The Boeing strike took another sour turn after negotiations between the Dow Jones giant and its machinist union broke down on Tuesday. Now, the company and its union employees are bracing for an extended fight. Boeing stock continued its decline Thursday.
Boeing on Tuesday said it withdrew its pay offer to 33,000 striking U.S. factory workers, according to reports. The aerospace giant said no further negotiations are planned with union representatives as the strike enters its fourth week.
"We're in this for the long haul and our members understand that," Jon Holden, president of IAM District 751 said in an interview with Reuters Wednesday.
Boeing and its International Association of Machinists held their latest round of negotiations with federal mediators on Monday and Tuesday. However, discussions ended with both sides at a standstill and blaming each other for the unproductive talks.
"Our team bargained in good faith and made new and improved proposals to try to reach a compromise, including increases in take-home pay and retirement," Stephanie Pope, Boeing's Commercial Airplanes CEO wrote in a Tuesday email to employees obtained by Barron's. "Unfortunately, the union did not seriously consider our proposals. Instead, the union made nonnegotiable demands far in excess of what can be accepted if we are to remain competitive as a business. Given that position, further negotiations do not make sense at this point and our offer has been withdrawn."
Offer Details Unclear
Meanwhile, the IAM accused Boeing of not making an offer that would have been acceptable to its members.
"The company was hellbent on standing on the non-negotiated offer that was sent directly to the media on Sept. 23," the union wrote in a statement. The IAM said Boeing also wasn't willing to compromise on multiple priorities for its members.
"They refused to propose any wage increases, vacation/sick leave accrual, progression, ratification bonus, or the 401(k) Match/SCRC Contribution. They also would not reinstate the defined benefit pension," the IAM said.
Holden told Reuters that "they're trying to take credit for very minor, very meager movement that wasn't really touching on the major issues in a way that we could even get in front of our members. The areas where they didn't make improvements are glaring."
Exact details on this week's offer were unclear. The IAM two weeks ago rejected a previous offer that Boeing made public, which included a 12% immediate raise and total raises of 30% over the four-year contract. The union rejected that offer after rejecting a tentative deal for a 25% raise over four years. Previous reports indicate the union is seeking a 40% raise as well as additional pension changes.
Boeing Strike, Both Sides Dig In
Roughly 33,000 Boeing union workers began striking on Sept. 13 in an effort for better wages and benefits, which shut down operations at factories in Seattle, Oregon and Southern California. The current dispute marks Boeing's first strike since 2008. The previous strike lasted eight weeks and cost the company an estimated $2 billion according to NPR.
The current strike is also delaying the production and delivery of 737 MAX aircraft, which were already under scrutiny by regulators for quality control concerns.
Wall Street analysts estimate the ongoing strike will cost Boeing about $1.5 billion per month.
Rob Tompkins, a 777x quality assurance inspector in Everett, Wash. told the New York Times on Wednesday that "the union membership is really unified right now. I'm ready to stay out until January if need be."
Meanwhile, Harry Katz, a professor of collective bargaining at Cornell University's School of Industrial and Labor Relations, told the NYT that Boeing may want to draw out the fight.
"I suspect they're hoping that as the strike continues on somewhat longer, the workers and the union will lower their expectations," he said.
New Ethiopian Airlines Crash Questions
Elsewhere Wednesday, the NYT reported that Ethiopian Airlines' chief pilot sent an urgent message to Boeing in late 2018, prior to the deadly 737 Max crash in March 2019. The chief pilot of the Ethiopian carrier requested information about emergency procedures following a crash during a Lion Air of Indonesia flight the month prior.
However, Boeing declined to answer the questions and referred him to a public document, an operations manual bulletin, that was issued after the Lion Air crash. The Dow jet manufacturer said it was prohibited from providing additional information because it was supporting authorities investigating the crash.
Three months following the request, the Ethiopian Airlines flight crashed and killed all 157 people on board, caused by the same flawed flight control system responsible for the Lion Air crash.
The Ethiopian Airlines pilot had asked about how to respond in the instance of such failure months prior with no response, the NYT reported.
It is unclear if more detailed information would have avoided the crash, but aviation experts that the NYT interviewed said a lack of additional information most likely contributed to the inability to pull out of the fatal nosedive once the malfunction occurred.
Boeing Stock
Boeing stock slid another 1.8% Thursday. Shares fell 3.4% Wednesday, the largest early loss on the Dow Jones Industrial Average.
BA shares have unraveled nearly 44% this year and are trading at their lowest level since November 2022.
Shares of supplier Spirit AeroSystems fell less than 1% Thursday and eased 1.6% Wednesday. Rival Airbus ticked slightly higher.
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