Boeing announced on Wednesday (September 18) that it will begin furloughing tens of thousands of employees due to the ongoing strike by roughly 30,000 machinists, which started last Friday.
The strike has halted production of key aircraft, including the 737 MAX, resulting in major disruptions for the company.
Boeing CEO Announces Layoffs
In a message to employees, CEO Kelly Ortberg stated that the layoffs would be implemented in the coming days and would affect executives, managers, and other US-based employees.
These employees will be required to take one week off without pay every four weeks during the strike. Ortberg explained that while this decision was difficult and affected everyone, it was necessary to preserve Boeing's long-term future and help the company navigate this challenging period.
According to Reuters, the CEO and other top executives will also take proportional pay cuts for the duration of the strike, although specific details were not disclosed.
The move suggests that Boeing is preparing for a potentially prolonged labor dispute, as the machinists' union and the company remain at odds over the terms of a new contract.
The union is pushing for a 40% wage increase over the next four years, far exceeding Boeing's offer of 25%. The machinists are also demanding the reinstatement of a traditional pension plan and other contract improvements.
Negotiations between the two parties, which resumed on Tuesday with the help of federal mediators, have so far shown little progress. The union has voiced frustration, accusing Boeing of not taking the mediation process seriously.
The strike was Boeing's first since 2008 and came at a challenging time for the company, which has been grappling with several issues, including a recent incident involving a 737 MAX door panel that detached mid-flight.
Experts warn that a prolonged strike could cost Boeing billions of dollars, further straining its financial situation, which is already burdened by $60 billion in debt. The company has halted the hiring of new workers and paused most orders for components across its jet programs, except for the 787 Dreamliner.
The layoffs will affect a large portion of Boeing's workforce in the US, though the exact number remains unclear. Boeing began the year with 171,000 employees, and estimates suggest the furloughs could impact tens of thousands.
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Boeing Machinists' Strike
While the machinists' strike has brought production to a standstill for the 737 MAX, 777, and 767 jets, Boeing has assured that essential operations related to safety, quality, customer support, and key certification programs will continue.
Production of the 787 Dreamliner, which is built by nonunion workers in South Carolina, is also expected to proceed uninterrupted.
Suppliers to Boeing are also feeling the effects of the strike, with some contemplating their own furloughs as the production halt disrupts the supply chain. The aerospace giant's network of suppliers could face significant financial pressure if the strike drags on, adding to the challenges Boeing is already facing.
Boeing shares have dropped approximately 40% this year, reflecting investor concerns over the company's financial health and ongoing challenges.
As the strike continues into its sixth day, the machinists' union and Boeing are scheduled to return to the negotiating table, with federal mediators again expected to assist in the discussions.
The union has made it clear that it will not back down from its demands, increasing the likelihood of a prolonged labor dispute, according to AP News.
Related Article: Boeing Strikes Tentative Deal with Unions, Offers 25% Raise Over Four Years
