Boeing’s new CEO announced on Friday a plan to cut 10% of its workforce, amounting to around 17,000 jobs, as part of efforts to restructure the company, reduce costs, and improve the production of its planes, which has been plagued by numerous delays.

Kelly Ortberg, who took over as CEO in August, informed employees in a memo that Boeing, which last reported a profit in 2018, was facing significant challenges and needed to transform its business by leveraging its core strengths.

The announcement follows a costly and disruptive strike that has been ongoing for nearly a month. The strike began when Boeing’s largest union, the International Association of Machinists and Aerospace Workers, rejected a contract offer and walked off the job. The union represents over 33,000 Boeing employees.

In addition to the layoffs, Boeing reported $5 billion in additional costs related to several commercial and defense programs.

“Our business is in a tough spot, and it’s impossible to overstate the challenges we’re facing,” Ortberg said. “Beyond navigating the current situation, we need to make hard decisions and structural changes to ensure our long-term competitiveness and ability to meet customer expectations.”

The 10% reduction, which includes both layoffs and leaving vacant positions unfilled, will affect all levels of the company, including executives, managers, and production workers. Boeing’s workforce currently stands at 170,000 employees.

This is not the first major cut Boeing has made. In April 2020, the company also announced a significant workforce reduction when air travel plummeted during the COVID-19 pandemic, eventually bringing the employee count down to 141,000 by the end of that year.

Ortberg, a former top executive at aerospace supplier Rockwell Collins, also stated that Boeing will revise its product lineup and adjust its sales timeline for new aircraft. Production of the older 767 freighter will end after fulfilling remaining orders. Meanwhile, the company expects to deliver the much-delayed 777X, a large plane designed for international routes, by 2026, a year later than initially planned.

Ortberg also warned of additional losses from a few fixed-price defense contracts that have become increasingly costly due to supply chain issues and rising costs, further straining Boeing’s finances.

“We will refocus and rebuild trust with those who rely on us,” he added.

The workforce reduction is seen as a way to realign Boeing’s business priorities, according to Kevin Michaels, managing director of AeroDynamic Advisory, an aerospace consulting firm. “There’s likely a need to streamline the workforce to better match the current business reality,” Michaels said.

Boeing said that the delayed 777X and the end of 767 production would contribute $2 billion in costs, while the fixed-price defense programs would add $3 billion more. These figures also account for the impact of the ongoing strike, which has severely disrupted the production of Boeing’s commercial airplanes.

The company also gave a preview of its upcoming quarterly financial results, which it will release later this month. Boeing anticipates $17.8 billion in revenue and a nearly $10 loss per share.

This week, S&P Global Ratings indicated it may lower Boeing’s credit rating to junk status depending on the duration of the strike, which would further raise the company’s borrowing costs. Boeing’s debt has surged to $58 billion, up from $9 billion a decade ago.

Ortberg’s appointment followed a management overhaul triggered by a January incident where a door panel blew off a Boeing 737 Max 9 during an Alaska Airlines flight. This event reignited concerns about the safety and quality of Boeing aircraft, years after two fatal crashes involving the Max 8 model.

As a result, the Federal Aviation Administration has limited production of Max planes until Boeing implements sufficient quality improvements. The company has since revamped its processes and increased employee training and oversight.

Meanwhile, negotiations between Boeing and the machinists’ union have stalled, with Boeing withdrawing its latest contract offer. Both sides are blaming each other for the lack of progress. The strike is costing Boeing millions of dollars daily.

Union members are demanding a 40% wage increase, the restoration of frozen pensions, and other concessions, citing rising living costs in the Seattle area and dissatisfaction with company policies. Many are inspired by the recent success of unions in other industries.t years.