Boeing cuts 10% of its workforce as coronavirus slams demand
Boeing said Wednesday it would cut 10% of its workforce in the face of dismal demand for its planes during what is likely to be a long recovery for the airline industry from the coronavirus pandemic.
The big picture: Boeing is facing a double whammy from the coronavirus-induced decline of air travel plus the more than yearlong grounding of its best-selling plane, the 737 MAX.
- With air travel down as much as 95% during the pandemic, airlines are cancelling or delaying orders for new planes, further slowing Boeing's production plans.
Driving the news: Boeing posted a $641 million loss in the first quarter and said it burned through $4.3 billion in cash during the period.
- The company said it will seek to reduce its payroll by about 10% through voluntary measures and "involuntary layoffs as necessary."
- But some divisions, including its commercial airplanes and services businesses, could see cuts as deep as 15%, CEO David Calhoun said in a memo to employees.
- Boeing had about 160,000 employees at the end of last year.
The state of play: The aerospace giant is scrambling to ensure it has liquidity to weather the crisis.
- Boeing has recently drawn down a nearly $14 billion loan.
- It would qualify for as much as $17 billion in taxpayer relief set aside in the CARES Act for "businesses critical to maintaining the national security."
- Such aid is controversial, however, given Boeing's problems with the MAX.
- Calhoun has also balked at the possibility of giving the government a stake in the company in return for federal aid.
What they're saying: "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. Boeing believes it will be able to obtain sufficient liquidity to fund its operations," Calhoun said.
- The company will share further information in a call with analysts later this morning.