According to the financial news app Zhitong Caijing, the factory workers of the American aviation industry giant Boeing (BA.US) rejected a new labor contract that would raise their wages by 35% over four years. This rejection deal was a major blow to Boeing, the aircraft manufacturer which has been struggling with operational difficulties all year, as the company tried to address the prolonged severe employee strikes through a new contract.

According to representatives of the International Association of Machinists and Aerospace Workers (IAMA), who represent about 33,000 striking workers, approximately 64% of union members who voted on Wednesday opposed the preliminary agreement, meaning about 64% of the striking workers rejected this proposed 35% pay raise. The long-lasting strike has significantly impeded Boeing's recovery process from various crises.

"We are still on strike," said Jon Holden, President of IAM 751, after the vote count. "Our members deserve more, and they have spoken out loudly."

Although the percentage of opposing votes in this round was lower than the overwhelming 94% of opposing votes in September, this outcome represents a significant setback for Boeing's efforts to get the business back on track. Boeing's manufacturing center in the Seattle area has had to halt work on its 737 as well as the larger 767 and 777 aircraft models for over a month, putting significant pressure on its financial situation and alerting credit rating agencies like S&P that Boeing's credit rating may be downgraded to junk status.

The strike has disrupted the financial recovery of this American aircraft manufacturer, and the consequences of this impact will continue until 2025. Boeing executives stated in Wednesday's earnings call that the company is expected to continue consuming cash next year, which is one reason why the company is preparing to issue stocks to increase cash reserves.

Prior to the labor dispute, the aircraft manufacturer was able to generate significant cash flow from the increasing aircraft deliveries. However, Boeing's CFO Brian West recently stated that due to the near halt in Boeing's production activities due to the strike and strict regulatory pressure, Boeing is projected to spend cash at a scale similar to around $4 billion quarterly as earlier this year to maintain the company's daily operations. This will lead to the company's total free cash outflow in 2024 reaching approximately $14 billion, marking the worst performance since the global aviation travel stagnation caused by the COVID-19 pandemic in 2020.

Investors once thought that this vote could be a positive catalyst, helping the aircraft manufacturer achieve a turnaround in years of frequent crises. Boeing's stock price has fallen by about 40% this year, potentially marking the worst annual return level since 2008.

Forecast data shows that labor conflicts are causing the company to lose approximately $0.1 billion in revenue per day, with strikes leading to production halts at Boeing's factories in Washington, Oregon, and California. Boeing's suppliers are also affected. Spirit AeroSystems Holdings Inc. has announced temporary layoffs for 700 employees, with potential layoffs if the strike continues into next month.

Meanwhile, some airlines have had to adjust their growth targets as they are unlikely to smoothly acquire the planes they had planned to purchase next year. Boeing had previously attempted to restore the production rate of 38 737 Max aircraft per month by the end of the year, but analysts now say that this goal may only be achievable by mid-2025.

IAM 751's strike represents the first significant labor conflict Boeing has faced in 16 years. Hourly workers are seeking a 40% pay raise and improved retirement benefits, motivated by minimal wage increases over the past decade while executives reaped hefty rewards, causing resentment among the workers.

The latest agreement attempts to address many of the grievances expressed by employees regarding the company's earlier proposals. However, it does not reinstate Boeing's fixed-benefit pension plan, which remains a potential sticking point for many members.

"For many, the pension loss remains the core issue," Hallton expressed after the vote.

Boeing had previously announced plans to increase contributions to workers' retirement savings plans. The company pledged a one-time $5,000 donation to all eligible employees' 401(k) plans and fully match up to 8% of their wages.

It is understood that the latest agreement was reached with the support of the White House, with U.S. Acting Labor Secretary Julie Su personally visiting Seattle to support the collective bargaining process. Last week, she met multiple times with the union and Boeing's new CEO, Kelly Ortberg, in an attempt to help Boeing break the deadlock.

Spirit Aerosystems has already implemented a series of cost-cutting measures to deal with the negative impact of ongoing strikes, including a 10% workforce reduction, as well as other measures such as freezing recruitment and prohibiting travel. Since the beginning of the year, Boeing has experienced a series of crises, including the incidents involving Alaska Airlines and strikes, leading to a restructuring of senior management with Altberg taking over in August.

Following the Alaska Airlines Boeing 737 MAX 9 cabin door jamming incident, Boeing's aircraft production capacity plummeted under heavy regulatory pressure, coupled with recent negative events such as the ongoing massive strike by Boeing employees, putting Boeing in a serious operational dilemma.

With approximately 0.033 million employees on strike for over a month, significantly disrupting Boeing's production planning and nearly depleting Boeing's cash reserves, Boeing recently announced plans to lay off up to 0.017 million people and incur costs of up to $5 billion. The latest news reveals that these Boeing workers involved in the strike have rejected the latest wage proposal, indicating that Boeing's corporate operation turmoil over the past year continues to persist and shows no signs of easing.