Boeing workers walked off the job at midnight on September 12 after more than 94 percent of union members rejected a tentative contract offer by the company.

After joining several picket lines in Washington state and Oregon on Wednesday and Thursday, Bryant told FreightWaves in a phone interview that union members were resolved to achieve fair pay and better benefits.

“The beginning of this week we wanted to visit with many of our members on the picket lines all the way from Everett [Washington], all the way down here to Portland to let them know they have the complete support of their union, the 600,000 active and retired IAM members both in the United States and Canada,” Bryant said. “… [W]hat it’s really about is, they’ve had 10 years of stagnant wages, 10 years where they’ve lost their pension, 10 years of continual increases in their health insurance. … [T]he workers here have just said enough is enough. … We’ve got to get a contract that truly respects us and recognizes the value that we do for the Boeing Company.”

Bryant said support for the strike has been overwhelming.

“We’ve talked to people who have 45 years in this plant, and we’ve talked to people that just started two months ago, and they’re all on the same page,” he said.

Bryant said that while Boeing does offer a 401(k) matching program, most workers can’t contribute to retirement because their wages aren’t high enough.

“They can’t afford both their mortgages, the rent payments, the vehicle payments, the gas, the fuel to get to work, the food to feed them and their families and their other utilities,” he said. “By the time that’s all done, they don’t have enough income to be able to even participate in the 401(k). It’s on Boeing. They’ve got to correct that. What they did 10 years ago with the pension was just ridiculous and uncalled for, but they’ve got to move forward. They’ve got to do something that gives people income security when they retire.”

Bryant blasted Boeing’s announcement of furloughs in response to the strikes.

“If they want to get serious about what they’re spending on executive salaries and if they’re overstaffed, they could have been dealing with that all [along],” he said. “It’s a cheap shot to make it look like they’re blaming the workers out here on strike because it’s their fault. Look, the workers are on strike here. None of Boeing’s problems have anything to do with these workers. In fact, all of the things that are wrong with Boeing right now are all attributed to bad decisions from corporate. … They’re the ones that have made the bad decisions that are putting Boeing in the position that they’re in. And it’s unfortunate that they’re trying to make this look like it’s the union’s fault. It’s just smoke and mirrors.”

Bryant said it will take a fair contract to resolve this strike and that members are resolved to wait as long as necessary to get that.

“I’m absolutely amazed and impressed with the solidarity and the commitment that our members of the Boeing workers have made to improve their situation,” he said. “This isn’t only happening with the Boeing Company. This strike is being followed all across—not just the U.S.—but in Canada also. This is being followed because the same thing that is happening and has happened to these workers here is happening at many different corporations.”

Boeing did not immediately respond to FreightWaves’ request for comment.

Editor’s Note: This article first appeared on FreightWaves.

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Over 30,000 machinists and aerospace workers at the company walked off the job Friday after a large majority rejected a tentative contract. A Bloomberg Intelligence analysis predicted Monday that Boeing could be out $3.5 billion in cash in the third quarter if the strike continues through September.

According to the Bloomberg report, the cash loss could reduce Boeing’s balances to $9 billion—near the minimum for the company. The largest driver of results in sales will be 737 deliveries, which Boeing will have made 78 of for Q3 versus 70 in Q2. The report stated that defense and Global Services are expected to perform similarly to Q2.

Boeing Cuts Costs

Boeing executive vice president and chief financial officer Brian West told employees in an emailed memo that the company would take actions to preserve its cash, including:

• Starting a hiring freeze across Boeing for all levels, and pausing any pay increases associated with internal executive and management promotions.
• Stopping any travel that is not for critical customer, program, regulatory or supply chain activity.
• Suspending nonessential capital expenditures and facilities spending.
• Suspending outside consultant spending and temporarily releasing nonessential contractors.

“… [W]e are planning to make significant reductions in supplier expenditures and will stop issuing the majority of supplier purchase orders on the 737, 767 and 777 programs,” West said in the memo. “We are also considering the difficult step of temporary furloughs for many employees, managers and executives in the coming weeks.”

