Boeing's West Coast factory workers initiated a strike early Friday after 96% voted in favor, halting production of its best-selling jet as the company struggles with persistent delays and mounting debt. This marks the first strike since 2008 and comes shortly after new CEO Kelly Ortberg, appointed in August, took charge following an incident in January where a door panel detached from a near-new 737 MAX mid-flight.
Approximately 30,000 members of the International Association of Machinists and Aerospace Workers (IAM) in Seattle and Portland, responsible for assembling the 737 MAX and other jets, overwhelmingly rejected a contract offer, the first in 16 years, in favor of a strike.
Union leader Jon Holden, who led negotiations, said the strike is about respect, addressing past grievances, and fighting for the future. Announcing the vote on Thursday evening, Holden declared, "We strike at midnight," as union members cheered and chanted.
Boeing acknowledged that the vote sent a clear message that the tentative agreement was unacceptable to workers. Despite offering a 25% wage increase, a $3,000 signing bonus, and a commitment to build Boeing's next commercial jet in Seattle (pending program launch within the next four years), the proposal was rejected. Workers had pushed for a 40% wage increase and were dissatisfied with the loss of an annual bonus.
Holden expressed the union's readiness to return to the bargaining table but did not speculate on the strike’s duration.
Boeing faces significant challenges, not only in renegotiating but also in managing the security of its partially built planes during the strike. Shares of Boeing rose 0.9% on Thursday before the vote results but have dropped 36% this year due to safety concerns, production delays, and $60 billion in debt.
In a letter to workers, CEO Ortberg warned that a strike could jeopardize Boeing's recovery, damage customer trust, and hinder the company’s future. A prolonged strike could impact Boeing's financials, airlines relying on its jets, and suppliers providing components. Air India CEO Campbell Wilson noted delivery delays for Boeing's 737 MAX even before the strike, citing supply chain issues and regulatory scrutiny following an Alaska Airlines incident.
A 50-day strike could cost Boeing between $3 billion and $3.5 billion in cash flow, according to TD Cowen. The 2008 strike lasted 52 days, costing Boeing an estimated $100 million per day. S&P Global Ratings warned that an extended strike could delay Boeing’s recovery and negatively affect its rating, which is just above junk status. The White House has yet to comment.