Boeing's US factory workers strike, halting 737 MAX production

SEATTLE, Sept 13 (Reuters) - Boeing's U.S. West Coast factory workers walked off the job early on Friday after overwhelmingly rejecting a contract deal, halting production of the planemaker's strongest-selling jet as it wrestles with severe output delays and heavy debt.

The workers' first strike since 2008 comes as the plane maker is under heavy scrutiny from U.S. regulators and customers after a door panel blew off a 737 MAX jet mid-air in January.

 A door panel blew off a 737 MAX jet mid-air in January

The mounting crises battered Boeing's stock and sparked a leadership upheaval. Boeing shares fell 4% in U.S. pre-market trading on Friday. The stock has fallen nearly 38% since the start of 2024.

New CEO Kelly Ortberg CEO Kelly Ortberg was brought in just weeks ago to restore faith in the planemaker and had proposed a deal including a pay rise of 25% over four years, far lower than the 40% workers had demanded.

Roughly 30,000 International Association of Machinists and Aerospace Workers (IAM) members who produce Boeing's 737 MAX and other jets in the Seattle and Portland areas voted on their first full contract in 16 years, with 94.6% rejecting it and 96% favoring a strike in a two-part ballot.

"This is about respect, this is about addressing the past, and this is about fighting for our future," said Jon Holden, who headed the negotiations for Boeing's largest union, before announcing the vote result on Thursday evening.

"We strike at midnight," said the union leader who had agreed to the just-defeated deal, as members in the union hall cheered and chanted: "Strike! Strike! Strike!"

BOEING, UNION KEEN TO GET BACK TO THE TABLE

A long strike could badly hit Boeing's finances, which are already groaning due to a $60 billion debt pile.

"We remain committed to resetting our relationship with our employees and the union, and we are ready to get back to the table to reach a new agreement," the planemaker said in a statement on Thursday.

The proposed deal included a $3,000 signing bonus and a pledge to build Boeing's next commercial jet in the Seattle area, provided the program was launched within the four years of the contract.

"The key question now is on the duration of the strike given the gap between the proposed wage increase and union members request," Jefferies analyst Chloe Lemarie said in a note, adding that a long strike represents a key risk for 737 MAX production levels.

Although IAM leadership recommended last Sunday that its members accept the contract, many workers had responded angrily, arguing for the original demand and lamenting the loss of an annual bonus⍐.