Boeing is about to cut 17,000 jobs

In a notice to employees on October 11, Boeing CEO Kelly Ortberg said large-scale staff reductions were necessary “given the current financial situation”. The strike by workers at Boeing factories on the West Coast has lasted a month, causing production of the 737 MAX, 767 and 777 models to stall.

“We will reset the new staff size according to the current financial situation, to focus more on priorities. In the coming months, we will reduce the total staff by 10%, including leadership, management and employees,” Ortberg wrote. This number equates to about 17,000 people. Boeing shares fell 1.1% in the after-hours trading session on October 11 because of this information.

The above change is a strong move by Ortberg – the new CEO of Boeing. He took office in August, while Boeing was reeling from a series of scandals, from a flight safety crisis, production delays to a debt of up to 60 billion USD. Ortberg also pledged to reestablish relations with workers and unions.

From September 13, about 30,000 Boeing workers belonging to the IAM union (International Association of Aviation Workers and Machinists) began a strike. This group assembles 737 MAX, 777 and 767 aircraft at factories in Seattle and Portland. They are not satisfied with the preliminary labor agreement that IAM leaders reached with Boeing early last month.

Ending the strike is important to Boeing. On October 9, the company filed a complaint with the National Labor Relations Board (NLRB), accusing the union of not negotiating in good faith. S&P forecasts that Boeing will lose $1 billion per month and may lose its credit rating because of this.

Thomas Hayes – analyst at Great Hill Capital said the layoffs could increase pressure on workers, causing them to end the strike. “They won’t want to be unemployed. I think the strike will end within the next week,” he said.

Ortberg said Boeing has also informed customers about delaying the delivery of the first batch of 777X to 2026, one year later than planned. The reason is challenges in the development process, not being able to fly tests and stagnating production at factories. Previously, the delivery of the 777X was also delayed because of certification issues.

Boeing will release its third quarter financial report later this month. The company is expected to achieve revenue of 17.8 billion USD and record a loss equivalent to nearly 10 USD per share. This company’s stock price is currently 151 USD and its capitalization is 93 billion USD.