Boeing announces revenue charges, layoffs

Boeing announced today that a recent work stoppage will negatively affect its quarterly earnings on both the defense and commercial aircraft sides. In addition, the company announced a 10% workforce reduction.

The company's Defense, Space & Security "expects to recognize pre-tax earnings charges of $2 billion on the T-7A, KC-46A, Commercial Crew, and MQ-25 programs," a statement issued late this afternoon reads. "The T-7A program pre-tax charge of $0.9 billion was driven by higher estimated costs on production contracts in 2026 and beyond. The KC-46A program pre-tax charge of $0.7 billion reflects the decision to conclude production on the 767 freighter and impacts of the [International Association of Machinists and Aerospace Workers] work stoppage.

"Results also include unfavorable performance on other programs," the statement continues. "Defense, Space & Security expects to report third quarter revenue $5.5 billion and operating margin of (43.1) percent."

On the commercial airplanes side, Boeing said: "Commercial Airplanes expects to recognize pre-tax earnings charges of $3.0 billion on the 777X and 767 programs. The company now anticipates first delivery of the 777-9 in 2026 and the 777-8 freighter in 2028, resulting in a pre-tax earnings charge of $2.6 billion.

"This schedule and resulting financial impact are based on an updated assessment of the certification timelines to address the delays in flight testing of the 777-9, as well as anticipated delays associated with the IAM work stoppage," Boeing continues. "Commercial Airplanes also plans to conclude production of the 767 freighter and recognize a $0.4 billion pre-tax charge on the program, which also reflects impacts from the IAM work stoppage. Beginning in 2027, the company will solely produce 767-2C aircraft in support of the KC-46A Tanker program. Commercial Airplanes expects to report third quarter revenue of $7.4 billion and operating margin of (54.0) percent."

Boeing President and CEO Kelly Ortberg said in the statement that "[w]hile our business is facing near-term challenges, we are making important strategic decisions for our future and have a clear view on the work we must do to restore our company.

"These decisive actions, along with key structural changes to our business, are necessary to remain competitive over the long term," he continued. "We are also focusing on areas that are critical to our future and will ensure we have the balance sheet necessary to invest, support our people and deliver for our customers."

Additionally, Ortberg in a separate message to employees announced the company would lay off 10% of its workforce.

"These reductions will include executives, managers and employees," he wrote, adding: "Next week, your leadership team will share more tailored information about what this means for your organization. Based on this decision, we will not proceed with the next cycle of furloughs.

"As we move through this process, we will maintain our steadfast focus on safety, quality and delivering for our customers," Ortberg continued. "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 is scheduled to report its quarterly earnings on Oct. 23.