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Spirit AeroSystems, the struggling supplier to Boeing, on Friday said it would furlough about 700 workers from the end of October as a prolonged strike at the aircraft maker has hit its supply chain.
The furloughs would last for 21 days and affect workers on the 767 and 777 programmes, the company said on Friday, confirming a report by Reuters. Production of the aircraft has been halted since September 13 after workers from Boeing’s largest labour union went on strike.
Spirit said it had built “significant inventory” for the 767 and 777.
“We don’t have room for additional storage,” it added.
The company would be forced to implement “lay-offs and additional furloughs” if the strike continued beyond November, the company added.
Spirit, which also builds the fuselage for Boeing’s 737 Max aircraft, employs about 12,100 people at its main facility in Wichita, Kansas. Spirit said the furloughs would not affect employees working on the Max.
Boeing, Spirit’s largest customer, is in the process of buying back Spirit, which it spun off more than two decades ago. The Financial Times reported earlier this month that Spirit would have to furlough workers if the strike dragged on.
The strike, by 33,000 members of the International Association of Machinists and Aerospace Workers District 751, has stopped all production at Boeing’s main factories in Washington state. The plants build the 767, the 777 and the best-selling 737 Max.
The work stoppage is straining Boeing’s already stretched finances and those of its suppliers.
The plane maker revealed this week that it had put in place plans to raise up to $25bn in new capital, alongside a $10bn credit facility, as it seeks to shore up its balance sheet and preserve its investment-grade credit rating. S&P Global Ratings earlier this month warned that a downgrade of Boeing’s debt to junk territory was possible.
Boeing has consolidated debt of close to $58bn and is burning through about $1bn a month as a result of the strike. Analysts expect the company to raise between $10bn and $15bn in the coming weeks. It will report results for the third quarter on October 23.
Spirit’s finances were already under strain before the strike after regulators launched investigations into the manufacturing processes at both Spirit and Boeing following the mid-air blowout of a fuselage section on an aircraft in January. Regulators also capped production of the 737 Max as a result.