Boeing, one of the world’s largest aircraft manufacturers, has announced plans to reduce its workforce by 17,000 employees, which represents 10% of its global workforce.
Delaying Delivery
This decision comes in the wake of a month-long strike that has significantly impacted the company’s production, especially for critical models like the 737 MAX, 767, and 777. Boeing is also delaying the delivery of its first 777X aircraft by a year, as the company reports losses of $5 billion for the third quarter of 2024.
The prolonged strike, which involves 33,000 employees on the West Coast of the United States, has taken a toll on Boeing’s ability to maintain its production schedules, according to Ziare.
As a result, the company has had to reevaluate its short-term strategy and reduce costs through workforce reductions. The layoffs will affect employees at all levels, including executives and managers, according to Boeing’s CEO Kelly Ortberg.
Resetting its Workforce
Ortberg, who took over as CEO in August, shared the reasoning behind the layoffs in a message to employees.
He explained that the company is "resetting its workforce levels to align with our financial realities and a more focused set of priorities." While Ortberg has previously pledged to improve relations with Boeing’s workforce and unions, the scale of these cuts may challenge those efforts.
Boeing’s financial struggles in the third quarter are largely due to problems in both its defense division and two key commercial programs.
The delay in the 777X delivery will exacerbate these challenges, further straining the company’s financial position. Boeing now expects revenues of $17.8 billion for the quarter, coupled with a loss of $9.97 per share.
In an effort to address internal issues, Boeing has also announced the dismissal of Ted Colbert, who led the company’s defense and space division.
Despite these setbacks, Boeing reported a slight improvement in operational cash flow, with losses smaller than initially projected.
