Boeing’s CEO announced plans to cut 10% of the company’s total staff in the coming months due to difficult business conditions. The company has faced significant challenges in the past, including losses of over $33 billion in the last five years, safety lapses, and increased scrutiny from regulators. The CEO emphasized the need for tough decisions and structural changes to ensure long-term competitiveness and customer delivery.
The troubled planemaker has experienced severe problems for over five years, starting with fatal crashes of the 737 Max plane in 2018 and 2019, leading to a lengthy grounding. The pandemic caused massive losses in 2020, and recent incidents such as a door plug blowing off a 737 Max have raised new safety concerns. Boeing’s space and defense business is also struggling, with issues like a stranded crew on the International Space Station and a focus on streamlining resources for better performance.
The company’s financial difficulties have led to rolling unpaid furloughs for nonunion employees, and the recent layoffs decision means an end to the next furlough cycle. Boeing’s debt has increased significantly, and it is at risk of having its credit rating downgraded to junk bond status for the first time. The ongoing strike by IAM members has cost the company about $1 billion a month, impacting commercial plane production and deliveries.
Despite offering wage increases to IAM members, Boeing faces challenges in reaching a contract agreement, with negotiations breaking off last week. Union members are still upset about giving up pension plans ten years ago and are concerned about the future of their jobs. While Boeing is facing financial pressures, its position as a key player in the global airline industry, alongside Airbus, ensures its continued relevance, with orders stretching years into the future.
Boeing is making program cuts, discontinuing the 767 jet once current orders are completed, and delaying the delivery of its newest widebody passenger plane, the 777X, to 2026. These measures are part of the company’s efforts to navigate difficult circumstances, streamline operations, and maintain competitiveness. As Boeing works to address its financial challenges and restructure its workforce, tough decisions will be necessary to ensure its long-term viability in the aerospace industry.
