Boeing Crisis Looming as Union Rejects Deal, Extends Five-Week Strike; Shares Tumble Pre-Market
1min read Boeing's crisis deepens as workers ruthlessly rejected a wage-raising offer and plan to extend their more than five-week strike, halting most manufacturing activities. This marks a new challenge for newly appointed CEO Kelly Ortberg, who is tasked with turning around the struggling plane manufacturer.
Boeing shares fell nearly 3% in pre-market trading, with a year-to-date decline of 40%.
The vote to dismiss the deal was 64%, the union said, despite the offer including a 35% wage increase over four years and a signing bonus ranging from $3,000 to $7,000.
After 10 years of sacrifice, we still have ground to make up. We hope to resume negotiations promptly, the International Association of Machinists and Aerospace Workers (IAM) said in a statement on X.
"We have made tremendous gains in this agreement. However, we have not achieved enough to meet our members' demands," said Jon Holden, president of IAM District 751, at a news conference Wednesday night. He emphasized that the union will push to return to the negotiating table.
Earlier in the day, Boeing posted its Q3 results, revealing a 1% revenue decline to $17.8 billion and a loss of $6.1 billion, nearly four times greater than the same period last year. CEO Kelly Ortberg stated that ending the strike is a top priority and hinted at potential divestitures to focus more on core lines during the earnings call.
We're going through a portfolio process right now to look at the overall portfolio and see what we want to look like five years from now. That may include streamlining certain things, Ortberg said. I think our core business of commercial aircraft and core defense products will always stay with the Boeing Co.
The strike is costing the company about $1 billion a month, according to S&P Global Ratings. Boeing had $10.5 billion in cash or equivalents on hand by the end of Q3, but this is far lower than its $57.7 billion debt. In October, the company entered into a new $10.0 billion short-term credit facility and now has access to total credit facilities of $20.0 billion, which remain undrawn.
