Airplane manufacturer Boeing recently announced that it is going ahead with a downsizing exercise as coronavirus pandemic severely impacts the airline industry.
The company said that it is eliminating more than 12,000 jobs in the United States, including 6,770 involuntary layoffs. The company also disclosed it plans “several thousand remaining layoffs” in coming months but did not comment on the geography of the jobs.
The company is going ahead with a cost-cutting exercise due to a sharp decline in airplane demand due to the grounding of airplanes because of government imposed travel restrictions and lockdowns to contain the novel coronavirus. The company was already in a soup after its 737MAX jet was grounded by air travel security agencies after two fatal crashes.
Boeing said it restarted 737 MAX production at a “low rate” at its Renton, Washington factory. However, a report by Reuters in April stated that regulatory approval for the MAX was not expected until at least August.
The company had earlier in April announced that it would cut 10% of its worldwide workforce of 160,000 by the end of 2020. Boeing on Wednesday said that its 5,520 U.S. employees will take voluntary layoffs, and also disclosed it was notifying 6,770 workers of involuntary layoffs.
In an email to his employees, Chief Executive Dave Calhoun said that the “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. … I wish there were some other way.”
In April, Boeing recorded zero orders for the second time this year and customers canceled another 108 orders for the 737 MAX, compounding its worst start to a year since 1962.
Last month, Boeing raised $25 billion in a bond offering that allowed it to avoid taking government aid. The recent job cuts include more than 9,800 employees in Washington State.
Boeing further said that the “several thousand remaining layoffs will come in additional tranches over the next few months.”
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