In a sombre memo to staff, Kelly Ortberg also revealed its defence and space division would record “substantial new losses” this quarter and the company would delay the launch of its new flagship aircraft, the 777X, until 2026.
“Our business is in a difficult position, and it is hard to overstate the challenges we face together,” he wrote.
The news follows another tough year for Boeing, which included a door plug blowing out of a 737 MAX 9 in mid-air and the bodged return of its Starliner spacecraft.
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More recently, 33,000 machinists began strike action last month, while the CEO of Boeing Defence and Space (BDS) was ousted.
“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,” wrote Ortberg.
“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.
“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.
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“With that in mind, today I am sharing some difficult decisions and several program updates: “On the 777X program, the challenges we have faced in development, as well as from the flight test pause and ongoing work stoppage, will delay our program timeline. We have notified customers that we now expect first delivery in 2026.
“We plan to build and deliver the remaining 767 freighters ordered by our customers and then conclude production of the commercial program in 2027.
“Production for the KC-46A tanker will continue.
“In BDS, our performance on fixed-price development programs is simply not where it needs to be.
“We expect substantial new losses in BDS this quarter, driven by the work stoppage on commercial derivatives, continued program challenges and our decision to complete production on the 767 freighter. I will be providing additional oversight of this business and these programs.
“Along with the above actions, we must also 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. These reductions will include executives, managers and employees. Next week, your leadership team will share more tailored information about what this means for your organisation. Based on this decision, we will not proceed with the next cycle of furloughs [which were in response to strike action].
“As we move through this process, we will maintain our steadfast focus on safety, quality and delivering for our customers.
“We know these decisions will cause difficulty for you, your families and our team, and I sincerely wish we could avoid taking them. However, the state of our business and our future recovery require tough actions.”
Boeing only appointed Ortberg in August to replace Dave Calhoun as the company’s overall chief executive, but he quickly removed BDS chief executive Ted Colbert III in September.
It followed the embarrassing setback of its Starliner spacecraft, which effectively left two astronauts stranded on the ISS until February.
The pair, who arrived at the space laboratory in June, were initially meant to stay for a week but will now return on a spacecraft operated by rival SpaceX eight months later than planned.
Adam Thorn
Adam is a journalist who has worked for more than 40 prestigious media brands in the UK and Australia. Since 2005, his varied career has included stints as a reporter, copy editor, feature writer and editor for publications as diverse as Fleet Street newspaper The Sunday Times, fashion bible Jones, media and marketing website Mumbrella as well as lifestyle magazines such as GQ, Woman’s Weekly, Men’s Health and Loaded. He joined Momentum Media in early 2020 and currently writes for Australian Aviation and World of Aviation.
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