Boeing cuts jobs as aviation sector views bleak future

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Boeing aircraft at the company’s Seattle plant
Shutterstock

Boeing is set to cut 30,000 workers as it continues to struggle with global costs while the coronavirus pandemic continues.

The news came as the International Air Transport Association called for more concerted efforts from governments to protect the sector and Heathrow reported it was losing traffic to rivals because of a lack of Covid-19 testing at the airport.

In what amounts to a 19 percentage point decrease in its workforce, job numbers are projected to be cut from 160,000 to 130,000 by the end of 2021.

Boeing already announced 16,000 job losses in April but added a further 3,000 in July, when it decided it would no longer produce the 747 aircraft.

In the UK, the manufacturer employs more than 2,000 people across 60 sites. It has sought to be seen as an innovator in attracting more women into science, technology, engineering and maths careers (Stem) and has a company-wide diversity strategy that partly is the result of operating in 65 countries.

The company reported a $925m (£715m) loss for the third quarter of 2020 compared with a profit of $1.2bn in the same period last year.

Its continuing military contracts should give the company some measure of stability over the coming period. Dave Calhoun, Boeing’s chief executive, said: “Our diverse portfolio, including our government services, defence and space programmes, continues to provide some stability for us as we adapt and rebuild for the other side of the pandemic.”

Meanwhile, the International Air Transport Association (IATA) has presented an analysis showing the airline industry cannot slash costs sufficiently to avoid bankruptcies and preserve jobs in 2021. It also called for state support to sustain airlines and avoid massive employment reductions. IATA said more pre-flight Covid-19 testing would help open borders and enable travel without quarantine.

It said that its research had found total industry revenues in 2021 would be down 46% compared with the 2019 figure of $838 billion. Alexandre de Juniac, IATA’s director general and CEO said: “Without additional government financial relief, the median airline has just 8.5 months of cash remaining at current burn rates. And we can’t cut costs fast enough to catch up with shrunken revenues.”

Maintaining last year’s level of labor productivity would require employment to be cut 40% IATA said. Further jobs losses or pay cuts would be required to bring unit labour costs down to the lowest point of recent years, a reduction of 52% from 2020 third quarter levels.

“There is little good news on the cost front in 2021. Even if we maximise our cost cutting, we still won’t have a financially sustainable industry in 2021,” said de Juniac.

Already in France and Germany, even Canada and Ireland have moved to testing and this is the way to make sure we can protect jobs in the UK as well as protecting people from coronavirus” – Heathrow CEO Holland Kaye

“The handwriting is on the wall. Unless governments act fast, some 1.3 million airline jobs are at risk. And that would have a domino effect putting 3.5 million additional jobs in the aviation sector in jeopardy along with a total of 46 million people in the broader economy whose jobs are supported by aviation. Governments must take firm action to avert this impending economic and labor catastrophe.

“They must step forward with additional financial relief measures. And they must use systematic Covid-19 testing to safely re-open borders without quarantine,” said de Juniac.

He spoke as new figures showed that Heathrow had been overtaken as Europe’s busiest airport for the first time by Paris Charles de Gaulle with Amsterdam Schiphol and Frankfurt gaining ground on the London hub.

Some 19 million passengers used Heathrow in the first nine months of the year, versus 19.3 million who used the airport in the French capital.

Heathrow said all three airport rivals had adopted testing regimes as a way of people reducing or avoiding quarantine.

By contrast, the UK had been “too slow to embrace passenger testing” and had fallen behind.

“Already in France and Germany, even Canada and Ireland have moved to testing and this is the way to make sure we can protect jobs in the UK as well as protecting people from coronavirus,” Heathrow chief executive Holland Kaye told the BBC.