Another major risk for Boeing! Union demands a 40% salary increase, threatening to strike.

Boeing, which is still mired in the investigation of the 737 Max, is now facing internal issues. The company's largest union is demanding a 40% pay raise within three to four years and threatening to consider a strike.

According to media reports, this labor dispute has been brewing for ten years. The International Association of Machinists and Aerospace Workers (IAM), as Boeing's largest union, has long been dissatisfied with the labor agreement that Boeing made in 2014, which sacrificed pensions, locked in minimum wage increases, and restricted labor rights activists.

Encouraged by the revival of the American labor movement, the scarcity of qualified aerospace workers, and the pressure on Boeing to maintain stable factory jobs, union leaders will demand a 40% pay raise within three to four years. "Our goal is to negotiate a contract that both union leaders and members can accept," said Jon Holden, president of IAM District 751, representing 32,000 Boeing mechanics in the Seattle area. "We won't strike lightly, but we are willing to do so."

Holden stated in an interview that he sees a path to reaching an agreement with Boeing. However, he also said that they are prepared to strike, following in the footsteps of auto workers in Detroit, screenwriters and actors in Hollywood, and fellow mechanics at Spirit AeroSystems Holdings Inc., a Boeing supplier in Kansas. Each of these industries made significant improvements to wages and other labor contracts after strikes last year.

If a strike were to occur, Boeing may shut down factories in Washington and Oregon, including the assembly line for its cash cow product, the 737 aircraft, and reduce production after the current IAM contract expires in September. With negotiations set to begin on March 8th, the tense labor situation will increase pressure on Boeing CEO Dave Calhoun, who is already facing scrutiny from regulators and investors due to the quality issues with the 737 Max.

"We will continue to focus on working with our team to improve the quality of our operations," Boeing said in a statement. "We believe there is a path to a new contract that can address the needs and concerns of our employees while maintaining our competitiveness in the global market."

Boeing's stock price rose 0.9% to $208.48 in intraday trading on the 6th. The company's stock price has fallen 21% this year, making it the worst-performing stock among Dow components.

Media analysis suggests that Boeing does not have any new aircraft as bargaining chips in the upcoming negotiations, and with unemployment rates nearing historic lows, the company cannot threaten to move production to the southern United States. Boeing is striving to stabilize its factories and suppliers and restore stable and reliable production levels. In this situation, the company cannot afford any work disruptions. Analysts say that the unions have the upper hand now, and it is a very active time for the unions to reach the most favorable agreements for them. Although Boeing insists on achieving a target of $10 billion in free cash flow by 2025 or 2026, the company refused to provide financial outlook for this year last week, as this goal is at risk of being undermined due to recent Boeing scandals.

Analysts also point out that labor agreements may come at a high cost, disregarding the impact on prices and production efficiency. For every 10% increase in mechanic wages, free cash flow in 2026 is expected to decrease by approximately $260 million.