Boeing announced that it will be cutting 10% of its workforce, which amounts to about 17,000 people, as the company continues to experience losses and faces challenges due to a machinist strike that has idled its aircraft factories for five weeks. In addition to the workforce reduction, Boeing will also delay the launch of its new wide-body airplane. The company announced that it will not deliver its 777X wide-body plane until 2026, six years behind schedule, after pausing flight tests due to structural damage found in one of the aircraft.
The decision to cut jobs and costs comes as Boeing expects to report a loss of $9.97 a share in the third quarter. The company anticipates a pretax charge of $3 billion in the commercial airplane unit and $2 billion for its defense business. Boeing also expects to have an operating cash outflow of $1.3 billion for the third quarter. The job cuts and cost reductions are part of the company’s efforts to navigate a challenging business environment and make structural changes to ensure long-term competitiveness and customer satisfaction.
Boeing’s CEO, Kelly Ortberg, emphasized the difficult position the company is in and the need to make tough decisions to restore the company and deliver for its customers in the long term. Ortberg, who is relatively new to the position, faces multiple challenges, including the ongoing machinist strike that has led to significant financial losses. Credit ratings agencies have warned that Boeing is at risk of losing its investment-grade rating, and the company has been burning through cash during what was hoped to be a turnaround year.
The machinist strike, which involves more than 30,000 workers and began in September after a rejected tentative agreement, has further strained Boeing’s finances. The company has reported losses exceeding $1 billion a month due to the strike. Tensions between Boeing and the International Association of Machinists and Aerospace Workers have been escalating, with Boeing accusing the union of negotiating in bad faith and misrepresenting the company’s proposals. Boeing withdrew a newer contract offer this week after the union criticized it for not being negotiated with the workers’ representatives.
Boeing’s decision to cut jobs will come at a time when the company and its suppliers have been struggling to ramp up production after the onset of the Covid-19 pandemic, which caused a sharp decline in demand for airplanes. The job cuts are expected to occur “over the coming months,” adding to the challenges faced by the company and its employees. Despite the difficulties and uncertainties, Boeing is focused on making necessary changes to strengthen its position in the market, regain stability, and continue to deliver high-quality products and services to its customers in the future.
