Beijing, October 12 (Xinhua) -- According to foreign media reports on the 11th, Boeing plans to lay off about 10% of its workforce, or approximately 17000 people. The company will also delay the launch of the new 777X wide body aircraft until 2026, citing development issues. Previously, the strike at the company had been going on for almost a month, and tensions between the company and the mechanics union were intensifying.
It is reported that the reason for Boeing's layoffs is that the company's losses have intensified, and a mechanical worker strike that led to the shutdown of the aircraft factory has entered its fifth week. The company will also postpone the long delayed launch of its new wide body aircraft.
According to local media, Boeing will not be able to deliver the uncertified 777x wide body aircraft until 2026, which is about 6 years later than the original plan. The company suspended flight testing of one of its aircraft after discovering structural damage in August. The CEO of the company, Kelly Oberg, stated in an employee memo on Friday afternoon that the company will cease production of commercial 767 freighters in 2027 after completing remaining orders.
Otterberg said, "Our business is in a difficult situation, and the challenges we face together cannot be overstated. In addition to dealing with the current environment, restoring the company also requires making difficult decisions. We will have to carry out structural reforms to ensure that we can maintain competitiveness and provide long-term services to customers
On Friday, Boeing unexpectedly announced that it expects a loss of $9.97 per share in the third quarter. The company is expected to announce pre tax expenditures of $3 billion for its commercial aircraft division and $2 billion for its defense business. In the preliminary financial report, Boeing expects an operating cash outflow of $1.3 billion for the third quarter.
This round of layoffs and cost cuts is the most dramatic move since Ultraberg took office. He has only been in office for over two months, and his task is to restore stability to Boeing after experiencing safety and manufacturing crises, including the almost catastrophic Boeing 737 MAX9 air door stopper device detachment earlier this year.
The mechanic strike is another challenge faced by Otterberg. Credit rating agencies have warned that the company may lose its investment grade rating, and Boeing has been burning money. The company's management hopes to turn losses into profits this year.
Earlier this week, Standard&Poor's Global Ratings stated that Boeing is losing over $1 billion per month, and the strike of over 30000 mechanics began on September 13th, with mechanics overwhelmingly voting to reject the initial agreement reached between the company and the union. The tension between Boeing and the International Association of Machinists and Aerospace Workers (IAM) has been escalating, with Boeing withdrawing a new contract earlier this week.
Boeing announced on Thursday that it has filed allegations of unfair labor practices with the National Labor Relations Board, alleging that IAM had malicious intent in negotiations and distorted the aircraft manufacturer's proposals. The union criticized Boeing for proposing a more favorable offer, stating that the offer was not negotiated with the union and that workers would not vote on it.
Otterberg stated that layoffs will occur in the "coming months". After the outbreak of the COVID-19, Boeing and its hundreds of suppliers have been scrambling to increase their staff. At that time, demand fell sharply.