Boeing Co (NYSE:BA, ETR:BCO) may soon be able to refocus on its turnaround efforts if the airplane manufacturer is able to reach a deal with its machinists this week, analysts at Bank of America believe.
IAM District 751 said on Saturday it has received a revised labor proposal from Boeing which will be voted upon by members on Wednesday, October 23.
About 33,000 IAM District 751 members began a strike on September 13 after more than 94% voted to reject an earlier offer from Boeing, halting production in Washington, Oregon, and California.
According to the union, Boeing’s latest proposal includes a 35% increase over four years, nearing the union’s demand of a 40% increase, the reinstatement of a performance incentive plan, and increased contributions to 401k plans, among other offerings.
Notably, it does not reinstate machinists’ pensions, a key demand from the union.
The ratification of the deal requires only a simple majority, Bank of America’s analysts noted.
They are optimistic members will vote in favor of the deal given the direct involvement of acting US Secretary of Labor Julie Su in the negotiations amid ramping pressure on each side.
However, they noted that the message from IAM 751 leadership was more conservative than when the first proposal was announced on September 8th and the pension was cut from the latest offer.
“If union members do agree to end the strike - the supply chain, investors, and Boeing management will share a collective sigh of relief,” analysts wrote.
“This is the critical first step for Boeing to refocus on operations before turning to a potential $25 billion equity raise, a 10% workforce reduction, and overall turnaround for the company.”
Shares of Boeing added almost 3% at about $160 on Monday afternoon.
The bank's analysts have a $170 price target and 'Neutral' rating on Boeing.