On Wednesday, Boeing announced it will be temporarily furloughing a “large number” of white-collar employees. The news comes after around 30,000 Boeing workers began a strike on Friday after rejecting a new pay contract.
“We are initiating temporary furloughs over the coming days that will impact a large number of US-based executives, managers, and employees,” Kelly Ortberg, the CEO of Boeing, wrote in an email to employees.
Selected employees will take one week of furlough every four weeks on a rolling basis, Ortberg wrote. Employees will find out the details of how their specific team is affected that same day. The memo did not specify how many employees will be affected.
In the email, Ortberg also said he and his leadership team will “take a commensurate pay reduction for the duration of the strike.” The memo did not specify the size of the pay cut.
The furloughs are aimed at preserving cash as the strike puts a stop to the production of key planes such as the 737 MAX.
In a union vote on September 12, workers voted against an agreement that Boeing and the labor union for machinists and aerospace workers had proposed. The vote was the first full contract vote in 16 years and did not come out in Boeing’s favor: almost 95% voted to reject the contract and 96% voted in favor of striking.
The strike is another headache for the American aircraft maker, which is grappling with safety and reputation concerns after taking several hits this year. It’s also a big blow to Ortberg, who stepped into his role as CEO about two months ago.
Preserving cash is essential for the heavily indebted Boeing, which knows exactly how expensive strikes can be. Boeing’s last strike, in 2008, went on for almost two months, causing the company to deliver about 70 fewer commercial aircraft than usual in the affected quarter. The walkout depressed revenues in the period by $4.3 billion, Boeing said at the time.
Along with furloughs, the company has barred employees and executives from flying business class, put a hiring freeze in place, and paused pay increases for managers, according to a separate memo sent to employees on Monday.
Boeing did not immediately respond to a request for comment from Business Insider sent outside regular business hours.
Read the full memo Ortberg sent to employees:
Team, As you know, the IAM 751 and W24 went on strike last Friday. We remain committed to resetting our relationship with our represented employees and continuing discussions with the union to reach a new agreement that is good for all of our teammates and our company as soon as possible.
However, with production paused across many key programs in the Pacific Northwest, our business faces substantial challenges and it is important that we take difficult steps to preserve cash and ensure that Boeing is able to successfully recover.
As part of this effort, we are initiating temporary furloughs over the coming days that will impact a large number of US-based executives, managers and employees. All benefits will continue for affected employees, and to limit the impact to you, 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. Your leaders will be in touch today to share more detail on your team’s specific approach.
Along with these steps, my leadership team and I will take a commensurate pay reduction for the duration of the strike.
Most important, we won’t take any actions that inhibit our ability to fully recover in the future. All activities critical to our safety, quality, customer support and key certification programs will be prioritized and continue, including 787 production.
While this is a tough decision that impacts everybody, it is in an effort to preserve our long-term future and help us navigate through this very difficult time. We will continue to transparently communicate as this dynamic situation evolves and do all we can to limit this hardship.
Restoring trust,
Kelly
Are you a Boeing employee with a story to tell? Get in touch with this reporter: sgoel@businessinsider.com.
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