Boeing to cut 17,000 Jobs, delay 777X delivery amid strike

Boeing has announced plans to cut 17,000 jobs—about 10% of its global workforce—and delay the first delivery of its highly anticipated 777X jet by a year as it grapples with ongoing financial challenges.

The US aircraft manufacturer has been significantly impacted by a month-long strike of 33,000 West Coast workers, which halted production of its 737 MAX, 767, and 777 jets.

In the third quarter of 2024, Boeing expects to report $5 billion in losses.

CEO Kelly Ortberg, who took the helm in August, informed employees that the downsizing is a necessary step to “align with [Boeing’s] financial reality” amid operational setbacks.

The job cuts will affect employees at all levels, including executives and managers. Boeing shares fell 1.1% in after-market trading following the announcement.

The strike, which began on September 13, has cost Boeing approximately $1 billion per month, according to ratings agency S&P.

Ortberg has filed an unfair labor practice charge with the National Labor Relations Board, accusing the machinists’ union of failing to negotiate in good faith.

Boeing’s financial stability is at risk, with analysts estimating the company needs to raise between $10 billion and $15 billion to maintain its investment-grade credit rating. Options under consideration include selling common stock or equity-like securities, such as mandatory convertible bonds or preferred equity.

Boeing is expected to report negative cash flow of $1.3 billion for the third quarter, significantly better than analysts’ estimates of $3.8 billion in cash burn.

However, the company’s long-term financial outlook remains shaky, with around $60 billion in debt and a year-long delay to the 777X’s first delivery, now scheduled for 2026.

The 777X has already faced multiple delays due to development issues and challenges with certification.

Adding to Boeing’s troubles is its ongoing struggle with US regulators following a January 2024 mid-air panel blowout on one of its new planes.

The incident highlighted safety lapses, and Boeing has since been under scrutiny from the Federal Aviation Administration (FAA). Boeing agreed to pay $487.2 million in fines, enhance safety measures by $455 million, and accept three years of court-supervised probation under a deal with the US Department of Justice.

In addition to job cuts, Boeing will discontinue its 767 freighter program in 2027 after fulfilling its final 29 orders. Despite this, production of the KC-46A Tanker will continue.

The machinists’ union has criticized Boeing’s recent moves, accusing the company of undermining negotiations with the workforce.

As Boeing faces a hearing in Texas over fraud charges and explores options to raise billions of dollars, the company’s future rests heavily on resolving labor disputes and restoring its reputation for safety and reliability.

The stakes are high for Boeing, as its credit rating teeters on the edge of junk status.