Boeing lays off 10% of workforce as strike enters fifth week

[SIMONE DEL ROSARIO]

A month into the strike of 33,000 Boeing machinists, the aerospace giant is facing more turbulence.

In a memo released Friday, newly-minted CEO Kelly Ortberg announced Boeing will layoff 17,000 employees, accounting for about 10 percent of its staff.

Ortberg, who took over the role in August, wrote:

“Our business is in a difficult position, and it is hard to overstate the challenges we face together. Beyond navigating our current environment, restoring our company requires tough decisions and we will have to make structural changes to ensure we can stay competitive and deliver for our customers over the long term.”

Ortberg said the layoffs will include executives, managers and employees and will happen in the next few months.

To make the situation even worse for Boeing’s financial health, it also announced preliminary Q3 results on Friday.

That included write-downs of $2.6 billion due to the delay of the 777x, $400 million on the 767, and $2 billion related to defense and space programs.

Overall the company lost $9.97 per share compared to the $1.61 loss expected by analysts.

Earlier this month, Boeing reportedly explored the option of raising $10 billion by selling new stock to make up for the third quarter losses, according to a report from Bloomberg. Although, it’s expected that wouldn’t take place until the strike is resolved.

S&P estimates the ongoing strike could cost the company more than $1 billion per month. And that’s damaging all the way down the line.

MANAGING DIRECTOR | AERODYNAMIC ADVISORY:

of course, when they stop ordering things and halt the production ramp that somebody at their suppliers had been facilitating for and taking out, you know, loans for and hiring people for, it’s extremely damaging to an awful lot of companies and jobs in the industry, you know, it’s, it’s not a it’s, it’s not a happy story

SIMONE DEL ROSARIO:

There’s no end in sight either as Jon Holden, the union’s chief negotiator, said his workers are in it for the “long haul.”

MANAGING DIRECTOR | AERODYNAMIC ADVISORY:

“I can’t imagine anything that would prevent the company from going the full, I don’t know, two months that you’ve seen for the maximum duration of a strike at this time. But then again, given all the cash that’s not coming in and all the pain they’re causing their suppliers, you have to ask, Why? Why can’t this be settled?”

SIMONE DEL ROSARIO:

Boeing continues to face regulatory scrutiny from the Federal Aviation Administration after a panel blew off during an Alaska Airlines flight in January.

Meanwhile, the relatives of the 346 people who died in the 737 Max crashes in 2018 and 2019 asked a federal judge Friday to throw out a proposed settlement from the company.

The proposal would call for Boeing to pay a fine of up to $487.2 million, but it would be cut in half with credit from a 2021 $2.5 billion settlement that allowed the company to avoid prosecution, which the Justice Department has since said Boeing violated.

And in August NASA ruled that a Boeing spacecraft wasn’t safe enough to bring back two astronauts from the International Space Station. Those passengers are now slated to return home in February in a SpaceX capsule.