Pressured by a prolonged commercial travel downturn and the hit from 737 MAX, Boeing on Wednesday announced additional job cuts that will lower headcount by 30,000 positions over two years.
The plane manufacturer, which has been in a belt-tightening mode throughout 2020 in the wake of coronavirus on top of the 737 MAX crisis, plans to eliminate around 7,000 more jobs through the end of 2021. The latest announcements will shrink the headcount down to 130,000 from 160,000 in January of this year, a drop of nearly 19% in less than two years.
“The global pandemic continued to add pressure to our business this quarter, and we’re aligning to this new reality by closely managing our liquidity and transforming our enterprise to be sharper, more resilient and more sustainable for the long term,” said Chief Executive Dave Calhoun. A sharp drop in commercial plane travel has prompted airlines to cancel plane orders or defer deliveries, crimping Boeing’s revenues.
On top of that, the company’s finances have been under pressure due to the grounding since March 2019 of the Boeing 737 MAX, which is nearing regulatory approval to resume service after a lengthy oversight process with air travel authorities.
In the third quarter, Boeing reported a loss of $449 million, compared with profits of $1.2 billion in the year-ago period as revenues fell 29.2% to $14.1 billion. Calhoun has emphasised that while Boeing faces a difficult medium-term environment, it expects air travel demand to eventually return. Calhoun has taken steps in 2020 to bolster its cash position since the coronavirus devastated the travel market.
Published in The Express Tribune, October 29th, 2020.
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