Thousands of Jobs at Risk: Boeing Prepares Layoffs as Turmoil Intensifies

Boeing plans to reduce its global workforce by 10%, which amounts to 17,000 jobs cut. Additionally the launch of its 777X jet will be delayed by a year and the company is expected to record $5 billion in losses in the third quarter. This comes as the U.S. planemaker continues to face challenges during a month-long strike. 

In a note to staff, CEO Kelly Ortberg stated that the significant layoffs were necessary “to align with our financial reality” following the production of the company’s 737 MAX, 767 and 777 aircraft being put on hold by a strike involving 33,000 American West Coast workers.

“We reset our workforce levels to align with our financial reality and to a more focused set of priorities. Over the coming months, we are planning to reduce the size of our total workforce by roughly 10%. These reductions will include executives, managers and employees,” Ortberg’s message stated.

Boeing mentioned in a separate statement that it is now expecting revenue of $17.8 billion, a loss per share of $9.97, and a better-than-expected negative operating cash flow of $1.3 billion. Boeing releases third-quarter earnings on October 23. Boeing stated in its initial financial reports that it estimates a $1.3 billion operating cash loss in the third quarter.

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Another challenge is the machinist strike. Boeing has been spending a lot of money in what company executives had believed would be a year of recovery, but credit rating agencies have warned the business it could lose its investment-grade status.

Earlier this week S&P Global Ratings said that Boeing is losing more than $1 billion monthly as a result of the over 30,000 machinist’s strike, which started on September 13 after the machinists completely rejected a tentative agreement. Boeing withdrew a revised contract offer earlier this week because of the growing tensions between the firm and the International Association of Machinists and Aerospace Workers.

Boeing announced on Thursday that it had filed a charge of unfair labour practices with the National Labor Relations Board, claiming that the  International Association of Machinists  (IAM) and  Aerospace Workers (AAW) had misrepresented the plane maker’s proposals and engaged in bad faith negotiations. Boeing was criticised by the union for a weakened offer, which it said was not discussed with the union and that employees would not be allowed to vote on.