No end in sight to Boeing strike as workers reject latest contract proposal

A Boeing spokesman said officials had no comment on the vote.

The work stoppage comes during an already challenging year for Boeing, which became the focus of multiple federal investigations after a door panel blew up a 737 Max jet during an Alaska Airlines flight in January.

The strike has deprived the company of much-needed cash it gets from delivering new planes to airlines. On Wednesday, the company reported a loss of more than $6 billion in the third quarter.

Union machinists assemble the 737 Max, Boeing’s best-selling airliner, along with the 777 or “triple-seven” and the 767 freighter at factories in Renton and Everett, Washington.

The latest rejected offer included pay rises of 35% over four years. The version unions rejected when they voted to strike last month featured a 25% rise in four years.

The union, which initially demanded a 40% pay rise over three years, said the annual increases in the revised offer would amount to 39.8%, when combined.

Boeing has said the average annual wage for machinists is currently $75,608.

Boeing workers told Associated Press reporters that one sticking point was the company’s refusal to restore a traditional pension plan that was frozen a decade ago.

“Pension should have been the top priority. We all said that was our top priority, along with pay,” said Larry Best, a 38-year customer quality coordinator at Boeing, on a picket line in front of a Boeing factory in Everett, Washington. “Now is the best chance at a prime time to get our pension back, and we all need to stay out and dig our heels in.”

Theresa Pound, a 16-year Boeing veteran, also voted against the deal. He said the health plan has become more expensive and his expected pension benefits would not be enough, even when combined with a 401(k) retirement account.

“I’ve spent more time at this place than I’ve ever been required to. I literally have blood, sweat and tears from working at this company,” the 37-year-old said. “I’m looking to work until I’m 70 because there’s a chance I won’t be able to retire based on what’s going on in the market.”

The strike began Sept. 13 and has served as an early test for Boeing CEO Kelly Ortberg, who became CEO in August.

In his first remarks to investors, Ortberg said earlier Wednesday that Boeing needs a “fundamental cultural change” and laid out his plan to revive the aerospace giant after years of heavy losses and damage to its reputation.

Ortberg reiterated in a message to employees and on the earnings call that he wants to “reset” management’s relationship with labor “so we don’t get so disconnected in the future.” He said company leaders need to spend more time in factories to learn what’s going on and “prevent problems from occurring and work better together to identify, fix and understand the root cause.”

Ortberg, a Boeing outsider who previously ran Rockwell Collins, a maker of avionics and flight controls for airlines and military aircraft, said Boeing is at a crossroads.

“Confidence in our company has been eroded. We are burdened with too much debt. We have had serious failures in our performance across the company, which have disappointed many of our customers,” he said.

But Ortberg also highlighted the company’s strengths, including a backlog of aircraft orders valued at half a billion dollars.

“It will return Boeing to its old legacy, but with the right focus and culture, we can return to being an iconic company and aerospace leader,” he said.

In recent weeks, Ortberg announced large-scale layoffs (about 17,000 people) and a plan to raise enough cash to avoid a bankruptcy filing.

Boeing hasn’t had a profitable year since 2018, and Wednesday’s numbers represented the second-worst quarter in the manufacturer’s history. Boeing lost $6.17 billion in the period ended Sept. 30, with an adjusted loss of $10.44 per share. Analysts polled by Zacks Investment Research expected a loss of $10.34 per share.

Revenue came in at $17.84 billion, matching Wall Street estimates.

The company burned through nearly $2 billion in cash during the quarter, weakening its balance sheet, which is saddled with $58 billion in debt. CFO Brian West said the company won’t generate positive cash flow until the second half of next year.

Boeing’s fortunes took a turn for the worse after two of its 737 Max planes crashed in October 2018 and March 2019, killing 346 people. Safety concerns were renewed this January, when a panel flew a Max during an Alaska Airlines flight.

Ortberg must convince federal regulators that Boeing is fixing its safety culture and is willing to ramp up production of the 737 Max, a crucial step in securing much-needed cash. This cannot happen, however, until the striking workers return to their jobs.

At the start of the strike, Boeing made what it called its “best and final” offer. The proposal included wage increases of 30% over four years and angered union leaders because the company announced it to striking workers through the media and set a short deadline for ratification.

Boeing backed down and gave the union more time. However, many workers maintained that the offer was still not good enough. The company withdrew the proposed contract on October 9 after negotiations broke down, and the two sides announced the latest proposal on Saturday.

Charles Fromong, a mechanic who has worked at Boeing for 38 years, said Wednesday night after the results were announced that the company needs to take care of its workers.

“I feel sorry for the young people,” he said. “I’ve spent my life here and I’m getting ready to go, but they deserve a pension and I deserve a raise.”

Boeing’s last strike, in 2008, lasted eight weeks and cost the company about $100 million a day in deferred revenue. A 1995 strike lasted 10 weeks.

Koenig reported from Dallas. Lindsey Wasson in Everett, Wash., contributed to this report.