© Reuters. FILE PHOTO: A Boeing 737 MAX-10 lands over the Spirit AeroSystems logo during an airshow at the 54th International Paris Air Show at Le Bourget near Paris, France, June 22, 2023. REUTERS/Benoit Tessier/File Photo
Written by Valerie Encina
WASHINGTON (Reuters) – Spirit AeroSystems said it will begin resuming operations at its Wichita, Kansas, plant on Friday after union workers voted on Thursday to accept a new contract and end a strike that has shut down work for a week.
After a vote in which union employees represented by the International Association of Machinists and Aerospace Workers (IAM) agreed to a four-year deal, Spirit said it will coordinate closely with its suppliers and customers as it resumes full production on July 5.
The rejection of an earlier offer on June 21 sent shockwaves through the aerospace industry, as Spirit is a cornerstone of the US aerospace industry, making major airframes for US manufacturer Boeing (NYSE:) and European rival Airbus.
Its Wichita plant is particularly important to Boeing, where workers on site manufacture the entire airframe of the best-selling 737 MAX, as well as the front fuselage of most other Boeing aircraft. It also produces turrets for the Airbus A220.
The new four-year contract, which union leaders endorsed on Tuesday, includes additional pay increases, allows employees to keep their existing health care plans and eliminate mandatory overtime on weekends — three features workers identified as priorities for the deal.
“It’s never an easy take on a vote to go on strike, but our members felt the exclusion of vital medicines in their basic insurance plan was unacceptable,” said Craig Martin, IAM’s Chief of Staff for the Southern Territory.
The deal is a boon for Boeing, which is on the verge of increasing MAX production from 31 to 38 aircraft per month. Stan Deal, CEO of Boeing Commercial Airplanes, said on June 18 that the production ramp is set to happen “very soon.”
Although Boeing maintains some buffer stock, analysts warn that a prolonged strike could force the company to slow or halt MAX production. Cowen analyst K. von Rumor wrote in a June 22 note to clients that a two- to three-week outage could begin to affect the 737’s output.
Michele Merlozzo, director of aviation market analysis for AIR Consulting Group, said the agreement “provides a certain degree of stability” as Boeing looks forward to negotiations with the Seattle-area machinists’ union next year.
It also solves a major dilemma for Spirit, which has been under financial pressure and expects to burn through cash this year. The company has been the source of several high-profile production defects on Boeing aircraft, such as the improper installation of a bracket on the 737’s vertical tail.