Boeing begins sending layoff notices in effort to reduce workforce by 17,000 employees

On November 13, Boeing stated that it is issuing layoff notices starting from this week to workers impacted by a broader plan by the financially challenged plane-maker to reduce 17,000 jobs, or 10 per cent of its global workforce, according to a detailed report by Reuters.

US staff receiving the notices this week will stay on Boeing's payroll until January to abide with federal requirements that give workers 60 days' notice before ending their employment.

Boeing would send out the Worker Adjustment and Retraining Notification (WARN) in mid-November was widely expected by market participants and investors, after the recent end to one of the most challenging worker strikes in company history, the Reuters report explained further.

“As previously announced, we are adjusting our workforce levels to align with our financial reality and a more focused set of priorities," Boeing explained in a statement. "We are committed to ensuring our employees have support during this challenging time."

Brief history of Boeing

The Boeing Company, is an American multinational corporation that designs, manufactures, and sells airplanes, rotorcraft, rockets, satellites, and missiles worldwide. It is a leading player manufacturer of such components and has a global reputation.

The company also provides leasing and product support services. Boeing is among the largest global aerospace manufacturers. Further, it is the fourth-largest defense contractor in the world based on 2022 revenue and is the largest exporter in the United States by dollar value.

Boeing was founded by William E. Boeing in Seattle, Washington, on July 15, 1916. The present corporation is the result of the merger of Boeing with McDonnell Douglas on August 1, 1997.

What is the reason behind this move by the major airline?

Recently, Boeing was challenged by a strike of about 30,000 workers. This strike took place on September 13 according to reports. It was also the first strikes in 16 years.

Around 30,000 members of the International Association of Machinists and Aerospace Workers (IAM), who build Boeing’s 737 MAX and other planes in Seattle and Portland, took part in a vote on their first full contract in 16 years. The workers turned down the offer, with a strong majority in favour of striking.

When did the strike end?

Since then, Boeing has conducted several rounds of discussions and negotiations with the working force to try to control the situation.

Boeing machinists approved a new labor deal on November 4, ending a costly and very challenging seven-week strike for the airline that halted most of the company’s aircraft production, worsening its mounting losses.

Details of the latest agreement between Boeing and workers

Machinists voted 59 per cent in favor of the new contract, which includes 38 per cent wage increases over four years and other improvements, according to a CNBC report.

Now as things stand it is to be seen how the company faces the upcoming challenges of managing its finances along with continuously keeping its work force intact and motivated along with laying off thousands due to financial constraints.

Market participants and global investors will keenly follow these developments for clues on taking investment calls on the leading airline player.