Boeing announces tentative deal to end strike | CNN Business

A tentative deal has been reached to end a five-week strike at embattled planemaker Boeing, the union announced early Saturday to its 33,000 striking members.

The agreement still needs to be ratified by a majority of the rank-and-file membership of the International Association of Machinists before it can take effect and workers can return to work. The union will vote on Wednesday.

The strike is a huge blow to the already struggling company, which remains a key component of the US economy despite recent troubles. Boeing is America's largest exporter and contributes an estimated $79 billion to the economy annually, directly and indirectly supporting 1.6 million jobs at 10,000 suppliers spread across all 50 states. The strike comes just a month after its new CEO, Kelly Ortberg, was hired, who said she wanted to “reset” the troubled relationship between the union and the company.

The rank-and-file had already almost unanimously rejected the previous tentative agreement, launching the first strike at the company in 16 years. But the union's statement said the new proposal deserves to be put to membership for a vote.

The union said the proposal would increase wages by 35% over the four-year life of the contract. It would also increase company contributions to members' 401(k) plans, though it would not restore the traditional pension plan taken away from union members 10 years ago. Many union members were outraged by the loss of pensions.

Acting Labor Secretary Julie Sue was credited with brokering the deal in indirect negotiations between the union and management. Su also discussed the end of the International Longshoremen's Association strike at dozens of ports on the East and Gulf coasts earlier this month after a three-day walk-out earlier this month.

“We look forward to our employees voting on this negotiated proposal,” Boeing said in a statement. The brief comment appeared to be an acknowledgment that approval of the contract could antagonize union members, who have maintained a strained relationship with the company's management.

According to an estimate by Standard & Poor's, the company is losing an estimated $1 billion per month due to strikes on top of its ongoing losses. It also announced plans to cut 10% of its global workforce, or about 17,000 of its 171,000 employees. The strike halted production of almost all of its commercial jets, and the company makes most of its payments from the sale of its planes after delivery.

But the company's problems go beyond the impact of the strike. It has been battling setback after setback for more than five years since two fatal crashes of its best-selling 737 Max in late 2018 and early 2019 led to a 20-month grounding of the plane. It has reported losses of more than $33 billion since then, and it already said it would report another huge loss on Wednesday for the quarter just ended, most of which occurred before the Sept. 13 strike began.

The union's statement stopped short of approving the proposal that members would vote on. It simply said that it “includes several key improvements” and that “it warrants presentation to members and deserves your consideration.” Union leadership supported the previous tentative agreement, calling it the best deal ever with Boeing, only for the rank-and-file to reject it by 95% of the membership.

This rejected offer would increase wages by 25% over the duration of the contract. It would have made even smaller improvements to 401(k) contributions and only received a $3,000 signing bonus. This offer includes a $7,000 signing bonus.

A week after rejecting that deal, Boeing improved its offer to 30% in wage increases over a four-year contract, its best and final offer. It said the union's demand for even larger wage increases “far exceeds what can be accepted if we want to remain competitive as a business.”

Boeing is able to pay union members significantly more despite its financial problems, because workers' salaries and benefits make up only a small part of the cost of building a plane, which can be sold for millions of dollars each, or more money goes to raw materials and suppliers. Provides many parts already assembled, often including the fuselage of the plane. 33,000 striking workers conduct final rally.

And perhaps Boeing will go out of business due to its current financial crisis. Boeing and European rival Airbus are the only companies that make the full-size jets needed by the global airline industry. Its place as part of a duopoly essentially ensures its survival.

Boeing has been dealing with one problem after another for more than five years — from the embarrassing to the shocking and all financially devastating. It has suffered two fatal accidents, a 20-month grounding of its best-selling plane and numerous federal investigations into the quality and safety of its planes that were sparked by a door plug that blew off an Alaska Airlines flight in January, an incident that took the plane from a Boeing factory. Going off without a bolt. It agreed to plead guilty to defrauding the Federal Aviation Administration during the original certification of the 737 Max.

This story has been updated with additional context and developments.