- Boeing to cut about 17,000 jobs, 10 percent of its global workforce
- The manufacturer will also delay deliveries of the 777X for another year
Boeing will cut about 17,000 jobs and delay the first deliveries of its 777X plane by a year, the US planemaker said, as it grapples with a workers’ strike and fears over its safety record.
In addition to cutting 10 percent of its global workforce, the manufacturer said it would also discontinue the 767 cargo plane.
CEO Kelly Ortberg told employees the reduction was necessary “to align with our financial reality” in the face of a damaging strike by 33,000 machinists.
“These reductions will include executives, directors and employees,” Ortberg said.
Boeing factory workers and their supporters picket near the entrance to a Boeing production facility in Renton, Washington.
Boeing announced plans to cut 10 percent of its global workforce as it faces a machinist strike.
The embattled company has faced additional federal scrutiny since a panel exploded on its 737 MAX plane during an Alaska Airlines flight in January.
The changes mark a major step by Ortberg, who arrived in August to revamp the beleaguered aircraft maker that has struggled with production problems and is running out of cash.
Thousands of members of the International Association of Machinists and Aerospace Workers (IAM) have been on strike since September 13, seeking 40 percent pay increases and better pensions.
Negotiations between Boeing and union leaders collapsed this week, eroding hopes for a quick end to the action, which halted production of its 737 MAX, 767 and 777 planes.
“Our business is in a difficult situation and it is difficult to overstate the challenges we face together,” Ortberg said.
“We need to be clear-eyed about the work we face and be realistic about the time it will take to achieve key milestones.”
Acting U.S. Secretary of Labor Julie Su flew to Seattle on Monday to intervene in the labor dispute.
“She is there to offer support to both sides throughout the negotiation process,” her spokesperson said.
Reaching a deal to end the strike is critical for Boeing, which relies on 737 production for much of its cash.
The union representing striking workers said in a statement that discontinuing the 767 was concerning and that it would evaluate its implications.
Even before the strike began, Boeing had been burning money as it struggled to recover from a mid-air panel explosion on a new plane.
Reaching a deal to end the strike is critical for Boeing, which relies on 737 MAX production for much of its cash.
The Federal Aviation Administration increased scrutiny of the company after a panel exploded on a MAX plane during an Alaska Airlines flight in January.
The chaos aboard the Alaska Airlines flight exposed weak safety protocols and led U.S. regulators to curb production.
Meanwhile, Boeing’s one-year delay on the 777X was widely expected in the industry.
The delay pushes deliveries until 2026.
In August, Boeing suspended its test fleet after encountering problems with the planes’ initial test flights.
The plane, designed for airlines seeking to connect major cities and transport about 400 passengers, is already years behind schedule.
Boeing unveiled the plane in 2013 and scheduled deliveries for 2020. It has about 480 unfilled orders for the plane.
Emirates Airline President Tim Clark, who had an initial order for 150 aircraft, responded to the delay.
“We will have a serious conversation with them over the coming months,” he said.
Clark also criticized Boeing’s new schedule for eliminating a certification testing milestone amid the strike.
“I don’t see how Boeing can make meaningful forecasts about delivery dates,” he said.
Ortberg took over at Boeing in August, becoming the troubled company’s third CEO in less than five years. He is a long-time aerospace industry executive, but a stranger to Boeing.
