Boeing announced sweeping cost-cutting measures Wednesday after reporting a first-quarter loss of $641 million following the hit to the airline business from the coronavirus pandemic.
The aerospace giant plans to reduce its workforce by 10 percent through a combination of voluntary and involuntary layoffs and will slash production of its main commercial planes, including the 787 and 777, Chief Executive David Calhoun said in a message to employees that accompanied an earnings release.
The quarterly loss of $641 million compared to profits of $2.1 billion in the year-ago period. Revenues fell 26.2 percent to $16.9 billion.
The loss reflected “abnormal production costs” connected to the temporary suspension of Puget Sound manufacturing operations due to COVID-19 and due to the suspension of production of the 737 MAX, which remains grounded following two deadly crashes.
Boeing said the pandemic crisis has hit demand for new planes and services, with airlines delaying purchases of jets, slowing delivery schedules and deferring elective maintenance.
It will cut production of the 787 from 14 per month to 10 per month in 2020 and gradually to seven per month by 2022.
Boeing also will trim output on the 777 and lower its targets for the 737 MAX.
“The COVID-19 pandemic is affecting every aspect of our business, including airline customer demand, production continuity and supply chain stability,” Calhoun said in a statement.
“Our primary focus is the health and safety of our people and communities while we take tough by necessary action to navigate this unprecedented health crisis and adapt for a changed marketplace.”
Boeing shares jumped 5.4 percent to $138.38 in pre-market trading.