WASHINGTON, OCT 13: Boeing CEO Kelly Ortberg told employees that the company has to make “tough decisions” during the machinist strike. Boeing CEO Kelly Ortberg told employees Friday afternoon that the company would need to delay the launch of the 777X and lay off roughly 10% of its workforce as the machinist strike continues.
“Our business is in a difficult position, and it is hard to overstate the challenges we face together,” Ortberg said in the note.
The 777X was originally slated to launch in 2025, but Ortberg said the company now expects to make the first delivery in 2026 as a result of challenges with development, the ongoing strike and a pause from flight-testing. Ortberg said Boeing notified all customers of the 777X delay. Some prominent carriers that have placed orders for 777X include Emirates, Lufthansa, Qatar Airways, Etihad and Singapore Airlines. However, numerous airline executives were already not confident that the 777X would have been able to be delivered in 2025.
Emirates president Sir Tim Clark previously said he believed the 777X wouldn’t start operating until 2026, according to Bloomberg. The Dubai-based carrier currently has the largest order for the 777X, at 205 planes, according to Boeing figures from September.
“We’ve got a business to run, and if we’re having to pay the bill for refurbishing all these aeroplanes, it should be put at Boeing’s door,” Clark said at the IATA annual general meeting in June. “Because by the time we get our first aircraft, it would be six years of delays.”
The plane maker is also discontinuing the 767 cargo plane.
U.S. Airlines Plan for Delays
So far, executives at U.S. carriers have said they aren’t currently affected by the machinist strike. United Airlines chief commercial officer Andrew Nocella said at the Skift Global Forum in September that the carrier implemented an insurance plan this year in anticipation of delivery delays.
“We have plenty of aircraft available for flight schedules as planned for the time being, and hopefully Boeing and its people can resolve their issues as quickly as possible,” Nocella said.
Southwest Airlines, which operates an all-737 fleet, is also introducing red-eye flights, limiting its hiring, and making service cuts to grapple with delivery delays.
Boeing Makes Major Cuts to Its Workforce
Ortberg said Boeing would lay off 10% of its workforce, translating roughly to 17,000 employees. These cuts will affect executives, managers and employees.
Previously, the company furloughed thousands of white-collar employees and froze hiring. Ortberg said Boeing would end the furloughs due to the layoffs.
“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,” Ortberg said in the message on Friday.
Talks with the International Association of Machinists and Aerospace Workers broke down this week as Boeing withdrew its offer that included a 30% pay raise over the course of four years. The union wanted a 40% increase.
“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,” Ortberg said.
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