Boeing’s (BA) efforts had stalled amid a seven-week strike by its largest union, which cost the company billions and delayed production of its planes.
That specific risk for the shares has now been removed. The International Association of Machinists and Aerospace Workers (IAM) strike ended on Monday evening, with union members voting in favor of the aviation giant’s latest contract offer. Analysts said the development should set the stage for a Boeing recovery.
“Boeing CEO Kelly Ortberg has added another check to the ‘Boeing Turnaround’ list,” Bank of America analysts wrote Tuesday morning.
The plane maker’s shares rose 1% in early trading and were down slightly by mid-session on Tuesday. The stock is down more than 40% this year.
The workers’ strike has been problematic for Boeing as the company tries to get out of heavy debt after safety and production problems that began in early January when a door plug flew out of an Alaska Airlines (ALK) Boeing plane.
The strike is estimated to have cost Boeing, its employees and suppliers nearly $10 billion in lost wages, revenue and supplier losses in late October, according to Anderson Economic Group.
Wall Street analysts remain cautious about how quickly the plane maker can ramp up aircraft production. Much of it was on pause during the strike that started on September 13.
“While the end of the strike and the return of workers to the workplace is a meaningful step in the right direction, an increase [production] Backing up will take time,” said analysts at Bank of America Global Research, who maintained their neutral rating on the stock with a $170 price target.
Last month, Boeing announced a 10% workforce reduction, and last week it raised more than $21 billion in capital, a move widely anticipated by Wall Street.
“Restarting and increasing production is necessary for the company to generate cash and repay debt,” Ben Tsocanos, director of aerospace at S&P Global Ratings, said after the union vote.
The contract approved by IAM includes a 38% salary increase over the next four years.
Before the vote, the union posted a message encouraging its members to approve the offer.
“We have reached a great agreement together,” says the IAM website. “Your entire bargaining committee believes it is time to end this strike and move forward.”
Employees can return to their shifts as early as Wednesday, but no later than Tuesday, November 12.
“While the past few months have been difficult for all of us, we are all part of the same team,” Boeing CEO Kelly Ortberg wrote in a message to employees after the bargaining agreement was approved by 59% of union members.
