By James Field, airwaysmag.com
According to a report from The Seattle Times, Boeing will lay off another 750 members of its staff. This comes following the demand slowdown caused by the ongoing COVID-19 pandemic.
According to Boeing, the termination date for the workers will be November 20, with the workers all being from the plant in Washington state. This brings the total number of workers to be axed at 12,600 for the Everett (PAE) & Boeing Field (BFI) plants as well as 19,000 company-wide.
However, with 3,000 new employees being hired into the defence sector, the figure looks to be at around 16,000 instead.
Boeing CEO Dave Calhoun stated that the plants at PAE and BFI would be hit the hardest because of the number of commercial airplane workers that are based there. This is down to, what Boeing spokesperson Jessica Kowal said over the weekend about the market changing.
The CEO said, “We’ll have to further assess the size of our workforce and ensure we’re aligning with the smaller market.” If we go back to July, the manufacturer said that job cuts of this magnitude would occur because of production rates having to be lowered because of low demand and delivery deferrals.
A Tough Period for Boeing
It has been an extremely tough week for Boeing. Around four days ago, the manufacturer and the Federal Aviation Administration (FAA) had its cultures blamed for the two 737 MAX aircraft that crashed over the last two years.
With COVID-19 also stepping on top of low consumer confidence for the aircraft, it will be interesting to see whether more cancellations are received. Because out of both of those crises, the MAX program has lost around $101bn in total.
Then on September 15, Airbus announced that it had topped Boeing as the biggest aerospace company. Sales at Boeing went down to $76bn, with Airbus’ sliding up to $78.9bn.
Bleak Environment Ahead?
Regardless of who is on top, we could see a further bleak environment ahead for Airbus and for Boeing. With Boeing having an obvious foothold in the United States, this presence may be reduced, and that is not because of Airbus in Alabama.
Two days ago, CEOs from major airlines such as American Airlines (AA), United Airlines (UA), Delta Air Lines (DL), and Southwest Airlines (WN) met at the White House. This was to lobby the US President Donald Trump to give a $25bn bailout package, which would be an extension of the CARES Act which expires in 10 days’ time.
If the CARES Act does not extend beyond the September 30 deadline, then it will mean further restructuring for airlines in the US. Such elements would consist of further delivery deferrals or even cancellations, especially with recovery not expected until 2024. And for Boeing and even Airbus, this would ultimately mean further cuts across the board.
The External Cannot be Fixed
As is well-known in business, external factors cannot be changed by companies that easily. For now, if Boeing is going to be able to get a grip on the current problems, then it needs to get the 737 MAX back in the air, fix issues with the 787, and continue work on the 777X.
With that in mind too, it needs to strengthen its quality assurance across the board to re-acquire its reputation for a company ‘that builds airplanes’ and is not focused on profit.
With such external influences placing more pressure on the manufacturer, it has to hope that the government extends the CARES Act.
If it does not, then it will be indirectly affected and will become a direct problem when it loses more revenue. Only time will tell what will happen next. And we will be watching.