Boeing's turbulent times: Mass layoffs as financial woes deepen
The American aircraft manufacturer Boeing has initiated a procedure for group layoffs. Employees are already receiving notices. These layoffs will affect 17,000 people, which accounts for 10 percent of the company's global workforce. The company attributes the job reductions to a challenging financial situation.
Boeing announced that it would lay off about 10 percent of its global workforce, which is 17,000 people. Those receiving their notices now will remain on the payroll until January. This is due to federal regulations in the U.S., which require the employer to provide a 60-day notice period.
Due to financial difficulties, the company is also delaying the launch of its 777X aircraft. It announced that its sales results for the third quarter would likely be much lower than Wall Street analysts' forecasts. The layoffs are expected to save Boeing about CAD 2.4 billion.
At the beginning of November, a strike by mechanics ended, which lasted 52 days and cost the company approximately CAD 140 million in lost revenues daily. About 33,000 employees from two key factories in the U.S. state of Washington participated in the protest. These factories produce some of the best-selling airplanes in the world, such as the Boeing 737, and also carry out work on the 777s, 767s, and several military programs. The company agreed to meet the employees' demand for a 35-percent wage increase spread over four years. This will cost Boeing over a billion dollars.
To improve its financial situation, Boeing decided to sell shares. At the end of October, the company offered 90 million common shares and securities held by depositors worth CAD 7 billion. It gained approximately CAD 34 billion from this.
Settlement and fine. Boeing admitted guilt
A decision to admit guilt in the case of two Boeing 737 MAX crashes (in Indonesia and Ethiopia), where 346 passengers died, significantly impacted the company's financial condition. In connection with the fraud charge, the company agreed to pay a fine of CAD 342 million to conclude the investigation by the U.S. Department of Justice.
Under the agreement, the aircraft manufacturer agreed to spend at least CAD 640 million over the next three years to strengthen safety and compliance programs.
At the end of October, Boeing published its financial results for the third quarter, during which it recorded its largest loss in nearly four years, amounting to CAD 8.5 billion CAD.
