Boeing is facing significant challenges as it prepares to lay off approximately 17,000 employees, amounting to nearly 10% of its global workforce. This decision comes amidst ongoing financial struggles and a strike by unionized factory workers that has severely disrupted the production line of the company’s most popular aircraft models.
The new CEO, Kelly Ortberg, conveyed this news to employees in a memo detailing that the layoffs would affect staff across various levels, including executives and managers. With a workforce totaling around 170,000 worldwide, Boeing is primarily structured around manufacturing operations in Washington and South Carolina. Following prior temporary furloughs, which the company has now opted to suspend, these layoffs will signal a more permanent shift in Boeing’s operational strategy.
The aerospace giant has already delayed the introduction of its anticipated 777X aircraft to 2026, a year behind the original schedule. Additionally, Boeing plans to halt production of the cargo variant of its 767 model in 2027, completing only existing orders. Since the beginning of 2019, Boeing has reported losses exceeding $25 billion, underscoring the extensive financial troubles the company has faced.
The ongoing strike, which has lasted since September 14, involves around 33,000 machinists who are part of the International Association of Machinists and Aerospace Workers. Recent negotiations have failed to achieve a resolution, prompting Boeing to file an unfair labor practices charge against the union. The strike has a direct impact on cash flow, as a significant portion of aircraft sales revenue is realized upon delivery to airlines, which has been halted due to the work stoppage.
In its preliminary third-quarter financial report, Boeing disclosed a cash burn of $1.3 billion during the period and a loss of $9.97 per share. Although market analysts had estimated a loss of $1.61 per share, the company’s major write-downs contributed to the worse-than-expected results. These included significant charges of $2.6 billion related to the delayed 777X, $400 million for the 767, and $2 billion in connection with defense contracts that encompass various military and civilian projects.
As of September 30, Boeing reported holding $10.5 billion in cash and marketable securities. The news comes as the company prepares to release its comprehensive financial results on October 23.
The company’s difficulties are compounded by increased regulatory scrutiny from the Federal Aviation Administration (FAA) following safety incidents involving its 737 Max aircraft. Boeing has agreed to plead guilty and pay a fine linked to past actions deemed fraudulent concerning the Max model. Moreover, a recent decision by NASA highlighted concerns regarding the safety of Boeing’s spacecraft, which was deemed unfit for transporting astronauts.
Ortberg, who assumed the CEO role in August, indicated to staff that Boeing is in a precarious position and that tough decisions must be made to ensure the company remains competitive and can fulfill customer demands effectively in the long term. His leadership comes at a critical juncture for Boeing, which grappled with previous management changes and aims to stabilize its operations amidst turbulence in the aerospace industry.
This moment in Boeing’s history illustrates the volatility of the market and the complex interplay of operational challenges, regulatory pressures, and labor relations that define the current landscape of aerospace manufacturing.