Boeing prepares layoff notices for thousands of workers as unrest intensifies

Thousands of Boeing employees will receive layoff notices within weeks, a union and industry officials said, while a top U.S. official flew to Seattle to try to ease a crippling strike and a major airline issued a warning about worsening unrest at the aircraft manufacturer issued.

Acting U.S. Labor Secretary Julie Su's first personal intervention comes days after Boeing announced plans to cut 17,000 jobs and impose $5 billion in charges, continuing a year of turmoil for the company.

“Acting Minister Su is meeting with both parties today to assess the situation and encourage both parties to move forward in the negotiation process,” a Labor Ministry spokesman said on Monday.

While Su has spoken with Boeing and the striking West Coast Factory Workers Union before, this is her first time meeting both sides in person in Seattle.

The International Association of Machinists and Aerospace Workers (IAM) said its chief negotiator, Jon Holden, informed Su of the current talks and “emphasized the union's commitment to a negotiated contract that values ​​the skills and commitment of our members.”

Boeing and a White House spokesman declined to comment on Su's visit.

About 33,000 workers have been on strike since September 13, demanding a 40% wage increase over four years.

Boeing will send 60-day layoff notices to thousands of workers next month, including many in its commercial aviation division, meaning those employees will leave the company in mid-January, a source familiar with the matter said.

A second phase of announcements could be rolled out in December if necessary, the source said.

A spokesman for the Society of Professional Engineering Employees in Aerospace, which represents Boeing engineers, said the company informed the union Monday that 60-day notices would be sent to its members on Nov. 15.

A Boeing spokesman said the company shared information with managers including plans for 10 percent cuts at its commercial unit, involving both union and non-union workers. The spokesperson added that the striking IAM employees are not currently affected.

Brian Bryant, the IAM's international president, called the job cuts plan “corporate greed at its worst.”

“Boeing just turned its back on 17,000 of its own workers — the same people who have carried Boeing through crisis after crisis year after year,” he said in a statement.

Shares of the aerospace giant fell 1.3% to close at $148.99 on Monday after the company made a surprise after-hours announcement of job cuts on Friday, which also included a new delay on the 777X aircraft and the cancellation of the civilian 767 freighter production included.

Boeing will refrain from requiring voluntary departures to limit severance payments and prevent a brain drain, sources said, adding that the company will rely exclusively on involuntary layoffs. Rivals are snapping up scarce workers 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 the post-pandemic skills shortage environment,” said Nick Cunningham, an analyst at Agency Partners.

Boeing has been hiring workers to prepare for higher production rates, but those haven't materialized because production was limited by regulators after a door plug on an Alaska Airlines plane burst in January.

INDUSTRIAL ALARM

The one-year delay in 777X deliveries to 2026 was widely expected in the industry and brings the delay in deliveries of the 777 mini-jumbo successor to six years due to certification and testing delays.

Tim Clark, president of Emirates Airline, whose initial order for 150 jets helped launch the world's largest twin-engine jet more than a decade ago, hinted at commercial implications.

“We will have a serious conversation with them over the next few months,” he said in a statement. “I see no way that Boeing can provide meaningful forecasts on delivery dates.”

He was also the first senior industry official to express concerns privately whispered by some industry leaders in recent weeks about Boeing's ability to emerge unscathed from the worst crisis ever.

“Unless the company is able to raise funds through a rights issue, I see an imminent investment downgrade as Chapter 11 looms 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 initial success has been marred by delays to its successor and the crisis that has engulfed Boeing's smaller 737 cash cow over safety and quality problems.

Friday's announcements showed Boeing has just over $10 billion in gross cash, a much-touted figure that analysts said would ease some near-term pressure, while warning that the company still needs to raise cash by year's end.

Most analysts expect Boeing to raise up to $15 billion through a stock offering. But major airlines' perception of Boeing's financial risk remains a sensitive issue because many have billions of dollars in deposits with the plane maker – a risk that some are already trying to limit because of delays, industry sources say.

Boeing declined to comment on Clark's comments.

Ratings agency S&P has warned that Boeing is at risk of losing its prized investment-grade credit rating.