Boeing is cutting more than 12,000 jobs as the Chicago-based airplane manufacturer copes with the sudden drop in air travel demand due to the coronavirus pandemic.
The number of people traveling by air has plummeted more than 90% since the beginning of March, and even though airlines saw a slight uptick in passenger traffic over the last couple of weeks, demand is still far below where it was last year at this time.
Financially beleaguered airlines are deferring and canceling orders for new planes. In April, Boeing did not book a single new aircraft order for the second month this year and airlines canceled orders for 108 jets. The company is moving to cut costs to match that slump in its core business.
Boeing CEO David Calhoun told employees in an email 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 (factory) lines and in our offices.” He added, “I wish there were some other way.”
Calhoun announced in April that the company would need to reduce its workforce by 10%, meaning 16,000 jobs would be need to be eliminated.
In a statement Wednesday, Boeing said it had approved voluntary layoffs for more than 5,500 employees. Those are workers with enough seniority to receive cash incentives to leave the company. Nearly 6,800 additional workers will begin receiving involuntary layoff notices this week.
Boeing’s statement indicates there will be more layoffs coming. “Today’s numbers represent the largest segment of layoffs. The several thousand remaining layoffs will come in additional tranches over the next few months,” the statement said.
Before the coronavirus pandemic, Boeing was already reeling from a crisis involving its best-selling 737 Max jetliner, which has been grounded by aviation authorities around the world since March of last year. Crashes in Indonesia and Ethiopia killed 346 people, and fixes for an automated flight control system blames in the crashes are not expected to be approved August at the earliest.