Boeing to cut 17,000 jobs, delay first 777X jet as strike hits finances

Boeing will cut 17,000 jobs – 10 per cent of its global workforce -- delay first deliveries of its 777X jet by a year and record $5 billion in losses in the third quarter, as the US planemaker continues to spiral during a month-long strike.

CEO Kelly Ortberg said in a message to employees that the significant downsizing is necessary “to align with our financial reality” after an ongoing strike by 33,000 US West Coast workers halted production of its 737 MAX, 767 and 777 jets.

“We reset our workforce levels to align with our financial reality and to a more focused set of priorities. Over the coming months, we are planning to reduce the size of our total workforce by roughly 10 per cent. These reductions will include executives, managers and employees,” Ortberg’s message said.

Boeing shares fell 1.1 per cent in after-market trading.

The sweeping changes are a big move by Ortberg, who arrived in August at the helm of the beleaguered planemaker promising to reset relations with the union and its employees. Boeing recorded pre-tax earnings charges totaling $5 billion for its defense business and two commercial plane programs. On Sept 20, Boeing ousted the head of its troubled space and defense unit Ted Colbert.

Boeing, which reports third-quarter earnings on Oct 23, said in a separate release it now expects revenue of $17.8 billion, a loss per share of $9.97, and a better-than-expected negative operating cash flow of $1.3 billion.

Analysts on average were expecting Boeing to generate quarterly cash burn of negative $3.8 billion, according to LSEG data. Thomas Hayes, equity manager at Great Hill Capital, said the layoffs could put pressure on employees to end the strike. “Striking workers who temporarily do not have a paycheck do not want to become unemployed workers who permanently do not have a paycheck,” Hayes said in an email.