Boeing to Cut 10% of Workforce Amid Mounting Challenges and Losses

Boeing announced on Friday that it will reduce its workforce by approximately 10% in response to severe financial struggles and ongoing operational challenges. In a memo to staff, CEO Kelly Ortberg revealed that the layoffs will occur “over the coming months” as the company seeks to navigate its difficult business environment and make strategic adjustments to ensure long-term competitiveness.

“We face significant challenges, and difficult decisions must be made to secure the future of our business,” Ortberg wrote. Appointed as CEO just two months ago, Ortberg has been contending with a company already plagued by financial losses, safety concerns, and regulatory scrutiny. The situation has been further aggravated by a strike involving 33,000 hourly workers, which has halted production at key facilities.

Impact of Years of Challenges

Boeing’s struggles date back over five years, beginning with two tragic crashes involving its 737 Max aircraft in 2018 and 2019, which led to the model’s global grounding for 20 months. The company also faced significant setbacks during the COVID-19 pandemic, which drastically reduced air travel and caused airlines to cancel or delay new aircraft orders.

Recent issues have further damaged Boeing’s reputation, including a January incident involving an Alaska Airlines 737 Max, in which a door plug detached mid-flight, exposing serious safety lapses. Investigations revealed that the aircraft had left Boeing’s factory without essential bolts to secure the door plug, triggering renewed regulatory scrutiny.

Beyond its commercial aviation troubles, Boeing’s space and defence division has also faced setbacks. The Starliner spacecraft, intended for crewed missions, left astronauts stranded on the International Space Station for months longer than anticipated.

Layoffs Amid Union Strike and Financial Losses

The workforce reductions come as Boeing grapples with the ongoing strike by members of the International Association of Machinists and Aerospace Workers (IAM). The strike, which began on September 13, has effectively frozen much of Boeing’s commercial aircraft production, causing the company to lose an estimated $1 billion per month, according to Standard & Poor’s.

Despite the financial strain, Boeing had offered the IAM members a 25% wage increase over four years, but the proposal was rejected by nearly all union members. Boeing later raised its offer to 30%, but the union maintained that it fell short of expectations, citing longstanding grievances about pensions and job security. The loss of traditional pension plans a decade ago remains a sore point for union members, with Boeing threatening at the time to relocate jobs from unionized plants.

Federally mediated negotiations between the company and union leadership recently broke down, and Boeing filed a complaint with the National Labor Relations Board, accusing the union of negotiating in bad faith. The union refuted the charge, calling Boeing’s actions a tactic to undermine worker solidarity.

Jon Holden, president of IAM District 751, which represents the majority of striking members, criticized Boeing’s negotiation strategy. “They are trying to divide our union, but our members are more united than ever,” Holden said, underscoring the union’s resolve to continue the strike until a satisfactory deal is reached.

Boeing’s Future and Program Changes

As Boeing grapples with labor disputes and financial turmoil, the company is making significant cuts to its operations. Ortberg announced that Boeing’s production of the 767 jet will be discontinued once current orders are fulfilled by 2027. Additionally, the development of the highly anticipated 777X passenger jet has been delayed further, with first deliveries now expected in 2026 due to ongoing issues with test flights.

Despite its challenges, Boeing is unlikely to face immediate extinction. With Airbus as its only significant competitor in the full-size passenger aircraft market, many Boeing customers would face long wait times to switch to Airbus, whose order books stretch years into the future.

Even so, Boeing’s mounting debt and financial losses have put the company at risk of a credit downgrade to junk bond status for the first time in its history. Boeing’s leadership remains determined to weather the storm, but the road ahead is filled with obstacles as the company tries to regain stability in an increasingly competitive and scrutinized market.