Wednesday, 11 March 2020

Recruitment freeze, overtime ban and possible layoffs on the cards for Boeing

A recruitment freeze, a ban on overtime in all but critical areas of the business are on the way for the staff of the US planemaker Boeing, according to a memo to staff seen by news agency Reuters.

Layoffs or furloughs were also being considered and were a “real possibility” a source told Reuters but were seen as a separate, later action, as a result of the growing Coronoavirus COVID-19 crisis and the continued grounding of the 737 Max aircraft.  

In a memo, Boeing CEO Dave Calhoun told employees on Wednesday that the company was taking steps to address the business pressures that result from “the pain our customers and suppliers are feeling. - It’s critical for any company to preserve cash in challenging periods,” Calhoun said.

The cash preservation actions the firm is taking is a direct result of the grounding of the 737 Max following the two crashes in Ethiopia and Indonesia which killed 346 people. The disasters have wiped billions off the company’s value and sparked hundreds of lawsuits from bereaved families. According to Reuters, shares were down roughly 11 percent on Wednesday to a 32-month low on weak orders and plans to draw down the rest of a $13.8 billion loan.

The ongoing Coronavirus crisis head lead airlines to defer orders and delay pre-delivery payments has also had an impact on the firm and forcing it to consider even tougher steps to reduce cash outflow.  

“You’ll hear from us often through this uncertain period ahead,” Calhoun told employees. “We’ll be clear about the challenges. And we’ll be transparent as we consider additional affordability measures.” 

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