Boeing announced its first major step Wednesday toward paring its workforce by about 10%, or 16,000 jobs, as it contends with the economic impact of the pandemic and its own debacle involving the 737 MAX.
In a letter to employees, CEO David Calhoun said the company is notifying 6,770 U.S. workers this week that they are being laid off. They will join about 5,520 U.S. employees who company spokesman Charles Bickers said are leaving Boeing voluntarily.
Further job cuts toward the 16,000 goal will “come in additional tranches over the next few months,” Bickers said.
When he announced the layoffs last month, Calhoun said certain divisions will bear a heavier share of the cuts, losing at least 15% of the staff. Those areas include the commercial airplanes and services business, and corporate functions.
Boeing has about 500 employees in its Chicago headquarters. Bickers couldn’t say how many jobs the headquarters might lose.
In his letter to employees, Calhoun said the laid-off workers in the U.S. will get severance and career counseling. Boeing sites overseas are working through their reductions subject to local laws, he said.
“The COVID-19 pandemic’s devastating impact on the airline industry means a deep cut in the number of commercial jets and services our customers will need over the next few years, which in turn means fewer jobs on our lines and in our offices,” Calhoun said. “We have done our very best to project the needs of our commercial airline customers over the next several years as they begin their path to recovery. I wish there were some other way.”
Calhoun added he sees “green shoots” in the economy, with some businesses returning and airlines starting to see flight reservations outpacing cancellations for the first time since the pandemic gripped the U.S.
He reiterated plans to restart production of the 737 MAX in Renton, Washington, without offering a timetable. Earlier this month, Calhoun said he wanted the plant reactivated in May.
Boeing’s data show airlines have canceled orders for 521 737 MAX jets so far this year. Its software has been implicated in two fatal crashes. Boeing has changed the software and been working with the Federal Aviation Administration to get the plane recertified to fly, but passenger trust and general avoidance of air travel because of COVID-19 complicate those plans.
In addition, Calhoun has outlined productions cuts for the 787, 777 and 777X passenger models.
Calhoun said Boeing’s defense and aerospace units continue to perform well and are hiring to fill key positions.
The CEO didn’t endear himself to his airline customers when he predicted May 12 in a television interview that a major carrier is “most likely” to go bankrupt this year. Calhoun did not name a candidate for bankruptcy.