Boeing Co., the aerospace behemoth, is enacting various cost-reduction strategies in response to the ongoing machinists' strike. These measures include a hiring freeze, reduced supplier spending, and potential temporary furloughs, according to a company memo.
Bloomberg has reported that Boeing's precarious financial standing may threaten its credit rating, potentially lowering it to below investment grade.
Approximately 33,000 members of the machinists' union commenced the strike last Friday after overwhelmingly rejecting Boeing's proposed four-year contract. This strike, the first for the company since 2008, has adversely impacted its commercial airplane production, which was already facing challenges due to various safety concerns.
In a memo addressed to employees, Chief Financial Officer Brian West announced a halt in hiring across all levels and the consideration of temporary layoffs to conserve cash during the strike. Reports suggest that employees were apprised of these urgent measures to aid the company's recovery.
Other planned steps include suspending non-essential travel, pausing salary increases linked to promotions, cutting expenditures for air shows and charitable donations, and significantly reducing supplier expenses. Boeing will also cease issuing the majority of its supplier purchase orders for the 737, 767, and 777 jetliner programs affected by the walkout.
West highlighted, "Our business is in a difficult period. This strike jeopardizes our recovery significantly, and we must take necessary actions to preserve cash and safeguard our shared future."
Last Friday, members of the International Association of Machinists and Aerospace Workers (IAM) began their strike in airplane assembly at Boeing's facilities in the Seattle area, Portland, Oregon, and Southern California.
Although Boeing reached a tentative agreement with IAM Districts 751 and W24 on September 8, and the union recommended accepting the deal, union members rejected the proposed contract, deeming it insufficient and voting to strike.
In response to the union's rejection, Boeing reiterated its commitment to resetting its relationship with both its employees and the union, expressing readiness to return to negotiations to achieve a new agreement.
This latest strike presents a significant setback for Boeing, which has been under intense scrutiny in recent years due to safety concerns.
The recent woes started with a January 5 incident where a mid-cabin door plug on an Alaska Airlines Boeing 737-9 MAX plane blew out mid-flight, leading the FAA to ground approximately 171 737 MAX 9 airplanes for several weeks of inspections.
In April, the FAA launched an investigation into an emergency landing by a Southwest Airlines Boeing 737-800 after an engine cover detached and struck the wing flap during takeoff.
Additionally, in mid-August, Boeing suspended flight tests for its new 777X jetliner and grounded the four-aircraft test fleet after discovering structural damage in one of the planes.
