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Boeing Cuts 4,000 Jobs Amid Commercial Unit Makeover

March 30, 2016
No involuntary layoffs are planned, with 40% of the cuts coming from a voluntary program introduced in February, and the other 60% either vacant or shed through attrition.

Boeing Co. plans to cut about 4,000 jobs from its commercial airplanes division by mid-year as part of a broader effort to reduce costs amid fierce competition from Airbus Group SE.

The U.S. planemaker doesn’t plan any involuntary layoffs, for now. Rather, the savings will come from 1,600 workers who elected to leave the company under a voluntary program announced last month, Marc Birtel, a Boeing spokesman, said by e-mail. Another 2,400 positions are either vacant or will be shed through attrition.

The commercial airplane division, which accounted for 68% of Boeing’s 2015 profit, is also flattening its management structure to create a “more streamlined and nimble organization that can respond to marketplace demands,” he said.

The effort to revamp Boeing’s sprawling commercial jetliner manufacturing unit comes as new CEO Dennis Muilenburg starts to make his mark at Boeing. Muilenburg used cost-cutting measures to bolster profits in an era of constrained defense spending in a previous role as chief of Boeing’s defense unit.

The company is also looking beyond labor for savings. Boeing is renegotiating supplier contracts, consolidating programs, slashing business travel and working to boost productivity, quality and reduce excess inventory, Birtel said. The number of job cuts could ultimately be affected by the success of those initiatives.

While the planemaker earned record revenue of $96.1 billion in 2015 and delivered 762 commercial planes, the most in its history, its adjusted profit fell 13% to $7.74 billion from a year earlier. Contributing to the decline: accounting losses related to the development of KC-46 tanker and declining 747 programs.

While analysts had expected aircraft deliveries to rise from a record 762 in 2015, in January Boeing indicated it would hand over about 20 fewer jets due to production changes for its largest and smallest aircraft.

The forecast reflects internal production issues at Boeing and not broader pressures on the aerospace sector, Muilenburg said then.

Aircraft deliveries should taper to between 740 and 745 jetliners this year as Boeing halves output of its iconic humpbacked jumbo jet and begins manufacturing a new version of the 737, its best-selling and most profitable jetliner. The first 737 Max jets will be assembled at a slower pace this year but should bolster delivery totals in 2017, when the new model is slated to make its commercial debut, according to Boeing.

The Seattle Times reported the job cuts earlier Tuesday.

By Julie Johnsson

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