Boeing will shed 17,000 jobs as financial woes deepen
Boeing said Friday it will cull 10% of its workforce – roughly 17,000 jobs – as the aviation giant grapples with mounting losses and manufacturing disruptions amid a machinists strike that has dragged into a fifth week.
Executives, managers and production employees will be affected by the cuts, chief executive Kelly Ortberg informed employees Friday in a memo. Boeing will also delay the launch of its 777X plane until 2026 due to ongoing challenges, Ortberg wrote.
A Boeing spokeswoman declined to comment on the layoffs.
The layoffs add to the pain at Boeing, where a stalemate between the company’s largest employee union dovetails with ongoing legal troubles and safety woes.
The strike has halted production of some of the company’s best-selling jets, further adding to its financial troubles. In the past five years, Boeing has lost more than $25 billion.
The announcement came as the company reported third-quarter financial results, saying it expected a loss of $9.97 per share despite taking in $17.8 billion in revenue. In a news release, Boeing said it recorded a $3 billion charge in its commercial airplanes businesses during the most recent quarter, and a $2 billion charge in its defense, space and security business.
“Our business is in a difficult position, and it is hard to overstate the challenges we face together,” Ortberg said in the memo. “The state of our business and our future recovery require tough actions.”
When Ortberg replaced Dave Calhoun as CEO in August, he pledged to fix the fractured relationship between the company and its more than 170,000 employees across the United States and more than 65 countries.
But on Sept. 13, members of the International Association of Machinists and Aerospace Workers District 751 walked off the job on after soundly rejecting the company’s latest contract offer.
Boeing began furloughing workers in late September as it looked to cut costs, though Ortberg said furloughs will be suspended in the face of layoffs.
Now at risk of a downgrade to its credit rating as its circumstances worsen, Boeing has taken other steps to reduce expenses, including imposing a hiring freeze and eliminating unnecessary travel.
The strike by Boeing machinists is costing the company roughly $1 billion a month, according to estimates from S&P Global. Talks between Boeing and the union representing 33,000 machinists broke down earlier this week, with the two sides blaming each other for refusing to compromise. Last month, machinists overwhelmingly rejected Boeing’s initial offer of a 25% wage increase over four years. The union is seeking a 40% increase.
Also Friday, legal representatives for Boeing appeared in a hearing regarding a settlement it reached with the Justice Department tied to a pair of fatal crashes involving 737 Max jets in Indonesia in 2018 and Ethiopia in 2019 that killed 346 people.
Boeing agreed to plead guilty to one count of fraud in connection with the crashes after Justice officials determined that it had breached the conditions of a deferred-prosecution agreement that would have insulated it from criminal prosecutions. Families of the victims oppose the settlement.