MW Boeing vote to decide how fast company gets back on track

By Claudia Assis

There's a big vote going on involving Boeing's factory workers in Washington state

Boeing Co.'s striking factory workers in Washington state are voting on a contract proposal Monday that could end a weeks-long strike that's seen by Wall Street as a major roadblock for the aerospace and defense company.

The vote comes after Boeing cleared another roadblock last week, completing a capital raise that lifted near-term danger that had threatened to send the company's debt ratings to the riskiest trades.

Boeing's stock $(BA)$ rose more than 1% Monday and is off about 1% since the strike started on Sept. 13. The equity and debt raise is expected to cover Boeing's cash burn through the first half of next year and its debt obligations maturing in 2025 and 2026.

See also: Boeing considers selling storied space business

Boeing's fourth proposal to striking machinists offers a 38% pay raise over four years - up from a previous offer of 35% - with a 13% increase in the first year and a $12,000 ratification bonus, among other items.

Workers held three previous votes that rejected earlier offers. The strike has lasted 53 days. If the proposal receives more than half of the votes, a return to work is slated for between Wednesday and Nov. 12.

The new contract proposal does not re-establish a defined pension, which has been a sticking point with some workers, but it could still be enough to sway a majority of voting workers to ratify the contract, especially as the holiday season approaches.

Related: Boeing's CEO wants to make it 'great again.' Here's what's standing in the way.

It is "important for [Boeing] to resolve the strike as soon as possible to increase airline customer and supplier confidence in the planned production rate increases," RBC Capital Markets Ken Herbert said in a recent note.

Boeing also has "lots of catching up" to do with its competitor, Europe's Airbus SE (FR:AIR), analysts at Deutsche Bank said in a note Monday.

Boeing and Airbus are in heated competition, especially in the narrow-body or single-aisle commercial jets highly favored by airlines, mainly for their versatility in flying both shorter and longer flights.

The market for narrow-body passenger aircraft is the largest segment of the commercial-aircraft market, and it will likely represent about 80% of total sales by units over the next 20 years, the Deutsche Bank analysts said.

"As the largest segment, the narrow-body passenger aircraft market has been fiercely fought over for decades by Airbus and Boeing, with each manufacturer seeking to retain its existing airline customers and convert the competitor's customers in sales campaigns that can lead to a decade or more of future sales," they said.

Production halts, including the current production stoppage due to the strike, have led to "a large gain" for Airbus's share of newer, more efficient narrow-body jets, the analysts said.

"It will take years for Boeing to return to its former rates of narrow-body production, we believe, during which time Airbus plans to further increase its production rate to continue dominating narrow-body passenger aircraft deliveries," the Deutsche Bank analysts said.

Shares of Boeing have lost about 40% so far this year, compared with an advance of about 20% for the S&P 500 SPX.

-Claudia Assis

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November 04, 2024 12:15 ET (17:15 GMT)

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