Covid-19: Boeing mulls 10% workforce cut; announces voluntary layoff plan

An aerial photo shows Boeing 737 MAX airplanes parked at the Boeing Factory in Renton, Washington, US. Photo: Reuters

The US-based airplane major, Boeing, is planning to cut nearly 10 per cent of its workforce amid the fallout caused by the coronavirus-induced pandemic, according to a media report. CEO Dave Calhoun outlined a plan of voluntary layoffs for employees, while warning that the coronavirus pandemic would have a lasting impact on the global aerospace industry.

The plan, which includes buyouts, early retirements and involuntary layoffs, is expected to mostly target the company's commercial arm, since turmoil in the global airline industry has put the unit under immense strain, Reuters quoted the Wall Street Journal as saying in a report on Friday.

No decisions on cuts have been made, with the potential 10 per cent decline in labour force still under consideration, according to the report.

ALSO READ: Coronavirus: Boeing suspends production of 787 at South Carolina plant

 
Amid the Covid-19 pandemic, Boeing has suspended production at various plants, including the manufacture of its 787 airplane at its facilities in South Carolina.

The coronavirus pandemic has compounded the year-old crisis over the grounding of Boeing's 737 MAX following fatal crashes that killed 346 people in a five-month span.

Meanwhile, US aero parts maker Triumph Group Inc, a Boeing supplier, said it was furloughing about 2,300 employees across its US and European plants for two to four weeks to cut capacity linked to Boeing commercial aircraft programmes amid the coronavirus outbreak. The company will give one week of pay and will cover the employee share of medical premiums during the furlough period, it said in a statement on Friday.

Triumph Group also said it will cut about 200 full-time positions due to fall in demand, adding that the reductions will be completed by May 1. Triumph Group, a Boeing supplier, cited the closures as the reasons for its steps to furlough employees.

In order to assess potential the US government's assistance or private sector loans, Boeing has hired investment banks Lazard and Evercore Inc. The largest US planemaker asked last month for at least $60 billion in US government loan guarantees for itself and other American aerospace manufacturers to help the embattled industry withstand a coronavirus-related cash drain.

"We're going to be meeting with Boeing," President Donald Trump told reporters on Friday. "Boeing has not asked for aid yet but I think they probably will... We can't let anything happen to Boeing."

Boeing has noted that typically 70 per cent of its revenue flows to its 17,000 suppliers and has told lawmakers that without significant assistance the entire US aviation manufacturing sector could collapse.

"This isn't a great time to sell airplanes," Trump said, adding that the United States will make sure "Boeing is strong again." The Wall Street Journal reported earlier that Boeing had hired the two investment banks.

The US Congress set aside $17 billion in direct loans for national security related companies that could be tapped by Boeing. Boeing could also take part in a Treasury-backed Federal Reserve lending program and one analyst said it could raise up to $11.25 billion under one facility.

This week, Boeing suspended production of its 787 airplane at its facilities in South Carolina and had indefinitely extended a halt in its production operations at its Washington state facilities.

But the company late on Friday said it was intending to restart limited operations in the Puget Sound region in Washington state from April 13 onwards. The resumption of operations would focus on its defense programs, including P-8 and KC-46, and Moses Lake site operations in support of 737 MAX storage.

Last week, Reuters reported Boeing was looking at drastic cuts in wide-body production amid a slump in demand for the industry's largest jetliners, citing sources.



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