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Boeing CEO Says the Company Will Begin Furloughs

On Wednesday Boeing’s CEO said that the company will furlough “a large number” of employees to conserve cash during the strike by union machinists that started last week.

Chief Executive Kelly Ortberg said the layoffs would be temporary and affect executives, managers, and other employees. About 33,000 Boeing factory workers in the Pacific Northwest started a strike Friday after rejecting a proposal to raise pay by 25% over four years. In the deal, they voted down for at least 40% raises and other improvements.

The furloughs are expected to affect thousands of Boeing employees. Ortberg said employees will be furloughed for one week every four weeks, and he and other senior executives will take pay cuts during the duration of the strike.

The strike is pausing production of several Boeing models, including its best-selling plane, the 737 Max. The strike will quickly hurt Boeing’s cash flow as the company gets more than half of the purchase price when new planes are delivered to buyers.

Ortberg said in a memo to employees that the company is talking to the International Association of Machinists and Aerospace Workers about a new contract agreement that could be approved.

“However, with production paused across many key programs in the Pacific Northwest, our business faces substantial challenges and we must take difficult steps to preserve cash and ensure that Boeing can successfully recover,” Kelly Ortberg said.

Boeing’s chief financial officer warned employees earlier this week that temporary layoffs were possible. The company, which is based in Arlington, Virginia, but has most of its commercial airplane business located in the Pacific Northwest, is also cutting spending on suppliers, freezing hiring, and eliminating most travel.

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