Boeing to cut 17,000 jobs as losses mount during factory strike

Boeing will cut 10% of its workforce, or about 17,000 people, as the company’s losses widen and a workers’ strike that has halted its aircraft factories enters its fifth week. It will also postpone the long-delayed launch of its new wide-body jet.

The manufacturer won’t take delivery of its unconfirmed 777X until 2026, putting it six years behind schedule. In August, the company suspended testing of the aircraft when it discovered structural damage to one of them. It will stop making the 767 freighters in 2027 after filling remaining orders, CEO Kelly Ortberg said in a staff memo Friday afternoon.

“Our business is in a difficult situation, and it is difficult to overstate the challenges we face together,” said Ortberg. “In addition to navigating our current environment, restoring our company requires difficult decisions and we will need to make structural changes to ensure we can remain competitive and deliver for our customers over time.”

Boeing expects to report a loss of $9.97 per share in the third quarter, the company said in a surprise release on Friday. It expects to report a pre-tax charge of $3 billion for its commercial aviation division and $2 billion for its defense business.

In preliminary financial results, Boeing said it expects operating cash flow of $1.3 billion in the third quarter.

The job and cost cuts are the most dramatic moves yet from Ortberg, who has been in the top job for just over two months, tasked with returning Boeing to stability after safety and production problems, including a near-catastrophic plug. it exploded earlier this year.

The machine strike is another challenge for Ortberg. Credit rating agencies have warned the company is at risk of losing its investment-grade rating, and Boeing has been burning through cash in what company leaders hope will be a turnaround year.

S&P Global Ratings said earlier this week that Boeing is losing more than $1 billion a month from a strike by more than 30,000 machinists, which began on Sept. 13 after machinists overwhelmingly voted down a deal the company had reached with the union. Tensions have been rising between the manufacturer and the International Association of Machinists and Aerospace Workers, and Boeing withdrew a new contract earlier this week.

On Thursday, Boeing said it has filed a labor practice lawsuit with the National Labor Relations Board accusing the International Association of Machinists and Aerospace Workers of improper bargaining and misrepresentation of the aircraft maker’s proposals. The union criticized Boeing for the sweet proposal saying that it was not discussed with the union and that the workers will not vote for it.

The job cuts, which Ortberg said will take place “in the coming months,” will come shortly after Boeing and hundreds of its suppliers have been looking for workers due to the Covid-19 pandemic, when demand has increased.