The crisis continues at Boeing, and the aircraft manufacturer announced Friday that it plans to lay off around 17,000 employees, or about 10% of its workforce as it faces a dismal third-quarter earnings report and ongoing damage from striking workers.
New Boeing CEO Kelly Ortberg shared the news in a letter to employees on Friday afternoon after the company shared its preliminary third-quarter financials, revealing it lost nearly $10 a share. The company expects to report revenue of $17.8 billion and an operating cash flow of $1.3 billion. Boeing said its cash and investments in marketable securities totaled $10.5 billion at the end of the quarter.
“While our business is facing near-term challenges, we are making important strategic decisions for our future and have a clear view on the work we must do to restore our company,” Ortberg said in a press release accompanying the financial data.
“These decisive actions, along with key structural changes to our business, are necessary to remain competitive over the long term," he continued. "We are also focusing on areas that are critical to our future and will ensure we have the balance sheet necessary to invest, support our people and deliver for our customers.”
Wow.
— Frog Capital (@FrogNews) October 11, 2024
Was just shutting down my real job and saw this.
Companies release this kind of stuff after 4 on Fridays because they don't want anyone to see it.
Boeing laying off 10% of entire workforce. (17k people)
How'd that machinist strike work out? pic.twitter.com/Hw8eK10AlS
Boeing also announced on Friday that it would end production of its 767 freighter in 2027, once it finishes current orders.
Boeing’s stock price was down about 1.6% in after-hours trading, and the share price is down roughly 40% year-to-date.
The aircraft manufacturer this week suspended bargaining with 33,000 striking union workers, accusing the International Association of Machinists and Aerospace Workers (IAM) of strong-arming it with demands. Boeing previously confirmed to Fortune that production of its jets had come to a halt. It withdrew an offer on the table with the union of a 30% pay increase to workers over four years. The resultant fallout at one of the world’s most dominant manufacturers led to a $1 billion reduction in U.S. GDP, according to an estimate.
To boot, Ortberg is relatively new, only stepping into the top job in August. Since starting the role, Ortberg has shaken up the leadership ranks, and parted ways with Ted Colbert, who oversaw the company’s defense and space division.
The aircraft manufacturer has faced repeated setbacks in recent years, dating back to two crashes in 2018 involving Boeing’s 737 Max aircraft. Two flights, Lion Air Flight 610 and Ethiopian Airlines Flight 302 both crashed shortly after takeoff, leading to the deaths of 346 passengers. Following the crashes, regulators grounded the entire 737 Max fleet and conducting extensive probes into the company’s flight control software.
Following the crashes, Boeing CEO Dennis Muilenburg resigned in 2019, and he was replaced by then board member David Calhoun. The financial impact cannot be understated; Boeing recorded its first annual loss in two decades in 2019, and recorded 18.4 billion in charges and costs related to the Max grounding. The Federal Aviation Administration finally greenlit the 737 Max’s return to service in November 2020.
Then in 2024, a door plug ripped off an Alaska Airlines 737 Max plane in mid-flight, setting off a cascade of renewed panic about Boeing’s quality controls and safety precautions. Calhoun announced in March 2024 that he would be leaving Boeing by the end of the year.
Meanwhile, the company is in potential jeopardy of losing its investment-grade rating, with $45 billion in net debt that would increase its borrowing costs, Bloomberg reported. Wells Fargo predicted this week that the beleaguered manufacturer would sell between $10 billion and $15 billion in new stock to account for lost earnings, according to an analyst note dated Oct. 9.
