Boeing, union reach preliminary deal to avert Seattle-area strike

Boeing has agreed on a preliminary new contract with union leaders that includes a hefty wage hike that would avert a strike in the Seattle region, the two sides announced Sunday.

The agreement, which must be ratified by workers, includes a 25 percent wage increase over the four-year life of the contract, according to Boeing and the International Association of Machinists and Aerospace Workers (IAM) District 751, which represents more than 33,000 workers.

Other key elements include lower health care costs for workers, reduced mandatory overtime, 12 weeks of paid parental leave and a commitment to build Boeing's next new airplane in the Puget Sound region of Washington state if the contract is ratified this week, according to a Boeing fact sheet.

The preliminary agreement comes just weeks after the arrival of new Boeing CEO Kelly Ortberg, who has been tasked with turning around the iconic plane-maker after its reputation was tainted by a series of air safety problems and other setbacks.

While Ortberg had pledged to "reset" relations with the union, the IAM as recently as Friday had described the two sides as "far apart" on key points.

In a message to rank-and-file members, IAM district president Jon Holden said the union's "strength, solidarity and unity" had produced "the best contract we ever had."

He urged members to review the proposal carefully, saying, "We believe this proposal will benefit all our members and our future."

If workers ratify the contract, Boeing would follow in the steps of the United Parcel Service, which narrowly averted a strike in July 2023 after reaching agreement with the Teamsters union.

In contrast, Detroit automakers General Motors, Ford and Stellantis experienced a six-week partial strike last fall before reaching a deal with the United Auto Workers that included a 25 percent wage hike.

- Commitment to Seattle region -

Boeing commercial airplane president Stephanie Pope described the wage bump as the "largest-ever general wage increase," in a video message to employees, Boeing said.

"Just as important, this contract deepens our commitment to the Pacific Northwest," said Pope, adding that the new-airplane pledge means "job security for generations to come."

Boeing has been under heavy scrutiny. In January, a fuselage panel blew out of an Alaska Airlines Boeing 737 MAX plane mid-flight, necessitating an emergency landing.

That revived questions about safety and quality control after the company had seemingly made progress following deadly MAX crashes in 2018 and 2019.

The aerospace giant in March announced a management shakeup that included the exit of Dave Calhoun as CEO. Ortberg took the helm on August 8.

But workers have complained of retaliation after raising safety concerns.

These issues were spotlighted in a Senate hearing in April and at a National Transportation Safety Board hearing in August into the Alaska Airlines incident, with IAM representatives describing company safety and training programs as insufficient.

Analysts have broadly praised the hiring of Ortberg, a Boeing outsider with extensive engineering and aerospace experience at electronics supplier Rockwell Collins.

But Ortberg faces significant challenges at Boeing, which slowed commercial airplane production following the Alaska Airlines incident and announced an acquisition of supplier Spirit AeroSystems as part of an effort to improve quality control.

On September 3, Wells Fargo downgraded Boeing and lowered its stock price target in a note that described the company's near-term profitability prospects as challenged.

Wells Fargo highlighted the need for Boeing to launch a new aircraft in the 2027 timeframe to compete with Airbus, dampening its medium-term outlook for free cash flow, even after the company pivots from its recent problems and boosts airplane production.