Boeing to cut 10% workforce, delay 777X delivery as strike takes toll

According to CEO Kelly Ortberg, Boeing will cut 17, 000 jobs, or 10% of its global workforce, and will postpone the first year’s delivery of its 777X jet. Additionally, it will announce significant new losses in its defense business as a monthlong strike batters company finances.

On Friday, in a message to employees, Ortberg said the company must reset its workforce levels “to align with our financial reality” after a strike by 33, 000 US West Coast workers shuttered production of its 737 MAX, 767 and 777 jets.

We adjust the workforce’s levels to reflect our financial situation and prioritize things more carefully. We intend to reduce the size of our workforce by roughly 10% over the upcoming months. These reductions will include executives, managers and employees”, Ortberg’s message said.

Boeing shares fell 2.3 percent in after-market trading.

Ortberg added that because of the difficulties the company has had with development, the pause in testing, and the ongoing work stoppage, Boeing has informed customers.

The 777X certification issue, which had significantly delayed the launch of the aircraft, was already a problem for Boeing.

Boeing, which reports its third-quarter earnings on October 23, said in a separate release it now expects revenue of $17.8bn, a loss per share of $9.97, and negative operating cash flow of $1.3bn.

We are making important strategic decisions for our future while our business is facing near-term challenges, Ortberg continued in a statement.

When the remaining 29 planes are finished and delivered by Boeing, the 767-freight program will end in 2027, according to Boeing, which stated that KC-46A tanker production will continue.

Ratings concern

Boeing is incredibly important to arrive at a resolution to put an end to the work stoppage. According to ratings agency S&amp, P, the strike is expected to cost it $1 billion per month and pose a risk of losing its coveted investment-grade credit rating. After two days of negotiations, Boeing abruptly withdrew its pay offer to about 33, 000 US factory workers, claiming that the union did not take its proposals seriously.

In light of the job cuts, the company announced in September that it would end its furlough program for salaried employees.

The company had been burning cash as a result of a midair panel blowout on a new plane in January that exposed weak safety protocols and sparked US regulators to halt production even before the strike started on September 13.

Boeing is reportedly considering options to sell shares and equity-like securities in order to raise billions of dollars.

The business posted operating cash flow losses of more than $7 billion for the first half of 2024 and has about $60 billion in debt.