The Boeing regional headquarters is seen amid the coronavirus pandemic on April 29, 2020, in Arlington, Virginia. (Photo : OLIVIER DOULIERY/AFP via Getty Images)
US premarket trading saw Boeing shares rising by 3%, thanks to a tentative labor agreement with a union representing workers in the US Pacific Northwest.
Reuters shared that the agreement, which may avoid a potentially bruising strike later this week, represents a key breakthrough for the planemaker, which is especially important since the arrival of new CEO Kelly Ortberg last month.
Boeing's Labor Agreement with Union
The Washington Post reported that the proposed four-year contract includes a 25% wage increase for the workers and a commitment to produce the next commercial aircraft in the Seattle area, a nod to Boeing's early grassroots in its early days.
The deal is being hailed as the best contract ever negotiated by the union, International Association of Machinists and Aerospace Workers, representing 32,000 Boeing employees with the contract will go to a vote on Thursday; IAM leaders unanimously recommended acceptance.
The new labor deal also provides increased retirement benefits and increasing the union involvement in Boeing's production system, including safety and quality. This broad-reaching deal is the first full new contract for Seattle-area workers in 16 years and covers a number of Ortberg's key mandates aimed at improving conditions and safety for workers.
Analysts, shared by Barron's, say that the deal is unlikely to be voted down with the union's strong recommendation. Jefferies analyst Sheila Kahyaoglu said the labor agreement could help Boeing regain investor and customer confidence as the company works to recover from recent setbacks.
Given that a possible strike could have occurred as early as Friday, September 13, the tentative agreement provides a strong way forward not only for Boeing but also its employees.
Notably, the salary increase will be $900 million for Boeing in four years, which is somewhat less than the projected figure of $1.1 billion. This contract has been deemed a necessary step towards regularizing the operations of the organization, after VCPost learned that the company is promising "complete overhaul" following controversial 737 Max crashes.