Boeing Plans More Layoffs, Suppliers Affected

With the COVID-19-related downturn showing few signs of recovery, Boeing announced this week that it will consider a second round of layoffs, couched as "voluntary," this summer and fall. Some 19,000 positions are at risk overall. The planemaker originally indicated it would try to reduce its workforce by 10 percent back in April, but the recovery to air travel has been slowed by economic conditions and a new wave of coronavirus cases. The bulk of the additional buyouts are expected to impact the commercial aircraft division.

“I truly wish the current market demand could support the size of our workforce,” said Boeing CEO Dave Calhoun. “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’s sales for new airliners have been minuscule and orders for the 737 MAX continue to drop from its books, both from active cancellations by lessors or when Boeing deems that the buyer will be financially incapable of taking delivery as planned. In July alone, Boeing lost some 43 orders for the MAX variants, bringing the cancellations to more than 400 aircraft. Including the accounting adjustments, Boeing has lost more than 800 sales for the jet.

Meanwhile, the slowdown has impacted suppliers. Last week, a company that supplies inflight-entertainment wiring announced that it would shutter its facility and lay off nearly 600 employees next week. “Aircraft build and retrofit are way down,” Scott Selbach, vice president and general counsel for Carlisle Companies, told the Seattle Times. “Our business has gone away, frankly.” Revenues fell by 50 percent in the second quarter, according to reports.

Other signs that customers are returning to airlines are hard to find. According to TSA figures, passenger travel through July was still down 73 percent from the prior year, which is a modest improvement over June (down 81 percent) and May (down 90 percent). Even so, travel typically tapers off near the end of summer, so it’s not looking particularly rosy for the airlines. Finally, while travel is up, there has not been an uptick in airliners returned to service. There are still some 1,800 airliners idled (making up 20 percent of the fleet) by the middle of August, though even that number is influenced by the airlines’ taking older designs into early retirement. British Airways has moved the planned retirement of its 747 fleet ahead, and the first of its 31 remaining 747s flew to Spain to be retired this week.