As we gear up for a new year, the business world is facing some major shakeups. One of the most significant developments comes from Boeing, a company that has been a staple in the aviation industry for decades. Recently, Boeing announced that it will be cutting 10% of its workforce, amounting to about 17,000 employees. This decision comes as the company faces mounting losses and a labor strike that has halted production at its aircraft factories for five weeks.
In addition to the workforce reduction, Boeing also revealed that it will be delaying the launch of its new wide-body airplane. The highly anticipated 777X will not be delivered until 2026, a delay of six years from the original schedule. Furthermore, the company plans to cease production of commercial 767 freighters in 2027 after fulfilling existing orders. CEO Kelly Ortberg addressed these changes in a staff memo, acknowledging the challenging position the company is in.
Boeing is bracing for a significant financial hit, with expectations of reporting a loss of $9.97 per share in the third quarter. The company anticipates a pretax charge of $3 billion in the commercial airplane unit and $2 billion for its defense business. Operating cash outflow for the third quarter is projected to be $1.3 billion. These adjustments reflect the company’s commitment to making necessary structural changes to remain competitive and viable in the long term.
The decision to implement job and cost cuts represents a pivotal moment for Ortberg, who took over as CEO just over two months ago. Tasked with steering Boeing through safety and manufacturing challenges, Ortberg now faces the daunting task of navigating the company through a labor strike that shows no signs of abating. Credit ratings agencies have raised concerns about Boeing’s financial footing, with the company burning through cash during a year that was supposed to mark a turnaround.
The labor strike, which began on September 13 after union members rejected a tentative agreement, has been a significant factor in Boeing’s financial woes. The company is reportedly losing over $1 billion per month as a result of the strike. Tensions between the manufacturer and the union have escalated, with Boeing filing an unfair labor practice charge against the International Association of Machinists and Aerospace Workers.
As Boeing prepares to implement the job cuts in the coming months, the ripple effects will be felt not only within the company but also among its extensive network of suppliers. The timing of these cuts is particularly challenging as the industry works to recover from the impact of the Covid-19 pandemic, which led to a significant drop in demand for air travel.
Stay tuned to Extreme Investor Network for more in-depth analysis and insights on the latest developments in the business world, including the ongoing challenges facing companies like Boeing. Our team of experts is dedicated to providing unique perspectives and valuable information to help you navigate the ever-changing landscape of the business news.