Boeing Intends to Reduce Workforce by 10 Percent
Struggling American aircraft manufacturer Boeing is planning to let go of 10% of its workforce, affecting roughly 17,000 employees. According to a letter from CEO Dave Calhoun, this decision is due to the company needing to adapt to its "financial realities." This reduction in workforce will impact executives, managers, and staff alike.
Additionally, the delivery of the 777X jet is facing a one-year delay, with customers not receiving their orders until 2026. The defense sector is also anticipated to incur significant losses.
As a hint at its projected financial performance for the third quarter, Boeing reported a loss per share of $9.97 on revenue of $17.8 billion, which falls short of the expected $18.7 billion. Following this announcement, Boeing's stock value decreased by 2.3% in post-market trading.
Labor dispute escalates
Boeing is currently dealing with a strike involving 33,000 West Coast workers, which has been ongoing since September 13 and is estimated to set Boeing back $1 billion each month by S&P. Midweek, Boeing withdrew its revised offer and ended negotiations with the striking workers. The union representing the West Coast factory workers is seeking a 40% wage increase over a four-year period and the reinstatement of a performance-based pension that was eliminated from the contract a decade ago. Previously, Boeing had offered a 30% wage increase over four years in September, as well as reintroducing a performance bonus and improving retirement benefits.
Boeing has been reporting substantial financial losses and currently carries $60 billion in debt. The company's management is also under pressure due to a string of technical issues. At the beginning of the year, a cabin wall panel from a Boeing 737 MAX-9 operated by Alaska Airlines separated mid-flight. The defense sector is also struggling - the division has recently racked up billions in losses. Boeing is also struggling with persistent delivery delays.
Other affected parties may feel the ripple effects of Boeing's workforce reduction, such as local businesses that rely on the company's employees as customers. The ongoing labor dispute between Boeing and its West Coast workers, costing the company $1 billion per month, further adds to its financial struggles.
