Boeing to cut workforce by 10% as strike eats into reserves
By Benedikt Kammel | Bloomberg
Boeing Co. said it plans to cut its workforce by about 10%, responding to the crisis facing the planemaker as it faces a drawn-out strike by workers and a worsening cash crunch.
The reductions will include executives, managers and employees, Chief Executive Officer Kelly Ortberg said in a memo to employees. Boeing ended 2023 with 171,000 employees.
“Our business is in a difficult position, and it is hard to overstate the challenges we face together,” Ortberg said in the memo.
Also see: Boeing strike squeezes California aerospace suppliers
The company said it expects to report third quarter revenue of $17.8 billion, and a loss per share of $9.97, according to preliminary figures. The operating cash outflow stood at $1.3 billion, leaving Boeing with cash and investments in marketable securities of $10.5 billion at the end of the quarter, it said. The company is due to report full figures on Oct. 23.
The company unveiled the measures and the earnings figures as it seeks to get its negotiations with labor unions back on track. Boeing has made two offers for higher wages, both of which were turned down by workers. About 33,000 employees at its main Seattle-area facilities have been on strike for a month now, devastating production and draining Boeing’s reserves.
The latest talks collapsed earlier this week, with no clear path when and how they might resume.
Boeing has already initiated a range of cost-cutting plans as it grapples with dwindling reserves and low output. The company has put some workers on furlough, frozen hiring and cut back on corporate travel. Ortberg said the company would not proceed with the next cycle of furloughs as part of its plan to cut jobs.
Boeing stock tumbled 42% this year through Friday’s close.
Ortberg also said the company has notified customers that the first deliveries of the 777X are now expected in 2026, citing the ongoing work stoppage and flight test pause. In August, Boeing announced it was suspending tests due to cracking in a key component that connects the plane’s engines to the wings.
It’s the latest setback for the jetliner, which has already experienced delays in getting certified by the Federal Aviation Administration.
The delay of the passenger version as well as the freighter — now scheduled for 2028 — will result in in a pre-tax earnings charge of $2.6 billion, Boeing said. Overall, the commercial aircraft subsidiary will have a pre-tax earnings charges of $3 billion,in part of the 767 programs that’s running out.
The defense & space business will have a pre-tax earnings charge of $2 billion, Boeing said.