Boeing To Lay Off 10% Of Workforce; Expects Hefty Q3 Loss

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(RTTNews) - Boeing Co. (BA) plans to lay off around 10% of its workforce, or approximately 17,000 employees, amid ongoing financial losses and production delays caused by a strike involving union machinists. The company expects a hefty loss in the third quarter due to the IAM work stoppage and charges in its commercial airplanes and defense segments. Boeing noted that challenges in the 777X program, including development issues and the flight test pause, will delay the timeline, with first delivery now expected in 2026. It plans to complete the remaining 767 Freighters ordered by its customers and conclude commercial production in 2027, while production of the KC-46A Tanker will continue.

In a message to employees, Boeing Chief Executive Officer Kelly Ortberg stated on Friday that the company plans to reduce its total workforce by approximately 10 percent over the coming months. These reductions will affect executives, managers, and employees. Next week, the company will provide more specific information about this. As a result of this decision, Boeing will not move forward with the next cycle of furloughs.

Recently, Boeing withdrew its pay offer to around 33,000 members of the International Association of Machinists and Aerospace Workers (IAM), saying the union had not considered its proposals seriously after two days of talks.

Boeing said Friday that expects to report GAAP loss per share of $9.97 in the third quarter of 2024 compared to a loss of $2.70 per share in the prior year. The company expects to report third quarter revenue of $17.8 billion. Analysts polled by Thomson Reuters expect the company to report a loss of $1.65 per share and revenues of $18.43 billion for the third quarter. Analysts' estimates typically exclude special items.

Boeing's Commercial Airplanes division expects to recognize pre-tax earnings charges of $3.0 billion related to the 777X and 767 programs. First delivery of the 777-9 is now anticipated in 2026, and the 777-8 freighter in 2028, resulting in a pre-tax charge of $2.6 billion due to updated certification assessments and delays from the IAM work stoppage. The division plans to conclude production of the 767 freighter, incurring a $0.4 billion pre-tax charge, and will begin producing only the 767-2C aircraft for the KC-46A Tanker program starting in 2027. Commercial Airplanes expects third-quarter revenue of $7.4 billion and an operating margin of (54.0) percent.

In Defense, Space & Security, pre-tax earnings charges of $2.0 billion are expected for the T-7A, KC-46A, Commercial Crew, and MQ-25 programs. The T-7A program will incur a pre-tax charge of $0.9 billion due to higher estimated production costs, while the KC-46A program will face a $0.7 billion charge from the decision to end 767 freighter production and impacts from the IAM work stoppage. Overall, Defense, Space & Security expects third-quarter revenue of $5.5 billion and an operating margin of (43.1) percent.