Boeing Co. factory workers rejected a new labor contract that would have increased their wages by 35% over four years, dealing a blow to the embattled aircraft manufacturer as it tries to overcome a crippling work stoppage.
Julie Johnsson, Spencer Soper, and Danny LeeKen Herbert, managing director with RBC Capital Market, joins us and talks about how the company takes a U.S.$.16 billion loss in Q3
“We remain on strike,” IAM District 751 President Jon Holden said after the vote count. “Our members deserve more and have spoken loudly.” The move will send Boeing and the union back to the negotiating table following six weeks of stop-start talks that eventually led to the White House dispatching Acting Secretary of Labor Julie Su to Seattle to help break the stalemate. While Boeing’s latest pay offer was a bump from its initial 25% increase, workers are still angered by the failure to reinstate their defined-benefit pension plan.
The manufacturer was on track to generate a surge of revenue from rising jet deliveries prior to the labor strife. With that activity all but halted, Boeing expects to burn around $4 billion in cash during the fourth quarter, similar to its outflow earlier this year, according to Chief Financial Officer Brian West. The would bring the company’s total free cash outflow to around $14 billion for 2024, its worst performance since the Covid pandemic flattened air travel in 2020.
The fallout is also rippling through Boeing’s suppliers. Spirit AeroSystems Holdings Inc. has said that it will furlough 700 workers, and that it might need to resort to layoffs if the strike continues into next month.
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