Boeing reaches tentative labour deal with 25% pay hike

Bengaluru/Washington — Boeing has reached a tentative agreement with a union representing more than 32,000 workers in Washington state, in a deal that could help avert a possible crippling strike as early as September 13.

The proposed four-year deal, which includes a 25% wage increase and a commitment to build the next commercial aeroplane in the Seattle area, is an early win for new Boeing CEO Kelly Ortberg, who took over in August.

Though the union had asked for a 40% raise in their first full negotiation with Boeing in 16 years, it made other dramatic gains, such as obtaining a voice in the safety and quality of the production system.

The deal also includes 12 weeks of paid parental leave, improved job security and enhanced benefits including retirement. It would need to be approved on Thursday by Boeing factory workers near Seattle and Portland.

“As part of the contract, our team in the Puget Sound region will build Boeing’s next new airplane. This would go along with our other flagship models, meaning job security for generations to come,” said Boeing Commercial Airplanes CEO Stephanie Pope in an employee message.

An accepted deal would secure labour peace for Boeing at a time when the planemaker is burning cash and trying to raise production of its strongest-selling 737 MAX to a target rate of 38 aircraft a month by year’s-end. It also avoids a strike that could have made Boeing a focus point in the 2024 presidential election.

Boeing is wrestling with a quality crisis and faces scrutiny from regulators and customers. In the latest incident in January, a door plug on a nearly new MAX blew off an Alaska Air jetliner in midair.  

In July, Boeing agreed to plead guilty to a criminal fraud conspiracy charge and pay a fine of $243.6m to resolve a US justice department investigation into two 737 MAX fatal crashes.

“Although there was no way to achieve success on every single item, we can honestly say that this proposal is the best contract we’ve negotiated in our history,” the International Association of Machinists and Aerospace Workers union representing the Boeing workers said in a statement.

Ortberg, a former Rockwell Collins executive who moved to Seattle to head Boeing, should be prioritising Boeing’s future programmes and improving labour relations, said aerospace analyst Richard Aboulafia.

Culture change

“Changing the culture starts with a different attitude towards labour and towards the future with new product development,” Aboulafia said on Sunday.

The talks had been watched by members of the Biden administration, with labour secretary Julie Su last week urging the sides to get a “fair contract”.

Su had spoken with both Ortberg, a source familiar with the matter said, and union local head Jon Holden.

The Boeing workers, who produce Boeing’s wide-body 777 and 767 in addition to the MAX, had voted in favour of a strike mandate in July.

The Federal Aviation Administration (FAA), which in January barred Boeing from boosting production of its best-selling 737 MAX passenger jet after the door panel incident, has boosted oversight of Boeing.

FAA administrator Mike Whitaker is set to visit Seattle later this month to meet Ortberg and get an update on the planemaker’s quality improvement plans.

Reuters