Boeing will cut 10% of its workforce, or about 17,000 people, as the corporate's losses mount and a machinists' strike that has crippled its aircraft factories enters its fifth week. It will even postpone the long-delayed launch of its latest wide-body aircraft.
The manufacturer won’t deliver its 777X wide-body aircraft until 2026, which is around six years behind schedule. The company paused flight testing of the plane in August when it discovered structural damage to 1 plane. Production of business 767 freighters will end in 2027 once remaining orders are filled, CEO Kelly Ortberg said in an worker 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 lack of $9.97 per share within the third quarter, the corporate unexpectedly announced on Friday. The company expects a pretax charge of $3 billion in its industrial aircraft business and $2 billion in its defense business.
In preliminary financial results, Boeing said it expected third-quarter operating money outflow of $1.3 billion.
The job and price cuts are probably the most dramatic moves yet by Ortberg, who has been on 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 in the beginning of the yr.
The machinists' strike is one other challenge for Ortberg. Ratings agencies have warned that the corporate is susceptible to losing its investment-grade rating, and Boeing has wasted money in a yr that company leaders hoped could be a turnaround.
S&P Global Ratings said earlier this week that Boeing is losing greater than $1 billion a month from the strike by greater than 30,000 machinists that began Sept. 13 after machinists overwhelmingly voted against a tentative agreement, which the corporate 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 moderen 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 staff wouldn’t vote on it.
The job cuts, which Ortberg said would occur “in the coming months,” would come shortly after Boeing and its lots of of suppliers scrambled so as to add staff within the wake of the Covid-19 pandemic as demand collapsed.
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