Boeing plans to lay off roughly 17,000 workers, delay its first 777-9 delivery and end 767 Freighter production, part of a plan to restructure its business around “core” products and keep afloat amid a crippling machinists strike and numerous other business challenges.
The company disclosed the moves on 11 October, when it also revealed preliminary third-quarter financial results, saying it lost more than $6 billion in the period.
Boeing is set to disclose its official third-quarter results on 23 October.
The aircraft manufacturer attributes the losses, lay-offs and programme changes partly to the now four-week strike by workers represented by the International Association of Machinists (IAM). That strike has forced Boeing to halt 737, 767 and 777 production.
Boeing’s production system has also suffered broader, long-lasting upheaval due to years of quality problems and intense federal scrutiny.
The union did not immediately respond to a request for comment.
“Our business is in a difficult position, and it is hard to overstate the challenges we face together,” Boeing chief executive Kelly Ortberg told employees in an 11 October letter. “Beyond navigating our current environment, restoring our company requires tough decisions and we will have to make structural changes to ensure we can stay competitive and deliver for our customers over the long term.”
In the coming months, Boeing plans to cut 10% of its staff, to “reset our workforce levels to align with our financial reality and to a more-focused set of priorities”, Ortberg says.
The company employed 171,000 people at the end of 2023, meaning about 17,000 workers will be let go. Affected staff will include managers, executives and others, Boeing says, adding that leaders next week plan to share more information about the pending cuts.
Ortberg tells employees the company must be “clear-eyed” about its challenges and “realistic about the time it will take to achieve key milestones”.
“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,” he adds, without being more specific.
Boeing now intends to deliver its first 777-9 in 2026, having most recently planned to deliver the first of the type this year. The programme, already long delayed, suffered more trouble this year when Boeing halted flight testing after finding that an engine structural component had failed.
“On the 777X programme, the challenges we have faced in development, as well as from the flight test pause and ongoing work stoppage, will delay our programme timeline. We have notified customers that we now expect first delivery in 2026,” Ortberg says.
Initial 777-9 customers Emirates Airline and Lufthansa did not immediately respond to requests for comment.
Boeing also now expects to deliver the first 777-8 Freighter in 2028, also one year later than most recently expected.
Additionally, the company will end 767F production after fulfilling existing orders in its backlog. Boeing says it will continue producing 767-based KC-46 Pegasus military refuelling jets.
The backlog includes 29 767Fs, among them 12 on order with FedEx and 17 with UPS.
This year, prior to the strike, Boeing had been delivering about one 767F monthly, suggesting production of the freighter could be completed in little more than one year after the strike ends.
Boeing additionally on 11 October released preliminary financial results for its third quarter, saying it expects to lose $9.97 per share in the period – or about $6 billion. The company says it generated $17.8 billion in third-quarter revenue, down from $18.1 billion in the same period last year.
The third-quarter loss largely reflects $5 billion in charges across Boeing Commercial Airplanes and Boeing Defense, Space & Security (BDS).
The company will take a $2.6 billion third-quarter charge against its 777X programme, resulting from “an updated assessment of the certification timelines to address the delays in flight testing” and “anticipated delays associated with the IAM work stoppage”.
Boeing will take another $400 million charge in the period against the 767F programme due to the strike.
Ortberg says BDS will post “substantial new losses” for the third quarter, weighed down by a $700 million penalty charge against its KC-46.
That charge “reflects the decision to conclude production on the 767 freighter and impacts of the IAM work stoppage”, Boeing says.
Starting in 2027, the company will produce 767-2C aircraft solely to support the KC-46A tanker programme. Boeing holds orders for 60 KC-46s, including four for Israel, two for Japan and the remaining 54 for the US Air Force, according to company’s data.
Boeing also continues to struggle on several of its most-important military development programmes, including the T-7A trainer jet and MQ-25 autonomous refueller.
BDS absorbed a $900 million penalty charge from the Pentagon on the T-7A in the third quarter, which the company says was driven by higher estimated costs on production contracts in 2026 and beyond.
The single-engined jet has been a consistent source of financial pain for Boeing, with just a handful of test examples delivered to the US Air Force well behind schedule.
Although the high-volume trainer programme is seen as a long-term source of stable revenue for BDS, the programme’s pre-pandemic fixed-price contract has made it a consistent loss-generator.
BDS will take a further $400 million third-quarter charge against development of the US Navy’s MQ-25 unmanned tanker jet and the Starliner commercial crew space capsule, which experienced multiple system malfunctions during its inaugural crewed flight in June. Those problems infamously forced NASA to keep two astronauts aboard the International Space Station months beyond their planned stay of a few days.
Ortberg blames Boeing’s previous defence strategy of using aggressive fixed-price bids to win government contracts at prices that leave little margin for cost growth or delays.
Boeing took that approach to secure new business in the previous decade, but it has proven disastrous for the company with pandemic-related supply chain and labour disruptions forcing many projects deep over budget and behind schedule.
“Our performance on fixed-price development programmes is simply not where it needs to be,” Ortberg says, echoing similar statements made by his predecessor Ted Colbert, who also struggled with the loss-generating programmes.
Going forward, Ortberg says he will be “providing additional oversight” of BDS and the troubled development programmes driving losses within the defence segment.
