Boeing to axe a tenth of workforce, secures $10B credit agreement

Turbulence at Boeing as the airplane manufacture plans to axe its workforce by a tenth – cutting 17,000 jobs – and postpone production as it deals with issues across its business.

The CEO of Boeing told employees on Friday (Oct. 11) that the company plans to cut 10 per cent of its total staff “over the coming months,” CNN reports.

“Our business is in a difficult position, and it is hard to overstate the challenges we face together,” said Kelly Ortberg, who started at CEO of Boeing two months ago and has been dealing with a strike by 33,000 hourly workers for half his time on the job.

In an email to staff, and as reported by the BBC, Ortberg said in an email that "executives, managers, and employees'" jobs are all at risk.

“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 wrote in the memo.

The business also warned of losses in its weapons and military equipment manufacturing arm, and pushed back the delivery date of its 777X plane.

Turbulent skies 

The revelation is the latest blow at the troubled plane maker, which is grappling with losses of more than $33 billion in the past five years; a string of series of safety lapses; and increased scrutiny from regulators and law enforcement as a result.

READ MORE: Bolts were missing from Alaska Airlines door: U.S. investigators

Boeing has been under intense congressional scrutiny after an incident in January, during which a defect caused a panel to blow out on a Boeing 737-MAX jet, operated by Alaska Airlines, shortly after takeoff.

No one was injured, but Boeing’s then-chief executive Dave Calhoun said the company was "acknowledging our mistake.”

Boeing’s space and defense business also face losses.

Its first flight of the Starliner space craft left the two astronauts it carried stranded on the International Space Station for months, rather than the short visit they were supposed to make.

Tough actions

Ortberg on Friday said the company needs to “focus our resources...rather than spreading ourselves across too many efforts that can often result in underperformance and underinvestment.”

The decision to cut jobs means the next furlough cycle will not happen, Ortberg wrote Friday. Boeing employees will be informed about the future of their jobs starting this week

“We know these decisions will cause difficulty for you, your families and our team, and I sincerely wish we could avoid taking them,” he wrote. “However, the state of our business and our future recovery require tough actions.”

$10 billion credit agreement

In an effort to shore up its balance sheet, Boeing announced Tuesday that it entered a $10 billion credit agreement with a consortium of major banks.

“The credit facility provides additional short-term access to liquidity as we navigate through a challenging environment,” the company said in a statement. “The company has not drawn on this facility or its existing credit revolver.”

The company also said that it could raise as much as $25 billion in shares or debt over three years, a move to increase liquidity, reports CNBC.

“This universal shelf registration provides flexibility for the company to seek a variety of capital options as needed to support the company’s balance sheet over a three-year period,” Boeing said in a statement.

Boeing shares are down nearly 43 per cent this year through Monday’s close.

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