Coronavirus: Boeing to cut 15,000 jobs – 10% of its workforce as air travel demand collapses
Boeing plans to cut about 10% of its jobs as it continues to reel from the Coronavirus crisis and the fallout from its 737 Max safety crisis. It will lost about 15,000 staff out of a global total of around 150,000, through a combination of buyouts, layoffs and the elimination of unfilled roles. At the end of 2019, the company had about 161,000 staff. The company recorded a loss of $641 million in the first quarter, compared with a profit of $2.15 billion in the same period in 2019. The company’s airline customers, which purchase Boeing planes to upgrade their fleets, have put purchases and maintenance on hold as they suffer from a global slowdown in travel. And Boeing continues to face losses due to the grounding of its 737 Max planes, which were blamed for two deadly crashes, in October 2018 and March 2019. Boeing’s chief executive Dave Calhoun said “The aviation industry will take years to return to the levels of traffic we saw just a few months ago.” Even that may be optimistic.
Coronavirus: Boeing to cut 15,000 jobs in ‘body blow’
Boeing plans to cut 10% of its workforce, saying the Covid-19 pandemic had delivered it a “body blow”.
The struggling US plane maker employs 150,000 people worldwide and was already under pressure after being forced to ground its 737 Max planes following two fatal crashes.
The coronavirus outbreak has led to a collapse in air travel.
BA said it will cut 12,000 jobs while Airbus called it the “gravest crisis” the industry has “ever known”.
Boeing’s chief executive Dave Calhoun said in a memo to staff that the pandemic is “delivering a body blow to our business” and demand for commercial airline travel “has fallen off a cliff”.
He warned: “The aviation industry will take years to return to the levels of traffic we saw just a few months ago.”
While 10% of jobs will be cut across the company, Boeing admitted that reductions would be steeper in some departments, such as its commercial airlines business.
Earlier this week, British Airways revealed its own redundancy plan which has been branded as “a heartless decision in a time of national crisis” by the union Unite.
Unite’s general secretary Len McCluskey said the announcement “will be felt as the stab in the back it undoubtedly is by the close-knit BA family”.
But BA’s chief executive Alex Cruz said: “The scale of this challenge requires substantial change.”
Guillaume Faury, the boss of Boeing-rival Airbus, said on Wednesday: “We are now in the midst of the gravest crisis the aerospace industry has ever known.”
Airbus reported a €481m (£413m) loss in the three months to March, compared to a €40m profit in the first quarter last year, on sales down 15% at €10.6bn.
Boeing also announced a first quarter pre-tax loss, of $1.5bn compared to a $2.3bn pre-tax profit last year. Sales dropped 26% to $17bn.
Mr Calhoun said Boeing is aiming for its 737 Max aircraft to begin flying again this year.
The jet was grounded globally more than a year ago following two plane crashes within five months which claimed the lives of 346 people.
Boeing’s results also revealed that the company burned through $4.3bn in cash during the first quarter.
At the weekend, Boeing ended talks with Embraer about buying the Brazilian company’s regional airline business for $4.2bn.
Embraer claimed that Boeing had “manufactured false claims as a pretext to seek to avoid its commitments to close the transaction and pay Embraer the $4.2bn purchase price.
But Mr Calhoun said that after two years of talks “we had reached a point where continued negotiation was no longer helpful”.
Boeing cutting 10% of its workforce as coronavirus, 737 Max wreak havoc on earnings
By Nathan Bomey (USA TODAY)
Apr 29, 2020
Boeing plans to cut about 10% of its jobs as it continues to reel from the coronavirus and the fallout from its 737 Max safety crisis.
The aircraft maker said Wednesday that it would shed about 1 in 10 positions through a combination of buyouts, layoffs and the elimination of unfilled roles.
At the end of 2019, the company had about 161,000 positions.
The cuts, which were widely expected, are aimed at helping Boeing stanch its financial freefall.
“We’ll have to make even deeper reductions in areas that are most exposed to the condition of our commercial customers — more than 15% across our commercial airplanes and services businesses, as well as our corporate functions,” Boeing CEO David Calhoun said in a letter to employees.
Boeing posted its second consecutive quarterly loss after turning a profit for more than 40 straight quarters. The company recorded a loss of $641 million in the first quarter, compared with a profit of $2.15 billion in the same period a year earlier. The company’s first-quarter revenue fell 26% to $16.9 billion.
Readying for a bailout?: Why Boeing might not need federal cash despite coronavirus, 737 Max crises
737 Max crisis takes toll: Boeing earnings pummeled by 737 Max grounding
The stability of Boeing’s defense and space division is helping to prevent the company from immediate collapse. But Boeing is still said to be considering requesting a federal bailout after lawmakers included a provision in a recent stimulus bill allowing the company to receive up to $17 billion in emergency aid.
The company’s airline customers, which purchase Boeing planes to upgrade their fleets, have put purchases and maintenance on hold as they suffer from a global slowdown in travel. And Boeing continues to face losses due to the grounding of its 737 Max planes, which were blamed for two deadly crashes.
The 737 Max was grounded after the crashes of two jets – a Lion Air flight in October 2018 and an Ethiopian Airlines flight in March 2019. The two incidents killed a total of 346 passengers and crew.
Boeing said Wednesday that it is taking numerous steps to shore up its finances, including drawing on its term loan facility, cutting discretionary spending, continuing to suspend share buybacks and dividends, reducing R&D and capital expenditures and eliminating CEO and chairman compensation for 2020.
Its total cash – a measure of whether the company can withstand this crisis – rose from $9.5 billion at the end of the fourth quarter to $15 billion at the end of the first quarter due primarily to new debt, which rose from $27.3 billion to $38.9 billion during the same period. Overall, the company recorded negative free cash flow of $4.73 billion for the first quarter after posting positive free cash flow of $2.29 billion in the same period a year earlier.
“Access to additional liquidity will be critical for Boeing and the aerospace manufacturing sector to bridge to recovery, and the company is actively exploring all of the available options,” the company said in a statement. “Boeing believes it will be able to obtain sufficient liquidity to fund its operations.”
Boeing also last week announced the termination of its $4.2 billion deal with Brazilian regional aircraft maker Embraer to form a joint venture that would be 80% owned by Boeing. Embraer is now taking that move to arbitration.
Analysts had said Boeing could save billions if it canceled the deal.
In his letter to employees, Calhoun said “we could not come to a resolution around critical unsatisfied conditions for the deal.”