Boeing cuts 5% of commercial airplane workforce as 737 ramp stalls

Boeing will cut 5% of its commercial airplane workforce through attrition and involuntary layoffs beginning in December, CNBC reported.

Stephanie Pope, head of the commercial aircraft unit, told staff in a memo Monday that adjusting production schedules and reducing aircraft output has left the division overstaffed. “Unfortunately, that means we need to align our staffing levels to our revised business plan, resulting in a reduction of approximately 5% through a combination of attrition and involuntary layoffs, with notifications beginning in December,” Pope wrote.

The cuts stem from a production ramp that is moving slower than CEO Kelly Ortberg told investors to expect. Ortberg said last month that Boeing will not significantly increase 737 Max production until the second half of 2027, according to CNBC’s coverage of Boeing’s third-quarter earnings. Wing production has been the bottleneck. The company is currently stabilizing output at about 47 planes a month and targeting 52 a month in the second half of next year.

The gap between 47 and 52 is the entire story. The 737 Max is Boeing’s bestselling product and its primary source of commercial aircraft revenue. Every month that production stays at 47 instead of 52, Boeing delivers five fewer planes and collects the associated payments later than planned. Airlines are waiting. The order backlog for the 737 Max stretches into the next decade, and carriers including Southwest, United, and Alaska have built their fleet plans around deliveries that keep getting pushed back.

The layoffs are the consequence of a staffing mismatch. Boeing hired to support a faster production ramp. When the ramp slowed, the headcount became a cost without a corresponding output. Pope’s memo makes the logic explicit: fewer planes means fewer people needed to build them, and the reduction comes through both attrition and involuntary cuts. The 5% figure applies to the commercial airplane unit specifically, not to Boeing’s defense, space, or global services divisions.

This is not the first round of Boeing layoffs this year. The company has been contracting since Ortberg took over as CEO in 2024, following the door plug blowout on an Alaska Airlines 737 Max that grounded the fleet and exposed quality control failures across the Renton, Washington production line. Ortberg’s strategy has been to stabilize operations, reduce debt, and rebuild the supply chain before pushing production rates higher. The layoffs are consistent with that approach, but they also signal that the stabilization is taking longer than the company projected.

The production delay has ripple effects across the aerospace supply chain. Spirit AeroSystems, which builds the 737 fuselage, has its own staffing and capacity plans tied to Boeing’s delivery schedule. Engine suppliers CFM International, a joint venture between GE Aerospace and Safran, must time engine deliveries to match airframe production. When Boeing slows, the suppliers slow, and the entire network operates below capacity. The airline industry, which is already scrapping planes years early because of engine shortages and delivery delays, loses another increment of capacity.

Boeing’s stock has reflected the struggle. Shares are down for the year while the broader market, including aerospace competitors, has posted double-digit gains. The company remains profitable on a per-plane basis when it delivers, but the volume is the problem. A 737 Max sells for roughly $50 million to $60 million depending on configuration. Five fewer planes a month is $250 million to $300 million in deferred revenue every month, and the deferral compounds because the planes are sold into a backlog that cannot be accelerated without the production capacity to fulfill it.

What I think

The layoffs are a symptom, not a solution. Boeing is cutting 5% of its commercial airplane workforce because it cannot build planes fast enough, and the reason it cannot build planes fast enough is that the production process is not stable. Cutting workers does not make the process more stable. It reduces the cost of running an unstable process at a lower rate, which is a reasonable short-term financial decision but does nothing to fix the underlying problem.

Ortberg inherited a mess. The door plug blowout, the quality control failures, the FAA scrutiny, and the supply chain breakdowns all predate his tenure, and he has been honest about the timeline. Stabilizing 737 production at 47 a month before pushing to 52 is the right sequence. Pushing rates higher before the process is reliable would produce more defects, more groundings, and more reputational damage. The layoffs are the cost of that patience, and the cost is borne by workers who were hired to support a ramp that has not happened.

The real question is whether Boeing can hit 52 a month in the second half of 2027. The company has missed production targets before. The 737 Max has been through two groundings, and the FAA has a presence on the Renton factory floor that did not exist before 2024. Every increase in production rate requires FAA approval, and the agency has shown it will slow-walk approvals if quality data does not support them. Boeing’s ability to hit 52 depends on its ability to prove to regulators that the process is reliable at the higher rate, and that proof is built one plane at a time.

The competitive damage is already done. Airbus has been delivering A320neo family aircraft at a higher rate than Boeing for several years, and the gap is widening. Airlines that need narrow-body planes now are buying Airbus because Boeing cannot deliver. Once an airline transitions training, maintenance, and scheduling to the A320, the switching cost of going back to the 737 is high. Boeing is not just losing months of revenue; it is losing customers who may not come back when production finally reaches 52.

The 5% cut will save money this quarter. It will not build more planes, it will not fix the wing production bottleneck, and it will not restore the confidence of airlines that have been waiting since 2019 for deliveries that keep slipping. Boeing’s problem is not too many workers. It is a production system that does not work at the rate the market demands. The layoffs buy time, but time is the one thing Boeing’s order backlog does not have.