Boeing plans to cut 17,000 jobs and postpone the 777X plane as revenues decline

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Boeing plans to cut about 17,000 jobs and delay deliveries of its first 777X, as the plane maker faces mounting losses and the effects of a weeks-long strike by its largest labor union.

CEO Kelly Ortberg announced the cuts, equivalent to 10 percent of its workforce, in a letter to employees on Friday. “Our business is in a difficult situation, and it is difficult to overstate the challenges we face together,” he said.

Boeing’s financial problems have escalated since the beginning of the year, when a door panel exploded on one of its 737 MAX planes during a passenger flight. Regulators demanded a slowdown in manufacturing to fix quality problems, which reduced the amount of cash flowing into the company.

Last month, 33,000 workers walked out of Boeing factories in Washington state after machinists union members overwhelmingly rejected a new contract. The work stoppage led to the cessation of production of the company’s 767 and 777 aircraft, further reducing revenues and putting pressure on its suppliers and customers.

Debt rating agency Standard & Poor’s warned this week that Boeing’s bond rating could be downgraded to junk status. Analysts expect the company to look to raise at least $10 billion in new shares to shore up its financial position.

In a separate statement after the market closed on Friday, Boeing warned investors that third-quarter results, scheduled for October 23, “will recognize impacts” related to the strike as well as charges at its commercial and defense divisions.

The company said it had $10.5 billion in cash and marketable securities at the end of September after burning through $1.3 billion in cash during the quarter. Losses for the period totaled nearly $10 per share, partly reflecting pre-tax charges of $5 billion in the quarter, including $3 billion on the 777X and 767 commercial aircraft programs and $2 billion for its defense, space and security business.

Boeing said revenues for the quarter would reach $17.8 billion, a figure that would be about 3 percent below analysts’ expectations.

Ortberg, former CEO of avionics manufacturer Rockwell Collins, was hired in late July to replace Dave Calhoun. It arrived shortly after Boeing pleaded guilty to misleading US regulators about the flight control system that caused two fatal 737 MAX crashes in 2018 and 2019.

Boeing still faces federal investigations into a 737 Max accident on an Alaska Airlines plane in January, which did not kill any passengers but led to new questions about quality control within the company.

The machinists’ strike came after union members rejected the 30 percent wage increase offered by the company. In an effort to conserve cash, Boeing has begun halting purchase orders with suppliers, freezing new hiring, and furloughing tens of thousands of employees.

Because of the planned job cuts, the company will not go ahead with the next round of furloughs, Ortberg said. The International Association of Machinists and Aerospace Workers did not immediately respond to a request for comment.

He said Boeing needed to “realign our workforce levels to align with our financial realities and with a more focused set of priorities,” adding that the cuts would include executives, directors and employees. Boeing had 171,000 employees at the end of 2023.

Ortberg announced that the first delivery of the Boeing 777X – which was scheduled to enter commercial service for the first time in 2020 – will be postponed again, from 2025 to 2026.

Boeing shares fell about 1.7 percent in after-hours trading.