Boeing announced it will cut 17,000 jobs — approximately 10 percent of its global workforce — delay the first deliveries of its 777X jet by another year, and record a $5 billion loss for the third quarter of 2024.
This move comes as the U.S. aerospace giant grapples with financial strain, exacerbated by a month-long strike of 33,000 West Coast workers that has halted production of key models, including the 737 MAX, 767, and 777 jets.
CEO Kelly Ortberg, in a letter to employees, explained that the layoffs were a necessary step to align Boeing’s operations with its “financial reality” after the production freeze. “We are resetting our workforce levels to match a more focused set of priorities,” Kelly Ortberg said, noting that the cuts will affect executives, managers, and employees across the company.
The layoffs mark a bold move by Kelly Ortberg, who took over as CEO in August, promising to improve relations with the union and Boeing’s workforce. However, tensions remain high as the company faces significant operational challenges, Reuters news report.
The job cuts come amid financial setbacks for Boeing. The company has posted $5 billion in charges tied to its defense business and two commercial jet programs. Additionally, Boeing ousted Ted Colbert, the head of its space and defense unit, as part of an ongoing shakeup. Boeing now projects a third-quarter revenue of $17.8 billion, with a per-share loss of $9.97, alongside a better-than-expected negative cash flow of $1.3 billion.
With the company burning through cash — posting losses of over $7 billion for the first half of 2024 — Boeing is exploring options to raise between $10 billion and $15 billion to prevent its credit rating from being downgraded to junk status.
The strike, which is costing Boeing an estimated $1 billion per month, remains a critical issue. Thomas Hayes of Great Hill Capital suggested that the job cuts might pressure striking workers to return to the table, noting that “striking workers without paychecks don’t want to become unemployed workers permanently without paychecks.”
Boeing has filed a labor complaint against the machinists union, accusing it of not negotiating in good faith. The union, however, has pushed back, criticizing Boeing’s claims as an attempt to distract from its refusal to engage with frontline workers. With the work stoppage now in its second month, both sides remain at an impasse.
Boeing also announced that the first deliveries of its highly anticipated 777X jets would be delayed until 2026, citing challenges in development, certification issues, and the strike. The company further disclosed that it would wind down its 767 freighter program by 2027 but continue production of the KC-46A Tanker.
Meanwhile, Boeing faces broader scrutiny over its operational safety and management. On Friday, a court hearing in Texas considered whether to accept Boeing’s guilty plea to fraud charges related to safety failures.
The company has agreed to pay nearly $500 million in fines and make improvements to its safety protocols. Additionally, a national watchdog report criticized the Federal Aviation Administration for its ineffective oversight of Boeing’s production processes.
