Boeing Stock Shrugs Off Strike Threat After Defense Union Rejects Pay Offer. What to Know.

A United States Air Force F-15 fighter jet speeds through the Dinas Pass. The F-15 is made by Boeing in St. Louis, Missouri. (Photograph by Christopher Furlong/Getty Images)

Boeing stock was rising in early trading Monday after workers in St. Louis rejected a contract offer, raising the potential for another damaging labor strike in just a few days.

“More than 3,200 IAM District 837 members at Boeing facilities in St. Louis, St. Charles, Mo., and Mascoutah, Ill., have overwhelmingly voted to reject the company’s contract offer during a vote held on Sunday, July 27,” read part of a news release from the International Association of Machinists and Aerospace Workers.

The existing contract expired at 11:59 p.m. Central time. There is a seven-day cooling-off period before a strike would begin.

Boeing stock was up 0.7% in premarket trading at $234.58, while S&P 500 and Dow Jones Industrial Average futures were rising 0.3% and 0.2%, respectively.

Local 837 represents about 3,200 Boeing workers. The company’s defense unit employs more than 18,000 workers in total. Sales in 2024 totaled almost $24 billion. The segment, however, lost $5.4 billion in operating profit. Money-losing fixed-price contracts have weighed on results.

In September, some 33,000 Boeing workers in the Pacific Northwest went on strike, shutting down production of 737 and 777 jets for more than seven weeks. It took three votes and four offers to reach an agreement. The accepted deal will raise average machinist wages to roughly $119,000 a year from $76,000, according to Boeing. There are many ways to calculate wage gains based on seniority changes and benefits, but those two numbers are a 57% increase over the four-year life of the contract.

The rejected offer for workers making F-15 and F-18 fighter jets, among other things, included 40% potential average wage growth over the life of the contract, according to Boeing. The average annual wage could have reached $102,600 from $75,000. The contract ratification bonus was $5,000.

Boeing didn’t immediately respond to a request for comment on Sunday, but said on its website: “We’re disappointed our employees voted down the richest contract offer we’ve ever presented to IAM 837, which addressed all their stated priorities. We’ve activated our contingency plan and are focused on preparing for a strike. No talks are scheduled with the union.”

The potential for another strike for Boeing is certainly something investors should be watching. Still, the potential defense business strike isn’t as significant for investors as the larger strike affecting the commercial airplane business.

Coming into Monday trading, Boeing stock was up about 32% so far this year, just off its 52-week high. Investors have been encouraged by recent production improvements in the commercial airplane business.

Write to Al Root at allen.root@dowjones.com