As of the latest Boeing news, In an announcement on October 11, 2024, Boeing‘s CEO Kelly Ortberg revealed that the company plans to lay off approximately 10% of its global workforce, impacting around 17,000 employees.
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Over the past five years, Boeing has been struggling with severe financial losses accumulating over $33 billion in deficits. This has led to a rise in the company’s debt levels, which are nearing dangerous levels with credit rating agencies warning of a downgrade to junk bond status.
As of the latest Boeing news, the third quarter of 2024 is expected to be dismal for Boeing with the company forecasting a $9.97 per share loss, which will result in a pre-tax charge of $5 billion for its commercial and defense divisions.
A strike involving 33,000 machinists from the International Association of Machinists and Aerospace Workers has severely disrupted Boeing’s production capacity.
The strike now in its fifth week has already cost the company over $1 billion per month. The union members rejected Boeing’s offer of a 25% raise over four years.
Tensions between Boeing and the IAM have increased with the company filing an unfair labor practice charge, accusing the union of negotiating in bad faith.
Talks between the two sides have broken down with Boeing withdrawing its improved offer of a 30% wage increase.
Boeing’s troubles were compounded during the COVID-19 pandemic, which caused a massive reduction in air travel leading airlines to cancel or delay aircraft orders.
This left Boeing with unsold planes and exacerbated its financial situation. While the aerospace industry has started recovering, Boeing continues to face hurdles in meeting demand due to production issues and labor disputes.
Boeing’s reputation has taken multiple hits in years due to a string of safety incidents. The 737 Max model was grounded globally for 20 months after two fatal crashes in 2018 and 2019.
As of the latest Boeing news, earlier this year, a 737 Max flown by Alaska Airlines had a door plug blow off mid-flight. The National Transportation Safety Board discovered that the plane had left the factory with missing bolts.
Development delays of Boeing’s newest passenger plane, the 777X have strained the company’s resources. Boeing has now pushed the launch date to 2026. This delay in the 777X program along with the discontinuation of the 767 freighter line in 2027.
With 147,000 employees in the United States and 171,000 globally, the layoffs will affect a huge portion of the company’s staff in its American workforce.
Boeing’s CEO, Kelly Ortberg addressed the need for structural changes to ensure the company’s competitiveness, stating, “Our business is in a difficult position, and it is hard to overstate the challenges we face together.”
Boeing’s reputation for safety has come under renewed scrutiny after an incident involving its 737 MAX 9 aircraft.
In January 2024, an Alaska Airlines 737 MAX 9 experienced a door plug blowout mid-flight, causing panic and grounding several planes.
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The door plug blowout raised concerns about the quality controls at Boeing and its ability to ensure the safety of its planes.
While no injuries were reported, the incident reignited fears over the safety of the 737 MAX model, which had previously been involved in two fatal crashes in 2018 and 2019.
US regulators took swift action after the incident, imposing new production restrictions on Boeing to ensure that such a malfunction would not occur again.
The difficulties at Boeing come in the wake of the 737 MAX crashes in 2018 and 2019, which killed 346 people and led to a global grounding of the aircraft.
The crashes were caused by faults in the flight control software, which was found to have serious defects that contributed to the accidents.
In July 2024, Boeing agreed to plead guilty to conspiracy to defraud the US government for its role in misleading regulators about the safety of the 737 MAX.
The company has paid billions in settlements and compensation to the victims’ families. The crashes and subsequent grounding of the 737 MAX cost Boeing approximately $18.4 billion in charges and losses.
The company’s financial health has been affected by these events, contributing to the decision to reduce the workforce and delay the 777X project.
As of the latest Boeing news, Boeing’s issues are not limited to its commercial aviation sector. The company’s Starliner spacecraft, which was developed for NASA’s International Space Station missions, it has also faced delays and technical problems.
The Starliner was supposed to complete its first crewed mission to the ISS in 2024, but the mission was plagued by hardware issues that extended the spacecraft’s stay in orbit.
In the end, the Starliner returned to Earth without the astronauts it had originally flown to the ISS. Boeing has incurred financial losses due to the delays in the Starliner program.
The failure to meet deadlines and technical setbacks have damaged Boeing’s credibility in the space exploration sector.
Boeing’s financial troubles have led to concerns over its ability to maintain its investment-grade credit rating. The company’s debt burden, which currently stands at around $45 billion has increased the cost of borrowing.
Ratings agencies like S&P have warned that Boeing’s cash flow issues and the mounting costs associated with the strike and project delays could lead to a downgrade in its credit rating.
This would make it more expensive for Boeing to raise capital and fund its operations. Boeing’s stock price has plummeted by nearly 40% year-to-date.
CEO David Calhoun, who had been at the helm since 2019 announced earlier in 2024 that he would step down by the end of the year. He has been replaced by Kelly Ortberg, who has already initiated a series of moves to stabilizing the company.
Ortberg’s appointment comes at a critical time for Boeing and he has wasted no time in making changes to the company’s leadership structure.
He has parted ways with Ted Colbert, the former head of Boeing’s defense and space division and is expected to make more changes as the company navigates its current crisis.
As of the latest Boeing news, Boeing has provided a preview of its financial performance for the third quarter of 2024 and the results are bleak. The company expects to report revenue of $17.8 billion, a loss per share of $9.97 and negative operating cash flow of $1.3 billion.
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