Boeing 737 MAX aircraft are pictured at the company's facility 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 crippled its aircraft factories enters its fifth week. It will also postpone the long-delayed launch of its new wide-body aircraft.
The manufacturer will not deliver its as yet uncertified 777X wide-body aircraft, whose customers include Lufthansa and Emirates, until 2026 and is therefore around six years behind schedule. The company paused flight testing of the plane in August when it discovered structural damage to one plane. Production of commercial 767 freighters will end in 2027 once remaining orders are filled, CEO Kelly Ortberg said in an employee note Friday afternoon.
“Our company is in a difficult situation and the challenges we face together can hardly be overstated,” said Ortberg. “Beyond managing our current environment, recovering our business requires difficult decisions and we must make structural changes to ensure we remain competitive and able to deliver to our customers over the long term.”
Boeing expects to report a loss of $9.97 per share in the third quarter, the company unexpectedly announced on Friday. The company expects a pretax charge of $3 billion in its commercial aircraft business and $2 billion in its defense business.
In preliminary financial results, Boeing said it expected third-quarter operating cash outflow of $1.3 billion.
The union late Friday called Boeing's announcement that it would stop production of 767 freighters “very concerning” and said it would assess the impact.
The job and cost cuts are the most dramatic moves yet by Ortberg, who has been at the helm for just over two months and is tasked with restabilizing Boeing after safety and production crises, including a near-disastrous mid-air doorstop failed at the beginning of the year.
The machinists' strike is another challenge for Ortberg. Ratings agencies have warned that the company is at risk of losing its investment-grade rating, and Boeing has wasted cash in a year that company leaders hoped would be a turnaround.
S&P Global Ratings said earlier this week that Boeing is losing more than $1 billion a month from the strike by more than 30,000 machinists that began Sept. 13 after machinists overwhelmingly voted against a tentative agreement, which the company had concluded with the union. Tensions are rising between the manufacturer and the International Association of Machinists and Aerospace Workers, and Boeing withdrew a more recent contract offer earlier this week.
On Thursday, Boeing said it had filed an unfair labor practices lawsuit with the National Labor Relations Board accusing the International Association of Machinists and Aerospace Workers of negotiating in bad faith and misrepresenting the plane manufacturers' proposals. The union had criticized Boeing over a sweetened offer that it said was not negotiated with the union and said workers would not vote on it.
After talks collapsed earlier this week, Boeing said further negotiations made no sense at this point. Jon Holden, president of the striking workers' union IAM District 751, called for a return to the bargaining table on Friday.
“CEO Ortberg has an opportunity to do things differently, rather than repeating the same old, tired labor relations threats that intimidate and oppress anyone who opposes them,” he said in a statement. “Ultimately it will be our membership that will decide whether a negotiated contract offer is accepted. They want a solution that is negotiated and responsive to their needs.”
The job cuts, which Ortberg said would occur “in the coming months,” would come shortly after Boeing and its hundreds of suppliers scrambled to add staff in the wake of the Covid-19 pandemic as demand collapsed.
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