10:49 AM EDT, 09/09/2024 (MT Newswires) -- Boeing's ( BA ) shares were rising intraday Monday after the plane maker said Sunday that it had reached a tentative labor deal with the International Association of Machinists and Aerospace Workers, representing more than 33,000 employees.

The proposed four-year agreement with the union's districts 751 and W24 includes a 25% general wage increase over the length of the contract, Boeing ( BA ) said. The deal includes improved contributions by Boeing ( BA ) to its employees' retirement plans and a lower healthcare cost share, among other benefits.

The agreement remains subject to ratification by union members by Thursday. The two IAM districts have recommended that its members approve the deal, according to a statement.

If ratified by Thursday, the aircraft manufacturer will pay a $3,000 lump sum payment to employees within 30 days and commit to build its next new airplane in the Puget Sound region, Boeing ( BA ) said. "This would go along with our other flagship models, meaning job security for generations to come," Stephanie Pope, chief executive of Boeing's ( BA ) commercial airplanes division, said in a video message to employees that was shared on the company's website.

Boeing's ( BA ) shares rose 3.7% in Monday trading.

The contract fits "largely in-line" with Boeing's ( BA ) cost expectations, with touch labor representing a mid-single digit of the total 737 Max cost, RBC Capital Markets said in a client note emailed Monday. This suggests elevated expenses shouldn't be a long-term headwind to Boeing's ( BA ) free cash flows, RBC said.

RBC analyst Ken Herbert wrote in the note that the deal is a positive factor for the plane maker, and could pave the way for a potential equity offering. The brokerage has an outperform rating on Boeing's ( BA ) stock.

In a separate client note, Deutsche Bank said it views the tentative agreement positively, but sees "pronounced risk" that members of IAM 751 could reject the contract and vote to strike.

Price: 163.49, Change: +5.87, Percent Change: +3.72