Boeing reports net loss; to axe 10,000 staff

29 January 2009

Saying that Boeing is facing "one of the most difficult commercial and financial environments that most of us have ever seen,'' chairman and chief executive Jim McNerney announced that it plans to cut 10,000 jobs, or more than six per cent of its workforce, after a machinists' strike and programme delays led to a fourth-quarter loss, and the global recession eroded demand for aircraft.

The job reductions include 4,500 its Puget Sound base that were previously announced by Boeing Co. The additional 5,500 job cuts, to come mostly through layoffs and attrition, will be across the company, including Washington state, where nearly half of Boeing's 162,000 employees worked at the end of last year.

The new target was disclosed in a conference call on Wednesday after the Chicago-based company - the world's second-largest maker of commercial planes and the number two US defence contractor - reported a net loss of $56 million after a year-earlier profit, and said 2009 earnings will be lower than analysts predicted.

Boeing expects an increase in cancelled or deferred orders this year as airlines cope with a drop in travel demand and tight credit. Almost a third of the world's carriers are likely to defer deliveries this year, up from eight per cent three months ago, a survey released last week by UBS Investment Research showed.

"We can and must prepare for the continued market uncertainty," McNerney, 59, said on the call. The company is taking steps to manage costs and investments more aggressively, he said.

The 5,500 new job cuts will be spread out over the year, with emphasis on the first half, and will come from support services, corporate positions and the defence side of the business, McNerney said.