Boeing to Slash 17,000 Jobs Amid Strike and Production Woes

Boeing is facing challenges as it announces plans to reduce its global workforce by approximately 10%, equivalent to 17,000 jobs.

This decision comes as the company grapples with ongoing financial difficulties and a prolonged strike by its unionized workers. CEO Kelly Ortberg recently communicated the extensive workforce reduction in a memo to employees, indicating that the cuts will affect various levels of the organization, including executives, managers, and staff across multiple departments. The move is part of a broader strategy to align Boeing's operations with its current financial situation and refocus on core priorities.

The job cuts are taking place against the backdrop of a contentious labour dispute involving around 33,000 workers, primarily machinists, who are advocating for improved pay and working conditions. The strike began last month and has since resulted in significant financial losses for Boeing, with estimates suggesting a $1 billion impact on production. The union's lead negotiator John Holden expresses the workers' readiness for an extended struggle and emphasizes their determination to secure a fair contract. In addition to the workforce reduction, Boeing has announced a delay in the delivery of its highly anticipated 777X aircraft.

Originally slated for delivery in 2025, the first 777X jets are now expected to reach customers in 2026 due to a combination of development challenges, test pauses, and the ongoing strike. This setback is particularly significant for Boeing, as the company has been counting on the 777X to enhance its competitive position in the commercial aviation market. The company's financial difficulties have been further compounded by growing concerns over the quality of its aircraft. A January incident involving a panel blowout on a Boeing 737-MAX jet shortly after takeoff, although resulting in no injuries, has intensified public and regulatory scrutiny of the company's quality control processes.

This event has added to the pressure on Boeing's management to address and resolve quality-related issues. The ongoing challenges at Boeing have not escaped the attention of credit rating agencies. S&P Global has placed the company on CreditWatch, signalling the potential for a credit rating downgrade if the strike persists and financial performance does not improve. The news of job cuts and production delays has also impacted Boeing's stock, with shares falling 1.1% in after-market trading following the announcement.