Boeing to slash 17,000 jobs - 10% of its workforce

 Boeing to slash 17,000 jobs - 10% of its workforce - as factory strike enters its fifth week following safety controversies

By James Gordon For Dailymail.com  and Associated Press

Published: 05:08, 12 October 2024 | Updated: 05:15, 12 October 2024

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.

The nearly month-long strike of 33,000 workers has only added to the company's litany of problems meaning it will now have to undergo another round of belt-tightening. 

Boeing factory workers and supporters gather on a picket line during the strike
near the entrance to a Boeing production facility in Renton, Washington

Among the recent issues facing the company, 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 $243.6 million fine to avoid a criminal trial for conspiracy to commit fraud tied to the Max, but relatives of the 346 people who died in two Max crashes want tougher punishments.

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.

Boeing staff with the International Association of Machinists and Aerospace Workers walked off the job on September 13 after overwhelmingly rejecting a contract offer. 

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

The Federal Aviation Administration increased scrutiny of the company after a
panel blew out of a Max during an Alaska Airlines flight in January 2024

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 September 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.

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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.

Boeing announced some large write-downs on 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.

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

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

'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.' 

'While our business is facing near-term challenges, we are making important strategic decisions for our future and have a clear view on the work we must do to restore our company,' Ortberg said.

Ortberg also vowed to take 'additional oversight' of Boeing's troubled defense and space businesses, which will experience 'substantial new losses' in the third quarter, he said in the message to employes. 

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 outsiders to Boeing.