Striking Boeing workers have rejected a labor deal that would have increased pay by 35% over four years, the machinists union announced on Wednesday night. This means that the work stoppage at the Dow Jones aerospace giant will continue.
Approximately 64% of union members who voted on Wednesday opposed the tentative agreement that was reached on Saturday.
Early on Wednesday, Boeing reported a wider-than-expected adjusted third-quarter loss. Boeing stock, which is near a two-year low, fell slightly on Wednesday.
Boeing (BA) reported an adjusted loss of $10.44 per share, widening from $3.26 per share last year. Revenue declined by 1% to $17.84 billion.
FactSet had expected an adjusted loss of $10.35 per share on $17.82 billion in revenue. Analysts had lowered their sales forecasts from around $18 billion after Boeing’s Q3 preview on Oct. 11, which indicated a GAAP loss of $9.97 per share on $17.8 billion in sales.
The adjusted loss reflected impacts from the IAM work stoppage, as well as over $5 billion in charges for its commercial and defense programs, which were previewed in the Oct. 11 release.
Boeing reported a net loss of $6.17 billion for the quarter, compared to a loss of $1.64 billion last year.
CEO Kelly Ortberg stated in the earnings announcement, “It will take time to return Boeing to its former legacy, but with the right focus and culture, we can be an iconic company and aerospace leader once again. Going forward, we will be focused on fundamentally changing the culture, stabilizing the business, and improving program execution, while setting the foundation for the future of Boeing.”
Commercial airplane deliveries increased by 10% during the quarter to 116 planes, while revenue fell by 5% to $7.44 billion. Boeing’s commercial airplanes loss from operations widened to over $4 billion, from $678 million last year.
Defense, space, and security revenue rose by 1% to $5.54 billion. However, the defense loss from operations increased to $2.38 billion from $924 million last year.
Boeing stated that it now has access to total credit facilities of $20 billion, which remain undrawn.
The Dow Jones plane maker secured a $10 billion credit agreement with multiple banks on Oct. 15 and filed to raise up to $25 billion in stock and debt. The company also announced plans to cut 10% of its workforce over the coming months, affecting roughly 17,000 employees.
In its latest proposal, Boeing offered International Association of Machinists union workers a 35% wage increase over four years, up from its previous offer for a 25% raise. Reports indicate that nearly 95% of the workers rejected the prior deal at the recommendation of union leaders.
The IAM has been seeking a 40% raise as well as additional changes and benefits.
Following the latest offer, the IAM wrote to its members, “we have received a negotiated proposal and resolution to end the strike, and it warrants presenting to the members and is worthy of your consideration.”
The top earners for the union make about $51 per hour, which equates to $115,000 per year before benefits and overtime. If accepted, the new deal would push that to nearly $70 per hour by 2028, or roughly $140,000 before benefits and overtime.
The 33,000-strong worker strike that began on Sept. 13 has affected the Arlington, Va.-based company, which was already dealing with various quality control issues and safety concerns.
Boeing stock fell by 1.8% on Wednesday, dropping from near the 50-day line that BA stock climbed off 2024 lows last week.
Despite this, Boeing shares have decreased by nearly 40% so far this year, making it one of the worst performing Dow Jones Industrial Average stocks of the year.
BA stock was indicated lower overnight following the union vote rejection.
In conclusion, the ongoing strike and financial challenges faced by Boeing have impacted its performance and stock value. The rejection of the labor deal by union workers further complicates the situation for the aerospace giant.