Boeing prepares layoff notices for thousands of workers as unrest deepens
Oct 14 (Reuters) – Boeing workers will receive layoff notices within weeks, a union and industry source said, as a senior U.S. official flew to Seattle to try to ease a crippling strike and a major airline issued a warning about the depth of the planemaker. the turmoil
“Acting Secretary Sue is meeting with both sides today to assess the situation and encourage both sides to move forward with the bargaining process,” a Labor Department spokesman said Monday.
Although Su has previously spoken to Boeing and the striking West Coast factory workers union, this was his first time meeting with both sides in person in Seattle.
The International Association of Machinists and Aerospace Workers (IAM) said its chief negotiator, John Holden, updated Sue on the current negotiations, “emphasizing the union's commitment to a negotiated agreement that values the skills and dedication of our members.”
Boeing and a White House spokeswoman declined to comment on Su's visit.
Around 33,000 workers have been on strike since September 13, demanding a 40% wage increase over four years.
Boeing will send thousands of workers, including many in its commercial aviation division, 60-day notices next month, meaning those workers will leave the company in mid-January, a source familiar with the matter said.
The second phase of notices, if necessary, may be introduced in December, the source said.
A spokesman for the Society of Professional Engineering Employees in Aerospace, which represents Boeing engineers, said the company told the union Monday that its members would be issued a 60-day notice on Nov. 15.
A Boeing spokeswoman said the company has shared information with managers about a 10% layoff plan at its commercial unit that involves both union and non-union workers. The spokesperson added that the striking IAM employees are currently unaffected.
Brian Bryant, IAM's international president, called the layoff plans “corporate greed at its worst.”
“Boeing has turned its back on 17,000 of its own workers — the same people who have steered Boeing through years of crisis,” he said in a statement.
Shares of the aerospace giant closed down 1.3% at $148.99 on Monday, after the company announced surprise hours of job cuts on Friday, which included a new delay on the 777X jetliner and the end of production of the civil 767 freighter.
Item 1 of 2 A Boeing 737 jetliner is seen behind Boeing factory workers and supporters as they gather on a picket line near the entrance to a Boeing manufacturing facility in Renton, Washington, U.S., on September 15, 2024. REUTERS/David Ryder/File photo
Boeing will refrain from asking for voluntary departures to limit severance cash and avoid an outflow of skills, the sources said, adding that the company will rely only on involuntary layoffs. Competitors are hoarding scarce labor to ease pressure on aerospace supply chains.
“The trick is not to lose the 10% of people you want to keep, which is even more important than usual in a post-pandemic skills shortage environment,” said Nick Cunningham, analyst at Agency Partners.
Boeing is hiring to prepare for higher production rates that have not materialized since regulators limited output after a door plug blew out on an Alaska Airlines jet in January.
Industry Alarm
A one-year delay in 777X delivery to 2026 was widely expected in the industry, and the delay in certification and testing brings the gap in delivery of the 777 mini-jumbo successor to six years.
Emirates Airline President Tim Clark, whose initial order for 150 jets helped launch the world's largest twin-engine jet more than a decade ago, points to the commercial response.
“We will have a serious conversation with them over the next few months,” he said in a statement. “I fail to see how Boeing can make any meaningful predictions of delivery dates.”
He also became the first senior industry figure to voice fears, with some industry leaders privately whispering in recent weeks about Boeing's ability to weather the worst of the crisis unscathed.
“Unless the company is able to raise funds through a rights issue, I see an imminent investment downgrade with Chapter 11 on the horizon,” Clark told Air Current, an aviation industry publication.
Emirates is the largest user of the 777 jet family, a long-haul workhorse whose real success was delayed by its successor and safety and quality issues that plagued Boeing's smaller 737 cash cow.
Friday's announcement package shows Boeing has just over $10 billion in cash, which analysts say will ease some near-term pressures, while warning the company needs to raise money by the end of the year.
Most analysts expect Boeing to raise up to $15 billion in the share issue. But the big airlines' perception of Boeing's financial risks remains a sensitive issue because many have billions of dollars in deposits with the planemaker — an exposure some already want to limit because of the delay, industry sources say.
Boeing declined to comment on Clark's comments.
Ratings agency S&P has warned of the risk of Boeing losing its valuable investment-grade credit rating.
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Reporting by Alison Lampert in Montreal, David Shepardson in Washington, Joe Brock in Seattle, Tim Heffer in Paris and Chandni Shah in Bengaluru; Additional reporting by Abhijith Ganapavaram and Surabhi Mishra in Bengaluru and Mike Stone in Washington; Editing by Lisa Schumacher, Matthew Lewis and Jamie Freed
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