New Boeing president and CEO Kelly Ortberg issued a memo to employees describing a multi-point plan for dealing with the manufacturer’s “difficult position,” meaning the ongoing strike by about 33,000 workers, the resulting halt in production across three aircraft programs, the federal oversight hampering its 737 MAX program, and particularly the $5-billion 3Q loss it reported for 3Q 2024.
Ortberg assumed his new position on August 8, having been selected by Boeing directors to replace Dave Calhoun amid the controversy and scrutiny surrounding the design and assembly of the 737 MAX.
The big step reported by Ortberg will be cutting the Boeing workforce by 10%, or about 17,000 people, including executives, managers, and employees. The cuts will be implemented over the coming months.
In addition, Boeing will once more delay the first deliveries of its 777X aircraft, the updated twin-engine widebody jet that Boeing has promoted as “the world’s largest and most efficient twin-engine jet”. Boeing has booked more than 500 orders for the 777X, but the deliveries were initially planned for 2021 and have been postponed several times.
According to Ortberg’s memo, the first delivery for the 777X is now planned for 2026.
Also, Boeing will complete its order book for the 767 Freighter aircraft and cease production of that model in 2027. It will continue to manufacture the KC-46A Tanker, a military aircraft based on the 767.
Ortberg reported that the Boeing Defense division’s “performance on fixed-price development programs is simply not where it needs to be,” and he indicated the 3Q results for the unit will be impacted by work stoppage for military programs based on commercial aircraft platforms.
The strike by the International Association of Machinists and Aerospace Workers has been underway for about one month. After the workers voted down a negotiated contract offer, Boeing responded with a new proposal that the union did not submit for a vote by members. Negotiations have been suspended now, and Boeing has filed an unfair labor practice charge with the National Labor Relations Board accusing the IAM of negotiating in bad faith and misrepresenting its contract proposals.
“Our business is in a difficult position, and it is hard to overstate the challenges we face together,” Ortberg wrote. “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.”
