Will Boeing’s New Proposed Deal End Its Dwindling Finances?
Strikes have flooded the news headlines for the past years, as thirty-three significant strikes occurred in 2023, with an estimated 462,000 workers engaged in those strikes. (Chris Isidore, CNN). Boeing was unable to escape the strike fever in 2024, as workers demanded a 40% raise in wages and the reinstatement of pension benefits. (Niraj Chokshi, New York Times). Due to the massive impact the strike had on the company, Boeing and the International Association of Machinists and Aerospace Workers (the “Union”) announced a negotiated proposal (“Proposed Deal”) subject to voting on October 23rd, 2024. (IAM District 751). Ultimately, the Proposed Deal was rejected by a 64% vote. (IAM District 751). This article discusses the key elements of the Proposed Deal and how it sheds light on the greater narrative of Boeing’s fragile state of dwindling finances, reputation, and relationship with its workers.
After numerous talks between Boeing and the Union, the rejected Proposed Deal contained many promising terms for the workers. (Niraj Chokshi, New York Times). The primary term required Boeing to raise wages by almost 40% over a four-year span. (IAM District 751). Another major component was a $7,000 bonus to workers upon ratification. Id. Other terms in the Proposed Deal, such as increasing workers’ 401Ks, would have also benefited the workers. Id. However, despite the Proposed Deal containing many terms favorable to workers, the Union voted to reject the deal. (IAM District 751).
This strike worsened an already bad year for Boeing’s finances and reputation. Anderson Economic Group, an economic consulting group, reported Boeing lost $9.66 billion due to the strike. (Patrick Anderson & Aidan Bergsman, Anderson Economic Group). With its workers on strike, the company delivered fewer 737 Max planes than hoped. (Niraj Chokshi, New York Times). This decline in production of the 737 Max is detrimental for Boeing, since this plane represents 75% of the orders that Boeing receives. Id. To make matters worse, Boeing announced earlier in October that it planned to lay off 10% of its workforce, making up around 17,000 jobs, in an effort to cut costs that the company continues to face. (Niraj Chokshi, New York Times). Further, as a reaction to the cumulative major financial hits, on October 28, 2024, Boeing announced that it will sell $19 billion worth of stock. (Danielle Kaye, New York Times). The need to sell such an extensive amount of stock, combined with the layoffs, shows the destructive financial ramifications that Boeing faced in 2024.
2024 proved to be dreadful for Boeing’s public reception as well, with the strike damaging Boeing’s already withered reputation even further. (Niraj Chokshi, New York Times). Early in the year, the company was under fire when a blowout on one of its 737 Max planes, flown by Alaska Airlines, left a hole in the body of the airplane. (Claire Rush, et al., Associated Press News). As a result, federal officials ordered the immediate grounding of 170 Boeing 737 Max planes in order for them to be inspected. (Charles Alcock, Business Jet Traveler). This event, compounded with the highly publicized workers’ strike, has blemished Boeing’s reputation, which could take the company years to amend.
As a result of the dwindling state of finances and public perception that Boeing found itself in, the company offered the Union the Proposed Deal. (Niraj Chokshi, New York Times). With terms of the Proposed Deal including nearly a 40% increase in wages and a $7,000 bonus to each worker, the Proposed Deal definitely favored the Union. Id. One of the driving factors for the Union to go on strike in the first place was the demand for a 40% wage increase. Id. By appealing to the Union’s demands, the Proposed Deal could have been a catalyst to end the strike.
However, the Union members still rejected the Proposed Deal despite its attractiveness. (IAM District 715). The 64% of workers who voted against the Proposed Deal, such as Josh Hajek, argue, “[t]hey took a bunch of numbers and moved them around to make them look like they’re giving us more than they were.” (Daniel Catchpole, et al., Reuters). Another reason workers voted against the Proposed Deal comes from the wake of Boeing’s crippled financial records and the resulting belief that the Union has more leverage than Boeing. Id. Donovan Evans, a worker in the 767-jet factory, said, “[w]e’re going to get what we want this time. We have better legs to stand on this time than Boeing.” Id. The reasoning behind this school of thought is that since Boeing is eager to resume production of its planes, the company is more desperate to end the strike, and so if the Union waits long enough, Boeing will crack and offer more appealing terms. Id. With the Proposed Deal denied by the Union, both sides are working on another negotiated proposal. Id. Irina Briones, a worker on strike, said after the vote, “[w]e’re ready to go back on strike until we get a better deal.” Id.
Given Boeing’s fragile financial state and grim reputation, the company is likely eager to end the strike and return worker focus to making planes. The subsequently negotiated proposal will most likely look even more promising for the Union and its members. The one certainty is that Boeing’s finances will further dwindle until the Union affirmatively votes for a proposal.