On Sunday, Boeing announced it has come to a preliminary agreement with a union that represents over 32,000 workers in the Pacific Northwest, which may prevent a major strike that could start as soon as September 13.

If the contract is accepted, this four-year proposal includes a 25% general wage increase and a commitment to construct the next commercial airplane in the Seattle area. This deal is a significant achievement for new Boeing CEO Kelly Ortberg, who started last month and is focused on improving quality, a goal that could be supported by a positive relationship with labor.

This would be the first comprehensive labor contract in the past 16 years, which also promises improved retirement benefits and greater union involvement in overseeing safety and quality in production. The union claims it is the best contract it has ever negotiated, emphasizing the dedication of its workers to manufacturing high-quality airplanes.

Boeing is currently facing a crisis regarding product quality and is under close inspection from both regulators and customers after a door plug detached from a recently delivered MAX aircraft mid-flight in January.

The agreement will require approval from Boeing factory workers near Seattle and Portland, Oregon, who are members of the International Association of Machinists and Aerospace Workers (IAM). The deal could be rejected if it doesn’t receive majority support from the workers, and a potential strike could be called if two-thirds of workers approve it in a second vote.

If the union members ratify the agreement on Thursday, Boeing will commit to producing a replacement for the popular 737 model in its Pacific Northwest facilities if the project begins during the duration of the contract. However, Boeing has not revealed when the announcement for its next aircraft will take place.

Boeing and its competitor Airbus are in the initial stages of developing strategies for new models to replace their best-selling single-aisle airplanes, which are expected to come into service in the late 2030s.

Boeing’s decision to reaffirm its commitment to the main manufacturing center in the Northwest for new airplanes is a shift from past strategies that included exploring various locations, which has caused friction with the IAM.

“This aligns with our other flagship models, ensuring job security for future generations,” stated Stephanie Pope, CEO of Boeing Commercial Airplanes, in a message addressed to employees.

Ortberg faces pressure to change Boeing’s company culture in a way that enhances product quality and also addresses labor relations and the company’s outlook moving forward, remarked aerospace analyst Richard Aboulafia. Ortberg previously held a position at Rockwell Collins before moving to Seattle to lead Boeing.

“Transforming the culture begins with a new approach towards labor and looking toward future product development,” Aboulafia added.

Boeing is also dealing with intense financial challenges, as it continues to operate at a loss. In July, the company reported a significant net loss of $1.44 billion for the second quarter.

Recently, Wells Fargo indicated that Boeing may not meet its annual cash flow target of $10 billion until approximately 2027-2028 and might need to secure around $30 billion in funding before launching a new jet. Wells Fargo analyst Matthew Akers noted that Boeing currently has a net debt of approximately $45 billion.

A ratified deal would provide Boeing with labor stability as it grapples with cash shortages and aims to ramp up production of the high-demand 737 MAX to reach a goal of 38 aircraft per month by year’s end.

While the union did not achieve its initial goal of a 40% wage increase, it still regarded the agreement positively.

“Even though we couldn’t meet every objective, we can genuinely claim that this proposal is the finest contract we have crafted in our history,” stated the IAM’s local union representing Boeing employees.

The contract comes at a time when workers are leveraging strong labor markets to secure better terms. For instance, last fall, the United Auto Workers union negotiated a similar 25% wage increase over four and a half years with the Big Three automakers.

Negotiations have been under the observation of officials from the Biden administration. Acting Labor Secretary Julie Su urged both parties last week in an interview with Reuters to come to a “fair contract.”

Su has reportedly spoken with both Ortberg and the local union head Jon Holden regarding the negotiations.

Boeing workers, who manufacture the widebody 777 and 767 models along with the MAX, had previously voted in favor of a strike authorization in July.