Boeing announced on Monday that it would offer its employees a second voluntary redundancy package. The company has offered the deal, which will include pay and benefits, as it struggles with the cancellation and deferment of orders from airlines.
Second Boeing layoff deal
As reported by Reuters, Boeing is to offer its employees a second opportunity to accept a voluntary layoff package with pay and benefits. The company will offer the deal to workers in the commercial aircraft and services divisions, as well as those in corporate functions. In a note distributed to employees, Boeing CEO, Dave Calhoun wrote,
“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. He added, “We anticipate seeing a significantly smaller marketplace over the next three years.”
The company announced in April that it would be cutting its 160,000 staff by around 10%. Most of the job losses were in the commercial airplane business and were scheduled to take effect before the end of the year.
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Mr Calhoun said that the latest move to extend the workforce job cuts is in response to feedback from employees. Boeing said in a statement that it has no set target for the redundancies. The company is encouraging all eligible workers to apply for the voluntary package. The CEO’s message to employees stated that more details would be announced from August 24.
Simple Flying reached out to Boeing for a comment. A spokesperson told us,
“While we have seen signs of recovery from the pandemic, our industry and our customers continue to face significant challenges. We have taken proactive steps to adjust to the market realities and position our company for the recovery. As we continue to assess our workforce and in response to employee feedback, we will be offering a second voluntary layoff (VLO) opportunity for employees to depart the company voluntarily with a pay and benefits package.”
Boeing struggles with cancellations
Boeing has been struggling with a freeze in production caused by the global pandemic as hard-hit airlines cancel or delay orders for new aircraft. The health crisis is in addition to the planemaker’s problems with the 737 MAX which was grounded in March 2019 after two fatal crashes.
Simple Flying reported last month that due to the slump in demand for air travel and the lack of orders, Boeing had a stockpile of 462 aircraft parked up. The figure included 423 of the grounded 737 MAX. In July, Boeing had orders for 43 new planes canceled, 37 of which were from lessors. The aircraft were all 737 MAX.
Earlier this month, Icelandair revealed that it had reached an agreement with Boeing for compensation over the MAX grounding. As part of the settlement, the airline would reduce its order commitment by four aircraft.
Boeing delivered just four aircraft in July this year compared to 19 in July 2019 and 39 in July 2018 before the 737 MAX was grounded.
Airbus also facing difficulties
Boeing is not alone in its struggle with the effects of the pandemic. Airbus has 166 planes that have made their first flights but remain undelivered. The planemaker delivered 196 aircraft in the first half of 2020, a fall of 50% over the previous year.
The company has cut its production of narrowbody planes from 60 to 40 per month, while the A330 and A350 have been reduced to two and six per month, respectively.
With many travel restrictions still in place and continued weakness in demand for air travel, Boeing and Airbus may be forced to make further cuts before the situation improves.
Do you think the aircraft industry will fully recover from the crisis? Let us know in the comments.