Summary
Boeing is laying off approximately 10% of its workforce, equating to around 17,000 jobs, as the company grapples with significant financial losses exacerbated by an ongoing strike by its union-represented machinists. The strike, which has entered its fourth week, has severely impacted production and cash flow, prompting Boeing to make drastic workforce reductions.
The company has faced mounting challenges, including a substantial cash burn of about $50 million per day due to halted production of its best-selling aircraft, the 737 Max, and delays in other models like the 777X. CEO Kelly Ortberg indicated that the layoffs are part of a broader strategy to navigate the financial difficulties and restore competitiveness. Boeing’s negotiations with the International Association of Machinists and Aerospace Workers (IAM) have stalled, with the union demanding a 40% wage increase and the reinstatement of pension plans, while Boeing’s last offer stood at a 30% raise. The breakdown in negotiations has led to accusations of bad-faith bargaining from both sides, further complicating the situation.
Key Developments
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Strike Duration: The machinists’ strike began on September 14, 2024, and has intensified the financial strain on Boeing, which reported a loss of over $25 billion since 2019.
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Layoff Announcement: The layoffs were announced on October 11, 2024, as part of a memo from Ortberg, who emphasized the need for “tough decisions” to ensure the company’s long-term viability.
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Impact on Production: The strike has halted production of several key aircraft models, leading to the suspension of temporary furloughs and cuts to healthcare benefits for striking workers.
Financial Implications
Boeing’s financial situation has deteriorated significantly, with a reported cash burn of $1.3 billion in the third quarter of 2024 alone. The company is also facing delays in the rollout of new aircraft, pushing back the delivery of the 777X to 2026. With the strike continuing and negotiations failing to yield results, Boeing is under pressure to stabilize its operations while managing the fallout from both the strike and the layoffs.
Boeing will lay off 10% of its workforce as strike by workers cripples production
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