GE Aerospace Stock Falls After Labor Deal. A Boeing Staff Dispute Is Ongoing.

Parts of a Leap engine produced by the GE Aerospace-Safran CFM joint venture. Coming into Monday trading, GE Aerospace stock was up about 81% this year. (BARTOSZ SIEDLIK/AFP via Getty Images)

Key Points

About This Summary

• GE Aerospace shares fell after United Auto Workers ratified a new five-year contract, ending a three-week strike.
• The contract includes a 21% wage increase over five years; some workers could earn $123,000 annually with benefits.
• Jefferies maintains a Buy rating on GE Aerospace with a $350 target, noting the union secured key wins.

GE Aerospace stock fell, barely, on Monday after workers voted to end a strike on Friday evening.

Shares of the jet engine maker lost 12 cents, down less than 0.1%, closing at $301.02, while the S&P 500 and Dow Jones Industrial Average added about 0.4% and 0.1%, respectively.

The move comes after workers represented by the United Auto Workers in the Cincinnati area agreed to a new five-year labor contract after a three-week strike. The deal increases wage rates by 21% over five years.

A worker making roughly $83,000 a year now could make $123,000 a year, after all benefits and cash bonuses are included, according to Barron’s analysis of the offer.

“GE Aerospace is pleased to have agreements that recognize our commitment to our employees and their families in the Greater Cincinnati area,” said Christian Meisner, chief human resources officer at GE Aerospace. “With these contracts in place, we look forward to our UAW-represented employees returning to work and resuming normal operations, continuing to deliver for our customers, and driving our shared success.”

“The success of these negotiations was due partly to our strong commitment to GE Aerospace and our dedication to our historical relationship,” said IAM Collective Bargaining Director and lead negotiator Craig Norman in a news release. “This agreement provides stability for the membership and the company.”

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The striking workers only represented about 1% of GE Aerospace’s workforce, wrote Jefferies analyst Sheila Kahyaoglu in a Sunday report. The “UAW secured three key victories with minimum headcounts and new work, additional vacation time, and nearly all health care premium increases covered by GE,” she added.

Kahyaoglu rates GE Aerospace shares Buy and has a $350 price target for the stock. She rates Boeing shares Buy and has a $255 price target for the stock.

Boeing resolved a significant strike impacting commercial plane production in November. A smaller strike impacting production of some defense products is ongoing. Workers represented by the International Association of Machinists and Aerospace Workers walked off the job in August.

The IAM recently voted on a contract offer that didn’t come from the company. Boeing didn’t appreciate the vote.

“It’s unfortunate that union leadership led its members to vote on something that isn’t real,” said Dan Gillian, Boeing Air Dominance vice president and general manager and senior St. Louis site executive, in a news release. “Our previous offer is real and would make our team among the highest-paid manufacturing employees in the St. Louis area. Most people would not consider a 45% average wage increase, free primary care, and more vacation time unfair or disrespectful.”

The strike impacts about 3,200 workers. Boeing employs about 170,000 people around the globe.

Boeing shares fell 1.6%, closing at $212.09. Coming into Monday trading, Boeing’s stock was down about 8% in September. GE Aerospace stock was up about 9%, six percentage points better than the S&P 500.

The strikes probably aren’t the reason for either stock move. In the case of Boeing, investors might be concerned with more delays to the 777X, the company’s newest twin-aisle jet, which it is trying to certify with the aviation regulator.

Deliveries of the new jet could start in late 2026. That might slip into 2027. That could have a financial impact on the company. More time means less revenue and the possibility that Boeing could have to compensate airlines for missing delivery dates.

Overall, investors feel good about the progress Boeing has made in turning around operations and the outlook for commercial aerospace. Coming into the week, Boeing stock was up 22% this year. GE shares were up 81%.

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