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CNN
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Boeing’s CEO told employees late Friday that the company plans to cut 10% of its total workforce “in the coming months.”

“Our company is in a difficult position, and the challenges we face together are difficult to overstate,” said Kelly Ortberg, who started as CEO of the troubled plane maker two months ago and has since been involved in a strike by 33,000 hourly workers Fighting takes up half of his working time.

The announcement is just the latest blow to the troubled aircraft maker, which has suffered losses of more than $33 billion over the past five years; a series of serious, sometimes fatal, safety defects; and thereby increased scrutiny from regulators and law enforcement agencies.

“Beyond addressing our current environment, recovering our business requires difficult decisions and we must make structural changes to ensure we remain competitive and able to deliver to our customers over the long term,” Ortberg wrote in a memo to employees on Friday. Positioning for the future.”

Ortberg’s announcement did not specify the number of jobs that would be eliminated, although Boeing had 171,000 employees worldwide at the start of the year, including 147,000 in the United States.

Years of problems and losses

Boeing has been struggling with serious problems for more than five years, starting with two fatal crashes of its best-selling plane, the 737 Max, in 2018 and 2019 that led to a 20-month grounding of the plane worldwide. The company also suffered massive losses in 2020 as the pandemic brought air travel to a near standstill and forced airlines to withdraw their orders for new aircraft.

Recent problems included a door plug on a 737 Max flown by Alaska Airlines that popped off minutes into the flight on a Jan. 5 flight, leaving a gaping hole in the side of the plane.

Although the plane was able to land without serious injuries to passengers and crew, it triggered a new round of federal investigations into the safety and quality of Boeing planes. The preliminary results of an investigation by the National Transportation Safety Board found that the plane had left a Boeing factory two months earlier without the four screws needed to secure the door plug.

Boeing’s space and defense business is also losing money. During the Starliner spacecraft’s first manned flight, the two astronauts it carried were stuck on the International Space Station for months instead of making the brief visit they were supposed to make.

Ortberg said Friday the company needs to “focus our resources … rather than spreading ourselves across too many efforts, which can often lead to poor performance and underinvestment.”

The company had already announced that it would implement ongoing unpaid leave for a large portion of its non-union employees to save money during the strike by members of the International Association of Machinists (IAM). These furloughs required affected employees to be off work every fourth week. The fourth week of the strike ended on Friday.

The layoff decision means that the next furlough cycle will not take place, Ortberg wrote on Friday. Starting next week, employees will be informed about the future of their parts of the company.

“We know these decisions will cause hardship for you, your families and our team, and I sincerely wish we could avoid them,” he wrote. “However, the state of our business and our future recovery require aggressive action.”

Losses over the past five years have pushed up Boeing’s debt levels and the company is at risk of being downgraded to junk bond status for the first time in its history, major ratings agencies said.

Standard & Poor’s said this week that the strike, which has halted most of the company’s commercial jet production, is costing the company about $1 billion a month. Boeing receives most of its money from the sale of an aircraft at the time of delivery.

Despite the poor financial conditions, Boeing had offered IAM members a 25% salary increase over the four-year term of the proposed contract. But the union’s rank-and-file members almost unanimously rejected this offer and voted to go on strike starting September 13th.

The company then increased its offer to increase wages by 30%, but union leadership said that was not enough either. Federally mediated talks between the two sides broke down last week.

But wages are not the only problem. Union members are still upset that Boeing demanded the abandonment of its traditional pension plans a decade ago, when the company was doing well financially.

Rank-and-file union members at the time narrowly agreed to lose pensions because Boeing threatened to move jobs from unionized plants in Washington state to new plants that could be built elsewhere. Boeing dropped that threat in exchange for eliminating its pension plans.

For all its problems, Boeing is probably not at risk of disappearing. The company has only one competitor that also supplies large passenger aircraft to the global aviation industry: Airbus. However, Airbus does not have the capacity to process Boeing’s orders. That’s because both Boeing and Airbus have order books for their aircraft years into the future. If airlines that are Boeing customers cancel their orders, they would have to wait five years for a comparable jet from Airbus.

The programs that will be canceled also include the 767 jet, which will only be built in a freighter version. Boeing will cease production of this aircraft once current orders are completed and delivered to customers in 2027. This plane is being built by some of the union members currently on strike.

Ortberg also said Boeing’s newest wide-body passenger jet, the 777X, currently in development, will be further delayed. The company had already announced that it was forced to cancel test flights due to problems. “We have informed customers that we now expect the first delivery in 2026,” he wrote.