Boeing CEO Kelly Ortberg told employees that the company will furlough thousands of employees, including executives and managers, after more than 30,000 workers went on strike over a rejected labor contract.
The new four-year contract offer promised a 25 percent pay rise over four years and improvements to terms and conditions, after being recommended by staff union leaders. However, 96% of employees reject the agreement, affecting operations at plants that make the 737 MAX, 777 and 767 freighters.
Affected employees will take one week off every four weeks for the duration of the strike and Ortberg and his team will take pay cuts until the company and the International Association of Machinists and Aerospace Workers reach an agreement.
“Although this is a difficult decision that affects everyone, it comes in an effort to preserve our long-term future and help us get through this very difficult time. We will continue to communicate transparently as this dynamic situation evolves and will do everything we can to mitigate the risks,” Ortberg explained. These difficulties.”
After the strike began, Fitch Ratings warned that a prolonged strike could lead to a downgrade of Boeing’s rating, while Moody’s placed Boeing’s credit rating on review for a downgrade.
Boeing has already put in place spending cuts, including a hiring freeze, cost reductions at suppliers and bans on non-essential, first and business class travel during this “difficult period”.
“This strike significantly jeopardizes our recovery and we must take action to preserve cash and protect our shared future,” Boeing Chief Financial Officer Brian West told employees in a letter last week. “So our immediate focus is to focus on cash conservation measures, and we will do that.”
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