November 1 marks the seventh week of a crippling strike of 33,000 factory workers at all production lines outside non-unionized North Carolina. Workers are demanding a 40% pay rise, arguing they have not seen wage increases for years.
The US planemaker improved the conditions in its latest offer on Thursday (October 31), hoping to put an end to the painful strike that has paralyzed its two main factories.
News agency AFP reports that the International Association of Machinists and Aerospace Workers District 751 — the union which represents the workers on strike — endorsed the new offer and set a vote for Monday. The offer includes a 38% wage increase over the four years of the contract and a $12,000 (€11,000) ratification bonus, Boeing said in its press release.
This is the fourth offer made by Boeing since early September, and the third on which members have been asked to vote. The strike is costing the company an estimated $50 million per day, AFP reports.
To calm nerves and avoid a downgrade of its investment rating, Boeing has begun raising about $25 billion in fresh capital by
Losses galore
Losses are the order of the day in a truly terrible year for one of aerospace industry’s proudest names: loss of prestige, loss of customer confidence and, almost, more loss of life — after narrowly avoiding catastrophe when in January.
And financial losses are mounting higher than ever. For the third quarter 2024, the company reported the second-worst quarterly result in its century and more of history, marking a $6 billion deficit. This adds up to $7.7 billion for the first nine months of 2024, ending up at an estimated $10 billion in the red for the whole year.
Boeing’s accumulating losses have led to announced — almost a tenth of the current workforce — and a massive selloff in the US planemaker’s shares which have fallen more than 40% since the start of the year.
For Steven Udvar-Hazy, Boeing’s current struggles are like a vicious cycle with no easy way out. “Boeing is a tragic case. Almost everything they touch turns to poison,” the Hungarian-American billionaire businessman and executive chairman of Air Lease Corporation — one of Boeing’s biggest customers — told DW.
Carsten Spohr, the chief executive of German flagcarrier Lufthansa, told journalists recently that he had “never seen anything like it in our industry, to be honest.”
Boeing strike worsens industry’s supply woes
There is no alternative for airlines as they are stuck with Boeing or for supplies of new aircraft. European planemaker Airbus, however, is equally booked out until the early 2030s and fights its own supply chain problems. Also, some parts suppliers maintain close links to both of the world’s biggest aircraft manufacturers and need both as customers.
The strike by Boeing workers is compounding woes in the entire aerospace industry, where everything is connected.
Boeing has a staggering backlog of over 6,000 aircraft ordered, but not yet produced. Airbus sits on orders for over 8,600 jets. So Boeing desperately needs to end the strike, and everybody, even at Airbus, wishes for its speedy recovery. This would also be in the interest of airline passengers and the environment, as newer, more environmentally friendly jets, are overdue to replace older, dirtier types now kept in service longer than was natural.
‘If he can’t do it, I don’t think anyone can’
Despite the problems, there is widespread agreement between Boeing workers, industry analysts and competitors that the man now at the helm of Boeing is capable of turning the behemoth around. “If he can’t do it, I don’t think anyone can,” the British business daily Financial Times quoted an industry analyst as saying recently.
Boeing’s new CEO, Kelly Ortberg, came out of semi-retirement in August to take the chief executive position at the Seattle, Washington-based planemaker.
On October 11, Ortberg addressed Boeing workers with a no-nonsense assessment of the situation, also laying out his plans to reverse fortunes: “Clearly, we are at a crossroads: The trust in our company has eroded. We’re saddled with too much debt. We’ve had serious lapses in our performance across the company which have disappointed many of our customers,” he said, adding that there were also opportunities for Boeing moving forward.
“Our company backlog is roughly half-a-trillion dollars. We have a customer base that want us and need us to succeed. We have employees who are thirsty to get back to the iconic company they know, setting the standards for the products that we deliver,” Ortberg said.
Ortberg described his mission as turning “this big ship in the right direction and restore Boeing to the leadership position that we all know and want.” But for him to achieve that a “fundamental culture change” was needed and a stabilization of business.
He also pledged that this was not “just lip-service, or commitments to be printed on posters and then be largely ignored, as had been the case since 1997.” At the time, Boeing had merged with McDonnell Douglas, shifting the company’s focus on shareholder value as the absolute priority over engineering excellence, the root cause of today’s crisis.
Only near the end of his speech, Ortberg touched on one of the most decisive issues. “Boeing is an airplane company and at the right time in the future we need to develop a new airplane. But we have a lot of work to do before then,” he said.
Being risk-averse and streamlined towards maximizing profits, Boeing has lacked product innovation for decades, especially in coming up with a successor to its cash cow Boeing 737. The plane was first flown in 1967 and is still sold today as MAX.
Edited by: Uwe Hessler
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