Boeing Furloughs Thousands Amid Ongoing Unresolved Strike, Reports Reuters

By David Shepardson and Allison Lampert

Boeing announced on Wednesday that it will temporarily furlough tens of thousands of employees after approximately 30,000 machinists went on strike on Friday, halting production of the company’s popular 737 MAX and other aircraft.

In an email to employees, CEO Kelly Ortberg stated, "We are initiating temporary furloughs over the coming days that will impact a large number of U.S.-based executives, managers, and 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."

This strike marks Boeing’s first since 2008 and adds to the challenges the company has faced this year, which began with a door panel detaching from a new 737 MAX jet in mid-air in January.

Ortberg also mentioned that he and other Boeing leaders would be taking pay reductions during the strike. The company and the International Association of Machinists and Aerospace Workers (IAM) have held two days of discussions with federal mediators. However, the union expressed frustration with the first day of mediation and reported no significant progress after the second day of talks.

"While we remain open to further discussions, whether directly or through mediation, currently there are no additional dates scheduled," the union stated. "We are fully committed to fighting for the contract our members deserve."

The furloughs indicate that Ortberg is preparing for a potential prolonged strike, which analysts believe could cost Boeing several billion dollars, further straining its finances and putting its credit rating at risk. "It’s unlikely that the cuts will fully offset the costs of a prolonged strike," noted Ben Tsocanos, aerospace director at S&P Global Ratings.

The union is demanding a 40% wage increase over four years in its first full contract negotiations with Boeing in 16 years, while Boeing’s offer of 25% was rejected by union members.

Brian Bryant, the IAM’s international president, criticized the furloughs and pay cuts as "smoke and mirrors," given the company’s previous expenditures on bonuses for top executives. "This is just part of their plan to make it look like they’re trying to save money," Bryant said, asserting that fair pay, pensions, and health insurance are necessary to settle the strike.

In his email to employees, Ortberg reassured them that the company would prioritize "all activities critical to our safety, quality, customer support, and key certification programs," including the production of the 787 Dreamliner.

Boeing employs about 150,000 people in the U.S., though it remains unclear which workers will be affected by the furloughs. A union representing Boeing engineers confirmed that its members are not impacted.

As the strike enters its sixth day, it poses risks to Boeing’s extensive supplier network, with some suppliers also contemplating furloughs. "Certainly suppliers are worried," said Nikki Malcom, CEO of the Pacific Northwest Aerospace Alliance. "It’s going to have a significant impact on suppliers if it goes on for a long time."

The strike has brought production of the 737 MAX, along with the 777 and 767 widebody aircraft, to a halt, delaying deliveries to airlines. Nonetheless, a major Chinese lessor recently placed a fresh order for 50 MAX jets for delivery from 2028 to 2031, indicating continued long-term demand for Boeing aircraft.

The manufacturer announced on Monday that it is freezing hiring to reduce costs, given its $60 billion debt burden. Additionally, it has halted most parts orders for all Boeing jet programs, except for the 787, which will further affect suppliers.

One high-level supplier described Boeing’s recent actions as "panic mode," reflecting the company’s limited options due to its strained financial situation. "They would be better to settle; they are getting very near the precipice," noted the supplier, who requested anonymity.

Amid these challenges, Boeing shares have dropped approximately 40% this year.