Boeing to axe 16,000 jobs as coronavirus stalls new plane orders
Planemaker Boeing plans to axe 16,000 jobs – one in 10 of its global workforce – in a drastic round of cost cutting in response to the coronavirus pandemic and the grounding of its 737 Max plane.
The job losses come after the US manufacturer made a core operating loss of $1.7bn during the first three months of the year during an unprecedented crisis for the global aerospace and aviation industries. It has also increased estimates of the 737 Max costs to $5bn in total.
The manufacturer has been bleeding money since two fatal crashes last year after two deadly crashes prompted the worldwide grounding of the 737 Max, while the coronavirus pandemic has wiped out global demand for air travel. Boeing’s airline customers have cut thousands of jobs to adjust to lower demand, such as British Airways’ plan to make 12,000 workers redundant.
Boeing’s chief executive, Dave Calhoun, said the crisis was putting “unprecedented pressure” on the company, but said it was “progressing toward the safe return to service of the 737 Max”. It had already suspended 737 Max production in December as it awaited regulatory approval to fly again.
The airline manufacturer is seeking a bailout worth tens of billions of dollars from the US government as it tries to survive.
“The Covid-19 pandemic is affecting every aspect of our business, including airline customer demand, production continuity and supply chain stability,”
Calhoun said.
Calhoun, who only started as chief executive in January following the removal of the heavily criticised Dennis Muilenburg, on Wednesday warned that job cuts would be concentrated on the parts of the business serving commercial airlines, as opposed to defence and aerospace projects where revenues are more stable. Corporate functions would also be affected, he said.
Boeing’s first-quarter revenues slumped by $6bn to $16.9bn in the first three months of 2020 compared to the previous year, as deliveries to airline customers plummeted.
The Chicago-headquartered manufacturer delivered just 50 commercial aircraft to customers in the first quarter of 2020 – a third of deliveries in the same period in 2019. Revenues were also hit by almost $800m in costs from the suspension of production of the 737 Max, and $336m to fix the “pickle fork”, linking the wings to the fuselage on the earlier model 737 Next Generation.
Airbus, Boeing’s European rival, also on Wednesday reported a severe drop in income, and its chief executive Guillaume Faury warned it may take as long as five years for passenger aviation to return to pre-crisis levels.