Boeing Announces 17,000 Layoffs Amid Financial Struggles and Strikes

Boeing has announced plans to lay off approximately 10% of its workforce in the coming months, equating to around 17,000 employees. The cuts come as the aerospace giant grapples with financial losses and an ongoing strike that has severely impacted the production of its top-selling planes. The layoffs, which will affect executives, managers, and employees alike, were confirmed in a memo sent by the company’s new CEO, Kelly Ortberg, on Friday.

Boeing, which employs around 170,000 people worldwide, operates significant manufacturing facilities in Washington and South Carolina. While the company had previously imposed temporary furloughs, Ortberg stated that these furloughs would be discontinued in light of the imminent layoffs.

Production Delays and Project Cancellations

In addition to the layoffs, Boeing has announced further delays in critical projects. The rollout of the much-anticipated 777X aircraft will now be pushed to 2026, a year later than initially planned. Furthermore, Boeing will cease production of the cargo variant of the 767 jet by 2027, completing only the current orders before ending production altogether. These moves come as the company faces mounting financial challenges, with more than $25 billion in losses since 2019.

Impact of Strikes and Unresolved Labor Disputes

The layoffs come amid an ongoing strike by approximately 33,000 union machinists, which began on September 14. Efforts to resolve this have been unsuccessful, with two days of talks this week yielding no agreement. Boeing has also filed an unfair labor practices charge against the International Association of Machinists and Aerospace Workers. The strike directly affected the production of the 737 Max, Boeing’s best-selling plane, and the 777 and 767 models.

However, the 787 production continues at a nonunion plant in South Carolina. In his memo to staff, CEO Ortberg acknowledged the severity of the situation, stating, “Our business is in a difficult position, and it is hard to overstate the challenges we face together.” He emphasized the need for “tough decisions” and structural changes to remain competitive and meet customer demands in the long term.

Disappointing Third-Quarter Financials

As Boeing prepares for layoffs, it also released a preliminary report on its third-quarter financial results, painting a grim picture for the company. Boeing reported a $1.3 billion cash burn during the quarter, with losses amounting to $9.97 per share. According to a survey by FactSet, this far exceeded analysts’ expectations, who had forecast losses of only $1.61 per share.

The larger-than-expected losses were partly due to several substantial write-downs, including a $2.6 billion charge related to delays with the 777X, a $400 million charge for the 767, and an additional $2 billion in write-downs tied to defense and space programs. This includes costs associated with new Air Force One jets, a space capsule for NASA, and a military refueling tanker. Despite these challenges, Boeing reported having $10.5 billion in cash and marketable securities as of September 30. Full third-quarter results are expected to be released on October 23.

Ongoing Federal Scrutiny and Safety Concerns

New CEO Kelly Ortberg faces numerous challenges as he works to steer Boeing through these difficult times. In addition to financial and labor woes, the company is under increased scrutiny from the Federal Aviation Administration (FAA) following a January incident in which a panel blew out of a 737 Max during an Alaska Airlines flight. Boeing has since agreed to plead guilty and pay a fine for conspiracy to commit fraud related to the 737 Max, a plane involved in two fatal crashes that claimed 346 lives.

Further complicating matters, NASA recently declined to use a Boeing spacecraft to return two astronauts from the International Space Station, citing safety concerns. These issues and the company’s ongoing production and financial difficulties represent significant hurdles for Ortberg as he works to regain public and investor confidence.