Boeing is set to cut approximately 17,000 jobs, accounting for 10% of its workforce, as the company faces mounting losses amid a prolonged machinist strike that has halted operations at its aircraft factories for nearly five weeks. Additionally, the manufacturer has announced a delay in the launch of its new wide-body aircraft.
The introduction of the 777X wide-body plane has now been pushed back to 2026, representing a six-year delay. The delay follows an August decision to pause flight tests after discovering structural damage in one of the aircraft. Boeing will also cease production of the commercial 767 freighters in 2027 after fulfilling outstanding orders, according to CEO Kelly Ortberg in a staff memo released Friday.
In his memo, Ortberg stated, “Our business is in a difficult position, and it is hard to overstate the challenges we face together.” He emphasized the need for tough decisions and structural changes to maintain competitiveness and meet customer demands in the long term.
Boeing is anticipating a substantial loss of $9.97 per share in the third quarter, as revealed in a surprise announcement on Friday. The company expects a pretax charge of $3 billion in its commercial airplane unit and $2 billion in its defense sector. Preliminary financial results indicate an operating cash outflow of $1.3 billion for the third quarter.
These job and cost reductions mark the most significant moves under Ortberg, who has held the CEO position for just over two months. He is charged with stabilizing Boeing following safety and manufacturing crises, including a near-catastrophic incident earlier this year involving a midair door failure.
Strike Fallout
The ongoing machinist strike poses an additional challenge for Ortberg. Credit rating agencies have warned that Boeing risks losing its investment-grade rating as it continues to deplete cash reserves during what was expected to be a year of recovery. According to S&P Global Ratings, Boeing is losing over $1 billion per month due to the strike involving more than 30,000 machinists, which commenced on September 13 after a tentative agreement was overwhelmingly rejected by union members.
Tensions have escalated between Boeing and the International Association of Machinists and Aerospace Workers, particularly after Boeing withdrew a new contract offer earlier this week. On Thursday, the company filed an unfair labor practice charge with the National Labor Relations Board, accusing the union of negotiating in bad faith and misrepresenting Boeing’s proposals. The union criticized Boeing for presenting an improved offer that had not been negotiated with union representatives, asserting that workers would not vote on the proposal.
Ortberg noted that the job cuts would occur “over the coming months,” following a period during which Boeing and its extensive network of suppliers had been working to ramp up staffing after the demand collapse triggered by the COVID-19 pandemic.
