Boeing freezes hiring, weighs furloughs as strike enters fourth day

Boeing said it is freezing hiring and weighing temporary furloughs in the coming weeks to manage costs as a strike by more than 30,000 Boeing workers who build planes in factories on the US west coast stretched into its fourth day on Monday.

Boeing added the strike would also impact spending on its supply chain, since it would stop issuing the majority of supplier purchase orders on the 737, 767 and 777 programs affected by the stoppage, CFO Brian West told employees.

"I know that these actions will create some uncertainty and concern," West wrote in a letter shared on Monday.

"This strike jeopardizes our recovery in a significant way and we must take necessary actions to preserve cash and safeguard our shared future."

Boeing's actions to protect cash come as company and union negotiators are due to resume talks over a labor contract on Tuesday. Rating agencies have warned that the work stoppage would adversely impact the planemaker's recovery with a lengthy strike set to strain Boeing's already fragile finances.

Even before its factory workers downed tools, Boeing was wrestling with a safety and production crisis sparked by a door panel flying off a near-new 737 MAX plane in midair in January and is saddled with $60 billion of debt.

"We believe an extended strike would be costly and difficult to absorb, given the company's already strained financial position," said S&P Global Ratings in a note on Monday.

"A shorter strike, on the order of weeks, would likely be manageable for Boeing and not lead to a negative rating action."

The International Association of Machinists and Aerospace Workers (IAM), Boeing's largest union, last week overwhelmingly voted down a contract which included a 25% pay increase spread over four years, but removed an annual performance bonus.

S&P said the does not immediately affect our issuer credit rating or negative outlook on the company.

Union leaders will meet with federal mediators and Boeing to restart labor negotiations on Tuesday, the IAM said in a post on its X social media feed on Saturday.

Jon Holden, the lead union negotiator, said on Saturday that workers wanted Boeing to increase its wage offer and reinstate a defined-benefit pension that was taken away a decade ago in return for keeping plane production in Washington State.

Two union sources told Reuters they didn't expect Boeing to restore the old pension, but that demand could be used to negotiate bigger company pension contributions and higher pay.

Union members on the picket lines outside Boeing factories around Seattle were bullish about their chances of getting a better deal out of Boeing, but few expect it to happen quickly.

"Not with the history of the way Boeing and the union have negotiated in the past," said Chris Ginn, a 37-year-old who works in a factory north of Seattle building 777 jets.

'PAYCHECK TO PAYCHECK'

This is the eighth strike since the IAM's Boeing arm was established in the 1930s. The last two, in 2008 and 2005, lasted 57 days and 28 days, respectively.

Reuters spoke to five workers who were using these previous stoppages as a benchmark for their financial planning since they won't receive their salaries during the strike. The union provides $250 a week to striking members.

"I can go for six weeks, eight weeks, but it's up to Boeing management to decide when they want to offer a fair deal," said Thinh Tan, an engineer in the 737 MAX factory.

Many factory workers are venting anger that has been brewing for more than a decade as they watched their wages lag inflation, while executive bonuses ballooned.

"I live paycheck to paycheck," said Ginn, clutching his son in one arm and an 'On Strike Against Boeing' placard in the other.