Boeing Co. is taking drastic measures to address its mounting financial challenges, announcing plans to cut 17,000 jobs-equivalent to 10% of its global workforce-and delay the first delivery of its 777X jet until 2026. The decision comes amid a debilitating strike by thousands of machinists that has severely impacted the aerospace giant's operations and financial stability. CEO Kelly Ortberg outlined these moves in a memo to employees on Friday, highlighting the need for tough structural changes as the company battles losses and faces uncertain economic conditions.

"Our business is in a difficult position, and it is hard to overstate the challenges we face together," Ortberg wrote to staff. "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's remarks reflect the gravity of Boeing's situation as it struggles to stabilize its finances and regain its footing in the competitive aerospace industry.

The strike, now entering its fifth week, involves more than 30,000 U.S. West Coast machinists and has led to the suspension of production at Boeing's key facilities, affecting the 737 MAX, 767, and 777 jet programs. The labor action began after machinists overwhelmingly rejected a tentative agreement with Boeing, citing insufficient wage increases and job security measures. Since then, the strike has cost Boeing more than $1 billion per month, according to S&P Global Ratings, further straining its balance sheet.

In addition to the job cuts, Boeing has decided to halt production of its 767 freighter by 2027, following the completion of its current orders. The company also faces continued delays in the rollout of its 777X wide-body aircraft, pushing the delivery date to 2026, a full six years behind its original schedule. The delay is attributed to a combination of development issues, flight-test pauses, and the ongoing strike, which has disrupted Boeing's ability to meet key milestones in the aircraft's certification process.

Ortberg, who has been at the helm of Boeing for just over two months, acknowledged the significant challenges the company is facing as he tries to steer it through one of the toughest periods in its history. "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," he said. Ortberg's short tenure has already been marked by difficult decisions as he navigates Boeing's recovery from both safety crises and the current manufacturing disruptions.

The ripple effects of the strike have also extended to Boeing's defense and space divisions, which Ortberg described as "simply not where they need to be." Boeing expects substantial new losses in its defense business this quarter, driven by continued program challenges and the impact of the strike on production timelines. The company's financial situation has deteriorated to the point where credit rating agencies have warned of a potential downgrade in Boeing's investment-grade rating if the crisis persists.

Boeing's decision to reduce its workforce by 10% will affect employees across all levels, from executives to rank-and-file workers. Ortberg emphasized that the cuts are necessary to align Boeing's workforce with its financial reality and refocus on its core priorities. "We reset our workforce levels to align with our financial reality and to a more focused set of priorities," Ortberg stated, adding that the company will begin providing detailed information about the layoffs to employees in the coming weeks.

The layoffs and cost-cutting measures come as a blow to a company that had hoped to make significant strides in 2024. Instead, Boeing finds itself grappling with operational shutdowns, soaring costs, and a workforce in turmoil. In a bid to conserve cash, Boeing initiated one-week furloughs for employees shortly after the strike began but announced that these furloughs will end in November as it moves forward with its broader restructuring plan.

Tensions between Boeing and the machinists' union have only escalated, with the company recently withdrawing its latest contract offer after talks broke down. The impasse has left Boeing's production lines idle, with no clear resolution in sight. Analysts warn that the prolonged strike could inflict even more damage on Boeing's finances and delay its recovery efforts, potentially impacting its position in the global aerospace market.