Boeing’s Turbulent Ride Takes a Turn for the Better
The aviation giant’s efforts to recover from a prolonged slump have finally gained traction, following the resolution of a seven-week strike by its largest union. The agreement brings an end to a period of uncertainty that had cost the company billions and disrupted jet production.
A New Chapter Unfolds
The strike by the International Association of Machinists and Aerospace Workers (IAM) came to an end on Monday evening, with union members voting in favor of Boeing’s latest contract offer. This development is expected to pave the way for a Boeing recovery, according to analysts.
A Checkmark on the Road to Recovery
Bank of America analysts noted that Boeing CEO Kelly Ortberg had added another milestone to the company’s turnaround efforts. As a result, shares of the plane maker rose 1% in early trading on Tuesday, although they slipped slightly by mid-session. Despite this, the stock remains down over 40% year to date.
The Cost of the Strike
The worker strike had been problematic for Boeing, which was already struggling to overcome heavy debt following safety and production challenges that began in early January. By late October, the strike was estimated to have cost Boeing, its workers, and suppliers nearly $10 billion in lost wages, earnings, and supplier losses.
Ramping Up Production
While the strike’s end is a significant step forward, Wall Street analysts remain cautious about how quickly Boeing can ramp up production of planes. Much of the production was put on pause during the strike, which began on September 13. As Bank of America Global Research analysts noted, “Ramping back up will take time.”
A Path Forward
Boeing announced a 10% workforce reduction last month and raised over $21 billion in capital last week, a move widely anticipated by Wall Street. According to Ben Tsocanos, aerospace director at S&P Global Ratings, “Restarting and increasing production is necessary for the company to start generating cash and repaying debt.”
A New Contract and a Fresh Start
The approved contract includes a wage increase of 38% over the next four years. Prior to the vote, the union posted a message encouraging its members to approve the offer, stating, “We have accomplished an amazing agreement together.” Workers can return to their shifts as early as Wednesday, but no later than Tuesday, November 12.
A Message of Unity
In a message to employees after the bargaining agreement was approved by 59% of union members, Boeing CEO Kelly Ortberg wrote, “While the past few months have been difficult for all of us, we are all part of the same team.”
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