Boeing Co said Wednesday it would temporarily furlough tens of thousands of employees after about 30,000 machinists went on strike on Friday, halting production of the 737 Max and other planes.
“We will begin a temporary administrative leave over the next few days, which will impact a large number of U.S.-based executives, managers and employees,” CEO Kelly Ortberg said in an email to employees. “The plan is for select employees to take one week of administrative leave every four weeks on an ongoing basis for the duration of the strike.”
A Boeing spokesman said the layoffs would affect tens of thousands of employees.
Ortberg also said he and other Boeing executives would “take appropriate pay reductions for the duration of the strike.”
Boeing and the International Machinists and Aerospace Workers Union are scheduled to resume contract negotiations Wednesday with a federal mediator after failing to reach an agreement on key issues, including wages and pensions.
In the first full-scale contract negotiations with Boeing in 16 years, the union is demanding a 40 percent wage increase over four years — a significant increase over the 25 percent offer that Boeing has firmly rejected.
Analysts said a prolonged strike could cost Boeing billions of dollars, further strain the company's finances and risk a downgrade of its credit rating.
The strike, which entered its sixth day on Wednesday, is Boeing's first strike since 2008 and the latest in a tumultuous year for the company that began in January when a door panel on one of its new 737 Max jets came off in mid-air.
“We will not take any action that would impede a full recovery in the future,” Ortberg said 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, as well as the 777 and 767 wide-body planes, and delayed deliveries to airlines.
Boeing said Monday it would freeze hiring to cut costs, as it already has $60 billion in debt on its balance sheet and fears it will be hit further if the strike drags on.
The company has also largely halted ordering parts for all Boeing jet programs except for the 787 Dreamliner, which will hit suppliers.
Boeing shares, down about 40% so far this year, were up 0.3% to $156.86 as of Wednesday afternoon.
