Boeing Initiates Voluntary Layoff Plan, Sees "New Reality" Post-Coronavirus

Boeing (NYSE: BA) is offering early retirement and buyout packages to its workforce, part of the aerospace giant's effort to retrench as the COVID-19 coronavirus pandemic saps demand for air travel and with it the need for new jets.

Shares of Boeing lost nearly half their value in March as airlines scrambled to cut flights, ground planes, and freeze spending. It's likely some of those older planes will never fly again, but if the pandemic causes the U.S. economy to fall into a deep recession, it will likely be some time before they are replaced by newer jets made by Boeing and archrival Airbus.

A Boeing 737 MAX airborne over the clouds.

Image source: Boeing.

Boeing has suspended its dividend, temporarily shut down aircraft production, and has taken other steps to cut costs, but CEO Dave Calhoun in a memo to employees said, "It will take time for the aerospace industry to recover from the crisis."

"When the world emerges from the pandemic, the size of the commercial market and the types of products and services our customers want and need will likely be different," Calhoun wrote. "It's important we start adjusting to our new reality now."

Boeing's struggles started well before the pandemic, with the company's much-anticipated 737 MAX jet grounded in March 2019 following a pair of fatal accidents. The company said it remains on track to get the MAX airborne by mid-year, but it is unclear whether airline demand for the plane will match Boeing's 4,000-plus unit order book.

The company had already anticipated slowing demand for larger widebody aircraft, and it had planned previously to reduce the number of 787 Dreamliners coming off the assembly line in 2021.

10 stocks we like better than Boeing
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Boeing wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks


*Stock Advisor returns as of March 18, 2020


Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.