By David Shepardson
(Reuters) -Boeing said on Wednesday the planemaker will temporarily furlough tens of thousands of employees after about 30,000 machinists went on strike on Friday, halting production of its 737 MAX and other airplanes.
“We are initiating temporary furloughs over the coming days that will impact a large number of US-based executives, managers and employees,” CEO Kelly Ortberg said in an email to 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.”
A Boeing spokesperson said the furloughs will impact tens of thousands of employees.
Ortberg also said he and other Boeing leaders “will take a commensurate pay reduction for the duration of the strike.”
Boeing and the International Association of Machinists and Aerospace Workers were set to resume contract talks on Wednesday in the presence of federal mediators, after failing to agree on key issues such as wages and pensions.
The union has been pushing for a 40% raise over four years in its first full contract negotiations with Boeing in 16 years, well above the planemaker’s offer of 25%, which was resoundingly rejected.
A prolonged strike could cost Boeing several billion dollars, further straining the planemaker’s finances and threatening a downgrade of its credit rating, analysts said.
The strike, which enters its sixth day on Wednesday, is Boeing’s first since 2008 and is the latest event in a tumultuous year for the planemaker which began with a January incident when a door panel detached from a new 737 MAX jet in mid-air.
“We won’t take any actions that inhibit our ability to fully recover in the future,” Ortberg said on Wednesday. “All activities critical to our safety, quality, customer support and key certification programs will be prioritized and continue, including 787 production.”
The strike has halted production of Boeing’s best-selling 737 MAX jets, along with its 777 and 767 widebody aircraft, delaying deliveries to airlines.
Boeing said on Monday it was freezing hiring to cut costs as its balance sheet is already burdened with $60 billion of debt and a prolonged strike could damage it further.
The company has also stopped placing most orders for parts for all Boeing jet programs except the 787 Dreamliner, in a move that will hurt its suppliers.
Boeing shares have fallen about 40% so far this year. The stock was up 0.3% at $156.86 on Wednesday afternoon.
(Reporting by David Shepardson in Washington; Editing by Matthew Lewis)
