Boeing will lay off approximately 17,000 employees and delay the first delivery of its 777X jet. The aircraft manufacturer is facing escalating losses and the impact of a strike by its largest union that has been ongoing for weeks.

The company's CEO, David Calhoun, announced the layoffs in a message to employees last Friday, representing 10% of the total workforce. Additionally, the first delivery of the Boeing 777X, originally scheduled to enter commercial service in 2020, will be further delayed, from 2025 to 2026.

Since the beginning of this year, Boeing's financial issues have been escalating, starting with the detachment of a cabin door on a Boeing 737 Max passenger flight. Regulatory authorities have demanded a slowdown in production to address quality issues, which has reduced the cash flow into the company.

Last month, 33,000 workers walked out of Boeing's factories in Washington State after members of the mechanics union overwhelmingly rejected a new contract. The strike led to the suspension of production of Boeing 767 and 777 aircraft, further reducing revenue and putting pressure on its suppliers and customers.

Rating agency Standard & Poor's estimates that the strike has cost Boeing $1 billion per month, and the company may lose its valuable investment-grade credit rating. Analysts predict that Boeing will need to raise between $10 billion and $15 billion to maintain its rating, which is currently just one level above junk status.

Running Point Capital Advisors partner Shulman said the delay in 777X delivery and layoffs were not surprising. "Due to poor management, their credit rating and stock price have been in danger for most of the past decade, and the stubbornness shown during the strike may be the last straw that breaks the camel's back."

The strike began on September 13th due to workers' dissatisfaction with wages, health insurance, retirement benefits, and working conditions, and Boeing failed to meet the union's demands for raises during negotiations. On Wednesday, after the latest round of negotiations reached an impasse, Boeing withdrew its wage proposals for striking workers.

To save cash, Boeing has already begun halting purchase orders with suppliers, freezing new hires, and placing tens of thousands of employees on temporary leave.

New Boeing CEO Calhoun said that due to the planned layoffs, the company will not implement the next round of unpaid leave.

He stated that Boeing needs to "realign the workforce levels to align with our financial realities and a more focused set of priorities," adding that the layoffs will include executives, managers, and employees. As of the end of 2023, Boeing had 171,000 employees.Since 2019, Boeing has been suffering losses every year, and this year, the company is facing additional pressures. In the meantime, over the past six years, Boeing has seen three CEOs come and go, each promising to improve the company's safety, yet there has been no substantial progress.

Boeing stated that its revenue for this quarter will reach $17.8 billion, a figure that is expected to be about 3% lower than analysts' forecasts.