ARLINGTON COUNTY – Boeing will cut 17,000 jobs, delay first deliveries of its 777X jet by a year and record US$5 billion (S$6.52 billion) in losses in the third quarter, as the US planemaker continues to spiral during a month-long strike.
CEO Kelly Ortberg said in a message to employees that Boeing must shrink its workforce “to align with our financial reality” after an ongoing strike by 33,000 US West Coast workers stopped production of its 737 MAX, 767 and 777 jets.
“We reset our workforce levels to align with our financial reality and to a more focused set of priorities. Over the coming months, we are planning to reduce the size of our total workforce by roughly 10 percent. These reductions will include executives, managers and employees,” Mr Ortberg’s message said.
Boeing shares fell 2.12 per cent in after-market trading.
The sweeping changes are a big move by Mr Ortberg, who arrived in August at the helm of the beleaguered planemaker promising to reset relations with the union and its employees.
Mr Thomas Hayes, equity manager at Great Hill Capital, said by e-mail that the layoffs could put pressure on employees to end the strike.
“Striking workers who temporarily do not have a paycheck do not want to become unemployed workers who permanently do not have a paycheck,” Mr Hayes said. “I would estimate the strike will be resolved within a week as these workers do not want to find themselves in the next batch of 17,000 cuts.”
Boeing recorded pre-tax earnings charges totalling US$5 billion for its defence business and two commercial plane programs.
Boeing, which reports third-quarter earnings on Oct 23, said in a separate release it now expects revenue of US$17.8 billion, a loss per share of US$9.97, and a better-than-expected negative operating cash flow of