Boeing withdraws pay offer to striking workers

Boeing has withdrawn its 30 per cent pay offer to striking factory workers as talks to end the financially damaging industrial action broke down.
The stalemate comes as S&P Global Ratings warned that it may cut the aircraft maker’s investment-grade credit rating to junk. A downgrade would increase the company’s borrowing costs at time when it is taking steps to preserve cash.
Boeing has been forced to halt the production of its bestselling 737 Max and its 767 and 777 planes as a result of the strike — the first at the company in 16 years — and is preparing to furlough tens of thousands of employees to save money.
Reuters reported on Wednesday that the company was examining options to raise billions of dollars through a sale of stock and equity-like securities while the factories are shut.
Stephanie Pope, the head of Boeing Commercial Airplanes, told staff: “The union did not seriously consider our proposals. Instead, the union made non-negotiable demands far in excess of what can be accepted if we are to remain competitive as a business.
“Further negotiations do not make sense at this point and our offer has been withdrawn.”
Pope added: “With talks now coming to a halt, this increases our concern of a dragged-out strike, which we continue to expect to add stress to the 737 Max supply chain.”
The International Association of Machinists and Aerospace Workers said that Boeing was “hell-bent on standing on the non-negotiated offer” proposed last month.
The union’s 33,000 members at Boeing factories on America’s west coast are seeking a 40 per cent pay rise over four years and the restoration of a defined-benefit pension that was taken away in contracts a decade ago. More than 90 per cent of workers voted down an offer of a 25 per cent pay rise over four years before going on strike in mid-September.
Boeing made an improved offer that it described as its “best and final”, which would give workers a 30 per cent raise and restore a performance bonus, but the union said a survey of its members found that was not enough.
The recently appointed chief executive, Kelly Ortberg, is battling to restore the company’s reputation after a door panel blew off a 737 Max jet during a flight in January. The strike also risks disrupting Boeing’s aircraft deliveries and its broader supply chain.
Boeing shares, which have fallen 40 per cent so far this year, were $3.89, or 2.5 per cent, lower at $150.77 by mid-morning in New York.
Jefferies, the stock broker, said in a research note: “Boeing has now withdrawn their previous ‘best and final’ offer to the 33,000 union workers on strike, saying that no further discussions are currently planned with union representatives.
“Boeing held talks on Monday and Tuesday, but both sides failed to come to an agreement, with a resolution soon looking increasingly unlikely.”