Boeing to meet union in bid to end crippling two-week strike
Boeing and union negotiators will meet later in a fresh bid to end strikes by workers that have hammered plane production, exacerbating the fallout from the company’s safety crisis.
The company, which is bidding to revive its fortunes under a new chief executive, has more than 32,000 staff refusing to work.
They walked out of factories in the Seattle area and in Oregon, which make aircraft including its 737 MAX models, on 13 September in protest at new contracts.
The International Association of Machinists and Aerospace Workers (IAM) is demanding the workers get a 40% pay rise.
It is also seeking the restoration of a defined benefit pension plan.
Boeing made this week, what it said was, a “best and final offer” of a 30% pay rise over four years and a performance-related bonus.
The union has refused to put the offer to a vote, declaring it falls short of what its members find acceptable.
Two previous days of negotiations ended without agreement.
Boeing 737 Max aircraft are parked behind a picket line in Washington. Pic: AP
Boeing placed tens of thousands of other workers on furlough as the strike began.
Production of its best-selling planes, the 737 MAX models, had already been hurt by curbs imposed by regulators in the wake of the mid-air Alaska Airlines scare in January that saw a panel blow out, forcing the 737 MAX 9 plane into an emergency landing.
Investigators examine the panel which failed during a flight on a Boeing MAX 9 jet in January
The incident prompted renewed safety scrutiny of Boeing after the scandal that followed the fatal crashes of MAX 8 planes in 2018 and 2019, blamed on faulty flight control software.
The production limits imposed on Boeing this year have further harmed deliveries to customers globally, including Ryanair.
Europe’s largest carrier by passengers, which has blamed Boeing’s delays for cuts to its expansion plans this year, made clear it feared extended delays to deliveries of new planes this week when asked about the impact of the strikes.
“The union is ready for this opportunity to bring forward the issues that members have identified as critical to reaching an agreement,” IAM said in a statement.
“We know that the only way to resolve this strike is through negotiations.”
Boeing, which has seen its shares fall 40% in the year to date, did not comment ahead of the talks.
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Susannah Streeter, head of money and markets at Hargreaves Lansdown, said of the dispute this week: “Boeing remains deep in a wage row, which is spelling fresh production trouble ahead.
“Shareholders who hoped that the arrival of a new CEO Kelly Ortberg in August would help the company make a fast exit from its difficulties are sorely disappointed. The deep-seated nature of the challenges the company is facing has come even starker, given the rejection of 30% pay offer to staff.
“Relations between management, union leadership and staff appear to have broken down further, given complaints by workers that they weren’t given time to vote on the latest proposal.”
One of the world’s largest investment firms has waded into the fight over the future of Thames Water, the water utility which is racing to stay afloat.
Sky News has learnt that KKR is in talks with Thames Water and its advisers about participating in a £3bn share sale which forms part of a wider recapitalisation plan.
City sources said this weekend that KKR, which has more than $550bn of assets under management, was among a handful of parties which had accessed a data room for potential investors.
Rothschild, the investment bank, is running a process to raise around £3bn from the sale of an equity stake in Thames Water, which is grappling with a debt mountain of as much as £19bn.
Other investors which have expressed interest in acquiring newly issued shares in the water company include Carlyle and Castle Water, the latter of which is controlled by Graham Edwards, the Conservative Party treasurer.
Global Infrastructure Partners, which is owned by BlackRock, Brookfield and Isquared are also reported to have lodged an interest, although sources said that the latter two were unlikely to play any further role in the process.
The crisis at Thames Water is presenting Sir Keir Starmer’s administration with a challenge as the debt-laden company attempts to avert temporary nationalisation.
Insiders said that KKR was “a serious player” in the equity process being run by Thames Water, although its outcome hinges on a final determination by Ofwat, the industry regulator, which is due by January at the latest.
Thames Water – and other suppliers across Britain – wants to hike bills and is demanding leniency from Ofwat on fines for past transgressions.
One obstacle to KKR buying a big stake in Thames Water, which has more than 15m customers, may be its 25% holding in Northumbrian Water.
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Under Ofwat’s mergers regime, the Competition and Markets Authority would need to review the deal, although there would not be an automatic prohibition.
The share sale process is being run in parallel to an attempt to raise up to £3bn in debt financing from hedge funds and other investors.
A battle has broken out between the holders of Thames Water’s class A bonds, which account for the bulk of its borrowings, and its riskier class B debt.
Both sets of bondholders have submitted proposals to the company, with the class A’s arguing that theirs is more certain and the class B’s arguing that theirs will save the company £380m or more in fees and interest over a 12-month period.
Thames Water has already endorsed the class A group’s offer, with an initial £1.5bn of funding to be delivered immediately.
The class A bondholders are now trying to secure backing for their proposal within the next fortnight.
Their group, which includes the American hedge funds Elliott Advisers and Silverpoint, would earn in the region of £650m during the first year of the financing.
One area of controversy is likely to be any incentive plan for Thames Water bosses, led by chief executive Chris Weston, as part of a deal to give the company a stay of execution.
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Last month, the environment secretary, Steve Reed, established an independent review of the industry that will look at far-reaching reforms.
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It was unclear this weekend which of KKR’s funds was participating in the Thames Water equity-raise.
The firm owns John Laing, an infrastructure investor, which it took private in 2021.
It has also owned South Staffordshire, another water company, selling its 75% interest in 2018.
KKR declined to comment.
The business secretary will next week hold talks with dozens of private sector bosses as the government contends with a significant corporate backlash to Labour’s first fiscal event in nearly 15 years.
Sky News has learnt that executives have been invited to join a conference call on Monday with Jonathan Reynolds, in what will represent his first meaningful engagement with employers since Wednesday’s budget statement.
Rachel Reeves, the chancellor, unsettled financial markets with plans for billions of pounds in extra borrowing, and unnerved business leaders by saying she would raise an additional £25bn annually by hiking their national insurance contributions.
An increase in employer NICs had been trailed by officials in advance of the budget, but the lowering of the threshold to just £5,000 has triggered forecasts of a wave of redundancies and even insolvencies across labour-intensive industries.
Sectors such as retail and hospitality, which employ substantial numbers of part-time workers, have been particularly vocal in their condemnation of the move.
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On Friday, the Financial Times published comments made by the chief executive of Barclays in which he defended Ms Reeves.
“I think they’ve done an admirable job of balancing spending, borrowing and taxation in order to drive the fundamental objective of growth,” CS Venkatakrishnan said.
His was a rare voice among prominent business figures in backing the chancellor, however, with many questioning whether the government had a meaningful plan to grow the economy.
Mr Reynolds held a similar call with business leaders within days of general election victory, and over 100 bosses are understood to have been invited to Monday’s discussion.
A spokesman for the Department for Business and Trade declined to comment ahead of Monday’s call.
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