Key Takeaways
- Boeing is taking substantial cost-cutting measures days after its largest union voted to strike.
- The measures at Boeing include a hiring freeze, a pause in purchase orders, and the delay of pay increases, according to a memo sent to employees.
- The International Association of Machinists and Aerospace Workers rejected Boeing’s tentative labor offer Thursday evening.
Boeing (BA) is putting in place a hiring freeze and implementing other cost-cutting steps after its largest labor union approved a strike last week, according to an internal memo sent to Boeing employees.
In a memo to Boeing staff shared with Investopedia, Chief Financial Officer Brian West said the plane manufacturer will halt most purchase orders for the 737, 767, and 777 aircraft. The company is also pushing back pay raises for salaried employees, and suspending all first- and business-class air travel, including for its executives.
Members of the International Association of Machinists and Aerospace Workers (IAM), which represents thousands of Boeing workers in Washington, Oregon, and California, voted overwhelmingly Thursday evening to reject the company’s tentative labor contract. The workers officially set down their tools at midnight and started picketing at facilities that manufacture several Boeing planes like the 737 Max.
‘Strike Jeopardizes Our Recovery’ Significantly: CFO
“We are working in good faith to reach a new contract agreement that reflects their feedback and enables operations to resume,” West said to staff. “However, our business is in a difficult period. This strike jeopardizes our recovery in a significant way and we must take necessary actions to preserve cash and safeguard our shared future.”
West said the company isn’t cutting costs from its safety, quality, and direct customer support work divisions but added that Boeing would consider temporary furloughs. Boeing didn’t immediately respond to a request for comment by Investopedia.
News of the memo was first reported by the Wall Street Journal.
Shares of Boeing fell nearly 4% Friday after the strike vote and are down about 40% this year following a string of safety incidents. On Monday, the stock closed down almost 1% at $155.55.