Boeing’s (BA) turnaround efforts had stalled amid a seven-week strike by its biggest union that cost the company billions and set back production of its jets.
That particular risk to its stock has now been removed. The strike by the International Association of Machinists and Aerospace Workers (IAM) ended Monday evening, with union members voting in favor of the aviation giant’s latest contract offer. Analysts said the development should set the stage for a Boeing recovery.
“Boeing CEO, Kelly Ortberg, added another check to the ‘Boeing Turnaround’ list,” wrote Bank of America analysts on Tuesday morning.
Shares of the plane maker rose 1% in early trading and had slipped slightly by mid-session Tuesday. The stock is down more than 40% year to date.
The worker strike was problematic for Boeing as it tried to get itself out of heavy debt following safety and production challenges that began in early January when a door plug blew out from an Alaska Airlines (ALK) Boeing jet.
By late October, the strike was estimated to have cost Boeing, its workers, and suppliers nearly $10 billion in lost wages, earnings, and supplier losses, according to Anderson Economic Group.
Wall Street analysts remain cautious on how fast the plane maker can ramp up production of planes. Much of it which was on pause during the strike that began Sept. 13.
“While the strike ending and workers returning to the shopfloor is a meaningful step in the right direction, ramping [production] back up will take time,” Bank of America Global Research analysts said, maintaining their Neutral rating on the stock with a price target of $170.
Last month Boeing announced a 10% workforce reduction, and last week it raised more than $21 billion in capital in a move widely anticipated by Wall Street.
“Restarting and increasing production is necessary for the company to start generating cash and repaying debt,” Ben Tsocanos, aerospace director at S&P Global Ratings, said following the union vote.
The contract approved by IAM includes a wage increase of 38% over the next four years.
Prior to the vote the union posted a message encouraging its members to approve the offer.
“We have accomplished an amazing agreement together,” read the IAM website. “Your entire bargaining committee believes it is time to settle this strike and move forward.”
Workers can return back to their shifts as early as Wednesday, but not later than Tuesday, Nov. 12.
“While the past few months have been difficult for all of us, we are all part of the same team,” Ortberg wrote in a message to employees after the bargaining agreement was approved by 59% of union members.
