Boeing in crisis, squeezed by costs

Boeing is freezing hiring amid a strike by its largest union. In addition, many employees will be furloughed and business travel will be cut to a minimum, Chief Financial Officer Brian West said in an email to employees. He said the strike has put the planemaker’s recovery at significant risk, which is why Boeing had to hold onto its cash.

Other measures include management not being allowed to book business and first class flights and suspending all salary increases linked to promotions. Participation in air shows will be restricted.

Boeing’s largest union, IAM, which has about 33,000 employees, began a strike on Friday. The stoppage affects Boeing’s production around Seattle in the northwestern United States, where, among other things, the best-selling 737 and the long-range 777 are made. Boeing has already been delayed in delivering planes to several airlines, especially the 737.

Boeing is in crisis after a series of unfortunate accidents and is suffering huge losses. After an incident in January, in which part of the fuselage of a new Boeing plane practically ripped off shortly after takeoff, the company has not been allowed to expand production of the 737 series until further notice.

The last time the union went on strike was in 2008. The strike lasted 57 days and, according to analysts' estimates, cost the company around $2 billion (currently €1.8 billion).

In addition, it has already become clear that the agreement with the union will also be costly for Boeing. Before the strike, union members rejected by a majority of about 95% an agreement that called for a 25% increase in wages over four years. In recent years, employees have largely accepted no wages while life in the region has become more expensive.