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Boeing ( BA ), union to hold preliminary talks on Tuesday

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Negotiations not expected to bring about new deal -source

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Seattle-area factory workers began strike on Friday

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Planemaker cutting costs with credit rating near junk

By Joe Brock

SEATTLE, Sept 17 (Reuters) - Negotiators at Boeing ( BA )

and its largest union are due to resume talks over a

labor contract on Tuesday, as the planemaker seeks to bring a

swift end to a strike that is costing the indebted company an

estimated $100 million a day.

More than 30,000 Boeing ( BA ) factory workers in the Seattle area

went on strike on Friday after overwhelmingly rejecting their

first full contract offer in 16 years, which included a 25% pay

increase spread over four years but removed an annual

performance bonus.

The top negotiators at Boeing ( BA ) and the International

Association of Machinists and Aerospace Workers (IAM) will meet

with federal mediators in Seattle on Tuesday for preliminary

talks, a person familiar with the process said.

Boeing ( BA ) and union negotiators are not expected to discuss

details of a new offer at the meeting, which is more about

setting out the rules of future talks, another source with

knowledge of the mediation said.

The sources declined to be identified because they were not

authorized to speak to media. Boeing ( BA ) and IAM declined to

comment.

A prolonged strike could cost Boeing ( BA ) several billion

dollars, fraying the planemaker's already strained finances and

threatening a downgrade of its credit rating, analysts say.

Boeing ( BA ) said on Monday it was freezing hiring and weighing

furloughs as it seeks to cut costs to limit the impact of the

strike and rein in its debt, which stands at around $60 billion.

Union members manning picket lines outside Boeing ( BA ) factories

in Seattle expressed little sympathy for the company's financial

plight, with many saying they were anticipating a protracted

negotiating period and a weeks-long strike.

"It makes me a little happy to see that they're showing the

first signs of struggling because I don't think they care about

their workers at all," said Martin Klyavkov, 20, who works

building wings for Boeing's ( BA ) best-selling 737 MAX.

"Boeing ( BA ) is going to get desperate one of these days and

cave."

Klyavkov and several other young Boeing ( BA ) workers told Reuters

they were getting part-time jobs as food delivery drivers to

supplement the $250 a week the union will pay them during a

strike, starting in the third week.

Boeing ( BA ) and union leaders miscalculated during their initial

negotiations, announcing an agreement over a tentative contract

that more than 94% of IAM workers later rejected. The union

originally had asked for a 40% hike.

Analysts expect it will take time to rebuild trust and bring

another deal to workers who are venting frustration built up

over a decade of stagnant wages and rising living costs.

Equity research firm Melius Research found median

employee compensation for the aerospace and defense firms it

monitors grew 12% between 2018 and 2023, while at Boeing ( BA ) it fell

6%.

"I think it'll be a while before they get an agreement,"

said Bill George, former Medtronic CEO and executive fellow at

Harvard Business School.

"The compensation may rise to the point where it's not

competitive for Boeing ( BA ) but that might be the lesser of a couple

of evils in terms of a long strike."