Boeing 737 MAX aircraft appear at the company's factory in Renton, Washington, on September 12, 2024.
Stephen Brashear | AP
boeing will cut 10% of its workforce, or about 17,000 people, as the company's losses mount and a machinists' strike that has paralyzed its aircraft factories enters its fifth week. It will also delay the long-delayed launch of its new wide-body aircraft.
The manufacturer will not deliver its still-uncertified 777X wide-body aircraft until 2026, which is a delay of about six years. In August, the company suspended flight testing of the plane when it discovered structural damage to one of them. It will stop making commercial 767 freighters in 2027 after fulfilling remaining orders, CEO Kelly Ortberg said in a memo to staff Friday afternoon.
“Our business is in a difficult position and it is difficult to overstate the challenges we face together,” Ortberg said. “Beyond navigating our current environment, restoring our business requires difficult decisions and we will need to make structural changes to ensure we can remain competitive and deliver for our customers over the long term.”
Boeing expects to report a loss of $9.97 per share in the third quarter, the company said in a surprise statement Friday. It expects to report a pretax charge of $3 billion on the commercial aircraft unit and $2 billion for its defense business.
In preliminary financial results, Boeing said it expects to have operating cash outflow of $1.3 billion for the third quarter.
The job and cost cuts are the most dramatic moves to date by Ortberg, who has been in the top job for just over two months, tasked with returning stability to Boeing after safety and manufacturing crises, including a door stopper in the air almost catastrophic. explode earlier this year.
The train driver strike is another challenge for Ortberg. Credit rating agencies have warned that the company is at risk of losing its investment grade rating, and Boeing has been burning cash in what company leaders hoped would be a turnaround year.
S&P Global Ratings said earlier this week that Boeing is losing more than $1 billion a month due to the strike by more than 30,000 machinists, which began Sept. 13 after machinists overwhelmingly rejected a tentative deal the company reached with the union. Tensions have risen between the manufacturer and the International Association of Machinists and Aerospace Workers, and Boeing withdrew a new contract offer earlier this week.
On Thursday, Boeing said it filed an unfair labor practice charge with the National Labor Relations Board that accused the International Association of Machinists and Aerospace Workers of bargaining in bad faith and misrepresenting airplane manufacturers' proposals. The union had criticized Boeing for an improved offer that it claimed was not negotiated with the union and said workers would not vote on it.
The job cuts, which Ortberg said would come “in the coming months,” would come just after Boeing and its hundreds of suppliers were struggling for staff in the wake of the Covid-19 pandemic, as demand plummeted.