Which Airlines Will Be Impacted?

Bloomberg Intelligence stated that airlines most affected by Boeing’s strike will be Ryanair, Southwest Airlines, United Airlines, and Alaska Airlines. While it’s not in the high-demand season, this is expected to predominantly affect U.S. air travel.

The report stated that the most-affected airlines in the near term appear to be Southwest, Alaska, Aeromexico, and Jin Air of Korea, all of which are expecting two deliveries in the remaining half of September. With vacation season waning in the U.S., Bloomberg estimates a minimized impact from delays.

Editor’s Note: This article first appeared on AirlineGeeks.com.

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The International Association of Machinists and Aerospace Workers (IAM) announced the result on its website late Thursday night after vote tabulation was completed. 

The union said its negotiating team will “regroup and begin planning the next steps on securing an agreement that our membership can approve.”

IAM chief Jon Holden said earlier this week that the tentative deal was the best contract the union has ever negotiated.

Union leaders and Boeing (NYSE: BA) reached a tentative agreement on Sunday, but rank-and-file machinists immediately expressed unhappiness with it. The last contract was ratified 16 years ago. On Monday, workers rallied outside Boeing’s widebody aircraft plant in Everett, Washington. 

One of the biggest issues is pay. Boeing is offering a wage increase of 25 percent over four years, but union members say it doesn’t include their current yearly bonus. Boeing will also put more matching funds into a 401(k) retirement plan but won’t restore a pension plan that the machinists used to have and gave up in an earlier negotiation. The collective bargaining agreement would also change mandatory overtime so workers will be required to work overtime and weekends less often and it puts in a floating vacation holiday. Workers will also be able to progress through different job responsibilities more easily. 

Workers also complain that the wage increase isn’t high enough, that the pension wasn’t restored and that Boeing’s promise to build a future aircraft type in the Puget Sound region only extends for the length of the contract. Workers still feel betrayed about previous rounds of negotiations in which Boeing twice threatened to move jobs outside of Washington. 

If the strike is authorized and goes on for an extended period the delivery of aircraft and components would stop. That wouldn’t have an immediate effect on airlines but would exacerbate the current backlog of aircraft and further limit the ability of airlines to modernize or expand their fleets to reach new markets. 

A strike comes at a difficult time for Boeing, which has suffered years of losses because of regulatory restrictions following a series of accidents and mishaps, as well as concerns about manufacturing quality and the safety culture that have slowed aircraft production rates. Still, some analysts have said that a production shutdown now isn’t the worst outcome because airlines are grappling with too much capacity as travel demand wanes and aren’t as eager to receive planes as they were last year.

A 10-week walkout in 1995 cost Boeing $100 million per day. The company has lost $27 billion since 2019. 

FedEx pilots in summer 2023 rejected a labor deal negotiated by union leadership and appear to have lost negotiating leverage since then. The air cargo market softened and the pilot shortfall that allowed pilots at some passenger airlines to win substantial deals eventually lessened, reducing pressure on FedEx to raise compensation beyond its target.

New Boeing CEO Kelly”Ortberg has been on the job for a little over a month. 

Editor’s Note: This article first appeared on FreightWaves.

The post Boeing Machinists Reject New Contract, Go on Strike appeared first on FLYING Magazine.

The union representing UPS pilots says they will not cross picket lines if Teamsters drivers and package sorters walk off the job when the current contract expires Aug. 1, resulting in the immediate shutdown of the express logistics company’s global air operations.

UPS (NYSE: UPS) has 3,300 pilots who are represented by the Independent Pilots Association (IPA), a separate union from the Teamsters.

“If the Teamsters are on strike, we will honor that strike and we will not fly,” IPA spokesman Brian Gaudet told FreightWaves. 

