Boeing Co (BA.N) said on Wednesday it was eliminating more than 12,000 U.S. jobs, including 6,770 involuntary layoffs, as the largest American planemaker restructures in the face of the coronavirus pandemic.
Boeing also disclosed it plans “several thousand remaining layoffs” in coming months but did not say where those would take place.
Boeing is slashing costs as a sharp drop in airplane demand during the pandemic worsened a crisis for the company whose 737 MAX jet was grounded last year after a second fatal crash.
Boeing said it restarted 737 MAX production at a “low rate” at its Renton, Washington factory. Reuters reported in April that regulatory approval for the MAX was not expected until at least August.
Boeing shares closed up 3.3% at $149.52, then rose another 4.6% to $155.84 after hours on news of the MAX production restart.
The company announced in April it would cut 10% of its worldwide workforce of 160,000 by the end of 2020. Boeing said Wednesday 5,520 U.S. employees will take voluntary layoffs, and also disclosed it was notifying 6,770 workers of involuntary layoffs.
Chief Executive Dave Calhoun told employees in an email the “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. ... I wish there were some other way.”
CFRA analyst Colin Scarola upgraded Boeing to buy and raised his price target to $174 from $112 saying Boeing “can weather its current crises and grow over the long term.”
In April, Boeing recorded zero orders for the second time this year and customers canceled another 108 orders for the 737 MAX, compounding its worst start to a year since 1962.
Last month, Boeing raised $25 billion in a bond offering that allowed it to avoid taking government aid.
The job cuts include more than 9,800 employees in Washington State. Boeing said the “several thousand remaining layoffs will come in additional tranches over the next few months.”
Slideshow (2 Images)Boeing said it expects to resume 737 MAX deliveries in the third quarter following regulatory approvals before gradually increasing to 31 per month during 2021.
The aerospace sector has been hard hit including many Boeing suppliers.
General Electric Co (GE.N) said this month it planned to cut its aviation unit’s global workforce this year by as much as 25%, or up to 13,000 jobs. SpiritAero Systems Holdings (SPR.N) announced it is cutting another 1,450 jobs in Kansas.