unsurprising to see even more extensive layoffs in the coming months. The executive indicated that Boeing would soon become a smaller company, one which focused on the historically profitable defense business as well as the core commercial aircraft that have yielded positive margins over the years, including the following:
Machinists, however, appear happy at today's news and are looking forward to getting back to work. Union leaders have indicated that today's news is a victory and sets a precedent for improved relations with Boeing going forward. In a statement to The Seattle Times, Jon Holden, the president of the Machinists union local, had the following words to share regarding the agreement:
“Now it’s our job to get back to work and start building the airplanes, increase the rates and bring this company back to financial success."
Holden is well aware that machinists play a crucial role in ensuring that Boeing hits its delivery timelines. As a result, it is unsurprising that the company was willing to agree to the union's demands to get assembly lines moving again.
A lukewarm reaction from financial markets
One may have expected a strong reaction from financial markets regarding today's news, given that it should put Boeing back on track to begin meeting its delivery targets. However, Boeing's shares fell around 3% in Tuesday morning trading following the public announcement of the deal.
Boeing still has its work cut out for it, and no one will argue that its financial picture is anything more than grim. But with its machinists back at work, there could be a path to profitability in the near future.