Boeing CFO announces cost cuts, including hiring freeze and potential furloughs

As Boeing’s strike with its IAM 751- and W24-represented employees continues, the company’s CFO announced cost cuts with potential furloughs on the way.

Boeing CFO Brian West told employees in an internal email the company would be taking “necessary actions” to cut costs, including a freeze on hiring, managerial promotions and possibly furloughing “many employees.”

“This strike jeopardizes our recovery in a significant way and we must take necessary actions to preserve cash and safeguard our shared future,” West stated.

More details: Boeing works to conserve cash as 33,000 factory workers go on strike

While West wrote that Boeing will “protect all funding for safety, quality and direct customer support work,” he also said the company will call off the majority of new orders for its 737 Max, 767 and 777 jets.

Aviation analyst Mike Dunlop told KIRO Newsradio the pause in accepting orders will have a cascading effect on airlines eager to expand their fleet.

“This is because (Boeing doesn’t) know when the delivery will be, they don’t know how long the strike is going to be,” he said, referring to the halt in production from thousands of the company’s plane makers out on the picket lines. “They have a massive backlog that they’re working from, and they don’t want to just add to that backlog and give people a delivery date that they might not be able to meet. There’s penalties related to late delivery.”

Dunlop explained that it’s complicated at this point and there are reasons for that.

“It’s difficult when you buy an airplane because you’ve got to sell the seats before you get the airline on a specific route to buy a particular airplane for a particular route,” he added. “You have to sell seats on that before the airplanes deliver so you’ve got passengers when the plane arrives. So it’s a complicated situation for the airlines.”

Other specific actions Boeing will take

Other actions West outlined include stopping all non-critical travel, eliminating all first and business-class air travel, including for the executive council and suspending non-essential capital expenditures and facilities spending.

“The situation is very, very serious, and the production stop has a lot of wide-reaching ramifications,” Dunlop said.

‘This is about respect:’ Boeing-related strikes go back more than 75 years

Boeing also plans to stop outside consultant spending and temporarily release non-essential contractors, along with pausing charitable contributions and advertising and marketing expenditures. Also, reducing company participation in airshows, tradeshows and special events.

The company is also stopping catered meals at Boeing facilities unless customer-related and canceling any team off-site meetings, stating on-site meetings that require travel should be virtual.

Potential Boeing furloughs loom over employees

Boeing is also considering temporary furlough for many employees, managers and executives in the coming weeks.

Dunlop believes Boeing is hemorrhaging.

“The company is in intensive care and you can’t be too concerned about the cosmetics, you want the patient to survive,” he said.

Dunlop said he believes Boeing can be brought back to a healthy state – but he said the longer the machinist’s strike continues, the worse the impacts will be: to itself, its workers, the surrounding communities that rely on workers’ spending and the airlines looking to fill seats on yet-to-be-built aircraft.

“They (union leaders) have leverage, Boeing’s on its back foot, but if the company doesn’t have any money, then the leverage doesn’t count for anything,” he said.

West said Boeing is working to come to an agreement with the unions.

“We are working in good faith to reach a new contract agreement that reflects their feedback and enables operations to resume,” he stated in the release.

Negotiations between Boeing, union continue

As of Monday, Boeing and the union appear to still be negotiating on a new contract offer.

‘Boeing can’t afford to drag this out:’ KIRO Newsradio hosts react to strike

Unionized workers shot down the last offer, tentatively agreed upon between union and corporate leadership, telling news outlets the proposed 25% pay raise over four years was not enough to keep up with the cost of living.

About 95% of the union workers voted “no” on the offer last week. Many said they were expecting to retain their yearly bonuses along with a higher annual wage increase of 40% over four years.

“The 25% isn’t enough to cover expenses in Washington,” Greg, a machinist picketing said. “I can’t even afford to buy a house. I’m in my career job, I can’t even afford to buy a house in this area. That’s kind of sad.”

The Seattle Times has reported entry-level workers make about $42,000 per year without overtime. The top-level machinists make about $100,000 annually before overtime.

West said Boeing will share more information about cost cuts in the coming days.

Julia Dallas is a content editor at MyNorthwest. You can read her stories here. Follow Julia on X here and email her here.

Sam Campbell is a reporter, editor and anchor at KIRO Newsradio. You can read more of Sam’s stories here. Follow Sam on X, or email him here.