Market Analysis

Boeing Offers Payback to Furloughed Workers as It Moves Forward with Layoffs

Amos Simanungkalit · 08 Nov 202427.3K Views

Image Credit: Reuters

Boeing CEO Kelly Ortberg announced Thursday that the company would compensate employees furloughed during the seven-week strike by factory workers, but it will proceed with plans to reduce its global workforce by approximately 10%.

The strike, which began in September and involved 33,000 union machinists, temporarily halted production of the 737 MAX. Boeing initially furloughed thousands of salaried workers on a rolling basis but later canceled the unpaid leave after revealing plans to cut 17,000 jobs.

Ortberg expressed gratitude for the employees' sacrifices, acknowledging their role in helping the company navigate through the challenging period and stating that lost wages would be reimbursed for those who took unpaid furloughs.

Despite the compensation, morale issues persist as Boeing moves forward with its workforce reductions, with many employees set to receive notifications about their job status later this month. Ortberg emphasized that these job cuts are essential for the company's competitiveness and long-term growth.

A representative for the Society of Professional Engineering Employees in Aerospace, which represents Boeing engineers, confirmed that its members would receive 60-day notices of job losses on November 15.

The company recently concluded a strike, securing a contract for its machinists that includes a 38% wage increase over four years and a $12,000 bonus. These workers are expected to return by November 12. Although Boeing has not provided a specific timeline for resuming 737 MAX production, it is expected to be gradual and closely monitored by regulators.

This year, Boeing has faced nearly $8 billion in losses amid a quality crisis, including a mid-air panel blowout in January. Ortberg acknowledged the challenges ahead but expressed confidence that the company was taking the necessary steps to recover and meet its customer commitments.

Boeing recently raised $24 billion to strengthen its finances and Ortberg indicated that a review of the company's businesses and long-term forecasts is ongoing. As part of its downsizing, Boeing may consider selling some assets to focus on its core civil aviation and defense sectors.