Boeing suffers from growing losses as the ongoing machinist strike remains for a fifth week, leading to a crucial decision.
With production on pause, Boeing announced that their losses kept piling up and that it had to cut off 10% of its workforce.
CNBC reported that this is equivalent to 17,000 jobs. CEO Kelly Ortberg acknowledged the challenges the company faces and called it a tough decision to make, so they can stay competitive and meet customer demands at the same time.
To be specific, Boeing is anticipating a loss of $9.97 per share for the third quarter, along with a pretax charge of $3 billion and $2 billion for its commercial airplane and defense sectors, respectively. This goes with their expected operating cash outflow of $1.3 billion during the same period.
Impact of Ongoing Boeing Strike
More than financial losses, Boeing will also delay the launch of its new 777x wide-body airplane to 2026, six years later than originally planned. Together with costly operational expenses caused by the strike, they also discovered structural issues during flight tests.
At the present, Boeing will also cease production of its commercial 767 freighters in 2027, and will only complete current orders.
According to VCPost, employees, even those who are not on strike, are being forced to take a temporary unpaid leave, affecting their thousands of workforce.
Reuters shared credit rating agencies have been warning Boeing of losing its investment-grade rating for losing more than $1 billion a month because of the strike. Tensions have escalated between Boeing and the International Association of Machinists and Aerospace Workers after a new contract offer was rejected last week.
Ortberg, who has only been in the position for over two months, has been striving to stabilize the company following its guilty plea from deadly 737 Max crashes a few years ago.
Now, with the ongoing strike, a structural change within the organization is likely to happen. On Thursday, Boeing has already filed an unfair labor practice charge with the NLRB (National Relations Board) to accuse the association of negating in bad faith.
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