Boeing says it is freezing hiring and restricting employees’ travel because of the new virus outbreak
Boeing is painting a sobering picture for its business in 2020.
The Chicago-based company said Wednesday it has imposed a hiring freeze in response to the virus outbreak that is undercutting air travel.
It said received 18 orders last month for new large planes but continues to lose orders for the grounded 737 Max.
And it is restricting employees’ travel and discretionary spending, while limiting overtime to work on getting the Max back in flight.
“The year ahead is shaping up to be as challenging for our business as any in the recent past,” CEO David Calhoun and Chief Financial Officer Greg Smith said in a note to employees. “On top of the work of safely returning the 737 MAX to service and the financial impact of the pause in MAX production, we’re now facing a global economic disruption generated by the COVID-19 coronavirus.”
The warning about 2020 is a strong statement considering that Boeing is facing its biggest crisis in decades after two deadly crashes involving Max jets, and that it just posted its first full-year loss since 1997.
Indeed, 2020 is off to an ominous start for Boeing. It reported no orders for new commercial planes in January while rival Airbus was recording 274 orders. Boeing’s 18 orders in February were all for so-called widebody or twin-aisles jets — larger planes that are typically used for long flights.
Boeing reported a loss of 43 orders for the Max this year through Feb. 29, as customers switched Max orders to other models. The company delivered 30 planes in the first two months of the year compared with 95 a year earlier, before it halted shipments of Max jets. Boeing depends on deliveries to generate cash flow.