BOEING said it plans to cut its workforce by about 10 per cent, responding to the crisis facing the planemaker as it faces a drawn-out strike by workers and a worsening cash crunch.
The reductions will include executives, managers and employees, chief executive officer Kelly Ortberg said in a memo to employees. Boeing ended 2023 with 171,000 employees.
“Our business is in a difficult position, and it is hard to overstate the challenges we face together,” Ortberg said in the memo.
The company said it expects to report third quarter revenue of US$17.8 billion, and a loss per share of US$9.97, according to preliminary figures.
The operating cash outflow stood at US$1.3 billion, leaving Boeing with cash and investments in marketable securities of US$10.5 billion at the end of the quarter, it said. The company is due to report full figures on Oct 23.
The company unveiled the measures and the earnings figures as it seeks to get its negotiations with labour unions back on track.
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Boeing has made two offers for higher wages, both of which were turned down by workers. About 33,000 employees at its main Seattle-area facilities have been on strike for a month now, devastating production and draining Boeing’s reserves.
The latest talks collapsed earlier this week, with no clear path when and how they might resume.
Boeing has made two offers for higher wages, both of which have been rebuffed by the union representing hourly factory workers across the west coast. About 33,000 employees have been on strike for a month now, devastating production and draining Boeing’s reserves.
The planemaker’s shares fell 1.6 per cent in after-hours trading on Friday (Oct 11). The stock tumbled roughly 42 per cent this year through the close.
Preliminary results
The company expects third-quarter revenue of US$17.8 billion, less than the US$18.6 billion expected by Wall Street, according to the average of analyst estimates compiled by Bloomberg.
The company also sees a US$9.97 net loss per share under generally accepted accounting principles, according to preliminary figures released Friday.
Operating cash outflow should be US$1.3 billion, leaving Boeing with cash and investments in marketable securities of US$10.5 billion at the end of the period, it said. The company is due to announce its full results on Oct 23.
The preliminary figures imply that Boeing will see a free cash outflow of US$1.8 billion during the period ended Sep 30, Kahyaoglu of Jefferies said Friday. That’s better than the US$3 billion cash burn that she had expected, suggesting Boeing’s cash crisis may not be as dire as some had predicted.
Boeing expects the results to include about US$5 billion in combined pretax charges at its two main business divisions. About US$2.6 billion of that stems from yet another delay of Boeing’s 777X widebody jet.
Ortberg said the company has notified customers that the first deliveries of the plane will not begin until 2026. He cited the ongoing work stoppage and flight test pause.
It is the latest setback for the jetliner, which was already five years behind schedule in getting certified by the Federal Aviation Administration. In August, Boeing announced it was suspending tests due to cracking in a key component known as a thrust link that helps attach the plane’s hulking GE Aerospace engines to the wings.
Initial 777X freighter deliveries will also slip to 2028, Boeing said. Overall, the commercial aircraft business will record charges of US$3 billion as it closes down production of the 767 program in 2027, after the remaining aircraft on order are built.
The defence and space business will also record a pretax charge of US$2 billion, Boeing said. Ortberg in September ousted Ted Colbert as the division’s former chief amid mounting costs from performance stumbles on new development programs as well as a revamped version of the F-15 fighter jet.
Boeing has already initiated a range of cost-cutting plans as it grapples with dwindling reserves and low output. The company has put some workers on furlough, frozen hiring and cut back on corporate travel.
Ortberg said the company would not proceed with the next cycle of furloughs as part of its plan to cut jobs. The current round of unpaid leave is scheduled to end in late October. BLOOMBERG
