Boeing’s laying off 10% of its workers as it struggles to land a union deal
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Still making headlines… still not in a good way. Boeing plans to lay off 17K employees (from execs to frontline workers) as it deals with its first strike since 2008. 33K Boeing factory workers hit the picket line a month ago after the plane maker and unions failed to reach a new contract deal. Negotiations broke down again last week after Boeing withdrew its “best and final” offer of a 30% raise over four years, saying the union made “non-negotiable demands.”
The strike’s already cost Boeing an estimated $5B, and it could lose an extra $1B for every month it goes on. Yesterday the US acting labor secretary headed to Seattle to try to speed up a deal.
Boeing delayed the delivery of its new 777X passenger plane (which is years behind schedule), sparking backlash from Emirates, its biggest customer for widebody jets.
Maxed out of problems… Boeing has piled up $28B in losses since 2019, and it has $60B in debt after facing a series of debacles (recall: the plug-door incident). US ratings agency Moody’s warned last month that the jet maker might see its credit rating downgraded to junk status, which could lead to higher interest rates on its mountain of debt. Experts say Boeing might have to borrow or issue new stock to keep operating through the strike. Its distress is spreading: Boeing suppliers have lost an estimated $900M in the first four weeks of the strike. Its customers (airlines) have racked up $285M in losses.
It could be a long runway to recovery… Last week, Boeing’s CEO said the company’s troubles were “hard to overstate.” Union reps say the longer the strike goes on, the harder it'll be to restart production. Even if a deal is reached soon, the damage to Boeing's reputation could take longer to repair. This year the stock’s down 40%.