Written by Alison Lampert and David Shepherdson
(Reuters) – U.S. aircraft maker Boeing, reeling from a month-long strike, cut 17,000 jobs in the third quarter, delayed the first delivery of its 777X jetliner by a year and cut 50 It is expected to post a loss of $1 billion.
In a message to employees, CEO Kelly Ortberg said an ongoing strike by 33,000 workers on the U.S. West Coast has halted production of the 737 MAX, 767 and 777 aircraft. In response, Boeing said it needed to reduce its workforce “to align with financial realities.”
“We are resetting our workforce levels to align with our financial realities and more focused priorities.Over the next few months, we plan to reduce our total workforce size by approximately 10 percent. These reductions include executives, managers, and employees,” Ortberg’s message said.
Boeing shares fell 2.12% in after-close trading.
The sweeping changes are a major move by Mr. Ortberg, who took over the helm of the beleaguered aircraft maker in August, promising to reset relations with unions and employees.
Thomas Hayes, equity manager at Great Hill Capital, said in an email that the layoffs could put pressure on workers to call off the strike.
“Striking workers who are temporarily without a paycheck don’t want to be permanently unemployed and without a paycheck,” Hayes said. In the next batch of 17,000 cuts. ”
Boeing recorded pretax earnings charges totaling $5 billion for its defense business and two commercial aircraft programs.
Boeing announced its third-quarter financial results on October 23, and in a separate release predicted sales of $17.8 billion, loss per share of $9.97, and negative operating cash flow of $1.3 billion, higher than expected. He said that
Analysts on average expected Boeing’s quarterly cash burn to be negative $3.8 billion, according to LSEG data.
Reaching an agreement to end the work stoppage is critical to Boeing, which on Wednesday filed unfair labor practice charges against the machinists’ union for failing to bargain in good faith. Ratings agency S&P estimated that the strike would cost Boeing $1 billion a month in losses and put the company at risk of losing its valuable investment-grade credit rating.
Ortberg also said Boeing has notified customers that first delivery of the 777X is expected to be in 2026 due to development challenges, flight test suspensions and work stoppages. Boeing was already facing certification issues for the 777X, significantly delaying the plane’s release.
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“While our business faces short-term challenges, we are making important strategic decisions for the future and have a clear view of the work that needs to be done to rebuild the company. ” Ortberg added in a statement.
Boeing said it will end the 767 freighter program in 2027 when the remaining 29 aircraft on order are completed and delivered, but production of the KC-46A tanker will continue.
In light of the layoffs, the company announced it would end the furlough program for salaried employees announced in September.
Even before the strike began on September 13, the company was struggling to recover from an accident in January in which an aerial panel on a new airliner exploded, exposing weaknesses in its safety standards and prompting U.S. regulators to shut down production. He was urged to restrain himself.
Reuters reported this week that Boeing is considering options to raise billions of dollars through the sale of stock or equity-like securities.
These options include selling common stock as well as other securities such as mandatory convertible bonds and preferred stock, the people said. One of the sources said the company has proposed raising about $10 billion for Boeing.
The company has approximately $60 billion in debt and posted operating cash flow losses of more than $7 billion in the first half of 2024.
Analysts estimate that Boeing currently needs to raise between $10 billion and $15 billion to maintain its current rating of one level above junk.
(Reporting by Alison Lampert and David Shepherdson; Additional reporting by Shivansh Tiwary; Editing by Rod Nickel and David Gregorio)
