Boeing, machinists kick off high-stakes contract talks on Friday

By Allison Lampert and David Shepardson

(Reuters) - Boeing and its largest union open talks on Friday seeking the first new contract in 16 years as the U.S. planemaker grapples with its ongoing 737 MAX safety crisis and after big gains by workers in other sectors of the economy.

U.S. unions have capitalized on tight labor markets to win hefty contracts at the bargaining table, with mainline pilots, autoworkers and others scoring big raises in 2023.

Unlike auto workers who were able to leverage strong industry profits, Boeing is losing ground to rival Airbus and trying to manage a crisis that erupted after a door plug blew off an Alaska Airlines 737 MAX jet in mid-air on Jan. 5. Boeing reported a net loss of $2.2 billion in 2023 after losing $5 billion in 2022.

The International Association of Machinists and Aerospace Workers (IAM), which represents over 30,000 Washington state workers building Boeing's 737 MAX jets, wants better retirement benefits and wage increases exceeding 40% over three to four years after what it termed years of stagnant earnings.

“We have a lot to make up for,” said Jon Holden, president of the IAM's District 751 representing the Seattle-area workers.

Workers are scheduled to vote for a strike authorization mandate on July 17, but could not strike before the contract expires on Sept 12.

Workers ratified a contract in 2008 and approved two extensions in 2011 in 2014. The current eight-year extension began in 2016.

Boeing said in a statement on Tuesday that it is "confident we can reach a deal that addresses the needs of our employees while allowing us to win new business in a very competitive global market."

A labor deal must be able to "balance the needs of both our employees and the union with our desire to maintain a structure that allows us to continue to win new business in the market," said a Boeing official who spoke on condition of anonymity due to the sensitivity of the talks.

The official said that over the last decade, worker take-home pay has kept pace with inflation, as the contract stipulates yearly cost-of-living adjustments.

Holden, however, said members earned four 1% wage increases over the last eight years and agreed to a pension freeze in 2014 in prior negotiations, a struggle for workers dealing with high inflation.

"When you look at the impact on inflation and the rise in the cost of housing and groceries and everything that working people need, we’re seeing a lot of momentum to increase pay," he said.

LIKELY STRIKE

Analysts said a strike is likely given union leverage and worker disappointment with the terms of the 2014 extension and as U.S. aviation regulators have curbed Boeing's production as they scrutinize safety processes at the planemaker.

"The IAM has a lot of leverage at this juncture given the various production and quality issues," said David Nolletti, New York-based head of the aerospace practice at consultancy Riveron. He said a strike was likely unless management "largely concedes to their demands."

Workers could also tap political support. President Joe Biden considers support for labor a cornerstone of his economic policies, having visited picket lines for the auto workers last year.

(Reporting by Allison Lampert in Montreal and David Shepardson in Washington; Editing by Matthew Lewis)