Market Intelligence: Africa

USA – Boeing’s largest union of machinists has voted to end a nearly two-month strike, accepting a four-year contract that includes significant wage and benefit increases. The contract promises a 38% wage increase over four years and $12,000 in signing bonuses, securing major gains for the 33,000-member International Association of Machinists and Aerospace Workers (IAM). The decision is a pivotal moment for Boeing, which has struggled with financial and reputational challenges in recent years.

• The contract includes a guarantee that Boeing’s next airplane will be manufactured in the Seattle area, a significant win for IAM, with 59% of voting members approving the deal.
• The new agreement raises average machinist salaries to $119,309 annually by the contract’s end, up from $75,608, and restores parental leave and an annual bonus program.

Statements

• Boeing CEO Kelly Ortberg noted in a message to employees, “We will only move forward by listening and working together… There is much work ahead to return to the excellence that made Boeing an iconic company.”
• “It’s time we all come back together and focus on rebuilding the business and delivering the world’s best airplanes,” Ortberg added, calling for unity.

Boeing’s Financial and Operational Challenges

• Ending the strike is expected to aid Boeing’s recovery, but analysts estimate that the walkout cost the company around $1 billion per month.
• Production of popular models, including the 737 Max and 777, must resume promptly to restore Boeing’s revenue stream, which was already affected by safety and compliance issues with the 737 Max.
• Boeing continues to face financial strain, reporting a $6.2 billion loss for the latest quarter, with ongoing cost-cutting measures set to reduce its 171,000-employee workforce by 10% next year.
• Ortberg has indicated Boeing may divest some non-core divisions to focus on aircraft production and has already instituted multiple cost-saving measures.

Source: IAM and Boeing

AFM team notes

• How does this industry development relate to a flight school?
  The end of the strike should accelerate aircraft deliveries providing a boost to airline pilot hiring demand in the first half of 2025 compared to the second half of 2024.
• How does this industry development relate to a full flight simulator pilot training center?
  The end of the strike should accelerate aircraft deliveries providing a boost to full flight simulator hour demand across Boeing types airline with especially type ratings increasing full flight simulator utilisation – forecasting FFS hour demand to increase in the first half of 2025 compared to the second half of 2024.
• How does this industry development relate to a pilot training industry supplier?
  Suppliers may see heightened demand for training equipment as Boeing stabilizes and accelerates aircraft production, particularly for popular commercial jet models.