Boeing Union Members Begin Strike; Stock Drops

(RTTNews) - Boeing Co.'s about 33,000 machinists union members have started a strike on Friday after majority of them voted to reject a proposed four-year contract by the aerospace and defence major. The first strike at the firm since 2008 is expected to hit the commercial airplane production of the aircraft manufacturer, which is already struggling with its various plane safety issues.

In pre-market activity on the NYSE, Boeing shares were losing around 4 percent to trade at $156.23.

The work stoppages by members of the International Association of Machinists and Aerospace Workers or IAM, who build commercial planes, happen in airplane assembly at Boeing's factories in the Seattle area as well as in Portland, Oregon and in southern California.

Boeing, after months of negotiations, had reached a tentative agreement on September 8 with IAM Districts 751 & W24, which represent more than 33,000 Boeing employees.

The agreement included a 25 percent raise over four years, along with improvements to health-care costs and retirement benefits, as well as increased job security for union members. The agreement also included a commitment to build the next new airplane at one of the union-represented plants in the Puget Sound region.

Boeing said if the tentative agreement was ratified by September 12, employees would receive a one-time $3,000 lump sum payment. The previous agreement was set to expire at midnight on September 12.

After reaching the agreement with Boeing, IAM 751 Union president Jon Holden had written that the union recommended acceptance of the deal, because they couldn't guarantee of achieving more in a strike.

But, soon after, the union members, who had been advocating for raises of more than 40 percent, started complaining that the proposal was not good enough, and rejected the deal recommended by union leaders. The members also voted to go on strike.

Around 95 percent of members of the IAM union voted against the deal, and around 96 percent voted to authorize a strike, which began in the midnight.

In a statement on IAM District 751 and W24's rejection of the tentative agreement with Boeing, the union stated that the negotiating teams from District 751 and W24 will now regroup and plan the next steps on securing an agreement that their membership can approve.

Further, in an update on the union's contract vote, Boeing said, "The message was clear that the tentative agreement we reached with IAM leadership was not acceptable to the members. We remain committed to resetting our relationship with our employees and the union and we are ready to get back to the table to reach a new agreement."

Boeing, in its website, commented that a strike would hurt local businesses of all sizes, from aerospace suppliers to restaurants and retailers, and could lead to economic disruptions across the state of Washington as well as in the Portland area.

The latest strike by the union members is a major hit to the plane maker, which has been under severe scrutiny for the past few years amid safety concerns.

In mid August, the company paused flight tests for its new 777X jetliner and grounded the four-aircraft test fleet after finding damage in a plane's structure.

In April, the FAA announced an investigation into the emergency landing by Southwest Airlines' Boeing 737-800 flight after its engine cover fell off and struck the wing flap during take-off.

Earlier, in January, a mid-cabin door plug on Alaska Airlines' Boeing 737-9 MAX airplane blew out in the middle of the flight, following which FAA grounded around 171 737 MAX 9 airplanes for inspections for several weeks.

In March 2019, 737 MAX, which was then the world's biggest-selling aircraft, was grounded worldwide following two crashes within just six months, which together claimed 346 lives.