Boeing prepares to lay off 10% of its global workforce

Boeing is set to lay off 10% of its workforce. Following a month-long strike at its manufacturing plants, the company has faced increased operating losses, prompting it to resort to significant downsizing to cut labor costs.

In a message to employees, Boeing CEO Kelly Ottberg stated, “Our business is in a challenging situation,” according to Reuters. “Significant reductions are necessary to align with our financial realities,” he said. “The company plans to reduce 10 percent of its global workforce over the next several months. Boeing employs approximately 170,000 people worldwide, and the cuts will affect executives, managers, and employees.

The aviation news service Air Current described the cuts as “the first big strategic move by Ottberg, who took over in August, using a hatchet, not a scalpel.” Ottberg was brought in to get Boeing back on track, as the company is struggling through its worst crisis following a series of fuselage defects and financial challenges in the defense and space sectors.

Last month, the U.S. aircraft manufacturer was forced into action when 33,000 unionized workers initiated the largest strike in 16 years, demanding higher wages, which led to a halt in airplane production due to a breakdown in negotiations. As a result of the strike, Ottberg announced that the 777X launch, already behind schedule, will be delayed by another year to 2026, and the company will cease production of the 767 freighter. “These workforce reductions and major structural changes are necessary for the long term to remain competitive,” he emphasized.

In a forecast released ahead of its third-quarter earnings announcement, Boeing warned of a decline in earnings due to the impact of the strike. It stated that its net loss per share would increase from $2.90 in the second quarter to $9.97 in the third quarter. The company also expects sales of $17.8 billion and a $1.3 billion loss in cash flow.


Ji-Sun Choi aurinko@donga.com