Boeing, union at strike impasse as company halts talks, withdraws pay offer

The strike between Boeing and its primary manufacturing union, now nearly four weeks old, shows no signs of a resolution following a breakdown in talks, with no new negotiations scheduled.

On Tuesday, the U.S.-based aircraft manufacturer retracted its pay offer to approximately 33,000 factory workers, stating that the union did not take its proposals seriously after two days of discussions. This deadlock exacerbates Boeing's financial and production challenges, adding to a backlog of deliveries for airlines that depend on the company, which is one of the two major global commercial airplane manufacturers.

According to S&P Global Ratings, the strike could cost Boeing more than $1 billion each month and may lead to a downgrade of its debt to junk status. The company currently carries a $60 billion debt. “The strike puts Boeing’s recovery at risk,” S&P noted in a statement on Tuesday.

Sources familiar with the negotiations indicated that the deadlock shows little potential for resolution. Boeing Commercial Airplanes head Stephanie Pope informed employees in a memo that “Unfortunately, the union did not seriously consider our proposals,” labeling the union's demands as “non-negotiable.” She added, “Further negotiations do not make sense at this point.”

Boeing has been experiencing significant cash burn in 2024 as it works to recover from a midair incident in January that revealed insufficient safety protocols and prompted U.S. regulators to limit its production capabilities.

Earlier this year, Boeing appointed Kelly Ortberg as CEO, replacing Dave Calhoun, with the aim of securing a labor agreement and improving the company's standing with clients and regulators. However, no progress has been made thus far.

The company is now exploring options to raise billions to strengthen its balance sheet, with reports indicating it is considering selling stock and equity-like securities amid concerns for its prized investment-grade credit rating.

Additionally, Boeing has instituted temporary furloughs for thousands of salaried employees, while production of its top-selling 737 MAX and 767 and 777 models has been halted.

S&P predicts that Boeing’s target to increase output of the 737 MAX planes to 38 per month will likely be delayed until mid-2025. On Wednesday, Boeing’s shares fell by 2.4 percent, reflecting a more than 40 percent decline in value this year.

Regarding the two days of negotiations, Pope stated, “Our team bargained in good faith and made new and improved proposals to try to reach a compromise, including increases in take-home pay and retirement benefits.”

However, the International Association of Machinists and Aerospace Workers union contested this claim, asserting that Boeing was “hell-bent on standing on the non-negotiated offer” it had made the previous month. The union argued that Boeing had declined to offer any wage increases, vacation or sick leave accrual, progression, ratification bonus, or 401(k) Match/SCRC Contribution, nor would it reinstate the defined-benefit pension.

Representing factory workers on the U.S. West Coast, the union is seeking a 40 percent pay increase over four years and the reinstatement of a defined-benefit pension that was eliminated in the contract a decade ago. More than 90 percent of the workers rejected an offer of a 25 percent pay increase over four years before initiating the strike.

Last month, Boeing proposed an improved offer it labeled its “best and final,” which included a 30 percent raise and the restoration of a performance bonus; however, the union reported that a survey of its members indicated this was insufficient.