Boeing has told its employees that furloughed employees will receive pay for the period when they were temporarily laid off, with the manufacturer continuing with its plan to reduce its workforce.
In a message that Kelly Ortberg, the president and chief executive officer (CEO) of Boeing, sent to the company’s employees on November 7, the executive outlined that employees who had been furloughed during the strike would receive salaries for the time they were temporarily removed from work.
Boeing began furloughing employees on a rolling basis in September. This was one of the measures that the plane maker enacted to save cash during the strike by over 33,000 unionized members in California, Oregon, and Washington, represented by the International Association of Machinists and Aerospace Workers (IAM) District Lodge 751 and District W24.
Other measures included a hiring freeze, pausing any pay increases, stopping non-critical travel, suspending non-essential capital expenditures, and, most significantly, making “significant reductions” in supplier expenditures and halting issuing the majority of supplier purchase orders on the 737, 767, and 777 aircraft programs.
The latter measure had reverberated throughout the supply chain, including Spirit AeroSystems. In a United States Securities and Exchange Committee (SEC) filing, the company warned that without additional liquidity, the continuous losses have cast doubt on its ability to continue as an ongoing concern.
Ortberg also reiterated the company’s plans to slash its workforce by about 10% of its 170,000-strong headcount across the US and other countries.
The CEO first detailed these plans on October 11, when Boeing published its preliminary Q3 results. At the time, the executive said that the company had to reset its workforce levels to align with its financial reality and to focus on critical priorities.
“Next week, your leadership team will share more tailored information about what this means for your organization. Based on this decision, we will not proceed with the next cycle of furloughs.”
The announcement included the news that Boeing was ending the 767F program with the last delivery in 2027, pushing back the entry-into-service date of the 777X to 2026, and promising additional oversight of Boeing Defense, Space, and Security (BDS) at a future date.
Boeing ended Q3 with a net loss of $6.1 billion and an operating cash flow of -$1.3 billion. As of September 30, its long-term debt was $53.1 billion, while it had $9.9 billion of cash and cash equivalents, including restricted.
Members of IAM District 751 and W24 approved the latest contract offer on November 4. As a result, they could return to work as soon as November 6 and have been mandated to do so by November 12.
However, considering Boeing’s previous cash-saving measures, including those related to its supply chain, will complicate things as machinists return to work.
Furthermore, even without the strike and its impact, Ortberg's prepared remarks before the company’s Q3 earnings call clearly conveyed several messages, including that Boeing had to secure its future right now.
“While we are somewhat consumed with the challenges of today, we need to be setting the foundation of the future for Boeing.”
Ortberg noted that it would launch a new aircraft program at the right time, but there was a lot of work to do before it could make such a decision.
“This includes stabilizing our business, improving execution on the development programs, streamlining the portfolio to do what we do well and restoring the balance sheet so that we do have a path to the next commercial aircraft. We need to reset priorities and create a leaner, more focused organization.”
As a result, the workforce reduction aimed to consolidate areas where the company was inefficient. Ortberg concluded by saying that Boeing needed to continue reducing non-essential activity.
