The airline industry has had a rough time lately, as the coronavirus pandemic has shuttered businesses for months and curtailed travel plans for many Americans.
While many airline companies have done their part to mitigate expenses, now in an effort to cut costs, Boeing is scheduled to lay off more than 6,000 employees this week as the coronavirus pandemic continues to wreak havoc the air travel and aerospace industries.
The aircraft manufacturer previously said it is looking for ways to slash its staff by 10% through voluntary and involuntary separations from the company. Boeing said in its 2019 annual report that it had over 160,000 employees.
Thousands of other employees will be notified if they are to be released over the next few months and 5,520 other Boeing employees have already been ratified for voluntary separations, Boeing said.
“I wish there were some other way,” Calhoun said. “For those of you who are notified, I want to offer my personal gratitude for the contributions you have made to Boeing, and I wish you and your families the very best.”
The coronavirus has hurt demand for air travel, damaging the airline and leasing customers Boeing counts on. Airlines are posting their first losses in years as crude oil has suffered tremendous losses this year, destroying demand until recently, which has in turn damaged demand for building new planes. This effect has been pervasive in the industry, hurting both Boeing and its main rival, Airbus.
The announcement comes in contrast to the news this week, however, that although the sector has been beaten down recently, Boeing and Airbus, have been reportedly working with health and aviation regulators and announced they are working on efforts alleviating coronavirus risks for air travelers, amidst news that a key customer deferred more aircraft orders.
Boeing stock rocketed higher on the news Tuesday, gaining 5.25%, while other aerospace names like Raytheon rallied as well, climbing over 8%, helping to lift ETFs like the Direxion Daily Aerospace & Defense Bull 3X Shares Direxion Daily Aerospace (DFEN) a massive 13.87%.
But Boeing has struggled for some time now, as the company had already been grappling with the fallout from two crashes of its 737 Max planes that killed 346 people, causing a plethora of plane order cancellations for the aerospace behemoth.