Spirit Aerosystems, major airlines supplier, suspends plant operations after labor contract rejected

Spirit Aerosystems, a major supplier to the world's largest aircraft manufacturers, is suspending operations at a critical Kansas plant after union workers there rejected a proposed four-year contract and authorized a strike.

Approximately 6,000 members of the IAM District 70, Local 839 voted to reject Spirit Aerosystems' best and last offer after 13 years without a fully negotiated agreement, the International Association of Machinists and Aerospace Workers said in a prepared statement.

Shares of Boeing Co. and Airbus slid about 2%, and shares of Spirit Aerosystems Holdings Inc. tumbled 10% at the opening bell.

The tentative deal that was rejected had included up to a compounded 34% average pay bump through general wages increases, cost-of-living adjustments, and a guaranteed annual bonus; a 14.7% increase in retirement benefits; increased paid time off; job security enhancements and made Sunday overtime voluntary.

A strike is scheduled to start on Saturday.

“Most of our members have concluded that the company’s offer is unacceptable,” the union said in a prepared statement. "IAM District 70 and Local 839 will regroup and begin planning the following steps to bring the company back to the table.”

The IAM is an industrial trade union that representing about 600,000 active and retired members in the aerospace, defense, airlines, railroad, transit, healthcare, automotive, and other industries.

Operations at the factory will be suspended starting Thursday, Spirit said. The company said union employees should not show up for work, but would be paid for their regularly scheduled hours. All scheduled overtime was canceled. Employees not represented by the IAM were instructed to show up for work as normal.

“We are disappointed that our employees represented by the IAM rejected our four-year contract offer and voted to strike. We believe that our fair and competitive offer recognizes the contributions of our employees and ensures we can successfully meet increasing demand for aircraft from our customers,” the Wichita, Kansas, company said in a prepared statement.

Aircraft manufacturers have wrestled with supply issues in recent years and a strike at Spirit Aerosystems at the Wichita plant could add to those headaches.

Spirit builds the fuselage for Boeing's 737 MAX narrowbody jet and substantial sections of aircraft bodies in other of its models. It builds components for Airbus aircraft as well.