Boeing HQ
Today’s key news is the rejection of the latest offer between Boeing and the IAM, meaning the strike continues. The vote this time was much closer, with 64% rejecting the deal, versus 95% on the earlier contract. The two key demands of the IAM that have not been met are a 40% wage increase and a restoration of a defined benefit pension plan for employees. The latter has, to date, been a non-starter for Boeing. We suspect the next offer will meet the 40% wage demand, but likely not the pension plan, with perhaps some improved contributions to the 401K plans with an annuity option.
This will likely result in the strike extending into November, with additional federal mediation given the importance of Boeing to the economy and global trade. Boeing will need to up its offer as it goes back to the negotiating table.
While the union vote is the key development today, Boeing CEO Kelly Ortberg also laid out his vision for the company through a memo to employees, interview on CNBC, and participation in the third quarter earnings call. The company lost $6.2 billion in a financially disastrous quarter, with several write-offs being taken. The company is facing difficult problems, but Ortberg is not planning to walk-away from financially challenged defense contracts.
In legal news that may slip under the radar, two Ohio pension funds have joined a suit against Boeing, stating that the company put profits over safety. Given the 737 MAX debacle and that the company is admitting fraud in the deferred prosecution agreement plea deal, they have a chance and succeeding in financial recovery from the company and its former executives.
The result of the latest debacle, the unexpected explosion of a Boeing-built satellite in orbit, has space agencies tracking pieces of space debris. The Russian space agency Roscosmos is tracking more than 80 fragments that pose a potential threat to spacecraft.
Links to today’s key stories follow:
- Union members reject deal with Boeing, prolonging strike – CNN
- As Boeing machinists vote on the strike, new CEO lays out his vision – Seattle Times
- Boeing CEO lays out strategy at Q3 earnings call – AirInsight
- Boeing adds $250 million to Starliner’s losses following delayed return in September – wccftech
- Boeing will not ‘walk away’ from financially challenged defense contracts, Ortberg says – Flight Global
- Ohio pension funds say Boeing puts profits over safety – Law360
- Space agencies tracking debris from Boeing-built satellite’s explosion in orbit – UPI
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