Boeing plans to cut about 17,000 jobs or 10% of its workforce, due to financial problems and a previous union strike.
The machinists' strike and quality issues have highly impacted Boeing's production and led to revenue losses.
Boeing's CEO encourages the need for workforce adjustments and plans to automate processes to stabilize the company's future.
10 percent of Boeing's workforce, or about 17,000 jobs, are being terminated. This move comes in the wake of the main labor union's strike and persistent financial difficulties. Chief Executive Kelly Ortberg announced these cuts in a message to employees. He highlighted the company's difficult position and the challenges ahead. Boeing aims to automate functions, which some investors view positively for the stock.
https://twitter.com/martypartymusic/status/1845220834534654432 Impact of Labor Strikes and Financial Woes
When a door panel on a 737 Max aircraft blew off early this year, Boeing's problems got worse. Consequently, regulators mandated a slowdown in manufacturing to address quality issues. This regulatory action limited cash flow into the company.
Furthermore, a new contract was rejected by the machinists' union, which led to 33,000 workers' walkout last month. Production of vital models including the 767 and 777 was stopped due to this strike. As a result, sales dropped precipitously, further taxing Boeing's clients and suppliers.
A warning was also issued by debt rating agency S&P regarding the potential downgrade of Boeing's bonds to junk status. According to analysts, Boeing will require the issuance of at least $10 billion worth of extra shares in order to maintain financial stability.
The company also stated that its third-quarter earnings will show the impact of the strike. When it revealed that its revenues would be roughly $17.8 billion, it roughly 3% underperformed the estimates of analysts. Due to large pre-tax costs, losses for the quarter came to about $10 per share.
Future Prospects and Leadership Changes
Boeing stated in a different statement that as of the end of September, the company had $10.5 billion in cash. It did, however, spend all $1.3 billion in cash in the previous quarter. These numbers highlight how urgently financial restructuring is required.
Ortberg, who took over as CEO in July, emphasized the necessity of resetting workforce levels. He mentioned that the planned job cuts would include executives, managers, and employees alike.
The job cuts and delays highlight Boeing’s urgent need to adapt to its current realities. The 777X jet's delivery has now shifted to 2026. Despite these challenges, the company remains determined to navigate these turbulent times.
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