Boeing strike ends with new contract, but crisis not over

The International Association of Machinists and Aerospace Workers (IAM) District 751 said late on Monday (November 4) that it had ratified Boeing management's contract proposal for a pay hike totaling 59%. The move will send some 33,000 Seattle-area employees back to work and restore operations at two major assembly plants after what became the costliest strike for the company this century.

The contract includes a 38% wage hike, a $12,000 (€11,000) signing bonus and provisions to lift employer contributions to a 401K retirement plan and contain health care costs. But it does not restore Boeing's former pension plan that had been sought by older workers.

Jon Holden, head of the Seattle union, described the agreement as a win for workers who were determined to make up for more than a decade of stagnant wages. "It's time for us to come together. This is a victory," news agency AFP reported Holden as saying. "The strike will end and now it's our job to get back to work and start building the airplanes, increase the rates and bring this company back to financial success."

Boeing staff can return as soon as November 6 and must be back on the job by November 12, the IAM said on social media platform X.

Boeing CEO Kelly Ortberg welcomed the ratification, adding that management and workers must work together as "part of the same team," according to a company statement. "We will only move forward by listening and working together. There is much work ahead to return to the excellence that made Boeing an iconic company," Ortberg said.

Losses galore

The 7-week strike, reportedly costing Boeing $50 million per day, had exacerbated Boeing's already precarious financial situation.

Losses are the order of the day in a truly terrible year for one of aerospace industry's proudest names: loss of prestige, loss of customer confidence and, almost, more loss of life — after narrowly avoiding catastrophe when a door plug blew out during a Boeing MAX flight in January.

And financial losses are mounting higher than ever. For the third quarter of 2024, the company reported the second-worst quarterly result in over a century, marking a $6 billion deficit. This adds up to $7.7 billion for the first nine months of 2024, ending up at an estimated $10 billion in the red for the whole year.

Boeing's accumulating losses have led to announced job losses of 17,000 workers — almost a tenth of the current workforce — and a massive selloff in the US planemaker's shares which have fallen more than 40% since the start of the year.

To calm nerves and avoid a downgrade of its investment rating, Boeing has successfully raised more than $20 billion in fresh capital by selling stock to try and limit the damage from the money it is losing.

For Steven Udvar-Hazy, Boeing's current struggles are like a vicious cycle with no easy way out. "Boeing is a tragic case. Almost everything they touch turns to poison," the Hungarian-American billionaire businessman and executive chairman of Air Lease Corporation — one of Boeing's biggest customers — told DW.

Carsten Spohr, the chief executive of German flagcarrier Lufthansa, told journalists recently that he had "never seen anything like it in our industry, to be honest."

Boeing strike worsened industry's supply woes

There is no alternative for airlines as they are stuck with Boeing or Airbus for supplies of new aircraft. European planemaker Airbus, however, is equally booked out until the early 2030s and fighting its own supply chain problems. Also, some parts suppliers maintain close links to both of the world's biggest aircraft manufacturers and need both as customers.

The strike by Boeing workers compounded woes in the entire aerospace industry, where everything is connected.

Boeing has a staggering backlog of over 6,000 aircraft ordered, but not yet produced. Airbus is sitting on orders for over 8,600 jets, and said it wished for a speedy recovery of its rival. This would also be in the interest of airline passengers and the environment, as newer, more environmentally friendly jets, are overdue to replace older, dirtier types now kept in service longer than planned.

'If he can't do it, I don't think anyone can'

Despite the problems, there is widespread agreement among Boeing workers, industry analysts and competitors that the man now at the helm of Boeing is capable of turning the behemoth around. "If he can't do it, I don't think anyone can,” the British business daily Financial Times quoted an industry analyst as saying recently.

Boeing's new CEO, Kelly Ortberg, came out of semi-retirement in August to take the chief executive position at the Seattle, Washington-based planemaker.

On October 11, Ortberg addressed Boeing workers with a no-nonsense assessment of the situation, also laying out his plans to reverse fortunes: "Clearly, we are at a crossroads. The trust in our company has eroded. We're saddled with too much debt. We've had serious lapses in our performance across the company which have disappointed many of our customers,” he said, adding that there were also opportunities for Boeing moving forward.

"Our company backlog is roughly half-a-trillion dollars. We have a customer base that want us and need us to succeed. We have employees who are thirsty to get back to the iconic company they know, setting the standards for the products that we deliver,” Ortberg said.

Ortberg described his mission as turning "this big ship in the right direction and restoring Boeing to the leadership position that we all know and want." But for him to achieve that a "fundamental culture change" was needed and a stabilization of business.

He also pledged that this was not "just lip-service, or commitments to be printed on posters and then be largely ignored, as had been the case since 1997." At the time, Boeing had merged with McDonnell Douglas, shifting the company's focus toward shareholder value as the absolute priority over engineering excellence, the root cause of today's crisis.

Only near the end of his speech, did Ortberg touch on one of the most decisive issues. "Boeing is an airplane company and at the right time in the future we need to develop a new airplane. But we have a lot of work to do before then," he said.

Being risk-averse and streamlined towards maximizing profits, Boeing has lacked product innovation for decades, especially in coming up with a successor to its cash cow Boeing 737. The plane was first flown in 1967 and is still sold today as MAX.

Edited by: Uwe Hessler