Boeing to sunset 767 freighter program, slow 777X rollout amid strike

October 11, 2024

Boeing said Friday afternoon it will stop production of the 767 freighter in 2027, sooner than expected, and won’t have the next-generation 777-8 freighter ready for commercial use until 2028, at least a year later than previously scheduled, as the company looks to stem financial losses amid a month-long machinists strike.

Management also announced it will take a $3 billion pre-tax charge on the 777X and 767 programs, lay off about 10% of its workforce and report a third-quarter loss of $9.97 per share. About 17,000 workers will be let go.

The cut in freighter production schedules is a potential problem for the air cargo industry, which faces a growing shortfall in international widebody freighter capacity as many aircraft reach retirement age and shipping demand grows at a forecast annual rate of about 4%.

Boeing (NYSE: BA) said it now anticipates first delivery of the 777-9 passenger jet in 2026 and the 777-8 in 2028. It is recognizing an unexpected expense of $2.6 billion against earnings in the third quarter because of the delay. The schedule is being pushed back because of an updated assessment that certification of the modernized 777 jetliner will take longer than planned and delays associated with the strike by the International Association of Machinists and Aerospace Workers.

The Commercial Airplanes division also plans to shut production of the 767-300 freighter and take a $400 million charge because of the work stoppage. It will deliver the 29 remaining 767 cargo aircraft on order from FedEx and UPS before terminating the line. Beginning in 2027, the only 767 version that Boeing will continue to make is the KC-46A tanker for the U.S. military.

“While 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,” said President and CEO Kelly Ortberg, who began in the job two months ago. “These decisive actions, along with key structural changes to our business, are necessary to remain competitive over the long term. 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.”

The debut of the 777X family of aircraft, which first flew in 2019, has already been delayed for years for a variety of issues. Boeing finally received Federal Aviation Administration approval for test flights last summer. Testing was slowed because the agency wasn’t satisfied with the technical data it had received from the company. The test flights over a 12-to-18-month period are necessary to certify the upgraded 777-9 airframe for commercial passenger service, with follow-on testing expected for the 777-8 freighter. Qatar Airways is the launch customer for the 777-8 cargo jet.

Boeing’s decision to close down the 767 freighter production line is a reversal from efforts to extend production beyond an international deadline. The FAA reauthorization bill signed into law in May includes language allowing Boeing an extra five years to produce 767 freighters for FedEx and UPS beyond the date when international standards mandating cleaner engine types kick in.

The legislation gave Boeing a bridge in the event express carriers needed extra capacity until it can develop a new freighter next decade. Boeing, FedEx and UPS lobbied Congress for a reprieve from the Jan. 1, 2028, production deadline, according to multiple industry sources at the time.

Boeing has been under white-hot scrutiny from aviation regulators for a long list of production glitches and safety issues since two Max 8 aircraft crashed more than five years ago, killing 346 people. Oversight increased after a door plug fell off a 737 Max 9 in January because bolts were missing. Boeing also faces damage to its finances and credibility from the failed Starliner mission that left two astronauts stranded aboard the International Space Station until next year and recent FAA safety warnings about its rudder control system on hundreds of 737 aircraft. The company has also halted production of its top revenue generator, the Boeing 737 jet.

Friday’s news comes two days after Boeing pulled its latest contract proposal with striking machinists. The unionized machinists had rejected the sweetened contract offer.

Thirty members of Congress on Friday wrote Ortberg to criticize high levels of executive pay and urge management to return to the bargaining table. They also expressed concern that workers have lost their employer-funded health care for exercising their right to strike.

(Caleb Revill contributed to this report.)