“Our business is in a difficult period.”
Crisis Point
Boeing simply can’t catch a break.
As rumors started swirling that the aerospace giant might be giving up on its plagued Starliner spacecraft, which left two NASA astronauts stranded on board the International Space Station, the company had a much bigger fire to put out.
Last week, more than 30,000 Machinists and Aerospace Workers (IAM) union members at Boeing’s factories in Seattle and Portland voted to go on strike, rejecting Boeing’s offer by an overwhelming majority.
In a memo addressing employees today, as obtained by Quartz, Boeing CFO Brian West announced that the company has now instituted a hiring freeze, cut back on non-essential travel, and paused executive pay raises.
West also said that Boeing is “considering the difficult step of temporary furloughs for many employees, managers and executives in the coming weeks.”
“Our business is in a difficult period,” West said. “This strike jeopardizes our recovery in a significant way and we must take necessary actions to preserve cash and safeguard our shared future.”
Jet Project
Boeing’s passenger jet business was already in big trouble before the latest strike. Besides its much-maligned Starliner spacecraft, the company has had to deal with the aftermath of a “door plug” blowing out of a 737 MAX jet mid-air back in January.
Regulators have heavily scrutinized the company’s safety practices since then, launching several investigations.
Production of the company’s workhorse 737 MAX jets had significantly slowed following the incident, with Boeing struggling to return to its original output.
The strike is bound to make the situation far worse for the company, which has already lost $33 billion since 2019.
“We will stop issuing the majority of supplier purchase orders on the 737, 767 and 777 programs,” West wrote in the memo.
While the credit rating agencies Fitch and Moody’s warned that Boeing’s credit rating could slide into “junk bond” territory last week, S&P Global Ratings announced that the strike wouldn’t immediately affect its rating today.
Nonetheless, analysts have suggested that Boeing could lose over $100 million in daily revenues due to the strike. Its shares are down roughly 40 percent since the beginning of the year.
Meanwhile, IAM union workers are getting $250 a week paid out from their union’s strike fund, a major pay cut for many.
In other words, both sides are incurring major losses.
“The key question is: How long are they willing to suffer?” Gabelli Funds portfolio manager Tony Bancroft told ABC News.
More on Boeing: Stranded Astronaut Says He Just Wasn’t “Comfortable” Getting “Back in the Starliner” After Safety Issues
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