Boeing is making significant changes to its staff as it confronts ongoing challenges from a major strike and lingering safety concerns. The American aerospace giant announced plans to cut approximately 17,000 jobs "over the coming months", representing about 10% of its workforce.
In a memo to employees, Kelly Ortberg, Boeing's new CEO, emphasized the need of "tough decisions" and "structural changes" to "align with our financial reality". He noted the importance of being "clear-eyed" about the company's recovery timeline. "These reductions will include executives, managers and employees."
This announcement comes as about 33,000 Boeing workers in Washington and Oregon are engaged in a strike that began a month ago over wage disputes, halting production of the 737 Max, 767, and 777 models. The ongoing standoff has contributed to the company's mounting losses and heightened financial instability.
In addition to the workforce reduction, Boeing revealed it would delay the first delivery of its 777X commercial jetliner by a year, now slated for 2026. This delay extends the timeline for a project already six years behind schedule and follows a pause in flight tests due to structural damage found in one of the aircraft. Ortberg indicated that Boeing would also cease production of commercial 767 freighters in 2027 after fulfilling existing orders.
Boeing is expected to report significant financial losses in the third quarter, forecasting a loss of nearly $10 per share. The company anticipates a $3 billion pretax charge related to its commercial airplane unit and an additional $2 billion for its defense sector. Furthermore, preliminary results suggest an operating cash outflow of $1.3 billion for the third quarter.
The machinist strike has compounded Boeing's difficulties, with S&P Global Ratings estimating that the company is losing over $1 billion monthly due to the labor action. Tensions escalated further after Boeing withdrew a revised contract offer, leading the company to file an unfair labor practice charge against the International Association of Machinists and Aerospace Workers. The union has criticized Boeing for alleged misrepresentations regarding the proposals and negotiating practices.
As Ortberg continues to navigate Boeing through this tumultuous period, he acknowledges the challenges ahead, stating, "Our business is in a difficult position, and it is hard to overstate the challenges we face together." He assured employees of a continued focus on safety and quality while managing the necessary adjustments.
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