The COVID-19 pandemic hit Boeing – one of the world’s prominent aircraft manufacturers – severely due to the large slump in travel demand. The headaches it is having with the 737MAX forces the organization to give pink-slips to as many as 7000 employees.
Prolonged Commercial Travel Downward Trend
Boeing reported a loss of $449 million in Q3 (JAS quarter) on Wednesday and announced additional job cuts to the tune of 7,000 that will effectively reduce the headcount by 30,000 positions over two years.
The world’s leading planemaker with headquarters in Seattle has been through a belt-tightening mode throughout 2020 in the wake of the COVID-19 pandemic on top of the self-inflicted 737 MAX fiasco.
While headcount is nose-diving from 160,000 in January to 130,000 at the end of 2021, a drop of nearly 19 per cent in less than two years, the company attributes these to the Pandemic impact other than their internal pressures on the 737 MAX program delays.
So, what is the strategy being adopted for recovery? Dave Calhoun, Chief Executive Officer at Boeing says ”
“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,”
Boeing’s Current Financial Obstacles
A sharp drop in commercial air travel has prompted airlines to cancel plane orders or defer deliveries had further damaged the prospects of Boeing and crimping its revenues.
Boeing reported a loss of $449 million, compared with profits of $1.2billion in the year-ago period. Revenues fell 29.2 per cent to $14.1billion. The company’s finances have been under tremendous pressure due to the ground of the 737MAX in March 2019 which is now nearing regulatory approval to resume service albeit with a lengthy oversight process. Please read Travel Radar’s story on the current 737MAX situation.
However, Boeing expects to recover steadily which has an impressive and long history in the making of airplanes.