After reporting a massive loss in the first quarter, United States based airplane maker Boeing said that it will cut down on its staff and slash production.
The coronavirus pandemic has virtually eliminated demand for air travel across the world and Boeing is yet to get out of the economic impact of the global grounding of it 737 Max planes after two fatal accidents in March last year involving the planes.
About 10 per cent of its workforce, amounting to about 16,000 jobs, will be slashed, Boeing announced The company will use a combination of strategies such as buyouts, natural attrition and involuntary layoffs. These layoffs will be the biggest ever in the history of the commercial airplane segment of the company which will have about 15 per cent jobs slashed. There would also be a drastic scaling back in production of the two widebody passenger jets, the 787 Dreamliner and the 777, Boeing said.
“The demand for commercial airline travel has fallen off a cliff,” said Boeing CEO Dave Calhoun. “The pandemic is also delivering a body blow to our business.”
In the first quarter, the company reported a loss of $1.7 billion from its core operations which was slightly more than what was expected by analysts at Wall Street. Two incidents hit Boeing very hard over the last year – the first being the grounding of its 737 Max planes and the second was a string of cancellations and delays in orders by airlines because of the coronavirus pandemic globally. The company also suffered a hit of $137 million because of a temporary shutdown of its factories in Washington state in response to the health concerns of employees amid the coronavirus pandemic.
According to tracking firm Cirium, almost two thirds of all of the aircraft across the world are now grounded because of the pandemic as airlines respond to bans on travelling in many countries around the world in efforts to prevent the spread of the pandemic. There has consequently been a 90 per cent drop in passenger demand.
The announcement for a delay of about 55 per cent of the 107 planes had been previously scheduled to be delivered from Boeing this year or next was announced by the United States airline Southwest Airlines, one of the largest customers of Boeing, on Tuesday.
And since Boeing’s strongest product sector – the Widebody jets, is used on long-range international flights, and since international travel has been significantly stopped, that could be a big hit for Boeing. Compared to a rebound in domestic travel, it will take much longer for international travel to rebound, said Boeing’s CEO Dave Calhoun at Boeing’s annual meeting on Monday.
Boeing said that it will reduce production of the 787 Dreamliner from 12 to 7 while the production of the 777, for which the company is set to launch a new version, will be cut to three a month.
(Adapted from CNN.com)