Boeing Co. Takes Action to Cut Costs Amid Strike Uncertainty
Boeing Co. is implementing a series of cost-cutting measures in preparation for a potential long and expensive strike by workers at its main hub near Seattle. The planemaker is taking steps such as a hiring freeze and temporary furloughs for many employees to support the company’s recovery amid the uncertainty.
Chief Financial Officer Brian West outlined these measures in a memo to employees, emphasizing the immediate actions needed to preserve cash and protect the company’s future. The cost-cutting measures include a halt to non-essential travel, a pause on pay increases associated with promotions, reductions in expenses for air shows and charitable donations, as well as significant cutbacks in supplier expenditures for specific jetliner programs affected by the strike.
The strike, initiated by roughly 33,000 workers represented by the International Association of Machinists And Aerospace Workers, has brought Boeing’s jetliner factories in the Puget Sound to a standstill after workers rejected a wage-boosting proposal. The two sides are set to meet again this week to negotiate a new agreement, with the possibility of a prolonged strike looming.
Boeing is facing financial challenges, with its credit rating at risk of dropping below investment grade and the company experiencing cash burn as aircraft production slows down. RBC Capital Markets analyst Ken Herbert estimates that Boeing could be burning about $500 million in cash each week due to the strike.
To mitigate the financial impact, Boeing will also eliminate first and business-class travel, release non-essential contractors, and pause team-event spending. Preserving the company’s credit rating is a top priority, with Boeing’s credit rating at a critical juncture as it navigates through the strike and looks ahead to upcoming debt payments.
The company is taking steps to evaluate its capital structure to ensure it can meet its debt obligations over the next 18 months. The financial position of Boeing is closely monitored by credit rating agencies, with potential downgrades looming if the strike persists and further strains the company’s finances.
In a challenging period for Boeing, the company is making tough decisions to weather the storm and safeguard its financial health. Stay updated with Extreme Investor Network for the latest developments in this ongoing situation.