Boeing’s CEO said Wednesday that the company will begin furloughing a “significant number” of employees. Save cash This comes amid a machinists union strike that began last week.
Chief Executive Officer Kelly Ortberg said those who will have to take unpaid leave over the next few days include U.S.-based executives, managers and other employees.
“This is a difficult decision that will affect everyone, but it is part of our efforts to protect our long-term future and navigate these extremely challenging times,” Ortberg said in a company-wide employee message.
Boeing has not said how many employees will be furloughed, but the number is expected to run into the tens of thousands. Aerospace giant At the beginning of this year, it had 171,000 employees.
About 33,000 Boeing factory workers in the Pacific Northwest The strike began After rejecting a proposed 25 percent pay increase over four years, they said Friday they want a minimum 40 percent pay increase, the restoration of traditional pension plans and other improvements in the proposed contract they rejected.
strike Boeing is halting production of several plane models, including its best-selling 737 Max. The strike would hit Boeing’s cash flow quickly because the company receives more than half the purchase price of new planes when they are delivered to buyers.
Ortberg said selected employees would be furloughed one week every four weeks while keeping their benefits, and the CEO and other senior executives would take pay cuts for the duration of the strike, but he did not say how large the cuts would be.
He said all work related to safety, quality, customer support and certification of new aircraft will continue during the layoffs, including production of the 787 Dreamliner jets, which are built by non-union workers in South Carolina.
Ortberg said in a memo to employees that the company is in discussions with the International Union of Machinists and Aerospace Workers about a new contract agreement that could be ratified.
“But with production suspended across many key programs in the Pacific Northwest, our business faces significant challenges and it is critical that we take difficult steps to preserve cash and ensure Boeing is positioned to recover,” he said.
Boeing Chief Financial Officer Employees were warned Earlier this week, it announced there may be temporary layoffs.
The airline, which is headquartered in Arlington, Virginia, but has most of its commercial aircraft operations in the Pacific Northwest, has also cut spending on suppliers, imposed a hiring freeze and all but eliminated business travel.
Representatives from the company and the union met with a federal mediator on Tuesday to resume negotiations and were scheduled to meet again on Wednesday. The union said in a post on its website to members that it was frustrated by the first day of new negotiations.
“The company has been unprepared and unwilling to address the wage and pension issues that you have all made clear are essential to ending the strike,” the union said. “It appears the company is not taking mediation seriously.”
Striking workers are picketing at several locations. Seattle areaThe strikes took place in three states: New Jersey, Oregon and California. The union, which recommended the proposal that 96 percent of its members later voted against, is surveying workers to find out what they want in a new contract. The union’s last strike at Boeing was in 2008 and lasted about two months.
If the strike doesn’t end soon, Boeing’s credit rating could be downgraded to non-investment grade or junk status, which would raise its borrowing costs. Shortly after the strike began on Friday, Moody’s put Boeing’s ratings under review for a possible downgrade, and Fitch said a downgrade became more likely if the strike lasted more than two weeks.