Boeing will lay off 10% of its employees as a strike by factory workers cripples airplane production

[October 12, 2024]  By DAVID KOENIG

Boeing plans to lay off about 10% of its workers in the coming months, about 17,000 people, as it continues to lose money and tries to deal with a strike that is crippling production of the company’s best-selling airline planes.

New CEO Kelly Ortberg told staff in a memo Friday that the job cuts will include executives, managers and employees.

The company has about 170,000 employees worldwide, many of them working in manufacturing facilities in the states of Washington and South Carolina.

Boeing had already imposed rolling temporary furloughs, but Ortberg said those will be suspended because of the impending layoffs.

The company will further delay the rollout of a new plane, the 777X, to 2026 instead of 2025. It will also stop building the cargo version of its 767 jet in 2027 after finishing current orders.

Boeing has lost more than $25 billion since the start of 2019.

About 33,000 union machinists have been on strike since Sept. 14. Two days of talks this week failed to produce a deal, and Boeing filed an unfair-labor-practices charge against the International Association of Machinists and Aerospace Workers.

As it announced layoffs, Boeing also gave a preliminary report on its third-quarter financial results — and the news is not good for the company.

Boeing said it burned through $1.3 billion in cash during the quarter and lost $9.97 per share. Industry analysts had been expecting the company to lose $1.61 per share in the quarter, according to a FactSet survey, but analysts were likely unaware of some large write-downs that Boeing announced Friday — a $2.6 billion charge related to delays of the 777X, $400 million for the 767, and $2 billion for defense and space programs including new Air Force One jets, a space capsule for NASA and a military refueling tanker.

Unpainted Boeing 737 Max aircraft are seen on Sept. 24, 2024, at the company's facilities in Renton, Wash. (AP Photo/Lindsey Wasson, File)

The company based in Arlington, Virginia, said it had $10.5 billion in cash and marketable securities on Sept. 30. Boeing is scheduled to release full third-quarter numbers on Oct. 23.

The strike has a direct bearing on cash burn because Boeing gets half or more of the price of planes when it delivers them to airline customers. The strike has shut down production of the 737 Max, Boeing's best-selling plane, and 777s and 767s. The company is still making 787s at a nonunion plant in South Carolina.

“Our business is in a difficult position, and it is hard to overstate the challenges we face together,” Ortberg told staff. He said the situation “requires tough decisions and we will have to make structural changes to ensure we can stay competitive and deliver for our customers over the long term.”

Ortberg took over at Boeing in August, becoming the troubled company’s third CEO in less than five years. He is a longtime aerospace-industry executive but an outsider to Boeing.

The new CEO faces many challenges to turn the company around.

The Federal Aviation Administration increased scrutiny of the company after a panel blew out of a Max during an Alaska Airlines flight in January. Boeing has agreed to plead guilty and pay a fine for conspiracy to commit fraud tied to the Max, but relatives of the 346 people who died in two Max crashes want tougher punishment.

And Boeing got attention for all the wrong reasons when NASA decided that a Boeing spacecraft wasn’t safe enough to carry two astronauts home from the International Space Station.

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