Boeing Plans 10% Staff Cut As Machinists Talks Stall

Two days after ending the latest round of talks with striking machinists, Boeing says it plans to reduce the size of its total workforce by 10% over the coming months.

Boeing’s 33,000 machinists in the Puget Sound region have been on strike since Sept. 13. Boeing offered a 25% pay increase over four years initially. While this was endorsed by the local union leadership of district 751, it was overwhelmingly rejected by members. Boeing later upped its offer to 30% with other improvements and shared it publicly, bypassing the union leaders, while also making it subject to the union meeting a deadline for approval. IAM never considered voting on the second offer. 

The strike, which has spanned nearly a month, has halted 737, 767 and 777 production and deliveries.

Boeing’s new CEO Kelly Ortberg explained in a message to employees on Oct. 11 that staff reductions will encompass executives, managers and other employees, and due to this decision, “we will not proceed with the next cycle of furloughs.” Based on current staffing figures the cuts are set to affect roughly 17,000 employees.

Ortberg also cited challenges in the development of the 777X, including the pause in flight testing and the ongoing work stoppage delaying the program timeline.

“We have notified customers that we now expect first delivery in 2026,” Ortberg said.

The airframer paused the certification program for the 777-9 in August to assess a thrust link failure. The issue came to light when a severed thrust link assembly was discovered on WH003, which was conducting routine FAA certification flights in Hawaii. Boeing inspected assemblies on all four 777-9 test aircraft and found at least one cracked part on each, including WH004, which has not flown since late 2021.

Prior to the issue, Boeing said it was on pace to wrap up certification and begin first deliveries by late 2025, and Aviation Week has previously reported that barring a rapid resolution to the latest setback, that timeline would likely extend into 2026.

“We have to give the team time to assess the situation and then [set] a path forward,” Boeing CFO Brian West said during a Morgan Stanley investor event Sept. 13.

Given its pushback of the first 777-9 and 777-8 freighter deliveries to 2026 and 2028, respectively, Boeing said it would record a pre-tax earnings charge of $2.6 billion in the third quarter (Q3), according to its preliminary guidance.

Additionally, it also plans to conclude production of the 767F freighter and recognize a $0.4 billion pre-tax charge on the program, a decision that 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, it said.

Additional preliminary Q3 guidance released by Boeing projects revenues of $17.8 billion; the company plans to report its Q3 earnings on Oct. 23.

Boeing’s commercial aircraft division expects to report Q3 revenue of $7.4 billion and an operating margin of -54%. Defense, Space & Security expects to report Q3 revenue of $5.5 billion and an operating margin of -43.1%.

“We are making important strategic decisions for our future and have a clear view on the work we must do to restore our company,” Ortberg said. “These decisive actions, along with key structural changes to our business, are necessary to remain competitive over the long term.”

Financial analysts believe that if the strike drags on it could cost Boeing much more than the union’s wage demand. Scott Mikus, Vice President of Aerospace and Defense Research at Melius Research, notes that just 3-5% of the total cost of a commercial aircraft program comes from touch labor. By contrast, raw materials account for 65% of the cost.

“Boeing could settle this in their contracts with airlines,” Mikus said on a recent Aviation Week Check 6 podcast. “They have pricing escalators built in, and the escalators are based on indices. One of the indices that’s commonly used is the employment cost index, so essentially, these cost increases on the touch labor will be passed along to the airlines and lessors. Why Boeing is taking such a hard stance? I can’t be exactly sure.””