Boeing will cut 17,000 jobs and delay the first delivery of the 777X due to a strike, according to Reuters.
Boeing will cut 17,000 jobs, delay the first deliveries of the 777X aircraft by a year, and report losses of $5 billion for the third quarter, as the situation at the company continues to deteriorate due to a month-long strike. This was reported by Reuters, as noted by UNN.
Details
It is noted that Boeing's CEO, Kelly Ortberg, in his address to employees, stated that the company is forced to reduce its workforce to align with financial realities, as the strike of 33,000 workers on the U.S. West Coast has halted the production of the 737 MAX, 767, and 777 aircraft.
It was observed that Boeing's stock fell by 1.7% in after-hours trading.
Boeing recorded losses of $5 billion in its defense and commercial divisions.
Reaching an agreement to end the strike is critical for Boeing, as the company filed a complaint on Wednesday regarding unfair labor practices, accusing the workers' union of engaging in bad faith negotiations. The S&P rating agency estimated that the strike is costing Boeing $1 billion each month, and the company risks losing its prestigious investment-grade credit rating.
The CEO also informed that Boeing has notified customers that the first delivery of the 777X is now expected in 2026 due to development issues, the suspension of test flights, and the strike. Previously, the company had already faced difficulties in certifying the 777X, significantly delaying the aircraft's launch.
Boeing, which is set to announce its financial results for the third quarter on October 23, stated in a separate announcement that it anticipates revenue of $17.8 billion, a loss per share of $9.97, and a negative operating cash flow of $1.3 billion.
Boeing will end its 767 freighter program in 2027 after completing deliveries of the last 29 ordered aircraft, but will continue production of the KC-46A refueling aircraft.
The company also stated that due to the job cuts, it will conclude the fixed salary employee leave program announced in September.
The publication notes that even before the strike began on September 13, the company was already incurring losses while trying to recover from safety issues that led to an accident involving a new aircraft in January.
This week, the publication reported that Boeing is considering options to raise billions of dollars through the sale of stocks and securities similar to stocks.
Among these options is the sale of common stock and securities such as convertible bonds and preferred shares. One source mentioned that Boeing was advised to raise approximately $10 billion.
The company has about $60 billion in debt and recorded operating cash flow losses exceeding $7 billion for the first half of 2024.
Analysts estimate that Boeing needs to raise between $10 billion and $15 billion to maintain its rating.