Long-suffering Boeing (BA 0.73%) investors were treated to some good news on the labor front over the weekend, and the stock is reacting positively on Monday morning. Boeing shares are up 5% as of 10:30 ET after the aerospace giant reached a tentative deal with the union representing 33,000 striking members.
A labor truce
Boeing has been hit by one setback after another over the past five years, ranging from internal engineering problems to the pandemic's effect on airlines. The latest blow came last month when members of the International Association of Machinists and Aerospace Workers (IAM) walked off the job.
Over the weekend, Boeing and the IAM reached a deal for a 35% general wage hike over four years, a 4% annual bonus payout, and a sweetened 401(k) match. The offer also includes a $7,000 ratification bonus and pension enhancements.
Investors are hoping the deal, which is subject to an Oct. 23 membership vote, will end a five-week strike and get Boeing production lines back up and running. The company needs to produce and deliver airplanes to restore cash flow and pay down the debt it took on during the pandemic.
NYSE: BA
Key Data Points
Is Boeing stock a buy?
Remember, there is no guarantee this deal will be approved by the union. Boeing has had a difficult relationship with it, and 96% of members voted to strike after the initial agreement was voted down.
Even if an agreement is reached, the aerospace titan faces a long and arduous journey. It will take years for the company to ramp up production and pay down its debt, and Boeing will need to raise tens of billions of dollars to plug shortfalls and continue operations. With regulators watching closely after a series of engineering mishaps, there are no guarantees Boeing will be able to stick to its timeline.
Boeing is one of the great names in U.S. manufacturing, and if the company can get its act together, it can fly higher from here. But given the headwinds, investors would be wise to watch this one from the sidelines for now.
