(Bloomberg) — Talks between Boeing Co. and its largest union to end a nearly month-long strike failed for a third time, extending the closure of the aircraft maker’s main commercial production base on the US west coast.
Most read from Bloomberg
Both the embattled aircraft maker and the International Association of Machinists and Aerospace Workers blamed each other for the impasse after two days of mediated negotiations over a previously announced proposal that would have raised wages by 30% and boosted pension benefits. Boeing said it has withdrawn the offer, saying there is no point in further discussions at this time.
Boeing and IAM District 751 leaders have been in a standoff over wages and pensions since the union’s 33,000 members walked off the job shortly after midnight on September 13.
“Unfortunately, the union has not seriously considered our proposals,” Stephanie Pope, who heads Boeing’s commercial aircraft division, said in a memo shared by the company. “Instead, the union made non-negotiable demands that far exceeded what is acceptable if we want to remain competitive as a company.”
The company’s first major strike in 16 years has taken a toll on its finances, costing Boeing $100 million a day in lost revenue, according to TD Cowen estimates. With cash flow rapidly shrinking while debt levels rise, Boeing is considering selling at least $10 billion in new shares once it knows the full extent of the financial damage from the work stoppage.
As the strike continues, Boeing is also flirting with a rating downgrade. S&P Global Ratings said earlier Monday it was considering downgrading Boeing’s credit rating to junk, citing the company’s growing cash needs. Moody’s said last month it would review Boeing’s investment-grade credit rating.
Both sides made blunders that angered rank-and-file members and complicated efforts to resolve the disagreement. The leadership of local union IAM backed the company’s initial offer of a 25% pay increase over four years, well below what many members expected in compensation for repeated annual sub-inflation pay increases. The offer also eliminated an annual bonus.
IAM members overwhelmingly rejected the offer and voted to strike.
Boeing later misjudged the union’s determination and bypassed leaders to make an offer directly to workers through the media, with the ultimatum that they would approve it within days. The terms include a 30% pay increase over four years, reinstating the bonus and increasing the company’s contribution to employees’ 401K retirement plans.
This move backfired by strengthening support for local union leaders and encouraging members to respond to their demands for higher wages and better pension benefits.
In a statement after the latest talks collapsed, the IAM said Boeing was “committed to responding to the non-negotiated offer” sent directly to employees last month. The company declined to propose further pay increases or reinstate the promised pension, the union said.
“By refusing to negotiate on the offer, the company made it more difficult to reach an agreement,” the union said. “Your negotiating committee tried to address multiple priorities that could have led to an offer we could put to a vote, but the company was unwilling to go our way.”
(Adds comment from Boeing in fourth paragraph.)
Most read from Bloomberg Businessweek
©2024 BloombergLP
