Boeing, the struggling aerospace company facing its highest level of debt, began sending layoff notices on Wednesday as part of a broader program to cut about 10% of its global workforce. The planemaker company, which was battered over the last year by financial and operational setbacks, said it plans to send about 17,000 worldwide packing. The effort must comply with the U.S. Worker Adjustment and Retraining Notification Act, American employees who received layoff notices this week will stay on Boeing’s pay ledger until January. Thus the 60-day federal notice requirement will be met.
Layoff notices had long been expected as Boeing said it was making workforce adjustments to be more in line with its financial needs and its redetermination of priorities. In a statement, the company said it was committed to helping those who would be affected by this difficult transition. “As we have previously announced, we are adjusting our workforce levels to align with our financial reality and a more focused set of priorities,” Boeing said. “We are committed to ensuring our employees have support during this challenging time.”.
The layoffs come at a time when Boeing’s new chief executive, Kelly Ortberg, tries to revive the production of its critically crucial 737 MAX aircraft model that mainly accounts for Boeing’s highest earning aircraft. Production was momentarily halted because of a protracted strike action by about 33,000 members of the U.S. West Coast Workers. Most of Boeing commercial jets assembly line was paralyzed. Attempting to steady its balance sheet, in October Boeing managed to raise over $24 billion to ensure its credit rating doesn’t decline below investment grade due to the moves by rating agencies.
Boeing’s Year Of Unprecedented Challenges
Cuts come on the heels of a tumultuous year for Boeing- one marked by crisis and turmoil since January 5, when the company witnessed the incident of a dislodged door panel detach in mid-air from one of its most successful jets: the 737 MAX. Ever since the incident, there have been continued regulatory investigations into Boeing’s practices, delayed manufacturing processes, and a thorough examination of the safety measures that Boeing allegedly lacked during this period of time. It has also braved the shock resignation of its CEO and slowed production as regulators continue investigating claims about Boeing’s corporate safety culture.
Boeing’s troubles escalated a notch higher on September 13 when its biggest union launched a strike, further piling up delays. The strike lasted till November 5, allowing workers to resume production of the 737 MAX on Seattle-area assembly lines.
However, on the other end, morale has been said to be at an all-time low amongst Boeing’s U.S. employees because of lay-offs, travel restrictions, and budget cuts instituted to help ease financial strain. According to anonymous sources, workers are sitting in anticipation for their one-on-one meetings or phone calls with their managers to determine whether or not they have a job.
Going forward, the 737 MAX program is going to be a large source of revenue for Boeing, which is driving the company’s effort to ride out its financial woes as it builds its investment-grade credit profile. Boeing raised $24 billion in funds last October in one of the most aggressive efforts ever by an aerospace company to secure its finances after its industry worries cut into its revenues.
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