The manufacturer will not deliver its yet-to-be-certified 777X wide-body plane until 2026, which is about six years later than originally scheduled. Boeing will also cease production of commercial 767 freighters in 2027, after completing existing orders, according to a memo from CEO Kelly Ortberg sent to staff on Friday afternoon.
Why Is Boeing Planning To Cut 17,000 Jobs?
In an unexpected announcement, Boeing projected a loss of $9.97 per share for the third quarter. It anticipates a pretax charge of $3 billion for its commercial airplane unit and $2 billion for its defense sector.
Preliminary financial results show that Boeing expects an operating cash outflow of $1.3 billion for the third quarter.
“Our business is in a challenging position, and it’s difficult to overstate the obstacles we are facing,” Ortberg stated. “Restoring our company will require tough decisions and structural changes to remain competitive and meet our customers’ needs in the long run.”
These job and cost reductions mark Ortberg’s most significant actions since taking the helm just over two months ago. He was brought in to lead Boeing through its recovery following safety and manufacturing crises, but the ongoing labor strike has presented his toughest challenge thus far.
Credit rating agencies have cautioned that the company may risk losing its investment-grade rating, and Boeing has been depleting its cash reserves during what was expected to be a year of recovery.
Boeing Losing Over $1 Billion Monthly Due To Strike
Earlier this week, S&P Global Ratings reported that Boeing is losing over $1 billion monthly due to the strike, which began on September 13 after machinists overwhelmingly rejected a tentative agreement with the company. Relations between the manufacturer and the union have soured, with Boeing withdrawing a contract offer earlier this week.
On Thursday, Boeing filed an unfair labor practice charge with the National Labor Relations Board, accusing the International Association of Machinists and Aerospace Workers of negotiating in bad faith and misrepresenting the company’s proposals. The union criticized Boeing for offering a revised proposal that it claimed was not negotiated with them and indicated that workers would not vote on it.
The job cuts, which Ortberg mentioned would take place “over the coming months,” come at a time when Boeing and its numerous suppliers have been trying to hire more staff following a pandemic-related downturn in demand.
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