Boeing (BA.US) sent a “final contract offer” to 17,000 engineers, and the SPEEA negotiation team endorsed it to avoid a repeat of the strike

The Zhitong Finance App learned that after years of certification delays, production turbulence, and strained labor relations, Boeing (BA.US) is trying to press the “pause button” before another potential crisis breaks out. The aerospace giant officially sent a contract offer to the Aerospace Professional Engineering Employees Association (SPEEA) representing some 17,000 engineers and technicians in its commercial aircraft division on Thursday, and received rare public endorsements from the union's negotiation team. Against the backdrop of Boeing's previous two major labor negotiations ending in a lengthy strike, this move was viewed by the market as a key effort by the company's management to repair relationships and avoid a new round of production interruptions.

Negotiation Breakthrough: Changing the Atmosphere from “Confrontation” to “Cooperation”

The negotiations between Boeing and SPEEA have progressed beyond market expectations. This negotiation is the first comprehensive contract negotiation between SPEEA and Boeing in nearly 14 years. According to reports, SPEEA has received two final offers for the proposed four-year agreement, covering approximately 13,000 engineers and scientists, as well as approximately 4,000 technicians, analysts, and planners, respectively. The negotiation team assessed the proposal as “providing real meaningful value to members, bringing about real positive changes in work-life balance, and meeting members' priorities.”

SPEEA said in a statement that Boeing management has made “sincere efforts” to repair relationships previously damaged by moving engineering jobs out of the Seattle area to cut costs. The union negotiation team clearly stated that the positive attitude of Boeing executives “represents a real transformation and a desire to rebuild trust with the employees that SPEEA represents.”

Boeing also expressed optimism about the progress of the negotiations. Ben Nimmergurt, chief engineer at Boeing's Functional Engineering Division, said: “We are delighted that the SPEEA negotiation team supports our final contract offer. The offer ensures that our team is market-leading in terms of compensation and benefits, while also addressing what the union sees as the most important priorities for employees.”

Key points: review next week, due in October

According to SPEEA's arrangement, union officials from the Engineer and Technician Negotiating Unit will review the terms and make recommendations to members next week. The current SPEEA contract expires on October 6. Although the Trade Union Council has the power to authorize a strike vote, any strike action can only take place after the current contract expires on October 6.

Judging from the current climate, the negotiations do not seem to be moving in the direction of a strike. The media pointed out that negotiations are progressing smoothly, and the two sides are working towards reaching a solution before the current labor agreement expires on October 6.

Boeing chief engineer Nimmergut said the offer “ensures that our team will be one of the market leaders in terms of compensation and benefits,” and responds to what the union sees as the most important priorities for employees. The trade union side pointed out that during the negotiations, Boeing management “listened to their concerns and responded with respect and collaboration,” and that this attitude “seems to represent a real transformation of Boeing and the will to rebuild trust with SPEEA employees.”

Historical shadows: Boeing's labor dilemma in “three years and three negotiations”

The urgency of this negotiation stems from Boeing's turbulent labor relations history in recent years. Boeing has conducted three major trade union contract negotiations in just a few years.

Previously, SPEEA members had agreed to extend the 2013 collective bargaining agreement twice. The negotiations officially began on July 1. As negotiations began, the Boeing engineer community was generally disappointed with the company's quality and safety culture in recent years — from the two 737 MAX fatal air crashes in 2018 and 2019 to the hatch falling off incident in January 2024, the engineers' confidence in management had dropped to a low point.

On the Boeing side, Ben Nimmergut, vice president of production engineering, led the negotiations. In a letter to employees, he said, “We have found common interests with SPEEA in several areas... We are seeing this negotiation as another opportunity to improve our company culture.”

Two previous negotiations — involving commercial aircraft workers and an independent defense business negotiation unit, respectively — were represented by the International Association of Mechanics and Aerospace Workers (IAM), and both ended in a lengthy strike. These strikes had a huge impact on Boeing's production and delivery, further exacerbating the company's financial and reputational difficulties after the 737 MAX crisis.

In January of this year, Boeing signed contracts with approximately 1,600 SPEEA members of the former Spirit Aerosystems in Wichita, Kansas. That contract included an approval bonus of $6,000, annual wage increases, health care and retirement plan improvements, and an additional six days of vacation each year. The market generally expects that this new contract for 17,000 people will be upgraded in a similar framework.

Production risk: Strike or “worsen” 737 MAX 10 and 777-9 certification

For investors, the direction of this labor negotiation is directly related to Boeing's most critical financial recovery engine. The engineers and technicians represented by SPEEA are at the core of the certification process, and Boeing is several years behind schedule in certifying the 737 MAX 10 and 777-9.

The 737 MAX 10 is the largest model in the Boeing single-channel jet series, and the backlog of orders is close to 1,500 units. The 777-9 is Boeing's largest dual-aisle jet, and certification work is expected to continue until 2026. The certification of both models is highly engineering-intensive work. Any potential strike would further delay the certification process for these two models. Considering that Boeing is several years behind schedule in terms of certification, once a shutdown occurs, it will not only directly affect the delivery schedule of the new aircraft, but may also be a major blow to the company's financial recovery.

The Boeing 737 MAX 10 is the largest model among its single-aisle jets, while the 777-9 is the company's largest jet airliner. Any strike action could further delay the certification process for these two models — and delivery of these two new models is the core driving force behind Boeing's cash flow improvements over the next few years.

According to Leeham News's analysis, it is in Boeing's best interest to quickly reach an agreement with the engineer and technician union, as the aircraft manufacturer's financial recovery depends on a steady increase in the productivity of its commercial aircraft projects. Any shutdown would be an “adverse outcome,” particularly as the company seeks stability and continued debt relief.