Boeing to Cut 10% of Global Workforce Amid Strikes and Financial Woes
Boeing has announced a significant reduction in its global workforce, cutting around 10%, or approximately 17,000 jobs. This decision comes as the company faces mounting financial losses and operational disruptions, primarily caused by an ongoing machinist strike. The labor stoppage has severely impacted Boeing’s production lines, compounding the company’s existing challenges.
Job Cuts and Production Delays
In addition to the workforce reductions, Boeing has delayed the launch of its highly anticipated 777X passenger jet until 2026. The 777X, initially planned for delivery in 2020, has encountered multiple setbacks, including issues discovered during initial test flights. Designed to accommodate around 400 passengers for long-haul routes, the aircraft still has approximately 480 unfilled orders. Boeing attributed the delay to technical and production difficulties.
The company also announced plans to phase out its iconic 767 cargo plane. Boeing will fulfill the remaining 29 orders for the 767 before discontinuing the model in 2027, although it will continue producing a military variant of the aircraft.
Significant Financial Impact
Boeing is expecting to record substantial financial losses due to these disruptions. The company will book $3 billion in pretax charges related to its commercial airplane programs, mainly the 777X and 767. Additionally, Boeing will take $2 billion in write-offs tied to troubled defense projects. These charges are anticipated to result in a quarterly net loss of around $6 billion. Boeing has reported over $25 billion in losses over the past five years, marking one of the most difficult periods in its history.
Leadership Response and Strike Impasse
Chief Executive Kelly Ortberg, who assumed the role in August, acknowledged the severity of the situation in a message to employees. “Our business is in a difficult position, and it is hard to overstate the challenges we face together,” Ortberg said. He emphasized that decisive actions are crucial for the company’s survival, urging employees to be realistic about the time required to recover from these setbacks.
Negotiations between Boeing and its machinists’ union have broken down, with both sides unable to reach a compromise. The strike, now in its fifth week, is estimated to be costing Boeing $1 billion per month in lost production. The union, which represents 33,000 workers, rejected Boeing’s offer of a 25% wage increase over four years, demanding a 40% raise. The ongoing strike has halted the production of some of Boeing’s most popular jets, further straining the company’s operations.
Legal Troubles Add to Boeing’s Woes
In addition to its operational issues, Boeing is also contending with legal challenges related to the fatal 737 Max crashes in 2018 and 2019, which resulted in the deaths of 346 people. The company appeared in court this week regarding a settlement with the Department of Justice. Boeing had agreed to plead guilty to one count of fraud as part of the settlement. However, families of the victims have opposed the agreement, arguing that it does not sufficiently hold Boeing accountable for its role in the tragedies.
Credit Rating and Future Outlook
Boeing’s worsening financial situation has put the company at risk of a credit rating downgrade. Rating agencies have warned that Boeing must take significant steps to preserve cash to avoid being downgraded to junk status. The company has already implemented cost-saving measures, including a hiring freeze and restrictions on non-essential travel. Despite these efforts, Boeing continues to face the threat of further financial damage.
The future of Boeing remains uncertain as the company grapples with multiple crises. From the ongoing strike and legal challenges to production delays, Boeing is under tremendous pressure to stabilize its operations and restore investor confidence.