New contract agreement ends Boeing strike but more obstacles ahead

Over 33,000 Boeing workers who have been on strike for the past seven weeks are headed back to work after a Monday vote by union members who narrowly approved a new labor contract with the aerospace giant.
Under terms of the new agreement, unionized employees will see a 38% increase in wages assessed in increments over the next four years, as well as other incentives. Some 59% of machinists union members voted Monday to accept Boeing’s offer, the third proffered by the company since a work stoppage commenced on Sept. 13.
The machinists “have been there a long time and felt taken advantage of by management,” Bill George, former Medtronic CEO and executive fellow at Harvard Business School, told Reuters. “The No. 1 issue now is separation of management from the people.”
Boeing, the third-largest aircraft manufacturer in the world based on market value, has been under siege following two crashes that raised serious safety questions about its flagship 737 Max commercial aircraft. The incidents in 2018 and 2019 resulted in the deaths of 346 passengers and crew and led to Federal Aviation Administration sanctions. In January of this year, a door plug blew out of an Alaska Airlines 737 Max 9 bound for Portland, Oregon. While the plane landed safely, the incident drew further scrutiny by the FAA, including an audit of Boeing manufacturing processes that uncovered quality control issues.
Hoping to plot a new course for the company that hasn’t had a profitable quarter since 2018, Boeing underwent a leadership change in August when Kelly Ortberg took over the helm as CEO. Last month, Ortberg announced plans to lay off 10% of the company’s 170,000 employees in a cost-cutting attempt. Last week, Boeing raised over $20 billion via a stock sale to bolster operations until it can get back to a profitable operating status.
“While the past few months have been difficult for all of us, we are all part of the same team. We will only move forward by listening and working together,” Ortberg said after the contract passed, per CNBC. “There is much work ahead to return to the excellence that made Boeing an iconic company.”
While Ortberg waxed optimistic following resolution of the labor dispute, analysts say Boeing has a long road ahead when it comes to resolving the company’s myriad issues.
“Yesterday’s resolution of the strike was low-hanging fruit in our view,” Jonathan Root, senior vice president at Moody’s Ratings, said in a note Tuesday, according to a report by CNBC. “Relieving the impediments to achieving and then sustaining strong positive free cash flow remains the challenge.”
In addition to ongoing issues with its commercial aircraft manufacturing, Boeing’s spacecraft development division has also experienced a series of setbacks, most recently as its Starliner space capsule suffered various system failures on its maiden crewed voyage to the International Space Station earlier this year. The issues left two astronauts stranded on the space station as NASA deemed the vehicle unsafe to bring its crew back to Earth. An empty Starliner returned without incident in September, but left crew members Suni Williams and Butch Wilmore on the station. The two veteran astronauts are due to fly back to Earth in February in a SpaceX Dragon capsule currently docked at the space station.