Boeing, the renowned aviation giant, has made a significant decision in response to its financial challenges. The company plans to cut approximately 10% of its workforce globally, affecting around 17,000 positions.
This move comes as Boeing faces a substantial third-quarter loss and grapples with various operational issues.
Boeing Workforce Layoffs: The Strike and Financial Strain
The catalyst for this workforce reduction is a monthlong machinist strike at two Seattle-area Boeing plants.
The strike, initiated by staff affiliated with the International Association of Machinists (IAM) and Aerospace Workers, has significantly impacted the company’s operations.
Ratings agency S&P estimates that the strike is costing Boeing a staggering $1 billion per month.
Boeing’s Chief Executive, Kelly Ortberg, emphasized the need to “reset our workforce levels to align with our financial reality.” The cuts will not spare any level of employment—executives, managers, and employees will all be affected.
These decisive actions are essential for Boeing’s long-term competitiveness.
Impact on Commercial Aviation
The IAM strike has had a direct impact on Boeing’s commercial aviation results. In the third quarter, the strike contributed to pre-tax charges of $3 billion, part of an anticipated loss of $9.97 per share.
Additionally, the company has decided to push back the first delivery of the 777X from 2025 to 2026 due to production delays caused by the strike.
The highly anticipated 777X jet had its initial service date set for January 2020.
Boeing’s challenges extend beyond commercial aviation. The company has faced scrutiny over safety lapses in its commercial aviation division and setbacks in its Starliner space program.
In response, Ortberg pledged to take “additional oversight” of Boeing’s troubled defense and space businesses. These segments are expected to experience “substantial new losses” in the third quarter.
Ortberg’s commitment to structural changes underscores Boeing’s determination to remain competitive in the long run.
Boeing: Legal Matters
Boeing’s troubles also include legal matters. A judge in Texas recently heard arguments regarding a U.S. Department of Justice criminal settlement related to the Boeing 737 MAX.
Family members of MAX crash victims contested the settlement, advocating for criminal prosecution of Boeing and former executives in a public trial.
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