Boeing announced on Friday a reduction in the coming months of around 10% of its global workforce. This should affect some 17,000 jobs, as well as a series of measures affecting its catalog of aircraft, to try to overcome its financial difficulties. In two separate messages, the aircraft manufacturer also announced a further postponement of deliveries of its new 777X wide-body aircraft and the cessation of production of the 767 freighter in 2027. It also warned that its third quarter results would be weighed down by heavy costs due, in particular, to the strike of more than 33,000 workers since mid-September. Boeing shares ended the session up 3% on the New York Stock Exchange.
The reduction in personnel will affect all categories – management, management, employees – said Kelly Ortberg, boss of Boeing for two months, in a message addressed to the group’s 170,000 employees. He added that details would be provided next week by line managers, indicating that the partial furlough measures in place since September 20 to preserve the group’s cash flow during the strike were suspended. They also concerned all categories of personnel – except strikers – and affected, in rotation, several tens of thousands of people. They were part of a larger savings program during the walkout.
The strike by members of the IAM machinists’ union in the Seattle region (northwest) has, among other things, completely shut down the group’s two main factories: that of Renton which produces the 737, its best-selling aircraft , and that of Everett, which manufactures the 777, the 767 as well as several military programs. Ratings agency Standard and Poor’s estimated Tuesday that the strike was costing Boeing $1 billion a month.
Vain negotiations
Production of the 787 Dreamliner is the only one still in operation because the employees of the factory, located in South Carolina (east), are not unionized. Several months of negotiations, including with federal mediation, did not allow the union and Boeing to agree on a new four-year social agreement. “Our company is in a difficult position,” noted Kelly Ortberg in her message. According to him, “recovering the group requires difficult decisions and we must make structural changes to ensure that we remain competitive and serve our customers in the long term.”
For its part, the IAM declared Friday evening that the withdrawal of Boeing’s offer during the last negotiations “will only complicate the conclusion of an agreement”. “The fact that they are complaining about our proposals shows their desperation and proves to our members that we are fighting for them,” the IAM said in a statement on X, without mentioning Boeing’s plan to cut 17,000 jobs .
The boss of Boeing, for his part, affirmed that the aircraft manufacturer had to “concentrate (its) resources” on its fundamentals, and indicated that the long-haul 777X twinjet program was going to be delayed again. According to a press release accompanying his message, the first delivery of the 777-9 should take place in 2026 (instead of 2025) and that of the 777-8 in 2028. They were initially scheduled to enter service in 2020. The group also intends to deliver the 767 freight planes ordered to date but will stop their commercial production in 2027. It will, however, continue that of versions for the KC-46A military refueling plane.
The aircraft manufacturer also warns that its third quarter results, which are scheduled to be published on October 23, will be reduced by several billion dollars in expenses. “Our business is facing short-term challenges and we are making important strategic decisions for our future,” noted Kelly Ortberg, adding that she has a “clear vision of the work we must do to restore the group.”
The Commercial Aviation (BCA) branch is expected to record a pre-tax charge of $3 billion under the 777X ($2.6 billion) and 767 ($400 million) programs. Its quarterly revenue is expected to reach $7.4 billion, with an operating margin of -54%. This charge arises from the suspension of the 777X certification process as well as, for both programs, the consequences of the strike.
The Defense, Space and Security (BDS) branch will be marked, once again, by a charge linked to several fixed cost programs, of around 2 billion dollars. The turnover should come out to 5.5 billion dollars and the operating margin to -43.1%. At the group level, revenue is expected to be $17.8 billion and net loss to be $9.97 per share.
Boeing is going through a difficult time, marked by production quality problems for many months which emerged with an in-flight incident in early January involving an Alaska Airlines 737 MAX 9. The aircraft manufacturer is under close surveillance by the FAA regulator and is the subject of several investigations (Parliament, federal police). The IAM announced on X a gathering on Tuesday in Seattle. “This is a strong statement to Boeing, to the industry and to all workers in this country: We will not back down!”