Labor negotiations have reached a deadlock, and thousands of Boeing Company (BA.US) employees are forced to take temporary leaves of absence.

The Boeing Company (BA.US), which is dealing with a strike, announced on Wednesday that the company will temporarily lay off thousands of employees. Boeing Company CEO Kelly Ortberg stated in an email to employees, "We will begin temporary layoffs in the coming days, affecting a large number of executives, managers, and employees based in the United States." "We plan to rotate a week off every 4 weeks during the strike." Kelly Ortberg also stated that he and other management at Boeing Company "will take corresponding pay cuts during the strike." It is worth noting that Boeing Company announced cost-cutting measures in a notice to employees on Monday. Boeing Company stated that with $60 billion in debt on its balance sheet, a long-term strike could further damage its balance sheet, leading to a freeze on hiring and consideration of temporary layoffs to reduce costs. The company's CFO Brian West said, "This strike poses a serious threat to the company's recovery, and we must take necessary action to preserve cash and secure our shared future." Employees at Boeing Company's West Coast factories went on strike in the early hours of September 13, with about 33,000 people participating. The strike will essentially halt commercial aircraft production at Boeing Company. Boeing Company and the International Association of Machinists and Aerospace Workers union (IAM) held two days of negotiations with a federal mediator present. The union expressed disappointment after the first day of mediation, and later on Wednesday, they announced that another day of negotiations had concluded without "meaningful progress." The union stated, "While we remain open to further discussions, whether through direct negotiations or mediation, there are currently no additional dates scheduled." "We will continue to fight for what our members deserve in the contract." The union has been pushing for a 40% pay raise over the next four years, well above Boeing Company's previous offer of 25% which was rejected. The large-scale temporary layoffs indicate that Kelly Ortberg is preparing Boeing Company to deal with a long-term strike. Given the anger of Boeing Company's ordinary workers, this strike is unlikely to be resolved easily. Analysts have indicated that a prolonged labor dispute could cost Boeing Company billions of dollars, further exacerbating its financial strain and threatening its credit rating. S&P Global, Inc. aerospace analyst Ben Tsocanos stated, "Cost-cutting measures are unlikely to fully offset the costs of a long-term strike." IAM President Brian Bryant stated that given Boeing Company's previous expenditures on executive bonuses and compensation, actions such as layoffs and pay cuts are equivalent to "smoke and mirrors." He said, "This is just part of their plan to make them look like they're trying to save money." "The ball is in Boeing Company's court, they can resolve this strike tomorrow." He added that fair wages, pensions, restored bonuses, and healthcare will be necessary. In the email to employees, Kelly Ortberg also stated that Boeing Company will not take any actions that "restrain our ability to fully recover in the future," and that "all activities critical to our safety, quality, customer support, and key certifications will be prioritized and continue, including the production of the Boeing Company 787." The strike has now been going on for six days, posing risks to Boeing Company's vast supplier network. Some suppliers are also considering layoffs. Nikki Malcolm, CEO of The Pacific Northwest Aerospace Alliance, said, "Suppliers are certainly concerned. If this situation continues for a long time, it will have a significant impact on suppliers." Boeing Company has suspended most of the parts orders for all aircraft projects except the 787 Dreamliner, which will harm the interests of its suppliers. A senior supplier criticized Boeing Company's latest statement as "panic mode," stating that it highlights Boeing Company's lack of room for maneuver due to its tight balance sheet. The supplier, who wished to remain anonymous, said, "They better defuse the situation. They are getting closer to the cliff."