Boeing shares dropped nearly 3% on Monday following the company’s announcement of significant cost-cutting measures, including a 10% reduction in its workforce, equivalent to around 17,000 jobs. CEO Kelly Ortberg, who took over in August, informed employees that Boeing is facing substantial challenges, leading to a delay in the launch of its 777x jetliner. The company also anticipates $5 billion in pre-tax earnings charges for its commercial airplanes and defense divisions during the third quarter, and is expected to report a loss of approximately $10 per share for the period.
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The aerospace giant has been struggling with a series of setbacks, including a recent incident with an Alaska Airlines flight and ongoing labor strikes. S&P Global recently issued a downgrade warning for Boeing’s debt following the company’s withdrawal of a contract offer to striking machinists. Despite these challenges, Boeing announced that the planned layoffs should prevent further furloughs, which were initiated last month to conserve cash during the strike.
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UBS analysts responded by lowering Boeing’s stock price target from $220 to $215, citing the delayed 777x jetliner and weaker cash flow projections for 2027. However, UBS maintained a “buy” rating, noting that while the layoffs and cost-cutting measures are necessary, Boeing still faces a long path to recovery. Boeing’s stock has fallen over 43% since the start of the year, with shares trading at $147.41 on Monday morning.
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