Pressure to cut costs has caused the world’s two largest airplane makers—Boeing and Airbus—to make an emergency landing.
Both companies have done layoffs and are planning to do more amid reduced demands for airplanes and the need to reduce production costs.
Boeing announced on April 17 that they are planning a “workforce reduction” in June.
“In an ongoing effort to increase overall competitiveness and invest in our future, we are reducing costs and matching employment levels to business and market requirements,” the company said in a statement. “Employment reductions, including managers and executives, will come through a combination of attrition, leaving open positions unfilled, a voluntary layoff program, and in some cases, involuntary layoffs.”
Although Boeing didn’t provide exact numbers or list facilities by name, it did say that staff at the 787 Dreamliner plant in South Carolina will not be cut.
Boeing had already reduced its staff by more than 2,000 workers since January 2017. That included around 1,800 voluntary buyout packages and 245 involuntary layoffs.
As of December 15, 2016, Boeing had 468 total orders, compared to 768 in 2015 and 1,432 in 2014.
Rival company Airbus hasn’t been immune to the turbulence in the aviation industry, either.
Airbus told its labor unions in November of 2016 that it would be cutting more than 1,100 jobs. The cuts will be spread across four countries: 640 in France, 429 in Germany, 54 in Britain, and 39 in Spain, according to Airbus spokesman Jacques Rocca.
As was the case with Boeing, Airbus hopes to make the cuts through voluntary departures and early retirements, as well as relocating certain positions, but it has said it would resort to layoffs if necessary.
Airbus had a rough year in 2016. It had losses due to troubles with its A400M military transporter and the A350 jet, its rival to Boeing’s 787. In another blow to the company, the World Trade Organization ruled in favor of the U.S. in a dispute over what Boeing and the U.S. saw as unfair competitive advantages to Airbus because of EU government subsidies.
Not only are both companies in an aggressive rivalry, but airlines are scaling back on buying airplanes for several reasons, including economic and geopolitical instability.
Regardless of the weakness in aircraft sales, Boeing is still giving a great return to its shareholders: in December 2016, the company hiked its dividend and approved $7.25 billion in new share repurchases.
Photo: Boeing corporate headquarters in Chicago, Illinois. Credit: DiegoMariottini / Shutterstock.com