On Friday, October 11th, Boeing, the American aircraft manufacturing giant, announced that it will be laying off about 17,000 employees, which accounts for 10% of its global workforce. This decision comes after enduring significant losses during a month-long strike.
In a memo sent to employees on Friday afternoon, Boeing’s CEO Kelly Ortberg stated that in addition to the 10% workforce reduction, the company will also need to further postpone the first delivery of its yet-to-be-certified 777X wide-body aircraft by a year, not expecting deliveries until 2026, and will cease the manufacturing of 767 commercial aircraft by 2027.
Ortberg also anticipated major new losses in the company’s defense business as the nearly month-long strike has severely impacted the company’s financial situation. He emphasized the challenging business position they are in and the difficult decisions that need to be made to ensure competitiveness and long-term customer service.
Having taken office just in August, Ortberg’s key move as Boeing’s CEO has attracted significant attention. The company is realigning its workforce to conform to financial realities and focus more on a range of priorities, planning to reduce the total number of employees by approximately 10% in the coming months, including executives, managers, and staff.
As a result of the layoffs, Boeing will end the paid employee furlough program announced in September. The company is set to release its third-quarter financial report on October 23rd, projecting revenue at $17.8 billion, with a loss per share at $9.97, and negative operating cash flow of $1.3 billion.
Following the announcement, Boeing’s stock price dropped by 1.7% in after-hours trading on Friday. The strike led by the International Association of Machinists and Aerospace Workers (IAM) is still ongoing. Boeing lodged a complaint of unfair labor practices with the National Labor Relations Board (NLRB) on Thursday, accusing the machinists union of not negotiating in good faith.
However, the union claims that Boeing presented a new proposal without consulting the union, so workers will not vote on it. The IAM strike began on September 13th, with S&P Global estimating that Boeing is losing $1 billion per month as a result, which could risk its valuable investment-grade credit rating.