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| Boeing announced sweeping cost-cutting measures after reporting a first-quarter loss of $641 million following the hit to the airline business from the coronavirus pandemic (AFP Photo/SCOTT OLSON) |
New York (AFP) - Boeing announced sweeping cost-cutting measures Wednesday after reporting a first-quarter loss of $641 million following the hit to the airline business from the coronavirus pandemic.
The
aerospace giant plans to reduce its workforce by 10 percent through a
combination of voluntary and involuntary layoffs and will slash production of
its main commercial planes, including the 787 and 777, Chief Executive David
Calhoun said in a message to employees that accompanied an earnings release.
"The
aviation industry will take years to return to the levels of traffic we saw
just a few months ago," Calhoun said. "We have to prepare for
that."
Calhoun
said the job cuts would be deeper -- more than 15 percent -- in commercial
airplanes and services, as compared with defense and space systems, where the
business has been more stable.
The
quarterly loss of $641 million compared to profits of $2.1 billion in the
year-ago period. Revenues fell 26.2 percent to $16.9 billion.
Total debt
at the end of the quarter was $38.9 billion, up from $27.3 billion at the end
of December.
Calhoun
said the belt-tightening was needed to maintain adequate liquidity at a time
its revenues are depressed, adding that the company is "exploring
potential government funding options" in the wake of COVID-19.
Boeing has
previously called for $60 billion in government support for the US aerospace
industry. Federal relief legislation includes $17 billion aimed at Boeing.
Calhoun has previously balked at the idea of the US taking a stake in Boeing.
The loss
reflected "abnormal production costs" connected to the temporary
suspension of Puget Sound manufacturing operations due to COVID-19 and due to
the suspension of production of the 737 MAX, which remains grounded following
two deadly crashes.
Boeing said
the pandemic crisis has hit demand for new planes and services, with airlines
delaying purchases of jets, slowing delivery schedules and deferring elective
maintenance.
It will cut
production of the 787 from 14 per month to 10 per month in 2020 and gradually
to seven per month by 2022.
Boeing also
will trim output on the 777 and lower its targets for the 737 MAX.
"We
have done a tremendous job of increasing our production rates and services
offerings in recent years," Calhoun said. "But the sharp reduction in
our demand for our products and services over the next several years simply
won't support the higher levels of output."
Boeing
shares jumped 4.1 percent to $136.36 in pre-market trading.
