The company described the layoffs as "the first," with more expected later in the year.
- Boeing said on Wednesday that it would lay off 6,770 US employees.
- The company described the layoffs as "the first," with more expected later in the year.
- Boeing has said it will need to reduce its payroll by 10%, including by at least 15% in its commercial division.
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Boeing said on Wednesday that it would lay off 6,770 US employees, "the first" wave of an expected round of job cuts as the coronavirus pandemic wreaks havoc on the aerospace sector.
In a statement, CEO David Calhoun said affected employees would receive severance pay, COBRA healthcare coverage, and career-transition services.
Employees at worksites outside the US will also see job cuts, Calhoun said.
Boeing previously said it expected to reduce its payroll by about 10% globally, including by 15% in its commercial-airplane division. The company had about 143,000 workers globally at the beginning of the year.
Boeing had also implemented a voluntary-layoff or buyout program. About 5,520 workers were approved for the buyouts, said Bradley Akubuiro, a Boeing representative.
Boeing has seen business in its commercial-airplane sector dry up as the coronavirus pandemic drags down demand for air travel. Airline and airplane-lessor customers have grounded significant portions of their fleets, and many are expected to defer or cancel orders for new airplanes. The company also closed its factories in Washington state and South Carolina for several weeks earlier this year because of COVID-19 outbreaks — the plants have since reopened.
Beaten up from the 737 Max crisis
The pandemic came as Boeing was already in a weakened position from the 737 Max debacle, which has seen the plane type grounded worldwide for more than a year and led to Boeing's worst financial year in decades. The company posted a $641 million loss for the first quarter and said it burned through $4.3 billion in cash.
Boeing suspended production of the 737 Max in January because of a lack of storage space for completed but undeliverable aircraft. The company has about 450 finished planes in storage and cannot deliver them to customers until the grounding is lifted. Calhoun said the company would resume production in May — it was not clear whether the factory had resumed operations.
In late April, the company announced that it would significantly pare back its aircraft production, adding to the 737 Max assembly suspension. Assembly of Boeing's 787 Dreamliner will be cut from 14 per month to 10 in 2020 and to seven by 2022. Production of the 777 family of aircraft will be cut from five per month to three by 2021.
The company said the 737 Max, which was produced at a rate of 42 per month from April 2019 through January, would be ramped up slowly when production resumes, gradually increasing to 31 per month during 2021.
The cuts aligned with analysts' forecasts of a 30% to 40% reduction in assembly rate. The company had an order backlog of 5,049 planes at the end of April, including 4,079 of the 737, but the possibility of cancellations or deferrals looms large as the pandemic continues to affect airlines and aircraft-leasing companies.
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