Boeing 737 MAX aircraft at the company's factory in Renton, Washington, on September 12, 2024.
Stephen Brashear | AP
Boeing The company will cut 10% of its workforce, or about 17,000 people, as the company's losses mount and a mechanics' strike that has idled plane factories enters its fifth week. It will also postpone the launch of its long-awaited new wide-body aircraft.
The manufacturer will not deliver its still-uncertified 777X widebody jet until 2026, putting it about six years behind schedule. In August, the company stopped flight tests of the plane when it discovered structural damage to one of them. The company's CEO, Kelly Ortberg, said in a memo to employees Friday afternoon that it will stop manufacturing 767 commercial freighters in 2027 after it fulfills remaining orders.
“Our business is in a difficult situation, and it is difficult to overstate the challenges we face together,” Ortberg said. “Along with navigating our current environment, restoring our company will require difficult decisions and we will have to make structural changes to ensure we can remain competitive and deliver for our customers over the long term.”
Boeing said in a surprise statement on Friday that it expects to report a loss of $9.97 per share in the third quarter. It expects to report pre-tax charges of $3 billion at its commercial aircraft unit and $2 billion for its defense business.
In preliminary financial results, Boeing said it expects to have operating cash flow of $1.3 billion for the third quarter.
The job and cost cuts are the most dramatic moves yet from Ortberg, who is just over two months into the top job and is charged with returning Boeing to stability after safety and manufacturing crises, including a near-disastrous mid-air door seal. It exploded earlier this year.
The machinists' strike presents 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 through 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 mechanics, which began on September 13 after mechanics voted overwhelmingly against a tentative agreement the company reached with the union. Tensions have escalated between the manufacturer and the International Association of Machinists and Aerospace Workers, and Boeing withdrew its new contract offer earlier this week.
Boeing said Thursday it had filed an unfair labor practices charge with the National Labor Relations Board, which accused the International Association of Machinists and Aerospace Workers of negotiating in bad faith and misrepresenting the plane makers' proposals. The union had criticized Boeing for the sweet offer, which it said had not been negotiated with the union and said workers would not vote on it.
The job cuts, which Ortberg said would happen “over the coming months,” will happen right after Boeing and hundreds of its suppliers scrambled to hire staff in the wake of the COVID-19 pandemic, when demand plummeted.
