Pandemic Drives More Boeing Job Cuts
October 28 2020 - 8:43AM
Dow Jones News
By Doug Cameron
Boeing Co. said it is reviewing jet production levels and plans
to shed another 7,000 jobs by the end of next year in response to
the mounting toll on the global airline industry from a fresh
global surge in coronavirus cases.
The plans came as the U.S. aerospace giant on Wednesday reported
a third-quarter loss of $466 million and said it is focused on
preserving cash ahead of the expected return to service of the 737
MAX as soon as next month, ending a protracted world-wide grounding
after two crashes took 346 lives.
The company expects to end next year with around 130,000
employees, having started 2020 with a workforce of 160,000, with
the cuts including some layoffs.
Boeing's sales fell 29% in the latest quarter from a year ago
and the company burned through $4.8 billion in cash, further
evidence of the mounting financial cost from the MAX crisis and
fallout from the coronavirus pandemic.
The per share loss of 79 cents in the quarter compared with a
$2.05 profit a year earlier. Boeing shares rose 1% in premarket
trading.
Boeing maintained its existing guidance to gradually increase
MAX production through next year and reduce output of the 787
Dreamliner when it moves all assembly to North Carolina. However,
Boeing officials said it could reduce output further if airlines
are unable to take delivery because of a lack of demand or
financing. Wide-body planes like the 787 are under particular
scrutiny because of the collapse in long-haul international
flying.
Global airline traffic is expected to halve this year and remain
severely depressed in 2021 and beyond, ending a decadelong boom in
jet sales that has led airlines to postpone or cancel their
orders.
The existing production cuts and pandemic-driven restrictions
are forecast to limit jetliner deliveries to airlines and leasing
companies to just 170 this year compared with about 500 at rival
Airbus SE, according to analysts. Boeing handed over just 28 planes
to customers in the September quarter compared with 62 a year
earlier, and has become more reliant on its defense business to
drive revenue and profit.
Boeing's commercial jetliner arm reported a loss of $1.4 billion
in the quarter as sales fell 56%.
The defense business produced a profit of $628 million, down 2%
from a year ago, but executives said they were watching a potential
slowdown.
Write to Doug Cameron at doug.cameron@wsj.com
(END) Dow Jones Newswires
October 28, 2020 08:28 ET (12:28 GMT)
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