Striking Boeing machinists are scheduled to vote Wednesday on a temporary labor agreement that could end a weeks-long strike, but the company's future will not be questioned.
The stakes of voting are high. The strike has cost companies, shareholders and employees billions of dollars since workers were fired on September 13th.
Financial strain puts additional pressure on Boeing as it makes important safety changes and seeks to mend relationships with customers and policymakers after a door on a Boeing plane exploded during an Alaska Airlines flight in January It becomes.
of proposed agreement According to the International Association of Machinists and Aerospace Workers (IAM), which represents 33,000 striking Boeing workers in the Seattle and Portland area, the deal includes a 35% wage increase over four years and a $7,000 increase. It is said to include a one-time ratification bonus and an increase in retirement benefits. .
There is no guarantee that members will approve the new agreement. The union is demanding a 40% wage increase over four years and the reinstatement of a defined benefit pension plan, but the company has not met their demands. Last month, member states overwhelmingly rejected a tentative agreement that would have increased wages by 25% over four years.
Even if Boeing and the union are able to agree to a costly strike, it doesn't mean the company's beleaguered company has clear skies ahead.
Boeing has suffered reputational and regulatory damage since the Alaska Airlines scandal, which led to Congressional hearings that brought together scores of whistleblowers who raised concerns about Boeing's safety culture and policies. was to be held.
The Federal Aviation Administration (FAA) strengthened surveillance It directed Boeing to develop a comprehensive plan to address safety issues, check in weekly with senior FAA leaders, and work with the company to step up inspections.
Boeing, which submitted an 11-page plan to the FAA in May, said it has worked transparently with regulators since the January incident.
Production of the Boeing 737 Max and 787 Dreamliner has slowed as part of this process, with Boeing CEO Kelly Ortberg recently saying production of the company's new 777X passenger plane and the upcoming 767 freighter will be slowed. The company announced plans to delay first deliveries to 2027.
Mr. Ortberg also recently announced that Boeing lay off 10 percent of employees A Boeing spokesperson pointed The Hill to the email when asked about the company's long-term restructuring plans.
“Our business is in a difficult situation, and the challenges we face together cannot be overstated,” Ortberg wrote in an email. “Beyond navigating the current environment, rebuilding the company will require difficult decisions and structural changes that will enable us to remain competitive and serve our customers in the long term. ”
The fallout has raised questions about the company's long-term recovery, particularly its defense business, which provides the company with a steady source of revenue and funding for research and development.
“They now have a mix of vulnerability and public scrutiny,” said Anat Alon Beck, an associate professor of law at Case Western Reserve University who specializes in corporate law and governance.
“So how is Boeing going to solve all the challenges it's currently facing?” Aron-Beck asked. “Will Boeing continue to have access to government-funded projects that support cutting-edge technologies such as space exploration and advanced defense systems, because that gives Boeing a commercial and defense competitive advantage? .”
In an email, Ortberg warned of “new significant losses” to the company's defense business. S&P Global Ratings said: “Profitability remains low as we currently work to address cost overruns on fixed-price development contracts.”
The U.S. government is one of Boeing's biggest customers. Approximately 37% Of the company's revenue in 2023.
Boeing is also one of the government's “big five” contractors. The government is reportedly obligating Boeing $23.8 billion in 2023, including $22.1 billion directly from the Pentagon. contract data Issued by the government.
“If you start using that, it really disrupts the company's revenue model. If that model is disrupted in the future, it's going to be very difficult for Boeing,” Aronbeck said. , noted that there is “significant competition” in the defense industry from new entrants such as Elon Musk's SpaceX.
Ortberg is expected to detail the defense losses and the company's financials during a closely watched earnings conference Wednesday morning, his first since taking over as CEO in August.
The analyst is Large losses and slump in sales are expected. Mr. Ortberg's email dashed investors' hopes that Boeing might recover in the third quarter.
S&P Global Ratings said earlier this month, citing strike-related financial risks: Boeing's credit rating may be downgraded To junk. Boeing also expects to burn through a $10 billion “cash outflow” this year, potentially pushing its 737 Max production targets back until mid-2025.
“We believe the company will continue to be exposed to higher-than-expected cash usage and adjusted debt over the next one to two years, and therefore expect a recovery to levels deemed consistent with expected credit metrics ratings,” the paper said. “There may be further delays.” S&P Global Ratings Analysis.
In an effort to stem a huge cash outflow, Boeing recently unveiled its financing plans. up to $25 billion Through the sale of bonds and stocks, agreement The company worked with multiple banks to secure a $10 billion loan facility.
