Boeing announced on Friday that it will reduce its workforce by approximately 17,000 employees, equating to about 10% of its total staff, and will cease production of a cargo aircraft made in Washington.
This decision comes amidst an ongoing strike involving aircraft machinists in the Puget Sound area and other locations on the West Coast, who have been on strike for nearly a month after rejecting a contract proposal from Boeing in September. Negotiations for a new agreement hit an impasse earlier this week, causing manufacturing activities to remain halted across Boeing’s facilities in the region.
Even prior to the strike, Boeing was grappling with financial challenges and escalating debt levels. Boeing President and CEO Kelly Ortberg communicated to employees that the company must adopt a pragmatic approach regarding its recovery timeline and concentrate its resources on its main products and innovations, rather than diversifying efforts too broadly. He confirmed that layoffs would take place “over the coming months,” impacting executives, managers, and staff.
Alongside the job cuts, Boeing has stated that it will discontinue production of the 767 commercial freight aircraft by 2027, following the fulfillment of existing orders. Additionally, the rollout of the 777X program will be further postponed, with first deliveries now anticipated in 2026. Both aircraft are manufactured in Everett, Washington.
In a related development, approximately 30 members of Congress, including Democratic Representative Pramila Jayapal from Washington, have sent a letter to both Ortberg and Jon Holden, president of the International Association of Machinists Local 751, urging both parties to engage in sincere negotiations to secure a fair contract promptly. They pointed out that Ortberg received more than $32 million in compensation this year after becoming CEO in August.
Discussions between Boeing and the International Association of Machinists and Aerospace Workers have been ongoing with the assistance of a federal mediator since a strike began last month, affecting around 33,000 employees. Boeing presented a new wage offer on September 23, proposing a 30% increase over four years, a doubled ratification bonus of $6,000, and the reinstatement of an annual bonus, along with a 100% match on 401(k) contributions up to 8% of pay. The company retracted that offer on Tuesday, indicating that continued negotiations were no longer viable.
The union is demanding a 40% pay increase and the return of a defined-benefit pension plan. Boeing has faced intense scrutiny regarding its safety record in light of an incident earlier this year involving a 737 Max as well as penalties totaling hundreds of millions due to fatal crashes in 2018 and 2019.
In its latest financial report, Boeing revealed a quarterly loss of over $1.4 billion for the second quarter of the year, with debt increasing from $48 billion to nearly $58 billion during that period. The company projected pre-tax costs of $3 billion related to the 777X and 767 programs, alongside an additional $2 billion pertaining to defense, space, and security initiatives. It expects third-quarter revenues to reach approximately $17.8 billion, alongside a negative operating cash flow of $1.3 billion, with full third-quarter financial details set to be disclosed on October 23.
The strike has disrupted operations at several facilities across the Northwest, including Renton, Everett, Auburn, and Frederickson in Washington, as well as Gresham and Portland in Oregon. Work on multiple commercial airplane models, such as the 737 Max, 767, and 777, as well as some military aircraft, has been paused due to the strike.
In order to conserve cash amid the ongoing strike, Ortberg had previously announced temporary furloughs for a portion of the workforce, including managers and executives. He stated that the anticipated job reductions would prevent the need for the next cycle of furloughs, remarking, “The state of our business and our future recovery require tough actions.”