Boeing offers employees second voluntary layoff package, ‘hard but necessary’

Boeing recently announced that it will be offering employees a second voluntary package. The planemaker described it as a “hard but necessary” move, it said on Monday.

“While we have seen signs of recovery from the pandemic, our industry, and our customers continue to face significant challenges,” Boeing said in a statement. “We have taken proactive steps to adjust to the market realities and position our company for the recovery. As we continue to assess our workforce and in response to employee feedback, we will be offering a second voluntary layoff (VLO) opportunity for employees to depart the company voluntarily with a pay and benefits package.

The airline industry has seen series of furloughs and involuntary and voluntary layoffs over the past four months. This is as a result of the dire impact of the coronavirus pandemic on the travel industry, especially among airlines.

Boeing’s voluntary layoff package will extend to workers in the commercial airplane division, services division, and corporate offices.

Earlier this year, the planemaker offered employees a buyout which has now extended to the current voluntary layoff offer. Boeing is yet to give a target as to how many employees it plans to lay off, and how many buyout extensions it plans to have. In a letter to the company’s employees, CEO Dave Calhoun said on Monday:

“This action will extend our overall workforce reductions beyond the initial 10% target and will allow more employees who want to depart the company to do so voluntarily with a pay and benefits package. Importantly, it will also help limit additional involuntary workforce actions.”

In addition to cutting costs through buyouts due to lower demand for air travel and a shrinking travel market, Boeing has slashed production rates, as well as other operational costs.

“The sharp and sudden drop in global air travel caused by Covid-19 continues to have ramifications on our commercial customers, and as a result, our business,” Calhoun said. Adding that, all the actions the company has taken so far is to “strengthen liquidity” and help them “bridge to the other side of the crisis.” He also said the company anticipates “a smaller marketplace over the next three years.”

According to Calhoun, the employees eligible to receive the next voluntary layoff package will begin the application process from August 28. From September 14, employees will be informed about their approval or denial of the package. All approved employees will be laid off on October 2 and December 4, respectively.

“Unfortunately, layoffs are a hard but necessary step to align to our new reality, preserve liquidity and position ourselves for the eventual return to growth.”  

At the close of trading on Monday Boeing shares rose 0.24% to $172. However, the company’s shares have plunged 47% this year, making it the biggest drop in the Dow Industrial Average.