Boeing CEO Kelly Ortberg announced plans to cut 10% of the company’s total staff over the coming months due to financial challenges. The troubled aircraft maker has faced losses of over $33 billion in the past five years, safety lapses, and increased scrutiny from regulators. Ortberg emphasized the need for tough decisions and structural changes to ensure competitiveness and long-term success.
Boeing has experienced severe problems over the years, including fatal crashes of the 737 Max, grounding of the jet worldwide for 20 months, massive losses due to the pandemic, and safety concerns such as a door plug blowing off a 737 Max. The company’s space and defense business is also losing money, as evidenced by the issues faced during the crewed flight of the Starliner spacecraft. Ortberg highlighted the need to focus resources on key areas for better performance.
The company had previously implemented rolling unpaid furloughs for nonunion employees to save cash during a strike by IAM union members. With the decision to lay off employees, the next cycle of furloughs will not occur. Boeing’s debt has soared over the last five years, raising concerns about a possible credit rating downgrade. Despite offering wage increases to IAM members, the union overwhelmingly rejected the offers and went on strike in September.
Boeing faces financial challenges, with the strike costing it about $1 billion a month and credit rating agencies considering downgrading its rating to junk bond status. Talks between Boeing and IAM union members have stalled, with issues over wages and pension plans causing tension. The company’s only rival in the full-size passenger plane industry is Airbus, but Airbus does not have the capacity to handle Boeing’s orders, ensuring Boeing’s continued existence.
The company has announced the discontinuation of the 767 jet program and delays in the development of the 777X widebody passenger plane. Boeing is making tough decisions to streamline its operations and ensure future success. Ortberg acknowledged the impact of these decisions on employees, their families, and the team but stressed the necessity of taking these actions for the company’s recovery. Despite facing numerous challenges, Boeing remains a key player in the global airline industry, with a backlog of orders that secures its future.
