Boeing to offer second voluntary layoff package this year as pandemic hits travel demand
The plane maker's chief executive expects a 'significantly smaller marketplace' over the next three years
Boeing confirmed plans to offer its employees a voluntary redundancy package with pay and benefits for the second time in 2020, extending previous job cuts, as the Covid-19 pandemic shrinks demand for air travel globally.
"While we have seen signs of recovery from the pandemic, our industry and our customers continue to face significant challenges. We have taken proactive steps to adjust to the market realities and position our company for the recovery," a Boeing spokeswoman said in an emailed statement.
"As we continue to assess our workforce and in response to employee feedback, we will be offering a second voluntary lay off (VLO) opportunity for employees to depart the company voluntarily with a pay and benefits package.”
The voluntary redundancy option will be offered to staff in its commercial airplanes, services and corporate units, Boeing chief executive Dave Calhoun said in a note to employees seen by The National. More details will be available from August 24, he said.
The coronavirus crisis has brought global air travel to a near-standstill and shrunk demand for new jetliners, hammering plane makers' business along with their airline customers and suppliers.
In response to a shrinking travel market, Boeing and its European rival Airbus have reduced production rates, cut jobs, and slashed other costs.
"The sharp and sudden drop in global air travel caused by Covid-19 continues to have ramifications on our commercial customers and, as a result, our business," Mr Calhoun said in the message. "The actions we’ve already taken as a company to strengthen liquidity will help us bridge to the other side of the crisis, but we anticipate seeing a significantly smaller marketplace over the next three years."
Boeing's shares rose 0.24 per cent to $172 (Dh631) at the end of trading in New York on Monday. Its shares have plunged 47 per cent this year, the biggest drop on the Dow Jones Industrial Average.
The US plane maker's second round of voluntary layoffs is in addition to a 10 per cent workforce reduction, or about 16,000 jobs, announced in April to preserve cash.
"I truly wish the current market demand could support the size of our workforce," Mr Calhoun said. "Unfortunately, layoffs are a hard but necessary step to align to our new reality, preserve liquidity and position ourselves for the eventual return to growth."
Boeing said that employees eligible for the voluntary layoff package will receive invitations to apply starting August 28. Employees will be informed of their approval or denial from September 14. For the majority of those approved, October 2 and December 4 will be the last days worked, based on business needs.
Meanwhile, its Toulouse-based rival Airbus is embarking on the biggest restructuring in its history with plans to cut 15,000 jobs in the commercial aerospace division. The world's biggest plane maker posted an adjusted loss of €1.31 billion (Dh5.67bn) for the first half of the year before interest and tax, compared with a €2.19bn profit a year earlier.
The coronavirus crisis has further deepened Boeing's woes as the aerospace giant works on returning its grounded 737 Max best-selling aircraft to the skies following two fatal crashes.
Mr Calhoun said he remains confident in Boeing's future, despite the challenges ahead.
"To help us overcome these challenges, we are engaging in a full-scale enterprise transformation effort, evaluating every aspect of our business for opportunities to improve," he said. "This will help us become stronger and more resilient as we continue driving safety, quality, operational excellence and innovation across the enterprise."
Updated: August 18, 2020 02:51 PM