Boeing, one of the world’s leading aerospace manufacturers, announced a significant workforce reduction of 10%, amounting to approximately 17,000 employees, as the company continues to grapple with mounting losses amid a machinist strike that has halted its aircraft production for over a month. This decision comes as Boeing faces challenges on multiple fronts, including delays in launching its new wide-body airplane and ongoing financial losses.
The company disclosed that it will delay the delivery of its uncertified 777X wide-body aircraft until 2026, marking a six-year setback from its initial schedule. Boeing had paused flight tests of the 777X in August after discovering structural damage in one of the aircraft. Additionally, the company plans to cease production of commercial 767 freighters in 2027 once remaining orders are fulfilled, as per CEO Kelly Ortberg’s memo to staff.
Ortberg acknowledged the difficult position Boeing is in, stating, “Our business is in a difficult position, and it is hard to overstate the challenges we face together.” The company anticipates reporting a loss of $9.97 per share in the third quarter, with a pre-tax charge of $3 billion in the commercial airplane unit and $2 billion in its defense business. Boeing also projects an operating cash outflow of $1.3 billion for the third quarter.
The ongoing machinist strike, involving more than 30,000 workers, has further exacerbated Boeing’s financial woes, with S&P Global Ratings estimating a loss of over $1 billion monthly due to the halt in production. The strike commenced on September 13 following the rejection of a tentative agreement, leading to heightened tensions between the manufacturer and the International Association of Machinists and Aerospace Workers.
Boeing’s move to cut jobs raises concerns about the broader implications for its workforce and the aerospace industry as a whole. With supply chain disruptions and labor disputes affecting production timelines, industry experts warn of potential ramifications on Boeing’s competitiveness and ability to meet customer demands in the long run.
The company’s efforts to navigate these challenges and implement structural changes to ensure stability will be closely monitored by stakeholders. As Boeing grapples with its current predicament, the repercussions of these developments on the industry and consumers remain to be seen.
