Boeing has pulled its 30 percent pay offer to striking factory workers as negotiations to end the costly strike have collapsed. S&P Global Ratings has warned it may downgrade Boeing’s investment-grade credit rating to junk status, which would raise borrowing costs at a time when the company is trying to save cash.
The strike, the first in 16 years, has forced Boeing to halt production of its popular 737 Max and its 767 and 777 planes. The company is preparing to furlough tens of thousands of employees to cut costs.
Reuters reported that Boeing is exploring ways to raise billions of dollars through stock and equity-like sales while its factories are closed. Stephanie Pope, head of Boeing Commercial Airplanes, stated that the union did not take the company’s proposals seriously and instead made excessive demands that are unsustainable for competitiveness.
Pope expressed concern over the possibility of a prolonged strike, which could further stress the 737 Max supply chain. The International Association of Machinists and Aerospace Workers accused Boeing of sticking to its non-negotiated offer from last month.
The union’s 33,000 members on the West Coast are demanding a 40 percent pay increase over four years and the reinstatement of a pension plan eliminated a decade ago. More than 90 percent of workers rejected a previous offer of a 25 percent pay raise before the strike began in mid-September.
Boeing’s latest offer was labeled as its best and final, featuring a 30 percent raise and a performance bonus, but the union found this insufficient based on a member survey. Newly appointed CEO Kelly Ortberg is trying to rebuild the company’s reputation following an incident where a door panel detached from a 737 Max during a flight in January. The strike also poses risks to aircraft deliveries and the overall supply chain.
Boeing shares, down 40 percent this year, fell by 3.89 or 2.5 percent to 150.77 by mid-morning in New York. Jefferies noted that Boeing has now withdrawn its previous best and final offer to the 33,000 striking workers, stating no further discussions are planned with the union. Talks earlier this week failed to reach an agreement, making a resolution seem increasingly unlikely.
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