Boeing announced sweeping cost cuts on Monday, including a hiring freeze, a halt to non-essential business travel for workers and a discount in spending with suppliers, to conserve money amid a strike by greater than 30,000 factory employees.
Workers at Boeing factories, mostly within the Seattle area, began a walkout Friday morning after overwhelmingly rejecting a tentative labor agreement, halting much of Boeing's aircraft production.
The manufacturer will “significantly reduce” spending on suppliers and stop most orders for its 737 Max, 767 and 777 aircraft, Chief Financial Officer Brian West said in a memo to employees, the primary clear sign of how the strike will affect the lots of of suppliers that depend on Boeing's orders.
“We are working seriously to reach a new contractual agreement that takes into account their feedback and allows us to resume operations,” West said in his statement. “However, our business is going through a difficult period. This strike poses a significant threat to our recovery and we must take the necessary actions to preserve cash and secure our shared future.”
He added that Boeing won’t cut funding for safety, quality and direct customer support.
The financial impact of the strike will rely on how long it lasts, but Boeing is concentrated on conserving money, West said Friday at a Morgan Stanley conference. He said the corporate's latest CEO, Kelly Ortberg, desires to return to the bargaining table immediately to barter a brand new deal.
“We are also considering the difficult step of temporarily laying off many employees, managers and executives in the coming weeks,” West said.
On Friday, Moody's downgraded all of Boeing's credit rankings and Fitch Ratings said a chronic strike could put Boeing liable to a downgrade, potentially driving up borrowing costs for a manufacturer already burdened with mounting debt.
Boeing burned through about $8 billion in the primary half of the yr because it scaled back production following a near-catastrophic crack in a door panel earlier this yr.
image credit : www.cnbc.com