Boeing will cut 17,000 jobs, or 10 percent of its global workforce, delay first delivery of its 777X jet by a year and announced substantial new losses in its defence business as a month-long strike by union workers in the northwest US cuts into the company’s finances. Boeing said it expects to report third quarter revenue of $17.8 billion, GAAP loss per share of $9.97, and operating cash flow of ($1.3) billion. Cash and investments in marketable securities totalled $10.5 billion at the end of the quarter.
“While our business is facing near-term challenges, we are making important strategic decisions for our future and have a clear view on the work we must do to restore our company,” said Kelly Ortberg, Boeing president and chief executive officer. “These decisive actions, along with key structural changes to our business, are necessary to remain competitive over the long term. We are also focusing on areas that are critical to our future and will ensure we have the balance sheet necessary to invest, support our people and deliver for our customers.”
Commercial Airplanes expects to recognise pre-tax earnings charges of $3.0 billion on the 777X and 767 programmes. The company now anticipates first delivery of the 777-9 in 2026 and the 777-8 freighter in 2028, resulting in a pre-tax earnings charge of $2.6 billion. This schedule and resulting financial impact are based on an updated assessment of the certification timelines to address the delays in flight testing of the 777-9, as well as anticipated delays associated with the IAM work stoppage.
Commercial Airplanes also plans to conclude production of the 767 freighter and recognize a $0.4 billion pre-tax charge on the program, which also reflects impacts from the IAM work stoppage. Beginning in 2027, the company will solely produce 767-2C aircraft in support of the KC-46A Tanker program. Commercial Airplanes expects to report third quarter revenue of $7.4 billion and operating margin of (54.0) percent.
Defense, Space & Security expects to recognise pre-tax earnings charges of $2.0 billion on the T-7A, KC-46A, Commercial Crew, and MQ-25 programs. The T-7A program pre-tax charge of $0.9 billion was driven by higher estimated costs on production contracts in 2026 and beyond. The KC-46A program pre-tax charge of $0.7 billion reflects the decision to conclude production on the 767 freighter and impacts of the IAM work stoppage. Results also include unfavourable performance on other programs. Defense, Space & Security expects to report third quarter revenue $5.5 billion and operating margin of (43.1) percent.
Ortberg said in an email to Boeing employees that “Our business is in a difficult position, and it is hard to overstate the challenges we face together. 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. We need to be clear-eyed about the work we face and realistic about the time it will take to achieve key milestones on the path to recovery. 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 underperformance and underinvestment.
“With that in mind, today I am sharing some difficult decisions and several program updates:
- On the 777X program, the challenges we have faced in development, as well as from the flight test pause and ongoing work stoppage, will delay our program timeline. We have notified customers that we now expect first delivery in 2026.
- We plan to build and deliver the remaining 767 Freighters ordered by our customers and then conclude production of the commercial program in 2027. Production for the KC-46A Tanker will continue.
- In BDS, our performance on fixed-price development programs is simply not where it needs to be. We expect substantial new losses in BDS this quarter, driven by the work stoppage on commercial derivatives, continued program challenges and our decision to complete production on the 767 freighter. I will be providing additional oversight of this business and these programs.
“Along with the above actions, we must also reset our workforce levels to align with our financial reality and to a more focused set of priorities. Over the coming months, we are planning to reduce the size of our total workforce by roughly 10 percent. These reductions will include executives, managers and employees. Next week, your leadership team will share more tailored information about what this means for your organization. Based on this decision, we will not proceed with the next cycle of furloughs.
As we move through this process, we will maintain our steadfast focus on safety, quality and delivering for our customers. We know these decisions will cause difficulty for you, your families and our team, and I sincerely wish we could avoid taking them. However, the state of our business and our future recovery require tough actions.”
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