Boeing engineers voted against a new labor agreement that included a 35% pay increase over four years, their union said Wednesday, extending a more than five-week strike that has halted most of the Seattle-based company’s aircraft production.
The contract’s rejection by 64% of voters is another major setback for the company, which warned earlier Wednesday that it would continue to burn cash through 2025 and reported a $6 billion quarterly loss, its biggest since 2020.
The strike is costing the company about $1 billion a month, according to S&P Global Ratings.
New CEO Kelly Ortberg had said reaching a deal with machinists was a priority to get the company back on track after years of safety and quality issues.
“I’m focused on getting everybody to look forward, get them back to work and improve that relationship,” Ortberg told CNBC’s “Squawk on the Street” earlier in the day when asked about the strike.
Ortberg laid out his vision for Boeing’s future, which could include downsizing the company to focus on core businesses. Earlier this month, he announced that Boeing would lay off 10 percent of its global workforce of 170,000 people.
Boeing’s more than 32,000 machinists in the Puget Sound area, Oregon and other locations walked off the job Sept. 13 after overwhelmingly rejecting an earlier tentative agreement that called for a 25 percent wage increase. The International Association of Machinists and Aerospace Workers union had originally sought a 40 percent wage increase. It is the first strike by machinists since 2008.
The latest proposal, announced Saturday, included 35 percent wage increases over four years, increased 401(k) contributions, a $7,000 bonus and other improvements.
Workers had been pushing for higher pay amid rising costs of living in the Puget Sound area. Some machinists were upset about losing their pension plan in a previous contract they signed in 2014, but the latest proposal did not include a pension.
Boeing agreed to build its next plane in the Pacific Northwest under the new contract, another sore point for union members after Boeing moved all of its 787 Dreamliner production to a nonunion plant in South Carolina.
“We’ve made huge gains with this agreement. But we haven’t achieved enough to meet the demands of our members,” Jon Holden, president of IAM District 751, said at a news conference Wednesday night. He said the union will push for a return to the negotiating table.
Boeing declined to comment on the vote results.
The labor disputes are the latest in a long list of problems at Boeing, which began the year when a door plug blew off a packed Boeing 737 Max 9, its best-selling plane, prompting renewed scrutiny from regulators.
The strike began as Boeing was ramping up production of the 737 and other planes.
The prolonged strike also poses a challenge to the aerospace supply chain, which has been vulnerable in the wake of the pandemic as the company’s network of suppliers has had to quickly train new workers.
Spirit AeroSystems said last week it would temporarily furlough about 700 workers and that layoffs or other forms of unpaid leave were possible if the Boeing machinists’ strike continues.