Boeing Implements Cost-Cutting Measures Amid Ongoing Strike
Boeing is taking decisive steps to “preserve cash” and “safeguard” the company’s future in light of an ongoing strike involving 33,000 union members. The strike began on September 13, 2024, after union workers overwhelmingly rejected a new contract that proposed a general wage increase and a commitment from Boeing to manufacture its next new jet in Washington.
On September 16, 2024, Boeing’s Chief Financial Officer, Brian West, communicated the company’s plans for cost-saving initiatives in a memo to staff. These measures are being implemented while members of the International Association of Machinists and Aerospace Workers (IAM) District 751 engage in strike action in the Pacific Northwest.
West stated, “We are working in good faith to reach a new contract agreement that reflects their feedback and enables operations to resume. 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. Importantly, we will protect all funding for safety, quality, and direct customer support work.”
The newly announced cost-cutting measures include a hiring freeze, a ban on all first and business-class air travel, suspension of outside consulting expenditures, and a pause on charitable donations and advertising budgets. Additionally, West highlighted that Boeing would make “significant reductions in supplier expenditure” and would cease issuing the majority of purchase orders for the 737, 767, and 777 programs.
Reflecting on lessons from the COVID-19 pandemic, Boeing is also considering temporarily furloughing staff across all levels of the organization. West acknowledged the potential for uncertainty and concern among employees, assuring them that further details on these measures would be provided in the coming days.
The rejection of the new contract and subsequent strike adds to the challenges facing Boeing, which is still recovering from a significant incident involving an Alaska Airlines Boeing 737 MAX 9 door plug blowout on January 5, 2024. This event subjected the manufacturer to intense scrutiny, raising questions about safety and quality control.
Production rates have slowed in the wake of these challenges, leading to frustration among airline executives and a notable decline in public trust in Boeing, particularly since the 737 tragedies of 2018 and 2019. The company is under pressure to restore its reputation while grappling with the operational impact of the strike.
In a further blow to Boeing, NASA recently opted to leave two of its astronauts aboard the International Space Station (ISS) rather than returning them on a Boeing CST-100 Starliner, which has faced multiple safety issues. This decision underscores the growing concerns about Boeing’s reliability in both the commercial aviation and space sectors.
As Boeing navigates these turbulent times, the company remains focused on reaching a resolution with its workforce while implementing measures to maintain financial stability and operational integrity. The outcome of the ongoing strike will be critical for Boeing’s recovery and future growth.