Following a walkout by over 30,000 machinists on Friday that prevented the company from producing its 737 MAX and other aircraft, Boeing announced on Wednesday that it will be temporarily furloughing tens of thousands of workers.
“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.”
Ortberg also said 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 strike that is not likely to be easily resolved given the anger among rank-and-file workers.
The strike, Boeing’s first since 2008, adds to a tumultuous year for the planemaker which began when a door panel blew off a new 737 MAX jet in mid-air in January.
A protracted labour battle could cost Boeing several billion dollars, further straining finances and threatening its credit rating, analysts said.
“It’s unlikely that the cuts will fully offset the costs of a prolonged strike,” said Ben Tsocanos, aerospace director at S&P Global Ratings.
Boeing and the International Association of Machinists and Aerospace Workers (IAM) are talking in the presence of federal mediators. The union said Tuesday it was frustrated with the first day of mediation, which it said Boeing was not taking seriously.
The union has been pushing for a 40 percent raise over four years in its first full contract negotiations with Boeing in 16 years, well above the planemaker’s offer of 25 percent, 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.
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