17,000 job cuts, $5 billion in costs: Boeing's crisis deepens
Boeing, the US-based aerospace giant, will issue layoff notices to thousands of its employees as it struggles with a crippling labor strike and rising financial troubles. The ongoing strike has already cost the company and workers $5 billion, according to Anderson Economic Group. The company recently revealed plans to cut 17,000 jobs to stabilize operations. The announcement comes amid an ongoing dispute with the West Coast factory workers' union which has seen 33,000 workers on strike since September 13.
Union demands wage increase, US official intervenes
The International Association of Machinists and Aerospace Workers (IAM) is seeking a 40% wage hike over four years. Amid this standoff, Acting Labor Secretary Julie Su flew to Seattle on Monday, her first in-person mediation effort between Boeing and the union. Despite the ongoing discussions, Boeing is preparing for massive workforce cuts from November.
Boeing's layoff plan and union's response
Boeing intends to send out 60-day layoff notices, mostly to employees of its commercial aviation division, with layoffs set for mid-January. A second wave of layoffs could be seen in December if things don't get better. The company has notified unions representing engineers and other professionals about the plans. However, striking IAM workers remain unaffected by the layoffs for now. IAM's international president, Brian Bryant, has slammed Boeing's decision as "corporate greed at its worst."
Boeing's financial troubles impact aviation industry
Boeing's financial woes have sent ripples across the aviation industry, with its stock falling 1.3% after the job cut announcement. The company also announced a delay in the production of its much-anticipated 777X jetliner until 2026, pushing the timeline of this mini-jumbo jet successor by six years. This has raised concerns among industry leaders like Emirates Airline President Tim Clark, who was frustrated with Boeing's inability to provide reliable delivery dates.
Boeing's financial stability and need for funds
Clark, who ordered 150 777X jets over a decade ago, warned of commercial repercussions from these delays. He also expressed concerns over Boeing's financial stability, hinting at an investment downgrade or even Chapter 11 bankruptcy if the company doesn't raise funds soon. Even though it has over $10 billion in cash, analysts warn Boeing will need to raise up to $15 billion by year-end to stabilize operations.
Boeing CEO addresses workforce reduction and cost-cutting measures
Boeing's newly appointed CEO Kelly Ortberg stressed the need to "reset workforce levels to align with our financial reality." The planned cuts will affect employees at all levels, including executives, managers, and workers. The company also announced a series of cost-cutting measures due to the strike. Despite these short-term challenges, Ortberg remains focused on Boeing's long-term competitiveness stating that "While our business is facing near-term challenges, we are making important strategic decisions for our future."
Boeing's legal issues over 737 MAX aircraft
Boeing's troubles are further compounded by legal issues surrounding the 737 MAX aircraft. A Texas judge is currently weighing a proposed settlement between Boeing and the US Department of Justice over the 737 MAX, which was grounded after two fatal crashes in 2018 and 2019. Family members of crash victims are asking the court to reject this settlement, demanding criminal prosecution of Boeing and its executives.
