Boeing, one of the largest aircraft manufacturers in the world, is facing serious difficulties. The company announced it will cut 17,000 jobs, delay deliveries of its new 777X jet by a year, and report significant losses of $5 billion in the third quarter of 2024.
These problems arise amid a month-long strike involving 33,000 workers on the U.S. West Coast, halting production of key aircraft models, including the 737 MAX, 767, and 777 jets.
Boeing to Cut 17,000 Jobs Amid Ongoing Strike
Boeing's CEO, Kelly Ortberg, informed employees that the company must reduce its workforce to "align with our financial reality."
The planned cuts, amounting to about 10% of its total workforce, will affect various levels of employees, including executives and managers. This decision came after Boeing shares fell 1.7% in after-market trading.
Boeing also disclosed charges of $5 billion related to its defense and commercial sectors. The ongoing strike is costing the company approximately $1 billion each month, which is threatening its investment-grade credit rating.
The company's financial troubles were compounded by an unfair-labor-practice complaint filed against the machinists' union, claiming that they have not been negotiating in good faith.
Boeing has informed customers that the first delivery of its much-anticipated 777X jet is now scheduled for 2026. This delay is due to various challenges the company has faced, including difficulties with flight-test procedures and ongoing work stoppages.
Boeing had already encountered issues with the certification of the 777X, which has led to major delays in its launch.
As Boeing prepares to announce its third-quarter earnings on October 23, it expects to report revenue of $17.8 billion, a loss of $9.97 per share, and negative operating cash flow of $1.3 billion.
Despite these challenges, Ortberg stated that Boeing is working on strategic planning to rejuvenate the company and address its financial issues, AP News reported.
Boeing to End 767 Freighter Program
In a recent announcement, Boeing revealed it would be ending its 767 freighter program in 2027 after completing and delivering the remaining 29 ordered planes. However, production of the KC-46A Tanker will continue.
Due to the job cuts, Boeing will also end the furlough program for salaried employees that was initiated in September.
Boeing had already been struggling financially before the strike began on September 13. The company was using its resources to recover from a serious incident in January, where a panel blew out mid-air during an Alaska Airlines flight.
This event raised concerns about Boeing's safety protocols, leading US regulators to impose restrictions on its production activities.
To manage its significant debt, which stands at about $60 billion, Boeing is exploring options to raise money, including selling stock and securities. Sources indicated the company might seek to generate around $10 billion by selling common stock or mandatory convertible bonds.
According to Reuters, experts believe Boeing needs to secure between $10 billion and $15 billion to maintain its credit ratings, which are currently just above junk status.
