Boeing cuts 6,770 jobs as it looks to reduce costs

Boeing is laying off 6,770 employees in the US, the first cut in its planned global headcount reduction programme to save costs, as the plane maker restarts production of its troubled 737 Max jets at its Renton, Washington plant.

The company, which previously said it planned to reduce its 160,000 workforce by 10 per cent through voluntary and involuntary layoffs, will see thousands more leave the firm in coming weeks. Workforce cuts in Boeing's international operations will be communicated separately according to "their own timelines and in accordance with local laws and benefit terms", the company said in a statement.

“Following the reduction-in-force announcement we made last month, we have concluded our voluntary layoff programme. And now we have come to the unfortunate moment of having to start involuntary layoffs,” Boeing president and chief executive Dave Calhoun told employees, according to a statement posted on company’s website. “We’re notifying the first 6,770 of our US team members this week that they will be affected.”

The company plans to reduce the headcount over several months through natural attrition and several waves of job cuts, Bloomberg cited a company spokesman as saying. Another 5,520 US employees have been approved to leave voluntarily with severance packages and will depart Boeing in the next few weeks.

The coronavirus pandemic has hit global aviation, tourism and hospitality sectors particularly hard, forcing carriers to go from growth to survival mode within a matter of months. The outbreak is expected to cut airlines’ passenger revenue by more than half, or about $314 billion (Dh1.15 trillion) this year, according to the International Air Transport Association, which said about 25 million jobs in the sector are at risk.

The dramatic fall in global travel has impacted demand for new aircraft, forcing Boeing to scale back its operations as customers become more cost conscious.

Boeing’s European rival Airbus, is also weighing options to rein in production and is considering laying off more than 10,000 employees. Airbus is already in discussions with workers’ unions to hammer out the details of potential layoffs.

“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,” Mr Calhoun said. “I wish there were some other way.”

In terms of required workforce levels, the company has done its very best to project the needs of its commercial airline customers over the next several years as they begin their path to recovery, he said.

Those who remain at the company, face “enormous challenges” as “we also will have to adjust our business plans constantly until the global pandemic stops whipsawing our markets in ways that are still hard to predict”, he said.

Some airlines started to gradually resume passenger flight operations as governments ease restrictions and nations try to reboot their tourism and hospitality businesses.

“We are seeing some green shoots. Some of our customers are reporting that reservations are outpacing cancellations on their flights for the first time since the pandemic started,” Mr Calhoun said.

Separately Boeing also said it is restarting production of its troubled 737 Max jetliner after suspending it in January. The plane maker began building airplanes at a “low rate” as it implements more than a dozen initiatives focused on enhancing workplace safety and product quality.

"We've been on a continuous journey to evolve our production system and make it even stronger," Walt Odisho, vice president and general manager of the 737 programme, said. "These initiatives are the next step in creating the optimal build environment for the 737 Max."

The company remains engaged with regulators around the world to end the global grounding of its best–selling jet, which has hit the company’s sales and tarnished its reputation. It remains to be see when regulators may allow the 737 Max to return to operations a flying ban was imposed in March 2019 following two crashes that killed 346 people.