Boeing Is Now Cutting An Alarming 17K Jobs

October 15, 2024

Boeing is now cutting an alarming 17K jobs during its factory strike following headwinds as the company’s losses mount.

Shares of the company (NYSE:BA) are down more than 2% in the past month and nearly 40% this year-to-date.

Boeing has announced it will reduce its workforce by 10%, translating to approximately 17,000 jobs, as the company faces mounting losses and a machinist strike that has halted its aircraft production for five weeks, per CNBC.

Additionally, the launch of its delayed wide-body airplane has been postponed further.

The company will not be delivering its still-uncertified 777X wide-body aircraft—which has clients like Lufthansa and Emirates—until 2026, now six years behind schedule.

Flight tests for the 777X were paused in August after structural damage was discovered.

Boeing will also cease production of commercial 767 freighters in 2027, following the completion of existing orders, as stated by CEO Kelly Ortberg in a memo to staff.

“Our business is facing significant challenges, and it is difficult to overstate the issues we must confront together,” Ortberg noted.

“In addition to navigating our current situation, we need to make tough decisions and implement structural changes to remain competitive and meet our customers’ needs in the long run.”

Boeing expects to report a loss of $9.97 per share for the third quarter, along with a pretax charge of $3 billion in its commercial airplane unit and $2 billion in its defense sector.

Preliminary financial results indicate an operating cash outflow of $1.3 billion for the third quarter.

The union responded to Boeing’s announcement about ending 767 freighter production, labeling it “very troubling” and stating it would assess the implications.

These job and cost-cutting measures represent the most significant actions taken by Ortberg, who has only been in his role for a little over two months, tasked with stabilizing the company after safety and manufacturing crises, including a near-catastrophic incident earlier this year.

The ongoing machinist strike adds another layer of difficulty for Ortberg. Credit rating agencies have warned that Boeing risks losing its investment-grade status, and the company has been depleting cash reserves in what was expected to be a turnaround year.

S&P Global Ratings previously stated that Boeing is losing over $1 billion monthly due to the strike involving more than 30,000 machinists, which began on September 13 after workers rejected a tentative agreement.

Tensions have escalated between Boeing and the International Association of Machinists and Aerospace Workers, with Boeing retracting a newer contract proposal earlier this week.

On Thursday, Boeing filed an unfair labor practice charge with the National Labor Relations Board, accusing the union of negotiating in bad faith and misrepresenting the company’s proposals.

The union criticized Boeing for presenting an enhanced offer that was not properly negotiated.

Jon Holden, president of the striking workers’ union, called for a return to negotiations, stating, “CEO Ortberg has the chance to approach this differently rather than resorting to the same old intimidation tactics.”

He emphasized that it will ultimately be the union members who decide whether to accept any negotiated contract offer, seeking a resolution that genuinely addresses their needs.

The job cuts, which Ortberg indicated would happen “over the coming months,” come after Boeing and its extensive supply chain had been working to hire more staff following the downturn caused by the Covid-19 pandemic.

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