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Boeing (BA+2.76%) is making good on a threat to its workers made in light of its machinists’ strike. The company has begun furloughing workers as it faces a pause in production during the work stoppage.
“With production paused across many key programs in the Pacific Northwest, our business faces substantial challenges and it is important that we take difficult steps to preserve cash and ensure that Boeing is able to successfully recover,” Boeing CEO Kelly Ortberg wrote to employees in a memo provided to Quartz.
After a door plug blew out on a 737 Max 9, the Federal Aviation Administration put a cap on the number of the planes Boeing can produce. A mandated slowdown for its key moneymaker has created a cash crunch for the company as it blows through billions of dollars trying to keep its operations running. In turn, Boeing’s investment-grade credit rating is hanging on by a thread, and if the strike chews up enough revenue, the planemaker could slip into junk bond status — and far more expensive borrowing costs.
“As part of this effort, we are initiating temporary furloughs over the coming days that will impact a large number of U.S.-based executives, managers and employees,” Ortberg wrote in his memo. “All benefits will continue for affected employees, and to limit the impact to you, we are planning for selected employees to take one week of furlough every four weeks on a rolling basis for the duration of the strike.”
The machinists’ union, the International Association of Machinists and Aerospace Workers, did not immediately respond to a request for comment.