Workers hold picket signs outside a Boeing Co. manufacturing facility during a strike in Everett, Washington, U.S., Friday, Sept. 13, 2024.
M. Scott Brauer | Bloomberg | Getty Images
Boeing announced sweeping cost cuts on Monday, including a hiring freeze, a pause on non-essential staff travel and a reduction in supplier spending to preserve cash as it grapples with a strike by more than 30,000 factory workers.
Workers at Boeing factories, mostly in the Seattle area, began walking off the job early Friday after overwhelmingly rejecting a tentative labor deal, halting most of Boeing's aircraft production.
The manufacturer will make “significant reductions” in spending from suppliers and suspend most purchase orders for its 737 Max, 767 and 777 aircraft, Chief Financial Officer Brian West said in a note to staff. It was the first clear sign of how the strike will affect the hundreds of suppliers that rely on Boeing work.
“We are working in good faith to reach a new contractual agreement that reflects your feedback and allows operations to resume,” West said in his note. “However, our business is going through a difficult period. This strike jeopardizes our recovery significantly and we must take the necessary steps to preserve cash and safeguard our shared future.”
He added that Boeing is not making any cuts in funding for safety, quality and direct customer service work.
Boeing factory workers and their supporters gather on a picket line during the third day of a strike near the entrance of a Boeing production plant in Renton, Washington, U.S., September 15, 2024.
David Ryder | Reuters
The financial 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 added that the company's new chief executive, Kelly Ortberg, wants to return to the negotiating table immediately to reach a new deal.
“We are also considering the difficult step of temporarily furloughing many employees, managers and executives in the coming weeks,” West said.
On Friday, Moody's put all of Boeing's credit ratings on review for a downgrade and Fitch Ratings said a prolonged strike could put Boeing at risk of a rating downgrade. That could increase borrowing costs for a manufacturer already saddled with mounting debt.
Boeing burned through about $8 billion in the first half of the year as production slowed in the wake of a near-catastrophic door panel explosion earlier this year.
