Boeing will cut 17,000 jobs, delay first deliveries of its 777X jet by a year and record $US5 billion ($7.4 billion) in losses in the third quarter, as the US plane-maker continues to spiral during a month-long strike.
CEO Kelly Ortberg said in a message to employees Boeing must shrink its workforce "to align with our financial reality" after an ongoing strike by 33,000 US West Coast workers stopped production of its 737 MAX, 767 and 777 jets.
"We 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 per cent," her message said.
"These reductions will include executives, managers and employees."
Boeing shares fell 2.12 per cent in after-market trading.
The sweeping changes are a big move by Ms Ortberg, who arrived in August at the helm of the beleaguered plane-maker promising to reset relations with the union and its employees.
Thomas Hayes, equity manager at Great Hill Capital, said by email the lay-offs could put pressure on employees to end the strike.
"Striking workers who temporarily do not have a pay cheque, do not want to become unemployed workers who permanently do not have a pay cheque," he said.
"I would estimate the strike will be resolved within a week as these workers do not want to find themselves in the next batch of 17,000 cuts."
About 33,000 union machinists have been on strike since September 14.
Boeing factory workers and supporters gather on a picket line near the entrance to a Boeing production facility in Renton, Washington, on Friday. (Reuters: David Ryder)
Two days of talks this week failed to produce a deal, and Boeing filed an unfair-labour-practices charge against the International Association of Machinists and Aerospace Workers.
Ratings agency S&P estimated the strike is costing Boeing $1 billion a month and the company risks losing its prized investment-grade credit rating.
The company has about 170,000 employees worldwide, many of them working in manufacturing facilities in the states of Washington and South Carolina.
Boeing had already imposed a furlough program for salaried employees last month, but Ms Ortberg said those would be suspended because of the impending lay-offs.
Boeing recorded pre-tax earnings charges totalling $US5 billion for its defence business and two commercial plane programs. The company has lost more than $US25 billion since the start of 2019.
In its third-quarter earnings report to be released on October 23, it now expects revenue of $US17.8 billion, a loss per share of $US9.97, and a better-than-expected negative operating cash flow of $US1.3 billion.
Analysts on average were expecting Boeing to generate quarterly cash burn of negative $US3.8 billion, according to LSEG data.
Ms Ortberg also said Boeing will further delay the rollout of a new plane, the 777X, to 2026 instead of 2025, due to challenges in development, the flight-test pause and the work stoppage.
It will also stop building the cargo version of its 767 jet in 2027 after completing and delivering the remaining 29 planes ordered
"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," the CEO said in a statement.
Even before the strike began on September 13, the company had been burning cash as it struggled to recover from a January mid-air panel blowout on a new Max during an Alaska Airlines flight that exposed weak safety protocols and spurred US regulators to curb its production.
Boeing has agreed to plead guilty and pay a fine for conspiracy to commit fraud tied to that jet, but relatives of the 346 people who died in two Max crashes want tougher punishment.
Reuters/AP