Boeing will lay off nearly 7,000 workers as the industry is decimated by the COVID-19 pandemic


Boeing said on Wednesday that it will lay off 6,770 US employees, “the first” wave of an expected round of job cuts as the coronavirus pandemic wreaks havoc on the aerospace sector.

In a statement, CEO David Calhoun said that affected employees will receive severance pay, COBRA health care coverage, and career transition services.

Employees at worksites outside of the US will also see job cuts, Calhoun said.

Boeing previously said it expects to reduce its payroll by about 10% globally, including by 15% in its commercial airplane division. The company had about 143,000 workers globally at the beginning of the year.

Before beginning involuntary layoffs, Boeing implemented a voluntary layoff, or buyout program. About 5,520 workers were approved for the buyouts, according to Bradley Akubuiro, a spokesperson for the company.

Boeing has seen business in its commercial airplane sector dry up as the coronavirus pandemic leads to a drop in air travel demand. Airline and airplane lessor customers have grounded significant portions of their fleets, and many are expected todefer=”defer”or cancel orders for new airplanes. The company also shuttered its Washington state and South Carolina factories for several weeks earlier this year due to COVID-19 outbreaks – the plants have since reopened.

The pandemic crisis came as Boeing was already in a weakened position from the ongoing 737 Max debacle, which has seen the plane type grounded worldwide for more than a year, and led to Boeing’s worst financial year in decades. The company posted a $641 million loss for the first quarter, and said that it burned through $4.3 billion in cash.

Boeing suspended production of the 737 Max in January, due to a lack of storage space for completed but undeliverable aircraft. The company has about 450 finished planes in storage, and cannot deliver them to customers until the grounding is lifted. Calhoun said the company would resume production in May – it was not clear whether the factory had resumed operations.

In late-April, the company announced that it would significantly pare back its aircraft production, adding to a suspension of 737 Max assembly that has been in place since January. Assembly of Boeing’s 787 Dreamliner will be cut from 14 to 10 per month in 2020, and seven by 2022. Production of the 777 family of aircraft will be cut from five per month to three by 2021.

The 737 Max, which was produced at a rate of 42 per month from April 2019 through January, will be ramped up at a slower rate when production resumes, the company said, gradually increasing to 31 per month during 2021.

The cuts aligned with earlier analyst forecasts predicting a 30-40% reduction in assembly rate. The company has an order backlog of 5,049 planes at the end of April, including 4,079 of the 737, but the possibility of cancellations or deferrals looms large as the pandemic continues to affect airlines and aircraft-leasing companies.

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