Workers hold picket signs during a strike outside a Boeing manufacturing plant in Everett, Washington, USA, Friday, September 13, 2024.
M. Scott Brauer | Bloomberg | Getty Images
Boeing The company on Monday announced major cost-cutting measures, including a hiring freeze, halting non-essential employee travel and reducing spending on suppliers, to conserve cash in response to a strike by more than 30,000 factory workers.
Boeing factory workers, mostly in the Seattle area, overwhelmingly rejected a tentative labor agreement and began a strike early Friday morning, halting most of Boeing’s aircraft production.
Chief Financial Officer Brian West said in a memo to employees that the company would “significantly reduce” spending with suppliers and halt most orders for the 737 Max, 767 and 777 jetliners, the first clear sign of how the strike would affect hundreds of suppliers that depend on Boeing’s operations.
“We are working in good faith to reach a new contractual agreement that incorporates their feedback and allows us to resume operations,” West said in the memo. “However, our business is at a challenging time, this strike has significantly jeopardized our recovery, and we must take the necessary steps to preserve cash and protect our shared future.”
He added that Boeing has no plans to cut funding for safety, quality and direct customer support operations.
Boeing factory workers and supporters gather on a picket line near the entrance to a Boeing production facility in Renton, Washington, USA, on September 15, 2024, on the third day of a strike.
David Ryder | Reuters
The economic impact of the strike will depend on how long it lasts, but Boeing is focused on conserving cash, West said at a Morgan Stanley conference on Friday. He said the company’s new CEO, Kelly Ortberg, wants to return to the negotiating table immediately to reach a new agreement.
“We are also considering the difficult step of furloughing a number of employees, managers and executives over the coming weeks,” West said.
Moody’s on Friday put all of Boeing’s credit ratings on review for downgrade, and Fitch Ratings said it could downgrade Boeing’s ratings if the strike continues for a long time, which could further increase borrowing costs for the already-indebted manufacturer.
Boeing lost about $8 billion in the first half of the year as production slowed after a devastating door panel explosion earlier in the year.