Boeing announces hiring freeze, cost-cutting measures

ISTANBUL

US-based aerospace manufacturer Boeing announced a hiring freeze and cost-cutting measures Monday as it deals with a strike by over 30,000 factory workers.

Chief Financial Officer Brian West said in a note to employees that the company will make "significant reductions" to spending and halt purchase orders for its 737 MAX, 767 and 777 airliners.

"We are working in good faith to reach a new contract agreement that reflects their feedback and enables operations to resume," West said in the note. "However, our business is in a difficult period."

"This strike jeopardizes our recovery in a significant way, and we must take necessary actions to preserve cash and safeguard our shared future," he added.

West said the company is also considering temporary furloughs for many employees, managers and executives in the coming weeks.

Boeing factory workers began walking off their jobs in the city of Seattle on Friday after rejecting a labor deal, which paused most of the company's aircraft manufacturing process.

Fitch Ratings warned Friday that a prolonged strike could pose a rating downgrade risk for Boeing.

"If the current strike lasts a week or two, it is unlikely to pressure the rating," it said in a statement. "However, an extended strike could have a meaningful operational and financial impact, increasing the risk of a downgrade."

"Although the current labor negotiations create near-term uncertainty, we believe management understands the importance of reaching a timely agreement that supports the maintenance of its current investment-grade ratings," it added.

Fitch noted that labor costs per 737 MAX are about 15% of each aircraft, with union labor costs accounting for around one-third, or roughly 5% of total aircraft costs.