Boeing, a major aircraft manufacturer, is facing some tough times ahead. The company recently announced that it will be cutting 10% of its workforce, which amounts to approximately 17,000 employees. This decision comes as Boeing continues to experience significant financial losses and is currently dealing with a factory strike that has been ongoing for five weeks.
In addition to the job cuts, Boeing also revealed that it will be delaying the launch of its new wide-body airplane, the 777X, until 2026. This means that the plane will be six years behind schedule. Furthermore, the company plans to stop producing commercial 767 freighters in 2027 after fulfilling its remaining orders.
The CEO of Boeing, Kelly Ortberg, addressed the situation in a staff memo, acknowledging the challenges the company is facing. Boeing is expected to report a loss of $9.97 per share in the third quarter, with significant charges in both its commercial airplane unit and defense business.
Ortberg emphasized that difficult decisions and structural changes will be necessary to ensure Boeing’s long-term competitiveness and ability to deliver for its customers. These job and cost cuts mark a significant shift for Ortberg, who took on the role of CEO just over two months ago with the task of turning around the company following safety and manufacturing crises.
The ongoing machinist strike has been a significant obstacle for Boeing, with credit ratings agencies warning that the company could lose its investment-grade rating. The strike, which began on September 13th, has been costing Boeing over $1 billion a month. Tensions between the manufacturer and the union have been escalating, with Boeing accusing the International Association of Machinists and Aerospace Workers of negotiating in bad faith.
Boeing’s decision to file an unfair labor practice charge against the union further highlights the strained relationship between the two parties. The job cuts, which Ortberg stated would be implemented over the coming months, could have a significant impact on Boeing and its suppliers who have been working to recover from the effects of the Covid-19 pandemic.
Overall, Boeing is facing a challenging road ahead as it navigates financial losses, labor disputes, and the need for significant restructuring. The company’s ability to overcome these obstacles and emerge stronger will be critical for its long-term success in the aerospace industry.
