Boeing reaches preliminary collective agreement with 25% wage increase and commitment to replace 737 aircraft | Boeing

Boeing and its largest union have reached a tentative agreement for more than 32,000 workers, averting a strike planned for this week.

The proposed four-year contract was hailed by the union as the best ever negotiated. It is also an early victory for new Boeing CEO Robert “Kelly” Ortberg, who is tasked with getting the struggling aircraft manufacturer back on track.

As part of the agreement, Boeing has committed to building a replacement for its workhorse 737 at its factories in the U.S. Pacific Northwest, provided the project begins during the four-year term of the labor agreement. However, the planemaker has not yet announced the new jet.

Boeing and its competitor Airbus are in the early stages of developing strategies to replace their best-selling narrow-body models, which are expected to enter service in the late 2030s.

The contract terms provide for a general wage increase of 25 percent over a four-year period. This is less than the 40 percent wage increase demanded by the International Association of Machinists and Aerospace Workers (IAM) union, signaling its recognition of Boeing's difficult financial situation.

The early settlement is a boost for Boeing as the company tries to restore investor and customer confidence, navigate regulatory scrutiny and ramp up production of its 737 Max after a doorstop on a nearly new Max was ripped off in mid-air by a passenger jet in early January.
Since this incident, Boeing's share price has fallen by 37 percent, while the blue-chip Dow index has risen by 7.7 percent.
JP Morgan analyst Seth Seifman noted that workers could still reject the deal. There will be two votes on Thursday – one on the contract, which requires 50% of the vote to pass, and a second on whether to strike, which requires a two-thirds majority.

“Workers have influence, and a highly unscientific sampling of social media views suggests that some union members are unhappy with contract terms,” ​​Seifman added.

A vote to authorize a strike in July received 99.9% support from workers.
Last year, Spirit AeroSystems, the fuselage supplier for Boeing's 737, had to temporarily halt production after workers rejected a four-year contract.