Boeing to lay off 10% of its workforce
Washington — Boeing said on Wednesday it would cut its workforce by about 10% and further reduce 787 Dreamliner production after reporting a loss for the second straight quarter as the coronavirus pandemic hits global travel demand.
Its stock was up 5.4% at $138.34 in premarket trading.
Plane makers, airlines and suppliers have been left reeling by the pandemic, which has crippled passenger travel, catapulted major economies into recession and forced big companies to scramble for cash to weather the downturn.
Chicago-based Boeing said it was confident of getting sufficient liquidity to fund its operations, sending its shares up 5.4% in premarket trading. Reuters reported on Tuesday that Boeing was working with investment banks on a potential bond deal worth at least $10bn.
In March, it drew down its entire $13.8bn credit line and is also weighing seeking government aid.
As the coronavirus took hold, Boeing was already grappling with a production freeze and year-long grounding of the 737 Max following two fatal crashes.
In January, Boeing CEO Dave Calhoun had said production of the Max could resume by April ahead of its forecasted midyear return to service, but the health crisis has put those timelines in question.
Boeing said on Tuesday that 737 Max production would resume at low rates in 2020 as timing and conditions of return to service are better understood and gradually increase to 31 per month during 2021, with further gradual increases to correspond with market demand.
Reuters reported on Tuesday that approval was not expected until at least August and could be pushed back later.
Boeing said it plans to cut production of the bigger 787 jet to seven units per month by 2022. In October, Boeing had announced plans to lower the 787 production rate to 12 per month in late 2020 from 14. Earlier in 2020, the company revised the target to 10 aircraft per month in early 2021.
It will also reduce the 777/777X combined production rate to three per month in 2021 from five.
Demand for the 787 had waned as a result of the US-China trade war and the pandemic has made it more difficult for Boeing to sustain production of the aircraft, which is its main source of cash as the 737 Max remains grounded.
Boeing said its assumed timing of 737 Max regulatory approvals would enable deliveries to resume during the third quarter.
The company's adjusted loss stood at $1.7bn, or $1.70 per share in the first quarter, compared with a profit of $1.99bn, or $3.16 per share, a year earlier.
At the weekend, Boeing cancelled a $4.2bn deal for Embraer's commercial aviation, prompting the Brazilian company to initiate arbitration.
It is also facing lawsuits related to the 737 Max crashes and federal prosecutors aided by the US's FBI and the department of transportation’s inspector-general are investigating the 737 Max’s certification.
On Wednesday, European rival Airbus posted a 49% slump in first-quarter core profit and called for an industry-wide campaign to restore confidence in flying. It highlighted plans to save cash after losing €8bn in the first quarter.