Amid growing challenges and delays, Boeing has announced significant job cuts, with plans to lay off about 17,000 employees, which constitutes roughly 10% of its workforce. This drastic move, revealed on October 11, 2024, by Boeing President and CEO Kelly Ortberg, aims to stabilize the company’s financial standing as it deals with the impact of strikes by machinists who have halted production across several facilities.
The cuts are expected to occur over the coming months and will include a wide array of employees, from executives to managers. Ortberg's announcement came on the heels of the machinist strike, which has idled about 33,000 workers for nearly five weeks. Over this period, the strike has crippled Boeing’s aircraft production, causing the company to suffer losses estimated between $50 million to $150 million each day, as noted by aerospace consulting firm Leeham News and Analysis.
“We need to be clear-eyed about the work we face and realistic about the time it will take to achieve key milestones on the path to recovery,” Ortberg emphasized in his message. He acknowledged the dire financial situation Boeing is facing, having recorded substantial quarterly losses and mounting debt, which now sits at nearly $58 billion.
Before the strike began, Boeing was already struggling financially, having posted significant losses the previous quarter - over $1.4 billion. The worker stoppage has exacerbated the situation, leading to temporary furloughs and the withdrawal of some earlier job offers. Ortberg stated, “The state of our business and our future recovery require tough actions.”
Additional strategic decisions announced included the delay of the 777X aircraft program, with this plane’s first deliveries now pushed to 2026, and significant changes to other aircraft models. Boeing will cease production of its 767 commercial freight plane by 2027 and has warned of potential losses due to supply chain difficulties and issues related to safety and quality.
This shutdown of operations was met with criticism from labor representatives. Ray Goforth, Executive Director of the Society of Professional Engineering Employees in Aerospace (SPEEA), claimed the decision to lay off such a significant number of employees reflects poorly on Boeing's management strategy, indicating “there’s no actual plan to save Boeing from its self-inflicted wounds.”
Further complicity arose from soaring rates of executive compensation as Congress took notice, with reports highlighting Ortberg receiving more than $32 million in compensation last year. This prompted bipartisan calls from over 30 lawmakers urging Boeing and the machinists’ union to resume negotiations and reach fair contract terms.
The union’s demands include not only pay increases, with requests for up to 40%, but also the restoration of benefits like defined-benefit pensions, which Boeing has shown reluctance to reinstate. Ortberg mentioned previously floated offers, such as wage increases and matching 401(k) contributions, but these negotiations have largely stalled.
Meanwhile, the pressure on Boeing's management is palpable, with industry analysts pointing out the potential risks to Boeing's investment-grade credit rating if the situation does not improve soon. The company's operational challenges coincide with pressures from clients like Emirates Airline, who have expressed frustration over delivery delays and contract issues linked to Boeing's continued problems.
Amongst these difficulties, Acting US Labor Secretary Julie Su's visit to Seattle to mediate discussions between Boeing and the union could prove pivotal. Her involvement marks federal attention to the negotiations, with hopes to alleviate some of the tensions and get both sides back to the bargaining table.
With uncertainty clouding production timelines and labor relations, Boeing faces the double-edged sword of maintaining productivity and conserving cash flow amid this turbulent atmosphere. Going forward, the aerospace giant must navigate these complex challenges carefully, balancing stakeholder interests and operational survival.
The company’s strategic pivot, including substantive layoffs, halting operations, and delaying product timelines, reveals the precarious state of affairs within Boeing as external pressures mount and internal clarity diminishes. The stakes are high, not just for the company but for the thousands of employees impacted and the clients who rely heavily on Boeing’s capacity to deliver.
