Boeing Plans to Lay Off 17,000 Employees Following Withdrawal of Pay Offer to 33,000 Factory Workers

Boeing has announced it will cut 17,000 jobs, representing 10% of its workforce, as the aerospace giant grapples with financial losses and a prolonged machinist strike. The move, revealed in a letter from CEO Kelly Ortberg, comes after Boeing withdrew a pay offer to 33,000 U.S. factory workers, sparking a strike that has lasted over five weeks and severely impacted production at its aircraft facilities.

In the letter, Ortberg explained that the workforce reduction was necessary to align Boeing’s employee base with its financial reality, stating, “We reset our workforce levels to align with our financial reality and to a more focused set of priorities. These reductions will include executives, managers, and employees.”

Delays in Key Projects

In addition to the job cuts, Boeing will also delay the launch of its highly anticipated 777X wide-body aircraft. Originally scheduled for release in 2020, the plane’s delivery has now been pushed back to 2026 due to certification delays and a pause in flight testing following structural damage found in one of the planes earlier this year.

Boeing also plans to cease manufacturing its commercial 767 freighters by 2027, fulfilling only current orders before discontinuing production. Ortberg acknowledged the tough road ahead, stating, “Our business is in a difficult position, and it is hard to overstate the challenges we face together.”

Third-Quarter Losses Loom

The company is bracing for significant financial losses in the third quarter, expecting to report a loss of $9.97 per share. Boeing anticipates a pretax charge of $3 billion in its commercial airplane division and an additional $2 billion loss in its defense unit. The company also expects an operating cash outflow of $1.3 billion for the quarter.

These financial struggles have raised concerns that Boeing could lose its investment-grade credit rating, particularly as the machinist strike drags on. The strike, which began on September 13, involves over 30,000 machinists and has reportedly cost the company more than $1 billion each month.

Future Uncertainty

Boeing is under immense pressure to stabilize its business after several safety and manufacturing issues in recent years, including a near-catastrophic midair incident involving a door-plug blowout earlier this year. Ortberg noted that while the company faces immediate challenges, it is also focused on making strategic decisions to secure its long-term future.

“Beyond navigating our current environment, restoring our company requires tough decisions and structural changes to ensure we can stay competitive and deliver for our customers over the long term,” Ortberg stated. Despite these setbacks, he assured that Boeing remains committed to its recovery and growth in the years ahead.

Industry Impact

Boeing’s decision to reduce its workforce and delay major projects comes at a time when the global aerospace industry is still recovering from the effects of the COVID-19 pandemic. With the added pressure of the machinist strike and mounting financial losses, Boeing’s future challenges are significant, leaving the industry and investors watching closely for the company’s next moves.

Sources By Agencies

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