Boeing will consider consolidating 787 Dreamliner manufacturing at a single location.

Boeing to Cut Output and Employment, Again

July 30, 2020
The jet builder's president/CEO announced efforts to manage the ongoing effects of the COVID-19 pandemic on the commercial aircraft sector, which may need three years to regain its 2019 rate of activity.

Boeing Co. president and CEO Dave Calhoun delivered a sober message to the manufacturer's 145,000 employees, describing how COVID-19 pandemic has shaped the business climate and will result in further cuts in jobs and aircraft production. "The pandemic’s effect on our communities and industry is ongoing," Calhoun wrote, "and the challenges we face as a company are still unfolding."

The letter was delivered on the same day Boeing reports its Q2 2020 results, with revenue of $11.8 billion and a -$4.79 loss per share. A closer view shows that the Commercial Airplanes division delivered just 20 new aircraft during the second quarter, and incurred numerous cancellations of previously booked aircraft orders. The division continues to post an order backlog of more than 4,500 aircraft, worth $409 billion.

Calhoun explained that "pressure on our commercial customers means they are delaying jet purchases, slowing deliveries, deferring elective maintenance, retiring older aircraft and reducing spend — all of which affects our business and, ultimately, our bottom line."

He estimated the commercial-aircraft market will need "around three years to return to 2019 passenger levels."

Boeing earlier this year lowered its commercial production rates to align production with the reduced market, but now will take further steps to adjust output, specifically:
• A slower increase in 737 production than previously planned, up to 31 jets per month by the beginning of 2022.
• Reducing the 777/777X production rate to two per month in 2021, one unit less per month than announced in Q1.
• Cutting 787 production to six per month in 2021, down from 10 per month currently and the previously planned seven per month by 2022. Calhoun noted that Boeing will evaluate further efficiencies in the 787 production program, "including studying the feasibility of consolidating production in one location."
• Production rates for the 767 and 747 rates remain unchanged, with 747 production due to end in 2022.

Calhoun noted that Boeing will "further assess the size of our workforce," beyond the net 10% reduction announced late in April. The reductions are being effected by a combination of voluntary and involuntary layoffs, plus attrition. The first round of involuntary layoffs were made in May, and the company is continuing to work through smaller, phased workforce reductions to reach the initial 10% target.

"We are looking holistically at our infrastructure footprint, our overhead and organizational structure, our portfolio and investments, our supply chain health and stability, and our ability to drive operational excellence and a keen focus on safety in everything we do," Calhoun reported.

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