Boeing to cut staff, output as pandemic batters airlines
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by John Biers
Boeing announced sweeping cost-cutting measures Wednesday as it reported a first-quarter loss of $641 million after suffering a damaging hit to the airline business from the coronavirus pandemic.
The aerospace giant plans to reduce its workforce by 10 percent through voluntary and involuntary layoffs, Chief Executive David Calhoun said in a message to employees that accompanied an earnings release.
Boeing also will slash production of its main commercial planes, including the 787 and 777.
“The aviation industry will take years to return to the levels of traffic we saw just a few months ago,” Calhoun said. “We have to prepare for that.”
Calhoun said the job cuts would be deeper — more than 15 percent — in the commercial airplane and services divisions, as compared with defense and space systems, where business has been more stable.
The company had 160,000 employees prior to the announcement, putting the downsizing at about 16,000 jobs.
The quarterly loss of $641 million compared to profits of $2.1 billion in the same three-month period a year ago. Revenues fell 26.2 percent to $16.9 billion.
And total debt at the end of the quarter had swelled to $38.9 billion, up from $27.3 billion at the end of December.
Calhoun said the belt-tightening was needed to maintain adequate liquidity at a time when revenues are depressed, adding that the company is “exploring potential government funding options” in the wake of the COVID-19 crisis.
Shares rallied following the announcements, including Boeing’s statement that it “will be able to obtain sufficient liquidity to fund its operations.” (AFP)