Following a vote on Wednesday, the strike involving 33,000 employees at Boeing will persist as the union members have rejected the company's proposal. The International Association of Machinists (IAM) members voted against the deal with a 64% majority, according to an announcement by the union. Although this was a closer margin compared to the 95% who previously dismissed an offer, it still fell short of the necessary simple majority to conclude the strike. Jon Holden, the president of the largest IAM local at Boeing and its lead negotiator, stated, "Our members are worth more. They have made their voices heard, and we will return to negotiations to strive for what they deserve." Boeing has not yet provided a response to the voting outcome.

The rejected offer would have seen wages for IAM members at Boeing increase by 35 percentage points over the four-year term of the contract, with an immediate 12% raise. Additionally, it included a $7,000 signing bonus, increased contributions to the union members' retirement funds, and provided certain job security assurances, such as a commitment to build the company's next commercial aircraft at a unionized facility rather than a non-union one. However, the ratification was not guaranteed. The union leadership did not fully endorse the offer, merely noting that it "contains several significant improvements" and "merits presentation to the members and your consideration." The previous tentative agreement, which was recommended by the union leadership, was almost unanimously turned down by the rank-and-file members, leading to the initiation of the strike on September 13.

A primary concern for many members was the discontinuation of the traditional pension plan. The membership had reluctantly relinquished the pension in 2014 after Boeing threatened to construct the 737 Max and 777X at non-union locations. The elimination of the pensions, during a period of strong financial performance for Boeing, sparked deep-seated resentment that continues to this day. While the proposed contract achieved many of the union's bargaining objectives and did offer enhanced retirement benefits, it did not reinstate the traditional pension plan. Holden highlighted this issue on Wednesday, calling it a "major sticking point for many of our members." He added, "This membership has endured a lot. There are profound wounds that were inflicted due to takeaways and concessions, threats of job loss. Our members have not forgotten those incidents."

The rejected agreement would have raised Boeing's labor costs by over $1 billion per year, as per an analysis by Seth Seifman, an aerospace analyst at JPMorgan Chase. Boeing has already declared its intention to reduce its global workforce of 171,000 employees by approximately 10%, or 17,000 positions. Seifman suggested that the savings from these cuts could more than compensate for the increased cost of the wage package. However, Boeing urgently needed to reach an agreement to end the strike. According to an estimate by Standard & Poor's, the strike is costing the company $1 billion per month in addition to its ongoing losses. On Wednesday, Boeing reported that its third-quarter net loss had surged to $6.2 billion from $1.6 billion a year earlier. This period included only a limited impact from the strike, as the work stoppage did not begin to affect aircraft deliveries and, consequently, company revenue until the final days of the quarter.

Boeing's new CEO, Kelly Ortberg, stated earlier on Wednesday that the company is at a critical juncture and requires a fundamental shift in its culture to stabilize its operations. He expressed his desire to reset the relationship between management and the union. "The foremost concern on everyone's mind today is ending the IAM strike," Ortberg said to investors during a call following the earnings report. "We have been tirelessly working to find a solution that is beneficial for the company and meets the needs of the employees."

The strike represents just a fraction of the challenges that have plagued the company over the past six years, during which it has accumulated core operating losses of nearly $40 billion and seen its long-term debt rise to $53 billion. The company is at risk of having its credit rating downgraded to junk bond status for the first time in its history. Boeing's troubles began with two fatal crashes of the Max in late 2018 and early 2019, resulting in a 20-month grounding of the company's top-selling aircraft. This was followed by canceled orders for new planes in 2020 when the pandemic led to a sharp decline in travel demand and substantial losses for airlines worldwide. In January of this year, a door plug detached from an Alaska Airlines' 737 Max jet shortly after takeoff. Although no serious injuries were reported, the incident prompted numerous federal investigations and raised questions about the quality and safety of Boeing aircraft. One federal investigation discovered that the plane had left a Boeing factory without the four bolts necessary to secure the door plug in place. The Federal Aviation Administration increased its oversight of the company, a move that will slow Boeing's ability to ramp up production of the Max to the levels required to regain profitability.

Despite recent issues, Boeing remains a crucial component of the US economy. It is the country's largest exporter, with an estimated annual contribution of $79 billion to the economy, supporting 1.6 million jobs directly and indirectly across 10,000 suppliers in all 50 states. Some of these suppliers have already started laying off workers due to the strike. Fortunately for Boeing, it is unlikely to be forced out of business by its current financial crisis. Boeing's position as part of a duopoly, alongside European competitor Airbus, essentially guarantees its survival. Boeing and Airbus are the only manufacturers of full-size jets needed by the global airline industry, and both companies have substantial order backlogs. Any airline that cancels its Boeing orders and switches to Airbus would have to wait at least four or five years to receive any aircraft from the European company.