Boeing to cut 7,000 more jobs for liquidity and sustainability
The pandemic and prolonged grounding of its 737 MAX jet is squeezing the planemaker’s finances
Chicago — Boeing is deepening job cuts as the pandemic and prolonged grounding of the 737 MAX jetliner squeeze the planemaker’s finances.
An additional 7,000 jobs are slated for elimination by the end of 2021, bringing the total workforce reduction made through retirements, attrition and layoffs to 30,000 people, Boeing said in an e-mail on Wednesday after reporting earnings. The company had 160,000 employees at the start of 2020 before the coronavirus gutted air travel and jetliner sales.
“We’re aligning to this new reality by closely managing our liquidity and transforming our enterprise to be sharper, more resilient and more sustainable for the long term,” CEO Dave Calhoun said in a statement.
Once a prodigious cash generator, Boeing is now carefully monitoring its liquidity and soaring debt while navigating an unprecedented drop in air travel and working with regulators to lift the Max’s grounding. Boeing has burnt through about $22bn in free cash since March 2019, when regulators grounded its best-selling jet after two fatal accidents.
For Boeing, the focus is “cash, cash and cash”, said George Ferguson, analyst with Bloomberg Intelligence, before the results were announced. “We’ll all be focused on deliveries and comments on how many MAXs can they get out of inventory in 2021. Who’s telling them, ‘Slow down’ or ‘Speed up my plane’.”
Calhoun and CFO Greg Smith will discuss Boeing’s results in a conference call at 10am US Eastern time. They are expected to provide more detail on when the company anticipates generating cash again.
Boeing fell 2.5% to $151.40 at 9.37am in New York amid broad market declines. The shares have tumbled 52% in 2020 by Tuesday, the biggest drop among the 30 members of the Dow Jones industrial average.
Investors were braced for an “ugly” report after Boeing delivered just 28 jetliners in the third quarter, 55% fewer than a year earlier, Ken Herbert, an analyst with Canaccord Genuity, said in an interview before the earnings announcement.
Boeing reported an adjusted loss of $1.39 a share, better than the average shortfall of $2.08 expected by analysts. Sales dropped 29% to $14.1bn. Wall Street had predicted $13.8bn.
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