The coronavirus pandemic has brought us on the verge of a global recession. Some sectors of the economy are looking at a crisis, which would take years to recover. Among these are airline and travel industry. With governments imposing travel restrictions and nationwide lockdowns the airline industry has come to a standstill. Airline companies have grounded their entire fleet and sent employees on furlough.
Amid such unprecedented crisis, US’s largest plane maker Boeing recently said that it would reduce the company headcount by 10%.
Announcing the decision to his employees via an email, Boeing Co CEO Dave Calhoun said, “We have begun taking action to lower our number of employees by roughly 10% through a combination of voluntary layoffs, natural turnover and involuntary layoffs as necessary.”
Boeing will need to make “even deeper reductions in areas that are most exposed to the condition of our commercial customers — more than 15% across our commercial airplanes and services businesses, as well as our corporate functions,” he said.
He also added that Boeing will reduce production of its large 787 and 777 jets and slowly resume production of the grounded 737 Max.
Earlier this week, Calhoun said that it will take years for the aircraft-building business to return to its pre-pandemic levels.
Boeing Co. said that it has started to shrink through employees volunteering to leave, attrition and “layoffs as necessary.”
Boeing made the announcement as it reported a loss of $641 million in the first quarter. It earned $2.15 billion in the same period last year. Revenue fell 26%, to $16.91 billion.
The job cuts will be more than 15% in the company’s large division that makes planes for airlines and also in services. Boeing’s defense and space unit will likely see the fewest jobs eliminated.
In addition, Boeing temporarily shut down assembly lines in Washington state and South Carolina after workers tested positive for the virus. The Seattle-area plants are beginning to resume activity, and workers are scheduled to return to the South Carolina plant beginning Sunday night.
Boeing was in financial trouble crisis before the virus outbreak. The grounding of its best-selling jet, the 737 Max, after two crashes that killed 346 people cut deeply into revenue last year, leading to Boeing’s first money-losing year in two decades. The company faces criminal and civil investigations and a flurry of lawsuits by families of the people killed in the crashes.
Boeing has about 160,000 employees worldwide.
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