Boeing Co. (NYSE: BA) said Sunday that 2,300 machinists in St. Louis represented by the International Association of Machinists and Aerospace Workers (IAM) have approved a contract extension through 2022. The contract is similar to the recent contract between Boeing and the IAM machinists in Washington state, where the company will build the wings for and assemble its new 777X aircraft.
Boeing’s St. Louis operation builds military aircraft and, union contract or not, the work is in jeopardy. The U.S. Navy has omitted funding for additional F/A-18E/F Super Hornets or EA-18G Growlers from its fiscal year 2015 budget, and Boeing is going directly to members of Congress seeking to override the Navy’s decision. A report last week from Reuters said that Navy officials would like to keep the planes but budget pressures are forcing the move. Boeing’s St. Louis assembly plant would likely close, costing many of 15,000 Boeing employees in Missouri their jobs.
Like the Washington contract, the new deal with the IAM phases out Boeing’s defined benefit pension plan by January 2016 and replaces it with a 401(k) defined contribution plan. The machinists will receive a signing bonus of $8,000 within 30 days and general wage increases every two years beginning in 2016, together with lump sum payments in the odd-numbered years.
The change in the pension plan is expected to add $80 million to the $140 million first-quarter non-cash charge Boeing is taking for the retirement plan change approved in Washington.
Boeing shares were trading up about 1.6% in the noon hour on Monday, at $130.37 in a 52-week range of $75.03 to $144.57.
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