Boeing Shares Rally 3% Amid Announcement of Deal with Labour Union

The proposed four-year contract, if ratified, promises significant gains for Boeing employees, including a 25% general wage increase and a commitment to manufacture the next commercial aircraft in the Seattle area.

Boeing shares saw a 3% increase in U.S. premarket trading on Monday following the announcement of a tentative agreement between the aerospace giant and a key union in the U.S. Pacific Northwest. This deal could potentially prevent a disruptive strike later in the week. The proposed four-year contract, if ratified, promises significant gains for Boeing employees, including a 25% general wage increase and a commitment to manufacture the next commercial aircraft in the Seattle area. This development comes just a month after Kelly Ortberg stepped into the role of Boeing CEO.

The International Association of Machinists and Aerospace Workers (IAM), representing 32,000 workers, hailed the agreement as the best contract they had ever negotiated. A vote scheduled for Thursday is expected to pass, with IAM leaders unanimously endorsing the proposal. Sheila Kahyaoglu, an analyst at Jefferies, noted, “IAM leaders unanimously recommending a vote to accept the proposal, the deal is unlikely to be rejected,” indicating strong support for the contract among union leaders.

This contract could represent a significant victory for Boeing, which is working to regain the confidence of investors and customers while managing regulatory scrutiny. The company is also seeking to increase production of its 737 MAX model, which faced setbacks after a door plug incident on a nearly new MAX jetliner in early January. Since that episode, Boeing’s stock has dropped 37%, starkly contrasting with a 7.7% rise in the blue-chip Dow index.

The new labor agreement, marking the first comprehensive contract for Seattle-area workers in 16 years, includes improved retirement benefits and offers the union more influence over safety and production quality—a key focus for CEO Ortberg. If the contract is not approved, Boeing workers could go on strike as early as Friday, September 13.