Boeing’s newly appointed President and CEO, Kelly Ortberg, has announced plans to reduce the company’s workforce by approximately 10% over the next few months as it grapples with significant financial challenges. The job cuts will affect employees across all levels, including senior management. This decision comes as Boeing faces pressure from multiple fronts, including development delays, safety issues, and contract miscalculations.
Ortberg also revealed adjustments to Boeing’s flagship projects. The delivery of the new 777X long-haul jet, initially slated for 2020, is now pushed to 2026 due to ongoing technical setbacks. Boeing had to halt test flights after a prototype sustained damage. Additionally, Boeing will cease production of its 767 freighters beyond 2027, citing stricter global regulations on noise and emissions. However, the company will continue producing the KC-46A tanker, used for military refueling operations, with orders coming primarily from the U.S. military, as well as Japan and Israel.
Long-Standing Issues and Recent Struggles
Boeing has been plagued by safety concerns since the fatal crashes of two 737 Max 8 aircraft in 2018 and 2019. The company only recently admitted guilt in connection to the accidents, after a 737 Max 9 lost a door cover mid-flight earlier this year. These safety failures, coupled with significant losses on aerospace and military contracts due to misjudged fixed-price agreements, have further strained Boeing’s finances.
The company’s financial situation has worsened due to an ongoing strike by 33,000 workers demanding higher wages. The strike, now a month long, is depleting Boeing’s capital reserves, especially as workers have twice rejected pay increase offers. Boeing’s business troubles have persisted for years, with Scott Kirby, CEO of United Airlines, describing it as a “two-decade problem.”
