Boeing & Striking Machinists Union Have “Productive Face-To-Face” Meeting With Support From Acting Secretary Of Labor

In a short strike update on October 29, the International Association of Machinists and Aerospace Workers (IAM) District Lodge 751 said that it had a productive meeting with Boeing as the two sides continued to negotiate on a new tentative agreement (TA).

Addressing key issues

In a statement on October 29, the IAM District 751, which is one of the two IAM lodges on strike at Boeing, with the other being IAM District W24, updated that it had a productive face-to-face meeting with the manufacturer.

Julie Su, the Acting Secretary of Labor, was also present during the meeting, and the two sides discussed key bargaining issues.

“Your negotiating committee will continue to engage with the company to secure the best possible outcome for our members. We will keep you informed of new developments as they unfold.”

However, the union did not disclose whether there are any additional rounds of negotiations scheduled for the time being, with the strike continuing after the machinists rejected the latest TA.

Over 33,000 Boeing workers in California, Oregon, and Washington have been on strike since September 13 after rejecting the initial TA that Boeing and the IAM agreed to on September 8, which the machinists voted against on September 12.

Pension plans

When Boeing and IAM agreed to a new TA on October 19, the union said that Su also helped negotiate the latest contract offer.

The union’s negotiating committee did not provide a recommendation for its members on whether they should accept or reject the deal.

“Your Union wants to ensure that whether you vote to accept or reject the contract, you base your decision on accurate, reliable information.”

Boeing highlighted the main improvements of the latest – and rejected – contract in a document. Then, the company offered a general wage increase (GWI) of 35%, compared to the 25% it provided in September, a ratification bonus of $7,000 (previous: $3,000), reinstated the Aerospace Machinists Performance Plan (AMPP) with a 4% guaranteed annual payout, retirement-related changes, and other benefits.

In terms of retirement, Boeing offered a one-time $5,000 contribution to an employee’s 401(k) account, with the match increased to 100% of the first 8% of pay, in addition to an automatic company contribution of 4%.

The legacy pension multiplier, which was previously left as it was, was increased from $95 per month to $105 per month for eligible employees.

The company stopped providing a defined benefit pension for its unionized and non-unionized employees in 2016, which has been a point of contention during today’s negotiations.

In return, Boeing committed to keep the assembly of the 777X in Washington, similarly to how now, the company promised to build its next aircraft, possibly called the 797, in the state.

On October 8, after another round of negotiations, IAM 751 said that Boeing would not reinstate the defined benefit pension.

According to a document from the Department of Labor (DOL), in 1975, private pension plans were split between 103,346 defined benefits and 207,748 defined contributions, or a 33.22% and a 66.77% split.

By 2022, the ratio of defined benefit pension and defined contributions was 5.8% and 94.19%, respectively, out of the total 801,371 plans.

Liquidity problems

From the perspective of Boeing, 401(k)-based retirement is less risky than a defined benefit pension plan. In the case of the latter, the company is responsible for paying out a pension until the retired employee passes away, and if it – or an outside party – mismanages the fund and runs out of cash, the company has to use its reserves to cover the difference to pay out pensions.

The former shifts the risk onto the retired employee, including the responsibility of not blowing through the account in a concise timeframe.

Boeing is already facing debt issues, including potential risks that the three major credit rating agencies, Fitch Ratings, Moody’s, and S&P Global, could downgrade its rating to junk, increasing the manufacturer’s interest payments.

At the same time, Kelly Ortberg, president and chief executive officer (CEO) of Boeing, outlined that one of his near-term goals was to stabilize the company’s balance sheet and to ensure that it kept its investment-grade rating.

As a result, Boeing has finalized a $10 billion credit agreement with four US banks and announced two concurrent public offerings of common and depository shares on October 28.

On October 29, the company unveiled the pricing of the two offerings, estimating that, in total, its net proceeds from its common and depository offerings will be around $15.81 billion and $4.91 billion, respectively.

At the end of Q3, Boeing’s long-term debt was $53.1 billion, with total liabilities being $161.2 billion. This included $2.1 billion of accrued retiree healthcare liabilities and $6 billion in pension plan-related liabilities (net).

Its interest and debt expenses were $728 million during the quarter, compared to $589 million in Q3 2023.

In total, Boeing’s cash and cash equivalents, including restricted, were $9.9 billion at the end of September, compared to $12.7 billion at the beginning of the year.