Boeing labor contract to boost wages by 25% over 4 years

Boeing’s (NYSE:BA) agreement on Sunday with its biggest labor union would raise wages by 25% over four years and commit the plane maker to build planes in the unionized Pacific Northwest, among other terms.

Negotiators reached a deal after a marathon session of discussions as Boeing (BA) seeks to avert a possible walkout of workers later this week. The 33,000 members of the International Association of Machinists and Aerospace Workers will vote this week on the contract, but they could reject it and vote to strike instead.

Boeing (BA) already is grappling with cash flow and production impediments as it works to overcome concerns about product safety. After a door plug blew out from a new 737 Max flown by Alaska Airlines in January, the Federal Aviation Administration imposed a limit on the company’s output of the plane.

Union leaders had sought a 40% pay raise over four years and other concessions. Their members have been dissatisfied with Boeing’s (BA) shift to nonunion labor in other states such as South Carolina.

In addition to the pay raise, the agreement strengthens retirement benefits, cuts healthcare costs and commits Boeing (BA) to build its next new plane in Washington state if the program starts during the contract’s four-year term.

The union on Sunday advised members to vote for the deal. If instead they reject the agreement and two-thirds vote for a strike, the walkout would begin at midnight on Friday.

“Although there was no way to achieve success on every single item, we can honestly say that this proposal is the best contract we’ve negotiated in our history,” Jon Holden, president of the IAM union chapter, said in a letter to members. “Financially, the company finds itself in a tough position due to many self-inflicted missteps.”

The union aimed to recapture benefits that had been given up in previous labor negotiations. Average wages with the new agreement would rise 33% over four years because of included seniority increases, Boeing (BA) said.

“Our team in the Puget Sound region will build Boeing’s (BA) next new airplane. Meaning job security for generations to come,” Stephanie Pope, Boeing’s (BA) commercial chief, said in a video message to employees.