Boeing is planning to slash its workforce by 10%, or 17,000 jobs, following a slew of production disruptions and financial losses.
This decision comes amid an ongoing strike by 33,000 factory workers, who have been on strike since mid-September, demanding higher wages.
Additional losses for the year
The troubled aircraft builder, already burdened with US$60 billion in debt, expects an additional US$5 billion in losses for the third quarter of 2024.
CEO Kelly Ortberg told employees that Boeing would align its workforce to meet the current financial challenges.
“We reset our workforce levels to align with our financial reality and to a more focused set of priorities,” Ortberg said, announcing the scheme to shrink the total workforce – executives, managers and employees alike – by 10% in coming months.
The sweeping changes also include the delay of the first deliveries of Boeing’s 777X jet by a year, now expected in 2026.
Shares plummet
Shares in the company fell 2.12% in after-market trading following the announcement.
Ratings agency S&P estimates that the ongoing strike is costing Boeing US$1 billion per month and there is concern that the company could lose its investment-grade credit rating.
Analysts also expect Boeing’s quarterly earnings, due for release on October 23, to show revenue of US$17.8 billion, with a loss per share of US$9.97.
Equity manager Thomas Hayes noted that the layoffs could increase pressure on striking workers to reach an agreement, suggesting that the strike could be resolved within a week.
“Striking workers who temporarily do not have a pay cheque do not want to become unemployed workers who permanently do not have a pay cheque,” Hayes remarked.
Boeing also faces further scrutiny over safety practices, including a recent panel blowout during a mid-air flight, which prompted regulators to curb production.