Boeing Co. offered its largest union a larger pay bump as it tries to overcome a debilitating strike that has shut down its aircraft manufacturing across the Pacific Northwest.
The planemaker offered striking Seattle factory workers a 30% wage increase over four years, up from the 25% increase turned down this month by 33,000 members of the International Association of Machinists And Aerospace Workers. Boeing said the terms are final and only valid until the end of Sept. 27, as it seeks to raise pressure on the other side to accept.
Talks have been at a standstill since September 18, when two days of federal mediation yielded little progress. After workers voted almost unanimously to strike earlier this month, the local district said it intended to push for a substantially higher wage increase and for Boeing to reinstate a defined benefit pension plan for members.
The showdown between Boeing and workers at its main manufacturing hub is being closely watched by Wall Street and the White House as labor strife flares up in the US ahead of a presidential election. An extended walkout would worsen Boeing’s already strained financial situation, after the company burned through more than $8 billion in cash in the first half as it slowed output to address quality lapses exposed by an aircraft accident in January.
“We heard your feedback,” Boeing said in a post on its website touting the latest contract offer. “We’ve made significant improvements to provide more money in key areas.”
The planemaker’s shares jumped as much as 3.3% in New York. Boeing has tumbled 40% in value this year, the second-worst performance among the members of the Dow Jones Industrial Average. Union leaders couldn’t be immediately reached for comment on the offer.
The conflict has shut down manufacturing of Boeing’s cash-cow 737 Max and other jetliners, and could drain an additional $1.3 billion in cash from Boeing each month, according to Sheila Kahyaoglu, an analyst with Jefferies. As Boeing risks losing its investment-grade credit rating, the planemaker has begun to furlough workers and take other steps to preserve cash during the strike.
Senior managers, including new Chief Executive Officer Kelly Ortberg, have also agreed to take pay cuts for the duration of the furloughs.
The strike pits the financially ailing aerospace manufacturer against workers with a history of activism and an ax to grind with their employer. The Machinists are embittered by a 2014 agreement that cost them their pensions and locked in only modest wage increases while inflation soared earlier this decade.
The company’s latest offer includes reinstating an annual bonus that averaged around 3.7% of wages and was dropped from the initial agreement, a flash point that striking Machinists cited repeatedly in interviews. Boeing also doubled to $6,000 the bonus that workers would get if the latest deal is passed, and increased its contribution to a pension plan, which would be run by the company rather than the union.
Machinists also walked off the job on Monday at Textron Aviation, which makes Cessna Citation business jets, after rejecting a 26% contract offer over the weekend. And potential strike by Longshoremen threatens to cripple US maritime shipping.
(Updates with details of contract offer, labor strike)