Boeing Faces Turbulent Times with Major Job Cuts and Strikes
Boeing, the renowned aircraft manufacturer, is grappling with significant challenges as it announces a reduction of approximately 17,000 jobs, accounting for 10% of its workforce. This drastic measure comes in response to mounting financial pressures and the ongoing strike by the International Association of Machinists (IAM), which has paralyzed production at its factories since mid-September. CEO Kelly Ortberg emphasized the need for these cuts to adapt to the current financial reality and to ensure the long-term competitiveness of the company.
The strike, which has entered its fifth week, has already cost Boeing over $1 billion, as reported by S&P Global Ratings. The machinists rejected a tentative agreement that included a 30% pay increase over four years, leading to heightened tensions between the union and management. The strike is particularly impactful at Boeing's Seattle area facilities, where the production of key aircraft models like the 737 and 777 is concentrated.
Boeing's financial outlook is grim, with the company projecting a loss of nearly $10 per share for the third quarter, significantly below analyst expectations. Additionally, the company announced a need for $5 billion in write-downs, primarily affecting its commercial aircraft division. Customers awaiting the next-generation 777X will face delays, with deliveries now expected to begin in 2026 instead of the originally planned timeline. Furthermore, the production of the 767 commercial jet will cease in 2027 as part of the company's restructuring efforts.
With these developments, Boeing's leadership is under immense pressure to navigate through this crisis. Ortberg, who has been in his role for just over two months, faces the daunting task of restoring the company’s reputation and financial health amid a backdrop of safety and manufacturing issues that have plagued Boeing for years.
