(Bloomberg) – Boeing Co. and the union representing 33,000 striking workers have reached a new agreement to end the work stoppage that has crippled the company’s aircraft production for more than a month and strained its finances.
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The proposal, issued overnight in Seattle, includes a 35% pay increase spread over four years, a guaranteed annual bonus of at least 4% and an additional $7,000 bonus if workers approve the contract, IAM District said 751 Saturday in a statement on its website. . A ratification vote is scheduled for October 23.
The union enlisted the help of U.S. Secretary of Labor Julie Su, who returned to Seattle to restart stalled talks. The Department of Labor said Friday that Su had spoken several times with both the union and Boeing’s new Chief Executive Officer, Kelly Ortberg.
“We look forward to our employees voting on the negotiated proposal,” Boeing said via email.
The potential breakthrough after weeks of acrimony could give a boost to Ortberg, who joined Boeing in August with a mandate to revamp the business. He will address analysts and investors for the first time on October 23, when Boeing reports its third-quarter results.
A provisional agreement between Boeing and the union does not guarantee that employees will also adhere to the rules. When the first bipartisan proposal was put to a vote last month, workers overwhelmingly rejected it.
Boeing has since returned twice with tighter bids, first with a 30% increase imposed directly on employees, and now with the latest plan on the table that is 10 percentage points above the original offer.
Pressure mounting
Pressure is increasing on Boeing, its suppliers and striking employees as the strike enters a sixth week. The work stoppage that began on September 13 extends up and down the West Coast and has forced Boeing to close assembly lines for its 737 Max, 767 and 777 cash cow planes.
The aircraft maker is moving ahead with plans to cut 10% of its workforce, the first step toward a broader reshuffle of its operations under Ortberg. The pain is also starting to ripple through Boeing’s supply chain, with Spirit AeroSystems Holdings Inc. warned that it would have to lay off 700 workers who built parts for the 767 and 777 programs.
Boeing has taken the first steps to raise the capital it will need to strengthen its operations and maintain its investment-grade credit rating. The company has secured a $10 billion credit facility with banks and has filed to raise as much as $25 billion over the next three years.
The IAM District 751 strike marks the first major labor dispute at Boeing in 16 years. As hourly workers push for 40% raises and better retirement benefits, they are driven by resentment over receiving paltry raises over the past decade while senior managers have been handsomely rewarded.
The latest agreement addresses many of the frustrations employees expressed about the company’s previous proposals. But it doesn’t restore Boeing’s defined benefit plan, a potential sticking point for some members.
Instead, Boeing would increase its contributions to employees’ retirement savings plans. The company would make a one-time $5,000 contribution to the 401(k) plans of all eligible employees, and fully match their contributions of as much as 8% of salaries.
–With help from Allyson Versprille and Danny Lee.
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