Even with freighters in service, a strike by 340,000 package car drivers, truck drivers and warehouse workers would effectively ground most UPS Airlines operations because there would be few, if any, personnel to load and unload aircraft, process packages and deliver them to and from airport facilities. UPS says it is training nonunion employees to handle packages in the event there is a labor disruption. Management estimates it could move about 22 percent of the 18.6 million daily parcels moving through its system.

The Teamsters union has a $300 million to $350 million fund to support workers with strike pay, but UPS pilots who don’t report to work will bear the burden on their own.

“We don’t have a strike fund. If you’re a UPS pilot and you’re being asked to not cross that picket line, that means you stay in your hotel, you don’t show up, you don’t fly and it’s on your nickel,” said Gaudet. 

UPS pilots ratified a two-year contract extension last August.

Bascome Majors, a senior transportation equity analyst at Susquehanna International Group, estimated in a research note that the Teamsters’ fund could last at least two weeks. Part-time workers would end up making about $210 less than their normal weekly pay, while full-timers would make about $1,450 less, which “could splinter enthusiasm for an extended strike and hurt Teamster solidarity.”

Barring a solidarity action by pilots, UPS likely would use a skeleton fleet to protect some international and overnight flights to its Worldport hub in Louisville, Kentucky, said Derek Lossing, founder of Cirrus Global Advisors, in an interview.

FedEx Express (NYSE: FDX) is the only air carrier that can realistically absorb UPS overnight, next-day package volumes, he explained. FedEx will try to take on as much of that business as it can because it is lucrative. Shippers that have a big relationship with UPS and only tender small volumes to FedEx are likely paying $6 to $8 more per parcel. FedEx can realistically handle 5 percent of UPS overnight volumes, Lossing added. 

UPS management and the Teamsters union are at an impasse over wages and other economic issues after previously agreeing on other terms.

Rich Labor Deal Poses Risks

Analysts say UPS is in a bind because it already is experiencing some shipment diversion to rival FedEx and could drive away more customers if it sharply raises rates to help cover the cost of an overly generous Teamster deal.

A new Teamsters contract could drive the cost per parcel about 2 percent  higher than current expectations and cut a dollar from UPS’ earnings per share next year, said Majors. Parcel consultants are forecasting that shippers can expect rate hikes of 6 percent  to 10 percent  in 2024, before a Teamsters contract is finalized. 

Majors predicts the Teamsters’ contract will boost wages by 18 percent for part-time workers and 7 percent for full-timers, with another 7 percent increase in costs for inflation and other factors.

Many businesses that felt burned by UPS during the last three years, when demand soared and the carrier didn’t bend on applying steep rate hikes, could be willing to look for alternative carriers.

“If UPS gives away too much in labor costs, it’s going to be forced to raise rates to shippers and significantly lose a share of their wallet because the 12- to-18 month outlook doesn’t justify price increases,” wrote Lossing, a former logistics manager at Amazon who helped the online retailer build out its  private cargo airline and international last-mile delivery network, on LinkedIn.

For every 10 percent increase in labor costs UPS negotiates, it will lose 4 percent market share over the next two years, according to modeling conducted by Cirrus Global Advisors. That translates to 70,000 daily ground packages shifting to the U.S. Postal Service or regional parcel carriers. If the Teamsters union wins a 20 percent increase in compensation, UPS could lose 140,000 daily packages to competitors.

Labor is UPS’ largest expense item, consuming nearly half of global revenue. According to UPS, delivery drivers on average earn $95,000 per year and part-timers earn $20 an hour, plus health and pension benefits. With FedEx and Amazon using an independent contractor model with nonunion workers for final-mile delivery, UPS has to control labor costs or risk “a slow spiral” that makes it uncompetitive, Lossing said. 

Online shoppers will experience slower deliveries if there is a UPS strike and e-commerce companies will be forced to cancel free shipping and increase shipping charges, he predicted. 

Companies that haven’t integrated other carriers besides UPS into their transportation planning systems could face significant operational and financial impact from a potential strike, logistics experts say. 

For more coverage on air cargo, go to FreightWaves.

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