Boeing strike ends as workers accept the new contract offer

Boeing's US West Coast factory workers accepted a new contract offer on Monday, their union said, bringing an end to an economically challenging seven-week strike that halted most jet production and deepened a financial crisis at the troubled plane maker as detailed in a report by Reuters.

The union said members voted 59 per cent in favour of the new contract, which includes a 38 per cent pay rise spread over four years, easing pressure on new Boeing CEO Kelly Ortberg after two previous offers were voted down in recent weeks.

"This is a victory. We can hold our heads high," Jon Holden the union's lead negotiator, told members after the results were announced the Reuters report elaborated further.

Welcome relief for Boeing as 33,000 machinists end strike

The end of the first strike in 16 years by Boeing's largest union provides welcome relief for a company that has lurched from one setback to the next since a door panel blew off a near-new 737 MAX plane in mid-air in January.

Around 33,000 machinists who work on the best-selling 737 MAX jet, as well as the 767 and 777 widebodies, have been on strike since September 13, demanding a 40 per cent wage increase and the restoration of a defined-benefit pension lost a decade ago.

It will now take weeks to ramp up plane production and boost cash flow, with 737 MAX output expected to languish in the single digits per month for some time, according to two people briefed on the matter, far short of the 38-a-month targeted before the strike.

Workers need to return to work by November 12

Workers can start building planes again from Wednesday and must be back to work by November 12, the International Association of Machinists and Aerospace Workers (IAM) said, although Boeing has warned that some people will have to be retrained due to the prolonged period away from the factory floor.

The strike was costing Boeing around $100 million a day in lost revenue, analysts said, prompting the planemaker to raise $24 billion from investors last week in a bid to preserve its investment-grade credit rating.

Ortberg now needs to reset relations with machinists in the Pacific Northwest who have used the strike to vent anger built up over a decade when wages have lagged inflation and the cost of living in the Seattle area has soared. Boeing has said the average annual machinists' pay at the end of the new four-year contract will be $119,309, up from $75,608 previously.

The pay increase may add $1.1 billion to Boeing's wage bill over the four years, while a $12,000 ratification bonus for each union member could result in another $396 million in outflows, according to analysts at Jefferies.

This positive development for Boeing is going to resonate well among market participants and investors. It will also help them make informed investment decisions.