By Allison Lampert, David Shepardson
(Reuters) -Boeing will cut 17,000 jobs, delay first deliveries of its 777X plane by a year and post a $5 billion loss in the third quarter, as the U.S. planemaker continues to spiral amid a month-long strike.
Boeing CEO Kelly Ortberg said in a message to employees that the company must reduce its workforce “to align with our financial realities” after an ongoing strike by 33,000 workers on the US West Coast has halted production of its 737 MAX, 767 and retired 777 aircraft.
“We have realigned our workforce to align with our financial realities and provide a more focused set of priorities. Over the coming months, we plan to reduce the size of our overall workforce by approximately 10 percent. These reductions will affect executives, managers and employees,” Ortberg's message said.
Boeing shares fell 1.7% in after-hours trading.
Boeing has charged a total of $5 billion for its defense and commercial activities.
Reaching a deal to end the work stoppage is crucial for Boeing, which filed an unfair labor practice charge on Wednesday, accusing the machinists' union of failing to negotiate in good faith. Credit rating agency S&P estimates that the strike is costing the country $1 billion a month and puts the country at risk of losing its prized investment-grade credit rating.
Ortberg also said Boeing has informed customers that the company now expects first delivery of its 777X in 2026 due to the challenges Boeing has faced in development, as well as the pause in flight testing and the ongoing work stoppage. Boeing had already faced certification issues with the 777X, which had significantly delayed the plane's launch.
Boeing, which reports third-quarter earnings on Oct. 23, said in a separate press release it now expects revenue of $17.8 billion, a loss per share of $9.97 and negative operating cash flow of $1.3 billion.
“While our business faces near-term challenges, we are making important strategic decisions for our future and have a clear view of the work we need to do to recover our business,” Ortberg added in a statement.
Boeing will end its 767 freighter program in 2027 when it completes and delivers the remaining 29 aircraft on order, but production for the KC-46A Tanker will continue.
The company said it would end the furlough program for salaried employees announced in September in light of the job losses.
Even before the strike began on September 13, the company had burned cash as it struggled to recover from a January panel explosion on a new plane that exposed weak safety protocols and prompted U.S. regulators to curb production .
Reuters reported this week that Boeing is exploring options to raise billions of dollars through the sale of shares and stock-like securities.
According to the sources, these options include the sale of common shares as well as securities such as mandatory convertible bonds and preference shares. One of the sources said they had proposed to Boeing to raise about $10 billion.
The company has a debt load of about $60 billion and posted operating cash flow losses of more than $7 billion in the first half of 2024.
Analysts estimate Boeing would need to raise between $10 billion and $15 billion to maintain its ratings, which are now a step above junk.
(Reporting by Allison Lampert and David Shepardson; Editing by Rod Nickel)
