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Boeing plans to cut about 10% of its jobs as it continues to reel from the coronavirus and the fallout from its 737 Max safety crisis.
The aircraft maker said Wednesday that it would shed about 1 in 10 positions through a combination of buyouts, layoffs and the elimination of unfilled roles.
At the end of 2019, the company had about 161,000 positions.
The cuts, which were widely expected, are aimed at helping Boeing stanch its financial freefall.
“We’ll have to make even deeper reductions in areas that are most exposed to the condition of our commercial customers — more than 15% across our commercial airplanes and services businesses, as well as our corporate functions,” Boeing CEO David Calhoun said in a letter to employees.
Boeing posted its second consecutive quarterly loss after turning a profit for more than 40 straight quarters. The company recorded a loss of $641 million in the first quarter, compared with a profit of $2.15 billion in the same period a year earlier. The company’s first-quarter revenue fell 26% to $16.9 billion.
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The stability of Boeing’s defense and space division is helping to prevent the company from immediate collapse. But Boeing is still said to be considering requesting a federal bailout after lawmakers included a provision in a recent stimulus bill allowing the company to receive up to $17 billion in emergency aid.
The company’s airline customers, which purchase Boeing planes to upgrade their fleets, have put purchases and maintenance on hold as they suffer from a global slowdown in travel. And Boeing continues to face losses due to the grounding of its 737 Max planes, which were blamed for two deadly crashes.
The 737 Max was grounded after the crashes of two jets – a Lion Air flight in October 2018 and an Ethiopian Airlines flight in March 2019. The two incidents killed a total of 346 passengers and crew.
Boeing said Wednesday that it is taking numerous steps to shore up its finances, including drawing on its term loan facility, cutting discretionary spending, continuing to suspend share buybacks and dividends, reducing R&D and capital expenditures and eliminating CEO and chairman compensation for 2020.
Its total cash – a measure of whether the company can withstand this crisis – rose from $9.5 billion at the end of the fourth quarter to $15 billion at the end of the first quarter due primarily to new debt, which rose from $27.3 billion to $38.9 billion during the same period. Overall, the company recorded negative free cash flow of $4.73 billion for the first quarter after posting positive free cash flow of $2.29 billion in the same period a year earlier.
“Access to additional liquidity will be critical for Boeing and the aerospace manufacturing sector to bridge to recovery, and the company is actively exploring all of the available options,” the company said in a statement. “Boeing believes it will be able to obtain sufficient liquidity to fund its operations.”
Boeing also last week announced the termination of its $4.2 billion deal with Brazilian regional aircraft maker Embraer to form a joint venture that would be 80% owned by Boeing. Embraer is now taking that move to arbitration.
Analysts had said Boeing could save billions if it canceled the deal.
In his letter to employees, Calhoun said “we could not come to a resolution around critical unsatisfied conditions for the deal.”
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.
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