Boeing is fine-tuning job cuts as the major buyer criticizes the delay of the 777X jet

(Reuters) – Boeing faces a crucial test for employees, customers and investors after the company announced 10% job cuts and $5 billion in charges as a crippling machinists' strike enters its fifth week.

The aircraft maker is planning a series of internal meetings this week to finalize its workforce plan, which could rely at least in part on involuntary cuts, the cost and impact of which on retaining sought-after skills would be easier to manage, industry sources said.

Boeing declined to comment. Its shares fell 1.7% in premarket trading.

In a surprise move late Friday, Boeing announced 17,000 job cuts and pre-announced quarterly earnings with $5 billion in charges stemming from another 777X delay and the suspension of 767 civilian production. No timetable was given for the job cuts.

The one-year delay in 777X deliveries to 2026 represents a delay that was already widely expected in the industry due to certification and testing delays, and means the planned successor to the 777 mini-jumbo would be six years late .

Emirates Airline President Tim Clark, whose initial order for 150 jets helped launch the world's largest twin-engine jet more than a decade ago, hit back on Monday.

“Emirates has had to make significant and extremely costly changes to our fleet programs due to Boeing's multiple contractual deficiencies, and we will be having a serious conversation with them over the next few months,” he said in a rare written statement on the website to address the issue of delivery delays.

He also questioned Boeing's new flight schedule. Citing the suspension of a certification test milestone and the four-week strike, he said: “I don't understand how Boeing can make meaningful forecasts on delivery dates.”

Emirates is the biggest user of the 777 family of jets, a long-haul bestseller whose initial success was marred by delays to its successor and the crisis that hit Boeing's smaller 737 cash cow because of safety and quality problems.

The latest crisis comes at a time when Boeing's markets are growing and many of its competitors are buying up scarce workers to meet demand and ease pressure on aerospace supply chains.

“The trick is not to lose the 10% of people you want to keep, which is even more important than usual in the post-pandemic skills shortage environment,” said Nick Cunningham, an analyst at Agency Partners.

Analysts said preliminary results, including just over $10 billion in gross cash, would ease some near-term pressure, but noted that Boeing still needs to raise money by year-end.

JP Morgan said it would also give Boeing management some more dry powder in its battle with the machinists' union.

The story continues

Reaching an agreement to end the shutdown is critical for Boeing because it relies on 737 production for much of its money.

Ratings agency S&P has warned that Boeing is at risk of losing its prized investment-grade credit rating.

The union representing the striking workers said Friday the decision to halt construction of the 767 Freighter was concerning and dismissed Boeing's claims about the conduct of collective bargaining as unfounded.

(Reporting by Abhijith Ganapavaram, Tim Hepher, Joe Brock; Editing by Christina Fincher)