More Layoffs for Boeing are No Surprise in Battered Air Travel Industry, Says GlobalData

Following the recent news that Boeing will extend staff cuts beyond the 10% originally announced;

Nicolas Jouan, Aerospace and Defense Analyst at GlobalData, a leading data and analytics company, offers his view on the situation:

“Despite an encouraging FAA directive issued earlier this month regarding the return to flight of the B737 MAX, Boeing’s troubles in the commercial aircraft market seem insoluble. The prospect of a MAX return will not be enough to keep the current workforce financially sustainable in the company’s civil aircraft segment.

“After previous cuts announced in April attaining 10% of total staff, CEO Dave Calhoun told employees that details on more layoff schemes will soon be communicated by the company. This unfortunate announcement comes as no surprise considering the extent of the COVID-19 current crisis on the passenger market. Airlines are bleeding cash as the industry is still in slow-motion. British Airways and Qantas announced last month that they were to retire their B747 fleets.

“These new layoffs will likely open the way to further production cuts for Boeing’s main commercial jetliners, already working at reduced speed. B737 MAX production is still officially set to increase gradually to 31 per month in 2021 but this figure seems increasingly unrealistic. Meanwhile, the B787 Dreamliner could close one of its two main assembly lines (North Charleston in South Carolina or Everett in Washington) to face collapsing demand.

“Wide-body aircrafts designed to transport many passengers in high-density cabins for long journeys, look particularly unfitted to the COVID-19 reality, but no more interest has been expressed so far for narrow-body such as the B737. For instance, SMBC Aviation Capital deferred 68 B737 MAX and Irish leasing company Avolon cancelled a cumulated total of 102 airplanes since last April. With so much headwinds coming its way, Boeing has no other choice than downscaling.”