Boeing will temporarily furlough thousands of U.S. executives, managers and other staff, citing the ongoing workers strike as the company races to preserve cash. The decision to furlough was announced to the employees by CEO Kelly Ortberg on Wednesday. Boeing furlough was after about 30,000 machinists went on union strike on Friday, halting production of its 737 MAX and other airplanes.
“We are initiating temporary furloughs over the coming days that will impact a large number of US-based executives, managers and employees,” CEO Kelly Ortberg said in an email to employees. “We are planning for selected employees to take one week of furlough every four weeks on a rolling basis for the duration of the strike.”
Boeing executive furlough and pay reduction
As per CEO, he and other Boeing leaders “will take a commensurate pay reduction for the duration of the strike.” The extensive furloughs show Ortberg is preparing the company to weather a prolonged Boeing union strike that is not likely to be easily resolved given the anger among rank-and-file workers.
Boeing union strike impact
A protracted labor battle could cost Boeing several billion dollars, further straining finances and threatening its credit rating, analysts said.
The union has been pushing for a 40% raise over four years in its first full contract negotiations with Boeing in 16 years, well above the planemaker’s offer of 25%, which was resoundingly rejected.
Brian Bryant, the IAM’s international president, said actions like furloughs and the cutback in salaries amounted to “smoke and mirrors,” given earlier company spending on bonuses and compensation for top executives.
Union’s thought on furlough
“This is just part of their plan to make it look like they’re trying to save money,” added Bryant who was in the Seattle area picketing on Wednesday with the “resilient” membership.
“The ball is in Boeing’s court. They could settle this strike tomorrow,” Bryant said, adding it would take fair pay, pension, restoring a bonus and health insurance.
The company employs about 150,000 people in the U.S. It is unclear exactly which employees are affected by the furloughs. A union representing Boeing’s engineers said their members were not affected.
Risk for Boeing suppliers
The strike, now six days old, also carries risks for the company’s vast network of suppliers, some of whom are also considering furloughs, as per report.
“Certainly suppliers are worried,” said Nikki Malcom, CEO of the Pacific Northwest Aerospace Alliance. “It’s going to have a significant impact on suppliers if it goes on a long time.”
On Monday, Boeing said it was freezing hiring to cut costs as its balance sheet is already burdened with $60 billion of debt.
Boeing stock update
Boeing stock have fallen about 40% so far this year. Boeing share price was at $155.11 at closing down 0.82% on Wednesday.
