Boeing's largest union, the International Association of Machinists and Aerospace Workers (IAM), has issued a strong call for the company's new CEO, Kelly Ortberg, to take a more active role in ongoing labor negotiations.
The demand comes as Boeing made the decision to suspend healthcare benefits for approximately 33,000 striking workers on the US West Coast, escalating tensions in an already contentious labor dispute.
Union Urges Boeing CEO to Take Charge of Negotiations
Brian Bryant, president of the IAM, emphasized the urgency of the situation, stressing that the new CEO needs to take control of the negotiations, which he believes are being mishandled by Boeing's management.
Bryant expressed the union's frustrations, saying that Ortberg should "step up and actively participate in proposal discussions," implying that the company's leadership has not been effectively handling the strike or the negotiation process.
The union is particularly outraged by Boeing's decision to terminate healthcare benefits for the striking workers, a move they see as punitive and unnecessary, according to Reuters.
Bryant criticized this decision, stating that there is "no justification for not postponing the health benefits issue" in order to allow negotiations to continue. The suspension of benefits, which went into effect on Tuesday (September 1), has become a central issue in the labor dispute, adding a new layer of complexity to the already difficult talks between Boeing and its workers.
The IAM represents workers in key Boeing locations, including the Seattle area and Portland, Oregon. The strike, which began on September 13, is the first walkout by the union since 2008 and has caused significant disruptions in Boeing's production of several commercial airplane models, including the best-selling 737 MAX jets.
The union is advocating for a substantial 40% wage increase and the restoration of a defined-benefit pension plan, which was removed from the contract a decade ago.
While Boeing recently presented a revised proposal to the union, calling it its "best and final" offer, the workers overwhelmingly rejected it.
The proposal included a 30% wage increase over four years and the reinstatement of a performance-based bonus, but according to union officials, it was insufficient to meet the workers' demands for fair compensation and benefits.
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Boeing Faces Financial Pressures
Boeing, meanwhile, has not issued a detailed response to the union's recent criticisms but has maintained that its offer was fair. The company has also faced questions regarding its financial position as the strike continues.
Boeing is reportedly considering raising at least $10 billion through a stock issuance to shore up its cash reserves, which have been affected by the ongoing labor dispute. However, sources suggest that the stock issuance may be delayed until the strike is resolved.
The union's appeal to Ortberg underscores the severity of the situation. The IAM believes that with direct involvement from the CEO, negotiations could progress more smoothly, and a resolution might be reached.
However, without such intervention, there is no clear timeline for when talks might resume. The union has halted discussions with Boeing's District 751, and there is uncertainty about when both sides will return to the negotiating table.
In addition to the labor issues, Boeing is facing significant financial challenges. The company's credit rating is under scrutiny, with Moody's Ratings and Fitch Ratings warning that the strike could further weaken Boeing's creditworthiness, potentially leading to a downgrade to junk status.
This would make it more expensive for Boeing to manage its $45 billion debt. Despite these concerns, S&P Global Ratings has indicated that the strike has not yet affected its view of Boeing's financial standing.
Boeing's Chief Financial Officer, Brian West, has previously stated that the company's focus is on maintaining stability within its factories and supply chain. However, with the strike causing production disruptions, Boeing has been forced to furlough non-unionized employees as part of its efforts to conserve cash.
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