Boeing Withdraws Pay Offer Amid Ongoing Strike

By Shivani Tanna and David Shepardson

(Reuters) – Boeing announced on Tuesday that it has withdrawn its pay offer to approximately 33,000 U.S. factory workers, with no further negotiations planned with their union representatives as the financially damaging strike approaches its fourth week.

Boeing (NYSE:BA) and the union recently attempted negotiations with federal mediators on Monday and Tuesday, but those discussions fell apart, leaving both parties in a contentious stalemate without a resolution in sight, according to a source familiar with the talks.

"Unfortunately, the union did not seriously consider our proposals," said Stephanie Pope, head of Boeing Commercial Airplanes, in a note to employees, calling the union's demands "non-negotiable."

She emphasized that further negotiations are impractical at this point and that Boeing's offer has been formally withdrawn.

Boeing has been taking measures to conserve cash during this time. Reports indicate that the company is exploring options to raise billions of dollars through stock and equity-like securities while production of its popular 737 MAX, as well as the 767 and 777 planes, remains halted.

The company is also on the verge of losing its valuable investment-grade credit rating and has initiated temporary furloughs for thousands of salaried employees.

The striking union representing West Coast factory workers is demanding a 40% pay increase over the next four years and the reinstatement of a defined-benefit pension, which was eliminated in past contracts. Over 90% of union members rejected a previous offer of a 25% pay increase over four years before deciding to strike.

Boeing had made an enhanced proposal last month, labeled as its "best and final," which included a 30% increase in pay and the reinstatement of a performance bonus. However, the union reported that a member survey revealed this offer was insufficient.

Pope mentioned that during the recent negotiations, Boeing's team negotiated in good faith, presenting new and improved proposals aimed at reaching a compromise, including increases in employees' take-home pay and retirement benefits.

In contrast, the International Association of Machinists and Aerospace Workers union stated that Boeing is "hell-bent on standing on the non-negotiated offer" it made last month, adding that the company refused to consider any wage increases, vacation/sick leave accruals, progression, ratification bonuses, or 401(k) matching contributions. The reinstatement of the defined benefit pension was also not considered by Boeing.