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737 Max Grounding And Covid-19 Woes Forces Boeing To Deepen Job Cuts


10/28/2020


737 Max Grounding And Covid-19 Woes Forces Boeing To Deepen Job Cuts
The coronavirus pandemic and 737 MAX grounding continued to hammer sales at Boeing Co propelling the company to report its fourth straight quarterly loss on Wednesday. The company however reaffirmed its expectations that it would be able to resume US deliveries of the 737 Max planes before the year end.
 
The company announced in July a very significant rate of reduction in production twin-aisle planes which it was still sticking to, the US plane maker also said. It was also committed to achieving its goal of hitting a build rate of 31 narrowbodies monthly in early 2022.
 
Global air travel has been brought to a near halt because of the Covid-19 pandemic and has consequently pushed many major airlines to the brink of bankruptcy and them being forced to request government bailouts in addition to cutting costs and postponing deliveries of aircraft deliveries. Most of the money that airlines pay to Boeing for new planes is when they get delivered.
 
“While losing money and burning through over $5 billion in three months is hardly good news, at least it wasn’t worse than this,” Vertical Research Partners analyst Rob Stallard wrote in a note.
 
The company as quite close to securing 737 MAX approval, said Boeing Chief Executive Dave Calhoun said during a television interview, and added that the company expects total air traffic for the current year to be at 30-35 per cent of that of last year.
 
A return of the global aerospace and airline industry to pre-pandemic levels will happen in about three years, expects Boeing, which is in line with estimates of other industry exports.
 
The downturn that it is facing has forced Boeing to severely cut down on production, culling thousands of jobs and a shift in its strategy for jet development even as the company tries to emerge from the down turn it is facing because of the 19-month-old worldwide 737 MAX ban triggered by two fatal accidents and the depths of the pandemic crisis.
 
Analysts and industry experts expect a lifting of the 737 Max grounding orders issued in March 2019 by the US Federal Aviation Administration to happen as early as next month, , pending approval of software and training changes. That means that the jet can be brought back into commercial flights in 2021.
 
About 30,000 jobs are expected to be eliminated by Boeing through buyouts, layoffs and attrition, Calhoun told employees in a memo on Wednesday, in an effort to cut costs. That reduction in staff strength is twice as much as was initially planned by the company which was to achieve total global workforce strength of about 130,000 by the end of 2021.
 
“With the 737 MAX inching closer to return to service around year-end, we do not expect Boeing to back away from targets for positive free cash flow in 2021 and delivering more than 50% of the 737 MAXs in inventory,” J.P. Morgan analyst Seth Seifman said.

(Source:www.reuters.com)


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