Boeing to Furlough Thousands Amid Union Strike to Conserve Cash

Boeing's CEO announced that the company will furlough numerous employees in response to a union machinists' strike. The strike, which began last week, demands higher wages and better terms. The furloughs, lasting one week every four weeks, aim to conserve cash as production halts and the company navigates financial challenges.

Boeing's CEO declared on Wednesday the initiation of large-scale furloughs to conserve cash amid a strike by union machinists that started last week.

Chief Executive Kelly Ortberg emphasized these temporary layoffs will impact executives, managers, and other employees.

Approximately 33,000 Boeing factory workers in the Pacific Northwest commenced a strike last Friday after a proposal to raise pay by 25% over four years was rejected. The workforce demands pay raises of at least 40% and other improvements in the proposed deal.

Ortberg indicated that the furloughs will affect tens of thousands of employees, with furloughs lasting one week every four weeks. He and other senior executives are set to take pay cuts during the strike's continuation.

Production of several Boeing models, including the popular 737 Max, has been halted due to the strike, significantly impacting Boeing's cash flow as the company earns more than half of the purchase price upon plane delivery.

In a memo to employees, Ortberg mentioned ongoing discussions with the International Association of Machinists and Aerospace Workers regarding a new contract agreement.

"With production paused in key programs across the Pacific Northwest, our business faces substantial challenges. It is crucial to take difficult steps to preserve cash and ensure Boeing's successful recovery," Ortberg noted.

Boeing's financial officer had warned of potential temporary layoffs earlier in the week. The company, headquartered in Arlington, Virginia but with major commercial-airplanes business in the Pacific Northwest, is also reducing spending on suppliers, freezing hiring, and eliminating most travel.

(With inputs from agencies.)