Boeing announced on Friday that it will reduce its workforce by about 17,000 employees, approximately 10% of its total workforce, and will cease production of a cargo aircraft manufactured in Washington.
The decision follows nearly a month of strikes by aircraft machinists in the Puget Sound area and other locations along the West Coast, who rejected a contract proposal from Boeing in September. Negotiations have stalled, and manufacturing has come to a standstill at the company’s facilities in the region.
Prior to the strike, Boeing was already grappling with financial losses and increasing debt.
Boeing President and CEO Kelly Ortberg emphasized the need for the company to focus on its core competencies and to be realistic about the timeline for recovery in a message to employees. Layoffs will take place over the next few months, affecting executives, managers, and workers alike.
In addition to the workforce cuts, Boeing will discontinue production of its 767 commercial freight airplane in 2027 after fulfilling existing orders for the aircraft, which is produced in Everett. The company will also delay the 777X program, with initial deliveries now expected in 2026, also made in Everett.
About 30 Congressional members, including Democratic U.S. Representative Pramila Jayapal of Washington, sent a letter to Ortberg and Jon Holden, president of the International Association of Machinists Local 751, urging both sides to negotiate in good faith to reach a fair contract promptly. They noted that Boeing’s CEO received over $32 million in compensation in 2023.
Discussions between Boeing and the International Association of Machinists and Aerospace Workers have been facilitated by a federal mediator since approximately 33,000 workers began striking last month.
Boeing made a revised offer on September 23, proposing a 30% wage increase over four years, doubling a ratification bonus to $6,000, and reinstating an annual bonus, along with a 100% match on 401(k) contributions up to 8% of pay. However, the company declared on Tuesday that it has withdrawn the offer, contending that further negotiations were no longer sensible.
The union is advocating for a 40% pay increase and the reinstatement of a defined-benefit pension plan.
Boeing has recently been under scrutiny for its safety record following a mishap involving a 737 Max and has incurred hundreds of millions in fines related to fatal crashes in 2018 and 2019.
In its latest financial report, Boeing revealed a quarterly loss exceeding $1.4 billion for the second quarter of the year, with debt rising from $48 billion to nearly $58 billion.
On Friday, the company projected pretax charges of $3 billion associated with the 777X and 767 programs, as well as $2 billion related to defense, space, and security initiatives. The anticipated revenue for the third quarter is expected to be around $17.8 billion, with a negative operating cash flow of $1.3 billion. Boeing plans to release its full third-quarter financial results on October 23.
The ongoing strike has shut down multiple facilities in the Northwest, including sites in Renton, Everett, Auburn, and Frederickson in Washington, along with locations in Gresham and Portland in Oregon. As a result, work has been halted on various commercial aircraft, such as the 737 Max, 767, and 777, as well as some military models.
Due to the strike, Ortberg previously announced temporary furloughs for employees, including those in management, to conserve cash. In his recent note, he indicated that the forthcoming layoffs would eliminate the need for another round of furloughs.
He concluded by stating that the current state of the business necessitates difficult measures for future recovery.