Boeing will cut about 5% of its commercial plane workforce as it moderates the pace of ramping up jet production, the company said on Monday. The manufacturer will eliminate the posts through a mix of layoffs and attrition.
Boeing commercial chief Stephanie Pope told employees the slower ramp-up would provide factories and supply chain partners additional time to achieve stability. Adjusting production schedules and reducing aircraft output puts the company in an overstaffed position, she added. The firm will begin sending layoff notifications in December.
Pope praised the team for improved operations reflected in US certifications this year of the 737 Max 7 and 737 Max 10. However, she acknowledged the company has not yet fully recovered. She promised to treat employees with dignity and respect as Boeing moves ahead with the workforce reductions.
Boeing executives had previously signalled slower plans to raise plane output, saying in a late October conference call the company would no longer meet its target for 2026 deliveries. The firm has pushed back the timeframe for lifting 737 Max production to 52 aircraft from 47 until the second half of 2027.
Raising 737 Max output has been viewed by investors as central to revenue and profit growth after a long period of financial losses due to safety problems, including two deadly Max crashes in 2018 and 2019. The production delays have kept the company from returning to sustained profitability.
CEO Kelly Ortberg said in October the company is making progress but still has more work to do. He expects it will take until next year to get fully stable at the current production rate. Ortberg cited the need for greater predictability in wing production and with the production of fuselages at its Kansas operation. The workforce reduction reflects ongoing challenges in stabilising manufacturing operations across Boeing's commercial aircraft division.
Why it matters for wealth
The workforce reduction signals continued operational challenges at Boeing, a major aerospace contractor whose production delays affect defence and commercial aviation portfolios. Slower 737 Max output could extend the period before the company returns to sustained profitability, a timeline investors have been monitoring since the 2018 and 2019 crashes.
Source: The Guardian
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