Boeing to cut 17,000 jobs amid financial turbulence
The American aircraft manufacturer Boeing has begun a process of group layoffs. Employees are already receiving notices. These layoffs will affect 17,000 people, accounting for 10 percent of the company's global workforce. The company cites financial difficulties as the reason for the job reduction.
Boeing announced that it would lay off about 10 percent of its global workforce, totaling 17,000 employees. Those receiving notices now will remain on the payroll until January. This complies with federal regulations in the USA, which require a 60-day notice period for layoffs.
Due to financial constraints, the company is also delaying the launch of its 777X aircraft. It announced that its sales results for the third quarter are likely to fall short of Wall Street analysts' forecasts. The layoffs are expected to save Boeing approximately $1.7 billion.
At the beginning of November, a 52-day mechanics’ strike ended, which cost the company $100 million per day in lost revenue. Approximately 33,000 employees from two key factories in Washington state participated in the protest. These factories produce some of the world's best-selling airplanes, such as the Boeing 737, and manage 777s, 767s, and several military programs. The company agreed to meet the employees’ demand for a 35-percent wage increase over four years, a commitment that will cost Boeing over a billion dollars.
To address the financial situation, Boeing decided to sell shares. At the end of October, the company offered 90 million common shares and depositary securities valued at $5 billion, raising approximately $24 billion.
Settlement and fine. Boeing admitted guilt
The decision to admit guilt in the case of two Boeing 737 MAX crashes (in Indonesia and Ethiopia), in which 346 passengers died, was significant for the company's financial condition. In line with a fraud charge, the company agreed to pay a fine of $243.6 million to settle the investigation by the U.S. Department of Justice.
Under the agreement, the aircraft manufacturer committed to spending at least $455 million over the next three years to enhance safety and compliance programs.
At the end of October, Boeing published its financial results for the third quarter, posting its largest loss in nearly four years, amounting to $6.17 billion.
