Boeing’s proposed strike settlement could leave firm with USD 1 bn bill: Boeing’s proposed contract to settle its labor strike would have it shell out over USD 1 bn in wage-related expenses, although its shares inched up 3% on Monday on hopes of an end to the crippling strike saga, analysts told Reuters. Some 33k workers are expected to vote on the contract proposal on Wednesday. Seth Seifman from JP Morgan estimates that wage increases could raise Boeing’s costs by over USD 1 bn, while Sheila Kahyaoglu from Jefferies put the number at around USD 1.3 bn.

It’ll take a while to turn the ship around: Even if the new contract is approved by members, the manufacturer will still need to quickly ramp up production to pre-strike levels once workers come back. “Based on our analysis of prior Boeing strikes, it has taken an average of 6-12 months after the conclusion of the strike for production rates to return to pre-strike levels. Moreover, the impact the strike has had on the already fragile supply chain is uncertain,” RBC Capital Markets analysts said.

What’s Boeing’s proposal? Boeing has reached a tentative agreement to offer striking machinists a 35% pay bump over the course of four years as the airline giant seeks to put an end to a five-week-long strike that has crippled production of some of its more popular aircraft. The offer includes a one-time USD 7k ratification bonus and increased employer contributions to worker retirement accounts, but is lower than the union’s targeted 40% pay bump and does not include the reinstitution of defined benefit pensions, another of the union’s key demands.

ICYMI- Boeing took its 30% pay raise offer off the table last week in union negotiations after the talks reached a stalemate yet again. The strike is taking place at Boeing’s 737 Max Jets production hub. This has worsened the company’s already existing supply chain issues and delivery delays, pushing them to stop issuing purchase orders for the 737, 767 and 777 jets to preserve the company’s credit rating.

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