Boeing Plans to Shed Jobs to Stay Afloat

Boeing's CEO, Kelly Ortberg, recently announced that the company will be reducing its workforce by about 10% in the coming months. This decision comes as the aircraft manufacturer faces significant challenges, including financial losses exceeding $33 billion over the past five years and a series of safety issues. One of the major setbacks was the grounding of the 737 Max jet after two fatal crashes in 2018 and 2019. The pandemic in 2020 further exacerbated Boeing's troubles, leading to a near-halt in air travel and a reduction in new plane orders. Recently, a door plug on a 737 Max operated by Alaska Airlines detached shortly after takeoff, sparking a new round of federal investigations. The National Transportation Safety Board found that the plane had left the factory without the necessary bolts to secure the door plug. Additionally, Boeing's space and defense division has also faced setbacks, such as the Starliner spacecraft's failed mission that left astronauts stranded.

Ortberg emphasized the need for Boeing to focus its resources more effectively to stay competitive and deliver for its customers over the long term. The company had already implemented unpaid furloughs for many non-union employees to save cash during a strike by members of the International Association of Machinists union. The layoff announcement means these furloughs will no longer be necessary. Boeing's financial struggles have been compounded by a strike that has halted most of its commercial plane production, costing the company about $1 billion per month. Despite offering significant wage increases, the company has been unable to reach an agreement with the union. The strike and ongoing financial issues have put Boeing at risk of having its credit rating downgraded to junk bond status. Despite these challenges, Boeing is unlikely to disappear. It remains one of the few companies providing full-size passenger planes globally, with Airbus being its main rival. However, Airbus lacks the capacity to handle Boeing's orders, as both companies have extensive order books stretching years into the future. Among the programs being cut is the 767 jet, which will be discontinued once current orders are delivered by 2027. The company's newest widebody passenger plane, the 777X, will also see further delays, with the first delivery now expected in 2026.

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