Boeing furloughs “large number” of its employees in wake of strike

Boeing will temporarily furlough thousands of executives, managers and other employees in the U.S., citing the ongoing machinists' strike, as the company struggles to maintain its liquidity, CEO Kelly Ortberg told employees Wednesday.

The forced furloughs would affect tens of thousands of Boeing employees, a company spokesman said.

The plan came less than a week after Boeing's more than 30,000 machinists in the Seattle area and Oregon overwhelmingly rejected a new labor contract and voted 96 percent in favor of a strike. They walked off the job just after midnight Friday.

Negotiations between the two sides continued this week with a mediator. Boeing had offered a 25 percent wage increase and the union had approved the tentative contract. But some workers told CNBC the contract offer was rejected because the raises were not enough to offset the increased cost of living in the Seattle area and would not restore their pensions.

Ortberg, who has had the job for almost six weeks, explained in a letter to employees that the affected employees would be given one week of short-time work every four weeks for the duration of the strike and that he and his team would accept “corresponding” wage cuts for the duration of the strike.

“While this is a difficult decision that affects everyone, it is an effort to secure our long-term future and help us get through this very difficult time. We will continue to communicate transparently as this dynamic situation evolves and do everything we can to limit this hardship,” Ortberg said in his message.

Boeing's Chief Financial Officer Brian West said earlier this week that the company would freeze new hiring and salary increases and temporarily lay off “non-essential contract workers” to cut costs.

The financial impact of the strike will depend on how long it lasts, West said, but it will increase pressure on Boeing's leadership as it tries to pull the company out of a safety and quality crisis that includes the fallout from a near-catastrophic door stopper failure in January and a $60 billion debt pile.

Ortberg said that “activities critical to our safety, quality, customer care and important certification programs are a priority and will continue,” including production of the 787 Dreamliners, which are manufactured at a non-union plant in South Carolina.