Boeing is set to eliminate 17,000 jobs, representing about 10% of its workforce, as the U.S. aircraft manufacturer faces multiple challenges within its operations.
In an email to employees on Friday, CEO Kelly Ortberg announced that the layoffs will involve executives, managers, and staff members. He emphasized that the reductions are essential to “align with our financial reality” following an ongoing strike involving 33,000 workers on the West Coast, which has disrupted production of the 737 MAX, 767, and 777 jets.
Additionally, the company will postpone the launch of the new 777X aircraft to 2026 instead of 2025 and will cease production of the cargo variant of the 767 jet in 2027 after fulfilling existing orders.
“Although our business is currently facing immediate challenges, we are making significant strategic decisions for our future and have a clear understanding of the work needed to restore our company,” Ortberg stated. Although Boeing had previously implemented temporary furloughs, those measures will be paused due to the upcoming layoffs.
Since the beginning of 2019, Boeing has incurred losses exceeding $25 billion (approximately £19 billion), with the worker strike directly impacting its financial situation. Jon Holden, the lead negotiator for the International Association of Machinists and Aerospace Workers union, noted that union members are “in this for the long haul” after the company only offered minor concessions before halting negotiations.
In a preliminary update on its third-quarter financial performance, Boeing reported a cash burn of $1.3 billion (£994 million) for the quarter, resulting in losses of $9.97 per share.
The company is also involved in a court hearing in Texas following its guilty plea to a criminal fraud conspiracy charge in July, stemming from an investigation into two fatal 737 MAX crashes. A judge will determine whether to accept the company’s proposal to pay a $243.6 million (£187 million) fine and invest a minimum of $455 million (£348 million) over three years to enhance its safety and compliance programs as part of a plea agreement.
This situation marks the latest issue for the troubled 737 MAX, which was grounded for around three weeks earlier this year after a panel on a new aircraft failed mid-flight.
