Boeing to cut 17,000 jobs and postpone first 777X delivery due to strike - Reuters
Kyiv • UNN
Boeing plans to cut 17,000 jobs and postpone the first delivery of the 777X for a year due to a month-long strike. The company expects a loss of $5 billion for the third quarter and is revising its financial plans.
Boeing will cut 17,000 jobs, delay the first deliveries of the 777X for a year and post a $5 billion loss for the third quarter as the company's situation continues to deteriorate due to a month-long strike. This was reported by Reuters, according to UNN.
Details
It is noted that Boeing CEO Kelly Ortberg, in his address to employees, said that the company is forced to reduce its workforce to meet financial realities, as a strike by 33 thousand workers on the US West Coast has suspended production of 737 MAX, 767 and 777 aircraft.
We are reviewing our staff levels in line with financial reality and focusing on priorities. In the coming months, we plan to reduce the number of employees by about 10%. This reduction applies to both managers and employees,
It is noted that Boeing shares fell by 1.7% during trading after the market close.
Boeing recorded losses of $5 billion in its defense and commercial divisions.
Reaching an agreement to end the strike is critical for Boeing, as the company filed an unfair labor practices complaint on Wednesday, accusing the workers' union of bad faith negotiations. The S&P rating agency has estimated that the strike is costing Boeing $1 billion a month, and the company risks losing its prestigious investment-grade credit rating.
The CEO also said that Boeing has informed customers that the first delivery of the 777X is now expected in 2026 due to development problems, suspension of test flights and a strike. The company has previously encountered difficulties in certifying the 777X, which significantly delayed the launch of the aircraft.
Boeing, which is due to report its third-quarter financial results on October 23, said in a separate statement that it expects revenue of $17.8 billion, a loss per share of $9.97, and negative operating cash flow of $1.3 billion.
Although our business is facing short-term challenges, we are making important strategic decisions for the future and have a clear idea of what needs to be done to rebuild the company,
Boeing will discontinue the 767 freighter program in 2027 after the last 29 ordered aircraft are delivered, but will continue to produce the KC-46A refueling aircraft.
The company also said that due to job cuts, it will end the vacation program for fixed-salary employees announced in September.
The publication notes that even before the strike began on September 13, the company was suffering losses as it tried to recover from the safety problems that led to the accident with the new plane in January.
This week, the publication reported that Boeing is considering options for raising billions of dollars through the sale of shares and equity-like securities.
Among these options, the sale of common stock and securities such as mandatory convertible bonds and preferred stock is being considered. One source noted that Boeing was advised to raise approximately $10 billion.
The company has about $60 billion of debt and recorded an operating cash flow loss of more than $7 billion for the first half of 2024.
Analysts estimate that Boeing needs to raise between $10 and $15 billion to maintain its rating.
