Boeing workers reject contract as company burns $1 billion a month

Boeing is grappling with a deepening crisis after its machinist union rejected its latest contract offer, extending a costly strike that is draining an estimated $1 billion a month from the aerospace giant.

Around 33,000 members of the International Association of Machinists and Aerospace Workers (IAM) are taking part in the strike, which began in mid-September. The union, Boeing's largest union, is seeking a 40 percent pay increase over the next three to four years to turn around what it says are “decades of stagnant wages” as well as improved employee benefits.

On Wednesday, the machinists' union rejected Boeing's latest proposal. 64 percent of its members voted to extend the industrial action. Jon Holden, president of IAM District 751, said the vote was a signal from Boeing workers that they are fully committed to “taking back more of what the company has taken from them for more than a decade.”

According to financial analysis and credit ratings firm S&P Global, the strike is costing the company over $1 billion a month, despite numerous austerity measures being taken since mid-September.

The proposal itself included a 35 percent wage increase as well as improved health and pension benefits and is the second to be rejected by workers in less than two months. But the latest offer failed to reinstate strikers' demands for a defined benefit pension plan that Boeing abolished a decade ago.

The strike has already taken a heavy toll on the company, exacerbating Boeing's previous production problems and halting production of its key aircraft, including the 737 MAX, 767 and 777 models.

This caused the company great financial difficulties. In its most recent financial report released Wednesday, Boeing reported a quarterly net loss of $6.17 billion. To protect the company, Boeing CEO Kelly Ortberg recently announced plans to cut 17,000 employees across the company. In mid-October, Boeing announced that it planned to raise up to $35 billion in funds through stock offerings and a credit agreement with its lenders.

According to S&P, Being's, along with rating agencies Moody's and Fitch, have received the lowest investment grade rating MarketWatch, That means any downgrade would see them branded with a “junk” bond rating.

Before releasing quarterly results, Boeing's CEO said the company was “working feverishly to find a solution that works for the company and meets the needs of our employees.”

However, Ortberg acknowledged that the company is at a “crossroads,” saying that confidence in the aerospace giant has “waned,” the company is “burdened with too much debt” and that Boeing is experiencing “serious performance slowdowns.” “Suffered by the entire industry” was a company that disappointed many of our customers.

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