Boeing Prepared to Start Involuntary Layoffs

 - May 27, 2020, 12:36 PM

This story is part of AIN's continuing coverage of the impact of the coronavirus on aviation.

Boeing notified its workers in a letter on Wednesday that it will begin involuntary layoffs this week of 6,770 U.S.-based employees, most of whom will leave the company on July 31. The move comes after Boeing approved voluntary layoffs for 5,520 U.S. employees as part of a 10-percent workforce reduction plan announced on April 29. The cuts will disproportionately affect the company’s commercial airplanes and services businesses, amounting to 15 percent of the workforce among those divisions.

“It will take some time for the company to reduce our workforce by the approximately 10 percent we announced, but today’s numbers represent the largest segment of layoffs,” said a Boeing spokesperson. “The several thousand remaining layoffs will come in additional tranches over the next few months.”

In the letter to employees, Boeing CEO David Calhoun said that international locations continue to work through their plans for cuts, announcements of which he noted would come on their own timelines.  

“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,” wrote Calhoun. “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.”

Speaking during the company’s first-quarter earnings call on April 29, Boeing CEO David Calhoun detailed the production rate cuts starting with the 787, which will see a reduction from the current 14 a month to seven per month in 2022, while 777/777X rates will fall from five this year to three next year.

Plans call for production of the 737 Max airliner, which Calhoun estimated will resume in the third quarter, to accelerate even slower than originally planned following the narrowbody’s year-and-half-long grounding. In a drastic departure from plans to raise the 737’s peak rate of 57 a month to as many as 63, Boeing now sees 737 Max rates gradually increasing to just 31 per month next year and modestly rising with any increased market demand thereafter.

Finally, the company envisions no change in the three-per-month rate for the 767, split between freighters and tankers, nor does it plan a change from the six-airplanes-a-year rate for the 747.

Calhoun called the pandemic “a body blow” to the business, created by a decline in passenger volumes of more than 95 percent compared with last year’s figures and an expected $314 billion fall in airline revenue in 2020. He added that a recovery from the Covid crisis to 2019 levels would take two to three years and that it would take “a few years beyond that” for the industry to return to long-term growth trends.