Boeing shares rise on hopes new wage offer will end strike

SEATTLE: Boeing shares rose 3.5 percent on Friday on bets that workers at the planemaker’s West Coast plant will approve a new wage proposal and end a seven-week strike that has halted plane production and battered the company’s finances.

Some 33,000 machinists, on strike since Sept. 13, will vote on Monday on a new contract offer that raises wages by 38 percent over four years, up from the previous offer of 35 percent.

The proposal added a $12,000 ratification bonus but failed to satisfy workers’ demands for defined benefit pension benefits to be restored. Boeing workers rejected two previous proposals in votes on September 12 and October 23.

“This looks promising as it gets closer to the union’s original target of a 40 percent pay rise over four years. The fact that the strike lasted almost two months is also a factor in favor of the agreement,” said Ben Tsokanos, director of aerospace. in the S&P Global Ratings rating.

Boeing CEO Kelly Ortberg on Friday urged workers to accept the deal, saying in a note to employees that it was time to “focus on rebuilding the business and delivering the world’s best airplanes.”

Workers on the picket lines were divided, with some telling Reuters they were ready to end the grueling strike and others determined to wait for the full 40 percent wage increase.

“This is not enough. They didn’t even meet our demands,” said Kenneth Wee, a 34-year-old quality inspector.

Kate McKinney, a 59-year-old who works on the 737 MAX, said she would vote to approve the deal.

“I want to get back to work. The bills are what they are,” McKinney told Reuters.

The strike halted production of Boeing’s best-selling 737 MAX and wide-body 767 and 777 jets, leading to a $6 billion loss in the third quarter and complicating Ortberg’s efforts to revive the economy.

Wall Street analysts scanned Reddit posts and social media reactions that were a harbinger of worker sentiment in the two previous votes.

The machinists’ union said it had squeezed everything it could out of the company but warned that future proposals could be regressive.

“The economics of this proposal are a significant improvement for unions. Union leadership’s approval, unlike the last proposal, should help move the vote even closer to ratification,” said Dino Kritikos, managing director at Fitch Ratings.

Workers have the option of depositing a lump sum of $5,000 from the bonus into their 401(k) retirement account or taking cash out.

That option, coupled with the possibility that 20 percent of workers’ paychecks would go into retirement accounts, could sway pension hardliners, Jefferies analyst Sheila Kahyaoglu wrote in a note.

Workers lost an average of $10,400 in wages during the strike, Kahyaoglu said, more than the average wage increase for the first year under the proposal. She said Boeing’s recent capital increase puts it in a stronger negotiating position.

The company’s shares have fallen 8.3 percent since the strike began in September.