Boeing's new CEO Kelly Ortberg announced the company will layoff 17,000 employees in the coming months as machinists remain on strike.

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Simone Del Rosario Business Correspondent

Business

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

Oct 14, 2024

Simone Del Rosario Business Correspondent

By Simone Del Rosario (Business Correspondent), Brent Jabbour (Senior Producer), Jack Henry (Video Editor)

A month into the strike of 33,000 Boeing machinists with no end in sight, Boeing’s issues are piling on. Boeing CEO Kelly Ortberg announced Friday, Oct. 11, the company will lay off 17,000 employees, which accounts for roughly 10% of its staff.

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“Our business is in a difficult position, and it is hard to overstate the challenges we face together,” Ortberg wrote in a memo. “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.”

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Ortberg, who took over the position in August, said the layoffs will include executives, managers and employees. He added the layoffs will take effect in the coming months.

On the same day, Boeing announced preliminary results for the third quarter of 2024. Those preliminary estimates 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.

Boeing explored the option of raising $10 billion by selling new stock to make up for the losses, according to a Bloomberg report earlier this month. It’s not expected Boeing would make a move until the strike is resolved.

Analysis from S&P has further bad news for the company, saying that the ongoing strike could cost Boeing more than $1 billion per month. Jon Holden, the chief union negotiator for the International Association of Machinists and Aerospace Workers, said the workers are in it for the “long haul.“

Meanwhile, Boeing continues to face regulatory scrutiny from the Federal Aviation Administration after a panel blew off during an Alaska Airlines flight in January. At the same time, relatives of the 346 people who died in the 737 Max crashes in 2018 and 2019 asked a federal judge on Friday to throw out a proposed settlement from the company.

Boeing would pay a fine of up to $487.2 million as part of the proposal, 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 it violated.

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.

Tags: Alaska Airlines, Boeing, Boeing 737 MAX, Ethiopia, Federal Aviation Administration, IAM, International Association of Machinists, Jobs, Kelly Ortberg, Labor, Lawsuit, Plane, plane crash, Regulation, SpaceX, Stock Market, Stocks, Strike

[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.