LONDON – In a memo to its employees regarding third-quarter performances, Boeing CEO Dave Calhoun warned that the workforce is anticipated to be around 130,000 by the end of next year.
This represents a cut from 161,133 at the start of 2020, resulting in job losses of over 31,000. In the recent announcement, this statement results in an additional 7,000 jobs being cut from the manufacturer. Calhoun went into a little bit more detail regarding what restructuring has taken place in the company.
“Since the start of the pandemic earlier this year, we have raised liquidity, reduced spending, simplified reporting structures, and dramatically lowered commercial production rates. We’re also transforming Boeing by reshaping our infrastructure, streamlining our overhead and organizational structure, rebalancing our portfolio and investment mix, and strengthening the health of our supply chain.”
“On top of these efforts, we have reprioritized and recommitted our research and development spending to ensure we are well-positioned for a strong recovery.”
Addressing the 737 MAX Certification
Calhoun also addressed those with an update regarding the continuing process of the 737 MAX certification. “This quarter, we made important progress working closely with global regulators on 737 certification efforts.”
“We also introduced a comprehensive Safety Management System (SMS), which incorporates the many lessons learned from the internal and external investigations surrounding the MAX, and further drives our safety and first-time quality efforts across the enterprise.”
“As we share our third-quarter financial results today, the deep impacts of COVID-19 on the commercial aviation market and our business are reflected in lower revenue, earnings, and cash flow compared to this time last year. Our overall business continuity efforts and the diversity of our customer base, including our government, defense, and space customers, provided some relief as we made difficult decisions and delivered on our commitments.”
Addressing the Workforce Cuts
“As we align to market realities, our business units and functions are carefully making staffing decisions to prioritize natural attrition and stability in order to limit the impact on our people and our company.”
“We anticipate a workforce of about 130,000 employees by the end of 2021. Throughout this process, we will communicate with you every step of the way. Our priorities remain the same — to strengthen our culture, improve transparency, instill operational excellence, rebuild trust, and ensure we always deliver the highest standard of safety and quality.”
“By working together and focusing on these priorities, we will emerge as a stronger company that is competitively positioned to deliver on our commitments to customers and realize new opportunities.” Calhoun then finished his address by telling people to “stay safe and take good care of yourselves and your families”.
Boeing reported third-quarter revenues of US$14.1bn, which is around a US$5bn hit compared to the same period last year.
For the nine months of the year, revenue was down 27% to US$42.85bn compared to US$58.64bn at the same point last year. The manufacturer’s operating cash flow is -US$4.8bn at this present time.
Boeing also revealed that its backlog includes more than 4,300 commercial aircraft at a list price of US$393bn. Calhoun added some more comments regarding such financials. “The global pandemic continued to add pressure to our business this quarter, and we’re aligning to this new reality by closely managing our liquidity and transforming our enterprise to be sharper, more resilient and more sustainable for the long term.”
“Our diverse portfolio, including our government services, defense and space programs, continues to provide some stability for us as we adapt and rebuild for the other side of the pandemic.”
Confident in the Future
“We remain focused on the health and safety of our employees and their communities. I’m proud of the dedication and commitment our teams have demonstrated as they continued to deliver for our customers in this challenging environment.”
“Despite the near-term headwinds, we remain confident in our long term future and are focused on sustaining critical investments in our business and the meaningful actions we are taking to strengthen our safety culture, improve transparency and rebuild trust.”
For the third-quarter of this year, only 28 aircraft were delivered, which is 55% less than the 62 recorded in 3Q19. As for the Nine Months, 98 aircraft were delivered, which is 67% less than the 301 delivered in the same period last year.
It remains clear that Boeing has taken a substantive hit during this pandemic, with the previous 737 MAX crisis also not helping either.
As the aircraft looks to turn away from 2020 pretty swiftly, it will be interesting to see when the MAX goes back into service and whether it will stay that way.
The manufacturer will definitely look to take a “new year, new me” style of approach, with significant pressure to be placed on Calhoun to ensure the aircraft it places in the skies are safe and ready to fly.
Featured Image: Boeing 787-10 Dreamliner in House Colours. Photo Credit: Brandon Farris