Boeing set to start voluntary layoffs: Report

Boeing is reportedly expected to announce 2,500 voluntary layoffs this week as a result of the coronavirus impact on the airline industry. Yahoo Finance's Heidi Chung breaks down the details.

Video Transcript

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BRIAN SOZZI: Yeah. Let's take a look at one of the companies we're watching on YahooFinance.com. Boeing is reportedly set to lay off 2,500 workers. Heidi Chung is back with the details. Heidi?

HEIDI CHUNG: Hey, Brian. Yeah. So Boeing has been feeling the wrath of COVID-19 for some time now. But the company looks to be gearing up to take some action here. Boeing is reportedly expected to announce 2,500 voluntary layoffs in the US this week as a result of the coronavirus-related demand hit that the airline industry has taken.

Union officials at the Society of Professional Engineering Employees in Aerospace saying that Boeing informed them that they should expect layoff notices on Friday, and the first wave of layoffs are anticipated to be concentrated in Boeing's Seattle area commercial airplanes operation. This round of layoffs marks the first big round of workforce reduction by Boeing since 2017, when it let 1,500 employees go as a part of a cost-cutting effort.

Boeing CEO David Calhoun said in April that the company might have to cut about 10% of its workforce, or about 16,000 jobs through a combination of voluntary layoffs, actual turnover, and involuntary layoffs if necessary. Now, according to union officials, 1,300 union members of Boeing's main engineering union applied for the voluntary layoff package and were accepted.

The airline sector's woes definitely have been trickling down here to materially impact a lot of the suppliers like Boeing, General Electric amongst several others. We also know that Boeing's rival Airbus has also implemented cost-cutting initiatives in an attempt to manage the impact from the COVID-19 pandemic.

And Calhoun has also said before he doesn't expect sales to return to 2019 levels for another three years or to start grow meaningfully until mid-decade. Boeing shares were up as much as 3% as the market opened, but have since [? fluctuated, ?] but are still maintaining to those gains right now, Brian.

BRIAN SOZZI: All right. Frequent flier Heidi Chung, thanks so much.