Boeing's Job Cuts and Employee Compensation

By David Shepardson

WASHINGTON (Reuters) – Boeing CEO Kelly Ortberg announced that employees furloughed during a seven-week strike by factory workers would be compensated for lost wages. However, the company plans to proceed with reducing its global workforce by about 10%.

Boeing (NYSE: BA) had furloughed thousands of salaried employees on a rolling basis after a strike by 33,000 union machinists that began in September, which halted production of the popular 737 MAX. The company later canceled the unpaid leave after revealing plans to cut 17,000 jobs.

In an email to staff, Ortberg acknowledged the sacrifices made by employees: "Your sacrifice made a difference and helped the company bridge to this moment. We want to acknowledge your support by returning your lost pay if you went on unpaid furlough."

As Boeing moves forward with job cuts, morale issues have arisen, with many employees expected to receive notifications about their job status this month. Ortberg stated, "We will continue forward with our previously announced actions to reduce our workforce levels to align with our financial reality and more focused priorities. These structural changes are crucial for our competitiveness and long-term value delivery to customers."

A spokesperson for the Society of Professional Engineering Employees in Aerospace, which represents Boeing engineers, indicated that 60-day notices for job losses would be sent to members on November 15.

On Monday, Boeing successfully ratified a contract that provided its machinists with a 38% pay hike over four years and a $12,000 bonus, thus ending the strike. The machinists are scheduled to return by November 12. Boeing has not yet specified when it will resume 737 MAX production, but the process is expected to be gradual and under regulatory review.

The planemaker has incurred losses nearing $8 billion this year due to a quality crisis, following a mid-air panel blowout in January. Ortberg stated, "We have hard work ahead to restore our company and deliver on our customer commitments, but we are on the right path and making the right changes."

Last month, Boeing raised $24 billion in new capital to stabilize its finances. Ortberg has mentioned he is reviewing Boeing's businesses and long-term forecasts. The company might consider selling some assets as it streamlines its workforce and focuses on key civil planemaking and core defense units.

Ortberg's email was previously reported by the Air Current, an aviation industry publication.