Boeing to ax staff by 10% after reporting negative quarter

Michael Vi

Shortly after Airbus, Boeing published its financial results for the first quarter of 2020. The manufacturer reports a net loss of $641 million against a profit of $2.149 billion a year earlier. To save on costs, Boeing announced it would reduce its workforce by around 10% worldwide.

Commercial aviation revenues fell by 48% to $6.21 billion. Defense revenues were mostly unaffected, only reporting an 8% drop to $6,042 billion. Only 50 aircraft were delivered, a third of last year’s performance. The company’s order book reached $439 billion at the end of the quarter, with over 5,000 commercial aircraft in the backlog. The operating cash flow was negative $4.3 billion, the worst in the history of the company. 

This is the second consecutive quarter in the red for Boeing. Already affected by the grounding of the 737 MAX, the company saw its financial results significantly impacted by the COVID-19 coronavirus pandemic and its effect on the aviation industry.

To align with the lower demand for new aircraft and the deliveries deferred by airlines, Boeing is taking several measures, including “reducing commercial airplane production rates”, “a leadership and organizational restructuring to streamline roles and responsibilities, and plans to reduce overall staffing levels with a voluntary layoff program and additional workforce actions as necessary.”

The production rate of the 787 will be reduced from 14 to 10 units per month in 2020, and gradually with an objective of 7 per month by 2022. The 777 and the upcoming 777X will be reduced to 3 aircraft per month in 2021. The 767 and 747 outputs remain unchanged.

On the sideline of the financial results, Calhoun sent a message to its employees in which he explains aiming for a drop in the staffing of around 10% globally, with as much as 15% in its commercial division, more directly affected by the crisis. Earlier in April 2020, the manufacturer had offered its employees a voluntary departure plan. Boeing employs more than 153,000 people worldwide.

Commenting on the future of the company, Boeing President and CEO Dave Calhoun remained confident. “Air travel has always been resilient, our portfolio of products and technology is well-positioned, and we are confident we will emerge from the crisis and thrive again as a leader of our industry,” he said.

As for the return to service of the Boeing 737 MAX, it could be delayed to August earliest, sources told Reuters. The company remained evasive on the subject. “We are progressing toward the safe return to service of the 737 MAX in close coordination with the U.S. Federal Aviation Administration and global regulators,” Calhoun said.

Related Posts