ARLINGTON- American aerospace company, Boeing announced some significant changes and restructuring related to financials, jobs, the 767 freighter program, 777X production delays, and more.
The company reported a preliminary third-quarter report as it faced strike action by IAM workers. The strike affects the company in many ways, even halting production at largest factory in the world.
Boeing 777X Delays
The new President and CEO of Boeing, Kelly Ortberg made some strong announcements and he wrote this for its employees on October 11, 2024.
The 777X program faces further delays, with the first delivery now expected in 2026. Ortberg cited ongoing development challenges, a flight test pause, and work stoppages as primary factors for the setback.
However, some journalists pointed out that Boeing 777X delays and the current strike are not directly related.
The aerospace giant suspended flight tests in August due to the discovery of cracks in a critical component connecting the plane’s engines to its wings. This issue compounds the ongoing challenges Boeing faces in securing Federal Aviation Administration (FAA) certification for the 777X, a process that has already experienced numerous delays.
These setbacks will have substantial financial implications for Boeing. The company disclosed that the postponement of both the passenger and freighter versions of the 777X will result in a pretax earnings charge of $2.6 billion.
Boeing’s 777X order book, as of September 2024, totals 503 aircraft from 13 identified airlines and undisclosed customers. The order breakdown includes 43 B777-8 variants, 55 B777-8F freighters, and 405 of the larger B777-9 models.
Ending 767 Program in 2027
Further, Boeing will conclude production of the commercial 767 Freighter program in 2027 after fulfilling existing customer orders. However, the company will continue producing the KC-46A Tanker variant for military use.
The existing 767F backlog comprises 29 aircraft, with 12 destined for FedEx and 17 for UPS. Before the ongoing strike, Boeing maintained a production rate of approximately one 767F per month.
Additionally, Boeing’s commercial aircraft division will incur a total of $3 billion in pretax earnings charges, partly attributed to the winding down of the 767 program.
17,000+ Job Cuts
The aerospace giant aims to cut 10% of its staff, approximately 17,000 positions, based on its 171,000-strong workforce at the end of 2023.
Ortberg emphasized the severity of Boeing’s current situation, stating, “Our business is in a difficult position, and it is hard to overstate the challenges we face together.”
The CEO stressed the need for structural changes to maintain competitiveness and meet customer demands long-term.
The workforce reduction will impact all levels of the organization, including managers and executives. Boeing plans to provide more detailed information about the cuts to affected staff next week.
Ortberg called for a realistic approach to the company’s challenges and the time required to achieve key milestones.
He emphasized the need to focus resources on core competencies, stating, “We also need to focus our resources on performing and innovating in the areas that are core to who we are, rather than spreading ourselves across too many efforts that can often result in under-performance and under-investment.”
Boeing Q3 Report
Boeing disclosed preliminary third-quarter financial results on October 11, revealing a staggering loss exceeding $6 billion. The company anticipates reporting third-quarter revenue of $17.8 billion and a loss per share of $9.97. Boeing’s operating cash outflow reached $1.3 billion, leaving $10.5 billion in cash and marketable securities at the quarter’s end.
The aerospace giant plans to release official third-quarter results on October 23, providing a complete picture of its financial situation.
Further, Boeing’s Defense, Space & Security (BDS) division faces substantial new losses in the third quarter, including a $700 million penalty charge related to the KC-46 program.
The company’s stock has plummeted 42% year-to-date, reflecting investor concerns over Boeing’s financial health and operational challenges.
Approximately 33,000 employees at Boeing’s main Seattle-area facilities have been on strike for a month, severely impacting production and depleting the company’s financial reserves.
Boeing has made two wage increase offers, both rejected by workers. The most recent round of talks collapsed earlier this week with no clear path forward.
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