Boeing will cut 10% of its workforce, or about 17,000 people, as the company’s losses mount and a machinist strike that has idled its aircraft factories enters its fifth week. It will also push back the long-delayed launch of its new wide-body airplane.
The manufacturer will not deliver its still-uncertified 777X wide-body plane, which has customers that include Lufthansa and Emirates, until 2026, putting it some six years behind schedule. The company in August paused flight tests of the aircraft when it discovered structural damage in one of them. It will stop making commercial 767 freighters in 2027 after it fulfills remaining orders, CEO Kelly Ortberg said in a staff memo Friday afternoon.
“Our business is in a difficult position, and it is hard to overstate the challenges we face together,” Ortberg said. “Beyond navigating our current environment, restoring our company requires tough decisions and we will have to make structural changes to ensure we can stay competitive and deliver for our customers over the long term.”
Boeing expects to report a loss of $9.97 a share in the third quarter, the company said in a surprise release Friday. It expects to report a pretax charge of $3 billion in the commercial airplane unit and $2 billion for its defense business.
In preliminary financial results, Boeing said it expects to have an operating cash outflow of $1.3 billion for the third quarter.
The union late Friday called Boeing’s announcement to cease 767 freighter production “very troubling” and said it would review the implications.
The job and cost cuts are the most dramatic moves to date from Ortberg, who is just over two months into his tenure in the top job, tasked with returning Boeing to stability after safety and manufacturing crises, including a near-catastrophic midair door-plug blow out earlier this year.
The machinist strike is yet another challenge for Ortberg. Credit ratings agencies have warned the company is at risk of losing its investment-grade rating, and Boeing has been burning through cash in what company leaders hoped would be a turnaround year.
S&P Global Ratings said earlier this week that Boeing is losing more than $1 billion a month from the strike of more than 30,000 machinists, which began Sept. 13 after machinists overwhelmingly voted down a tentative agreement the company reached with the union. Tensions have been rising between the manufacturer and the International Association of Machinists and Aerospace Workers, and Boeing withdrew a newer contract offer earlier this week.
On Thursday, Boeing said it filed an unfair labor practice charge with the National Labor Relations Board that accused the International Association of Machinists and Aerospace Workers of negotiating in bad faith and misrepresenting the plane makers’ proposals. The union had blasted Boeing for a sweetened offer that it argued was not negotiated with the union and said workers would not vote on it.
After talks broke down earlier this week, Boeing said further negotiations didn’t make sense at that point. Jon Holden, president of the striking workers’ union, IAM District 751, on Friday urged a return to the bargaining table.
“CEO Ortberg has an opportunity to do things differently instead of the same old tired labor relations threats used to intimidate and crush anyone that stands up to them,” he said in a statement. “Ultimately, it will be our membership that determines whether any negotiated contract offer is accepted. They want a resolution that is negotiated and addresses their needs.”
The job cuts, which Ortberg said would occur “over the coming months,” would hit just after Boeing and its hundreds of suppliers have been scrambling to staff up in the wake of the Covid-19 pandemic, when demand cratered.
