Boeing to cut 17,000 jobs, suffer $5b loss

Delays first 777X jet as strike hits finances

MONTREAL:

Boeing will cut 17,000 jobs—10% of its global workforce—delay first deliveries of its 777X jet by a year and record $5 billion in losses in the third quarter, as the US planemaker continues to spiral during a month-long strike.

CEO Kelly Ortberg said in a message to employees that the significant downsizing is necessary "to align with our financial reality" after an ongoing strike by 33,000 US West Coast workers halted production of its 737 MAX, 767 and 777 jets.

"We reset our workforce levels to align with our financial reality and to a more focused set of priorities. Over the coming months, we are planning to reduce the size of our total workforce by roughly 10%. These reductions will include executives, managers and employees," Ortberg's message said.

Boeing shares fell 1.1% in after-market trading.

The sweeping changes are a big move by Ortberg, who arrived in August at the helm of the beleaguered planemaker promising to reset relations with the union and its employees.

Boeing recorded pre-tax earnings charges totalling $5 billion for its defence business and two commercial plane programmes. On September 20, Boeing ousted the head of its troubled space and defence unit Ted Colbert.

Boeing, which reports third-quarter earnings on October 23, said in a separate release it now expects revenue of $17.8 billion, a loss per share of $9.97, and a better-than-expected negative operating cash flow of $1.3 billion.

Analysts on average were expecting Boeing to generate a quarterly cash burn of negative $3.8 billion, according to LSEG data.

Thomas Hayes, equity manager at Great Hill Capital, said the layoffs could put pressure on employees to end the strike.

"Striking workers who temporarily do not have a paycheck do not want to become unemployed workers who permanently do not have a paycheck," Hayes said in an email. "I would estimate the strike will be resolved within a week as these workers do not want to find themselves in the next batch of 17,000 cuts."

Reaching a deal to end the work stoppage is critical for Boeing, which filed an unfair-labour-practice charge with the National Labour Relations Board on Wednesday accusing the machinists union of failing to bargain in good faith. Ratings agency S&P estimated the strike is costing Boeing $1 billion a month and the company risks losing its prized investment-grade credit rating.

Ortberg also said Boeing has notified customers that it now expects the first delivery of its 777X in 2026 due to challenges in development, the flight-test pause, and the work stoppage. Boeing had already faced issues with the certification of the 777X that had significantly delayed the plane's launch.

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

Boeing will end its 767 freighter programme in 2027 when it completes and delivers the remaining 29 planes ordered but said production for the KC-46A Tanker will continue