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(Bloomberg) — Boeing factory workers rejected a new labor contract that would have increased their wages by 35% over four years, deepening a crisis for the planemaker as it struggles to overcome crippling work stoppages.

About 64% of union members who cast ballots Wednesday voted against the tentative agreement, according to the district’s International Association of Machinists and Aerospace Workers, which represents 33,000 striking workers.

“We continue to strike,” announced Jon Holden, president of IAM District 751, after the votes were counted. “Our members deserve better and have spoken out.”

While the opposition this time was less than the overwhelming 94% vote to reject the company’s initial offer in September, the result is a setback in Boeing’s efforts to get operations back on track. The planemaker was forced to suspend work on its 737 and larger 767 and 777 airliner models at its Seattle manufacturing center for more than a month, straining its finances and putting credit rating companies on alert for a possible downgrade to junk. .

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“Basically, October is gone, part of November is gone, and it will cascade throughout the supply chain,” Sheila Kahyaoglu, an analyst at Jefferies, said on Bloomberg TV.

Boeing fell 3.2% in pre-open trading in the US. The company’s shares are down 40% this year, making them record their worst annual performance since 2008.

The move will bring Boeing and the union back to the negotiating table after six weeks of talks that ultimately led to the White House sending acting Labor Secretary Julie Su to Seattle to help break the impasse. Even though Boeing’s latest salary offer was higher than the initial 25% raise, workers are still outraged that their defined benefit pension plan has not been restored.

“For many union members, the main concern is still the loss of their pension,” Holden said. “We will put all our cards on the table” to see what Boeing can offer in lieu of a pension plan, he added.

The strike has disrupted the planemaker’s financial recovery, and its effects will be felt well into 2025. Boeing expects to burn cash next year, one of the reasons the company is preparing a potential equity sale to shore up its reserves, executives said during Wednesday’s earnings call .

The manufacturer was on track to generate revenue growth from growing jet deliveries before the labor conflicts. With that activity all but halted, Boeing expects to burn about $4 billion in cash in the fourth quarter, similar to outflows earlier this year, according to Chief Financial Officer Brian West. This would bring the company’s total free cash flow to about $14 billion in 2024, which would be the worst result since the Covid pandemic flattened air travel in 2020.

Investors saw the vote as a possible positive catalyst to help the planemaker emerge from the crisis after a year of cascading crises. By some estimates, labor conflicts are costing the company about $100 million a day in lost revenue, and the shutdown has closed Boeing plants in Washington, Oregon and California.

Boeing’s new CEO, Kelly Ortberg, has already implemented a series of cost cuts to weather the impact of the strike, including a 10% job cut and other measures that include a hiring freeze and a travel ban. Ortberg took over in August following changes in senior management following the growing crises at Boeing since the beginning of the year.

The effects of the crisis also affect Boeing’s suppliers. stated that it would lay off 700 workers and that it may have to resort to layoffs if the strike continues next month.

Meanwhile, some airlines have had to revise their development targets because they are unlikely to receive the planes they had planned for next year. Boeing had previously aimed to restore 737 Max production to 38 per month by the end of the year, and analysts now say that goal is unlikely to be achieved before 2025.

The strike in IAM District 751 is the first serious labor conflict at Boeing in 16 years. As hourly workers call for 40% pay increases and better retirement benefits, they are resentful of receiving paltry raises over the past decade while senior executives have been richly rewarded.

“I’m all for a fair contract,” said Charles Fromong, 59, a machine tool repairman who works in Boeing’s military aircraft division. “The strike is just a byproduct of Boeing not paying people what they are worth.”

– With help from Danny Lee, Zoe Ma, Michael Sin, Jonathan Ferro and Annmarie Hordern.

(Update with analyst comment in fifth paragraph.)

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