Please ensure Javascript is enabled for purposes of website accessibility

Boeing Initiates Voluntary Layoff Plan, Sees "New Reality" Post-Coronavirus

By Lou Whiteman – Apr 2, 2020 at 11:49AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company does not see new jet demand bouncing back quickly.

Boeing (BA -0.96%) is offering early retirement and buyout packages to its workforce, part of the aerospace giant's effort to retrench as the COVID-19 coronavirus pandemic saps demand for air travel and with it the need for new jets.

Shares of Boeing lost nearly half their value in March as airlines scrambled to cut flights, ground planes, and freeze spending. It's likely some of those older planes will never fly again, but if the pandemic causes the U.S. economy to fall into a deep recession, it will likely be some time before they are replaced by newer jets made by Boeing and archrival Airbus.

A Boeing 737 MAX airborne over the clouds.

Image source: Boeing.

Boeing has suspended its dividend, temporarily shut down aircraft production, and has taken other steps to cut costs, but CEO Dave Calhoun in a memo to employees said, "It will take time for the aerospace industry to recover from the crisis."

"When the world emerges from the pandemic, the size of the commercial market and the types of products and services our customers want and need will likely be different," Calhoun wrote. "It's important we start adjusting to our new reality now."

Boeing's struggles started well before the pandemic, with the company's much-anticipated 737 MAX jet grounded in March 2019 following a pair of fatal accidents. The company said it remains on track to get the MAX airborne by mid-year, but it is unclear whether airline demand for the plane will match Boeing's 4,000-plus unit order book.

The company had already anticipated slowing demand for larger widebody aircraft, and it had planned previously to reduce the number of 787 Dreamliners coming off the assembly line in 2021.

Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Boeing Stock Quote
Boeing
BA
$132.23 (-0.96%) $-1.28

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
342%
 
S&P 500 Returns
110%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.