The New York Times Company
The breathtaking slowdown in global aviation is taking a huge toll on Boeing, which said Wednesday that it would slash about 16,000 jobs after reporting that revenue tumbled by 26% in the first three months of the year.
“The global pandemic has changed the way we live and work,” Boeing’s chief executive, David L. Calhoun, said in a note to staff. “It is changing our industry. We are facing utterly unexpected challenges.”
Airlines around the world are trying to stay alive, with losses expected to total more than $300 billion by year’s end, according to an industry trade group. As a result, many carriers are delaying purchases, deliveries and maintenance.
Boeing said it was slowing aircraft production, including for the troubled 737 Max, the 787, the 777 and the 777x. The company is also exploring ways to raise more capital, either from the federal government or from financial markets. The job cuts, about 10% of Boeing’s staff, will be even steeper for those employed in the divisions most exposed to the downturn, the commercial airplanes and services businesses. Staff cuts in those units will be about 15%.
“I know this news is a blow during an already challenging time,” Calhoun said in the note. “I regret the impact this will have on many of you. I sincerely wish there were some other way.”
Boeing reported a net loss of $641 million in the first quarter, compared with $2.1 billion profit a year earlier.
The company has said that it does not expect air travel to recover to levels reached before the pandemic for three years and that it would likely take several years more for travel to return to its previous long-term growth rate.
Boeing’s commercial aircraft business was especially hard hit in the first quarter by the grounding of the Max and the pandemic, with revenues for that business down nearly 50%, to $6.2 billion, from a year earlier. Total revenue dropped to $16.9 billion. The company received just 49 new orders and had 196 cancellations between January and March.