Boeing laying off 6,700 U.S. workers; thousands more planned

Boeing is laying off over 6,700 of its U.S. workers, with "several thousand” more layoffs planned. Yahoo Finance’s Emily McCormick and Akiko Fujita discuss.

Video Transcript

AKIKO FUJITA: We're going to stay in the aerospace sector, because some big news coming out of Boeing today-- the company announcing it is laying off 6,700 US workers. I want to bring in Emily McCormick, who's been tracking that story for us. Emily, what do we know about those workers? What specific parts of the company are they looking at?

EMILY MCCORMICK: Absolutely, Akiko. So this was the first round of Boeing's involuntary job cuts. It said it will be notifying, as you mentioned, about 6,700 US employees this week that their positions are going to be eliminated. Now, not necessarily something that we're seeing move the stock-- Boeing is moving to the upside today. We knew that these job cuts were going to be coming.

The CEO David Calhoun did say on the company's last reported quarter earnings call that Boeing would be a smaller company for some time, given the disruptions for the aerospace industry around the coronavirus pandemic. Now, the company has also had an additional about 5,500 workers taking voluntary buyouts to leave with severance packages in the coming weeks. Boeing has previously said it would cut around 10% of its workforce. That earlier totaled about 160,000. Most of these layoffs are expected to take place in the Seattle, Washington area, where much of Boeing's commercial aircraft business takes place.

Now, in the announcement that we got, these layoffs were announced in a memo to employees from the CEO. He did add quote, "we are seeing some green shoots. Some of our customers are reporting that reservations are outpacing cancelations on their flights for the first time since the pandemic started." He also added that quote, "some parts of our business, most notably on the defense side, will continue hiring to meet customer commitments and fill critical skill positions."

However, Boeing as a whole did say that the industry will take some time to come back to the level it had been at about two months ago. And previously, the company did say it might take anywhere from about two to three years to see commercial air travel return to pre-virus levels-- so something to keep watching as we see this pandemic play out, and air travel trends as a whole as well. Akiko

AKIKO FUJITA: Emily, you know, we've heard from some airlines as well talking about layoffs, and that's kind of raised a question about, you know, what about the bailout that they got from the government? And wasn't that supposed to be to keep the workers in place? Secretary Mnuchin certainly facing a lot of pressure to look into this-- what are we likely to expect on that front?

EMILY MCCORMICK: Well, just looking at some of the news that we had coming out today, we have house Democrats sending a letter to treasury secretary Steven Mnuchin to release guidelines that would clarify that airlines that were reducing hours were in violation of the CARES Act and that bailout money that these airlines did receive as part of that. And that was supposedly designed with strings attached so that airlines getting aid couldn't lay off or cut pay rates for employees through at least the end of September.

So essentially, what these lawmakers are alleging is that these airlines have found what they think is an inappropriate loophole where they aren't technically directly cutting pay, but they are indirectly impacting workers' compensation since their hours were getting cut. So that's something that we're seeing lawmakers pressed for, both on the House of Representatives side, and we also saw Senate Democrats send a similar letter to CEOs of some airlines earlier this month. So a lot of pressure coming from multiple sides here, and we'll have to see how this plays out since it is a bit of a technicality and a nuance with some of these funding packages and the strings that were put in place as part of them.

AKIKO FUJITA: Yeah, United Airlines one of those carriers calling on their workers to take 20 unpaid days-- so expect to hear more on that front. Emily, thanks so much.