Boeing Freezes Hiring, Considers Furloughs After Workers Strike

(Bloomberg) -- Boeing Co. said it’s instituting a range of cost-cutting measures as the planemaker prepares for a drawn-out and expensive strike by workers at its main Seattle hub, including a hiring freeze and temporary furloughs “for many employees.”

Chief Financial Officer Brian West laid out the steps in a memo to employees shared with Bloomberg News, in which he informed workers of the necessary and “immediate” actions to support the company’s recovery. 

The sweeping measures also include a halt of non-essential travel, pausing any pay increase associated with promotions, cutting back outlays for air shows and charitable donations and “significant reductions in supplier expenditures.”

“Our business is in a difficult period,” West said in the memo. “This strike jeopardizes our recovery in a significant way and we must take necessary actions to preserve cash and safeguard our shared future.”

Some 33,000 workers voted overwhelmingly last week to go on strike as Boeing’s first offer for a new pay package fell short of their expectations. The steps laid out by West underscore the difficult financial position in which Boeing finds itself, with its credit rating at risk of dropping below investment grade and the company bleeding cash as aircraft output sputters. 

Other steps that Boeing will undertake include the elimination of first and business-class travel, including for senior executives, releasing non-essential contractors and pausing team-event spending, according to the memo.

West said at an analyst conference last week that preserving the credit rating is a key metric for the company, which has a large debt load and is mindful of not seeing its costs servicing that debt rise. Boeing has been in crisis since a Jan. 5 accident whit a 737 Max aircraft forced the company to cut back output to get its manufacturing in order.