Boeing announced on Friday that it will reduce its workforce by approximately 17,000 employees, representing 10 percent of its total staff, as the aerospace giant struggles with ongoing financial difficulties and production disruptions. The job cuts, which will impact executives, managers, and production workers alike, come amid a machinists strike that has entered its fifth week.
In a memo to employees, Chief Executive Officer Kelly Ortberg explained that the company’s current business situation and future recovery prospects necessitate these difficult decisions. The layoffs coincide with Boeing’s release of its third-quarter financial results, which revealed an expected loss of $9.97 per share despite generating $17.8 billion in revenue.
The company also disclosed that it would delay the launch of its 777X aircraft until 2026 due to persistent challenges. Boeing reported a $3 billion charge in its commercial airplanes division and a $2 billion charge in its defense, space, and security business for the most recent quarter.
These developments add to Boeing’s mounting troubles, as the ongoing strike by its largest employee union compounds existing legal issues and safety concerns. The work stoppage has halted production of some of the company’s most popular aircraft models, further exacerbating its financial woes. Over the past five years, Boeing has incurred losses exceeding $25 billion.
The International Association of Machinists and Aerospace Workers District 751 initiated the strike on September 13 after rejecting Boeing’s latest contract offer. The company had previously begun furloughing workers in late September to cut costs, but Ortberg stated that these furloughs would be suspended in light of the impending layoffs.
Facing the possibility of a credit rating downgrade, Boeing has implemented additional cost-cutting measures, including a hiring freeze and the elimination of non-essential travel. According to estimates from S&P Global, the machinists’ strike is costing the company approximately $1 billion per month.
Negotiations between Boeing and the union, which represents 33,000 machinists, reached an impasse earlier this week, with both sides accusing the other of refusing to compromise. Last month, union members overwhelmingly rejected Boeing’s initial offer of a 25 percent wage increase over four years, instead demanding a 40 percent raise.
In addition to its labor disputes, Boeing is grappling with legal challenges. On Friday, the company’s legal representatives attended a hearing regarding a settlement with the U.S. Department of Justice related to two fatal crashes involving 737 Max jets in Indonesia in 2018 and Ethiopia in 2019, which claimed 346 lives. Boeing agreed to plead guilty to one count of fraud in connection with these incidents after Justice Department officials determined that the company had violated the terms of a deferred-prosecution agreement that would have protected it from criminal prosecutions. Families of the crash victims have expressed opposition to the settlement.
When Ortberg assumed the role of CEO in August, replacing Dave Calhoun, he pledged to repair the strained relationship between the company and its workforce of more than 170,000 employees across the United States and over 65 countries. However, the current
circumstances have presented significant obstacles to achieving this goal.
As Boeing navigates these complex challenges, the company faces an uphill battle to restore its financial stability, address safety concerns, and rebuild trust with both its employees and the broader aviation industry.