Boeing needs more money, expects several thousand layoffs
As it faces the impact of the COVID-19 pandemic on air transport, Boeing is preparing to take additional loans in the coming months and suspend the payment of dividends for years. More layoffs at the company are also expected, starting from June 2020.
The recently-appointed CEO of Boeing, Dave Calhoun, spoke on April 27, 2020, at the general meeting of shareholders, ahead of the publication of the company’s financial results.
"We know we're going to have to borrow money over the next six months" in order to keep the supply chain operating, said Calhoun, as the manufacturer plans to continue ordering parts and services, to keep its suppliers afloat. Boeing has already received $17 billion of state aid in the form of secured loans.
According to Calhoun, it will take two to three years for air travel to return to its pre-crisis levels and several more years for a return to long-term growth in the sector. Therefore, the payment of dividends could be suspended “for years”.
The demand for new airplanes reached a record low, which will force Boeing to reduce its production output. This will have consequences on employment, and Calhoun warned that the voluntary departure plan unveiled earlier in the month would lead to “several thousand” job cuts. More accurate numbers will be revealed in the financial results of the first quarter that will be published on April 29, 2020.
The Dreamliner facility in North Charleston will reopen on May 3 or 4, 2020, joining the 27,000 employees that were recalled to the assembly lines in the Seattle area to restart production of the 747, 767, 777 and 787.
Commenting on the falling through of the Embraer joint venture priced at $4.2 billion, Calhoun said that while the cancellation was disappointing, the discussions had reached a stage where they were no longer useful. “We worked diligently for two years to finalize the transaction, but ultimately we could not come to a resolution around critical unsatisfied conditions for the deal,” he said. At a time when Boeing considers cuts into its workforce, the pool of engineers offered by the Brazilian manufacturer most likely became unattractive.
The two manufacturers have entered a row over whether Boeing will have to pay a $100 million termination fee or not. Embraer sought arbitration in the matter.
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