Boeing Responds to Airline Woes With 'Deep' Staffing Cuts
May 27, 2020 | Michelle Te, I-Connect007Estimated reading time: 3 minutes
The COVID-19 pandemic’s devastating impact on the airline industry will result in continued “deep cuts” to Boeing’s U.S. facilities, according to an email released to employees today by President and CEO Dave Calhoun.
Employees were notified this week that Boeing will cut 6,770 jobs in the United States. International locations are also “working through workforce reductions,” he said, that will be communicated on a different timeline.
While he sees “eventual signs of recovery,” Calhoun said the global health and economic crisis is not over, and remaining employees will face “enormous challenges” that include keeping employees healthy and safe, supporting customers and suppliers through the recovery, and working with its customers to assure the traveling public that it can fly safely from infection.
“We will also have to adjust our business plans constantly until the global pandemic stops whipsawing our markets in ways that are still hard to predict,” Calhoun wrote.
In April, the company made a reduction-in-force announcement that resulted in a voluntary layoff program. On Wednesday, Calhoun said, “We have come to the unfortunate moment of having to start involuntary layoffs.”
The near-shutdown of the airline industry has had a ripple effect on Boeing. Its reported first-quarter earnings were $16.9 billion, with a GAAP loss per share of ($1.11) and core loss per share (non-GAAP) of ($1.70), primarily reflecting the impacts of COVID-19 and the 737 MAX grounding. This reflects a 26% decrease from the first quarter of 2019.
The Boeing leader also addressed employees after the release of the company’s first-quarter earnings, relating that commercial airline revenue is expected to drop by $314 billion this year.
In his April letter, Calhoun stated, “The COVID-19 pandemic's devastating impact on the airline industry means a deep cut in the number of commercial jets and services our customers will need over the next few years, which in turn means fewer jobs on our lines and in our offices. We have done our very best to project the needs of our commercial airline customers over the next several years as they begin their path to recovery.” He then added, “I wish there were some other way.”
Calhoun outlined Boeing’s strategy, but added, “The pandemic is also delivering a body blow to our business—affecting airline customer demand, production continuity, and supply chain stability,” he wrote. “The demand for commercial airline travel has fallen off a cliff, with U.S. passenger volumes down more than 95% compared to last year.”
The voluntary reductions were expected to reduce the total workforce by 10%, he said, with even deeper cuts in areas that are most exposed to the condition of its commercial customers, “more than 15% across our commercial and service businesses, as well as our corporate functions.”
He said the aviation industry will take years to recover and announced other steps the company was taking to “meet that new reality,” which included reducing commercial airplane reduction rates.
- 737 MAX production is expected to resume in 2020 at lower rates, increasing to 31 planes per month during 2021, with gradual increases to correspond to market demand.
- Reduce the 787 production rate to 10 per month in 2020 and to seven per month by 2022, continuing to evaluate the rate after that.
- Reduce the combined 777/777X production rate to three per month in 2021 and take a measured approach to the 777X rate ramp.
- Production rates for 767 and 747 will remain unchanged.
He assured Boeing employees that its Defense, Space and Security and defense service teams are stable, stating they have “achieved a number of milestones recently, including the successful return to orbit of the reusable and autonomous X-37B Orbital Test Vehicle.”
He also stated the company is moving forward with its plan to restart 737 MAX production in Renton, Washington, and the Global Services team is changing its organization to ensure “it is lean and focused on the post-COVID needs of its customers.”
Calhoun believes there is reason to be optimistic as some customers are reporting that reservations are outpacing cancellations on their flights for the first time since the pandemic started.
“Some countries and U.S. states are starting cautiously to open their economies again,” he said. “And some parts of our business, most notably on the defense side, will continue hiring to meet customer commitments and fill critical skill positions.”
Suggested Items
Lockheed Martin Australia, The Department Of Defence Sign Strategic Partnership Head Contract
04/26/2024 | Lockheed MartinLockheed Martin Australia signed a landmark AUD$500 million contract with the Department of Defence to build Australia’s future Joint Air Battle Management System under project - AIR6500 Phase 1 (AIR6500-1).
SMC Korea 2024 to Highlight Semiconductor Materials Trends and Innovations on Industry’s Path to $1 Trillion
04/24/2024 | SEMIWith Korea a major consumer of semiconductor materials and advanced materials a key driver of innovation on the industry’s path to $1 trillion, industry leaders and experts will gather at SMC (Strategic Materials Conference) Korea 2024 on May 29 at the Suwon Convention Center in Gyeonggi-do, South Korea to provide insights into the latest materials developments and trends. Registration is open.
Elevating PCB Design Engineering With IPC Programs
04/24/2024 | Cory Blaylock, IPCIn a monumental stride for the electronics manufacturing industry, IPC has successfully championed the recognition of the PCB Design Engineer as an official occupation by the U.S. Department of Labor (DOL). This pivotal achievement not only underscores the critical role of PCB design engineers within the technology landscape, but also marks the beginning of a transformative journey toward nurturing a robust, skilled workforce ready to propel our industry into the future.
Real Time with... IPC APEX EXPO 2024: Going Vertical: SCHMID's Advanced Solutions for Printed Circuit Boards
04/24/2024 | Real Time with...IPC APEX EXPOEditor Marcy LaRont chats with Bob Ferguson, the president of SCHMID, about advanced solutions for PCBs and the equipment they are highlighting at this year's show. He delves into vertical no-touch handling systems and the prospect of achieving sub-10-micron lines. Inspired by SCHMID's technology, Bob expresses excitement about where the industry is today.
Big Win for Defense Production Act Budget Allocation in FY24 Budget
04/23/2024 | I-Connect007 Editorial TeamOne year ago, President Biden issued a determination that chips and packaging are critical for national security. Since that time, much work has been done to continue the conversation in Washington, elevating the importance of the entire chips value chain, and including printed circuit boards and substrates, without which chips cannot operate.