Troubled aerospace giant Boeing (NYSE:BA) is shaking up bonus structures for its workforce to increase accountability for safety and quality.
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The move comes amid multiple quality issues with Boeing’s planes, including a door panel blowout at 16,000 feet in January. According to the Wall Street Journal, Boeing is making the largest pay structure shift in its commercial business. Around 60% of annual bonuses will now be tied to safety and quality parameters in the unit. In its defense and services units, quality and safety will determine employees’ operational performance scores.
Boeing has been heavily criticized over the past few months due to a lack of quality controls and production processes. In January, the FAA (Federal Aviation Administration) limited the production of Boeing’s 737 MAX planes.
Boeing is also facing demands for a nearly 40% wage hike from the International Association of Machinists and Aerospace Workers union. Reportedly, the negotiations are set to begin today. This will be the first complete contract negotiation for Boeing in 16 years, with a key union demand being that the company commit to producing its new planes by its workers, according to the WSJ.
Meanwhile, a tire flew off a Boeing 777-200 plane after takeoff from San Francisco yesterday, leading to an emergency landing in Los Angeles.
Is BA a Good Buy Right Now?
Boeing’s stock price has plunged by nearly 22% year-to-date due to quality and safety woes at the company. Additionally, the FAA oversight and ongoing probes continue to weigh heavily on investor sentiment in the stock. Overall, the Street has a Moderate Buy consensus rating on Boeing alongside an average price target of $264.
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