Investing.com -- Striking Boeing (NYSE:BA) machinists have rejected a revised contract offer, extending a crippling labor action that is placing heavy pressure on new CEO Kelly Ortberg's plans to overhaul the jet manufacturer's ailing finances.
Of the members of the International Association of Machinists and Aerospace Workers District 751 who voted, 64% said no to the new offer, which would have raised their pay by 35% over the next four years and provided greater retirement benefits. Following the decision, union leaders -- who have called for a 40% pay bump and the return of defined-benefit pensions for the roughly 33,000 workers they represent -- said they were ready to return to the negotiating table with Boeing.
Last month, 95% of the workers in the US Pacific Northwest rejected a prior offer and chose to go on strike. Analysts at Jefferies estimated the stoppage is costing Boeing $1.3 billion of free cash per month, mostly due to lost deliveries of its best-selling 737 model.
On Wednesday, Ortberg called for a "fundamental culture change" at Boeing, which has also faced recent scrutiny over its safety record following a dangerous mid-air door plug blow-out on one of its planes earlier this year. Ortberg added the firm is at a "crossroads" after it posted a net loss of $6.17 billion in the third quarter, widening from a loss of $1.64 billion in the corresponding period in 2023.
Meanwhile, Chief Financial Officer Brian West warned analysts that the jetmaker would keep bleeding cash in its 2025 fiscal year and in the final three months of 2024.
"We expect [Boeing] to further enhance the contract offer, but resolution likely moves to November," analysts at Baird said in a note to clients, adding that the prolonged work stoppage means the company's recovery remains "on hold." Shares in Boeing slipped by almost 3% in premarket US trading on Thursday after shedding 1.8% in the prior session.
(Ambar Warrick contributed reporting.)