In the current collective bargaining dispute, Boeing has withdrawn its improved offer and broken off negotiations because the union is not willing to negotiate. Among other things, this demands 40 percent more wages.
It is the first strike in more than 16 years, which also costs billions: Boeing employees have been fighting for better working conditions and higher wages for 26 days. But now, after an inconclusive round of negotiations, the US aircraft manufacturer has withdrawn its current offer to the striking workers.
The IAM union made demands that Boeing could not accept without losing competitiveness, criticized the head of the airliner business, Stephanie Pope. “Unfortunately the union did not seriously consider our proposals.” Therefore, from the group’s point of view, further discussions are pointless at the moment.
Belts for the bestseller 737 are at a standstill
Among other things, Boeing had proposed an income increase of 30 percent over four years. Previously, workers had overwhelmingly rejected the previous proposal of 25 percent. From the perspective of the union leadership, the concession that followed did not go far enough.
The largest Boeing union, IAM, with around 33,000 employees, went on strike in mid-September. She is calling for a 40 percent pay increase over four years and the restoration of a defined benefit pension that was removed from the contract a decade ago. This is justified because Boeing workers have accepted several zero rounds in the past decade.
The work stoppage affects Boeing production around Seattle in the northwest of the USA, where, among other things, the best-selling 737 model and the long-haul 777 jet are built. Boeing is already behind schedule with deliveries to many airlines, especially with the 737.
Costly strike
The strike, which has now been going on for 26 days, is already a costly affair for Boeing. According to analyst estimates, the strike could cost $100 million per day, although the company had already taken cost-cutting measures. For the duration of the strike, affected employees will be furloughed for one week every four weeks, as stated in a September message from Boeing CEO Kelly Ortberg to the workforce.
In addition, Ortberg and the other members of the management team are taking a “appropriate salary reduction” for the duration of the strike. The company’s management had previously initiated a hiring freeze, austerity measures in the travel budget and a reduction in expenses at suppliers.
Downgrade by S&P Global Rating threatens
Nevertheless, the strike is now having its first consequences: Yesterday, the rating agency S&P Global Ratings downgraded the company’s triple B rating for loans and senior unsecured debt to negative credit watch. “CreditWatch’s listing reflects the increased likelihood of a downgrade if the strike continues toward the end of the year,” S&P said.
A CreditWatch is used when a change in the rating is possible but has not yet been finally decided. S&P cited the increased financial risk for the company due to the strike as the reason. This “further limits the recovery of the company’s cash flow generation.”
For Boeing, a rating downgrade could make it much more difficult to obtain financing and thus overcome its problems. The group is struggling to improve its finances and operations after five difficult years that included two fatal crashes, a pandemic that curtailed travel demand and, most recently, an incident in which a door panel blew off one of its planes in flight. burdened the company.