#BoeingCrisis #AerospaceStrike #FinancialStruggles
Boeing's Critical Crossroads: Layoffs, Strike, and Financial Struggles
Boeing, the aerospace giant, is facing one of its most challenging periods in recent history. The company has announced plans to lay off approximately 10% of its global workforce, affecting around 17,000 employees, in response to ongoing financial losses and a crippling strike by factory workers.
The strike, which began on September 14, involves about 33,000 union machinists in the Pacific Northwest who rejected a proposal for a 25% wage increase over four years, instead demanding raises of at least 40% along with additional benefits.
This labor dispute has brought production of key aircraft models, including the 737 Max, 777X, and 767, to a standstill. The halt in production is severely impacting Boeing's cash flow, as the company typically receives a significant portion of the aircraft's price upon delivery to airline clients.
Boeing's financial situation is dire. The company has reported a cash outflow of $1.3 billion for the third quarter, with losses amounting to $9.97 per share. This exceeds analysts' expectations, which were already pessimistic. Boeing has incurred losses exceeding $25 billion since early 2019.
In addition to the layoffs, Boeing is postponing the launch of its new 777X aircraft to 2026, a year later than initially planned. The company will also cease production of the cargo variant of the 767 by 2027 after fulfilling existing orders.
CEO Kelly Ortberg has emphasized the necessity of these measures, stating that the current circumstances "necessitate difficult choices" and that structural changes are required for Boeing to remain competitive and fulfill its commitments to customers.
The layoffs will affect a broad range of employees, including executives, managers, and various staff members. This move follows earlier temporary furloughs, which are now being halted in favor of the more permanent layoffs.
Boeing's financial struggles are compounded by significant write-downs and a reduction in supplier spending, recruitment freezes, and strict limits on travel. The company held $10 billion in cash and marketable securities as of September 30, but the ongoing strike continues to erode its financial stability.
As the aerospace industry watches, Boeing's actions underscore the severe impact of labor disputes and financial pressures on a global leader. The company's ability to navigate these challenges will be crucial in determining its future competitiveness and success.
Original Article: https://www.cnbc.com/2024/10/11/boeing-layoffs-factory-strike.html
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