Boeing airplane unit to cut more jobs in 2017

SEATTLE Boeing Co’s (BA.N) commercial airplanes unit said on Monday it would cut more jobs in 2017 after slashing the workforce by 8 percent in 2016 as it battles to sell planes.

The job cuts come as Boeing and rival Airbus (AIR.PA) face slowing demand for new aircraft, particularly twin-aisle jetliners such as the Boeing 777 and Airbus A330.

Boeing said last week that it would cut 777 production to five a month in August 2017, a 40 percent reduction from the current rate of 8.3 a month, because of slow sales.

Boeing did not say how many job it will cut next year, noting it is still finalizing its 2017 budget and employment needs.

But the announcement shows the world’s biggest plane maker is cutting jobs more aggressively than it forecast earlier this year, and that the pressure will not abate under new airplanes Chief Executive Kevin McAllister, who succeeded Ray Conner on Nov. 21. Conner is now vice chairman.

“To successfully compete and win new orders that will fund future product development and growth requires us to achieve much better performance,” Conner and McAllister said in a memo to Boeing Commercial Airplane employees on Monday.

Boeing “will need to do more in 2017” to lower costs and make its planes more affordable, the memo said.

Boeing shares were up 1.1 percent at $156.19.

For 2016, Boeing said it expects job reductions to total 8 percent of the commercial airplanes workforce, including a 10 percent reduction in the ranks of executives and managers.

The unit cut 6,115 jobs, or 7.3 percent, through November compared with the tally on Dec. 31, 2015, according to Boeing’s employment data. That suggests a further 565 job reductions in 2016, and more next year. In March, the company said it planned to cut about 4,000 jobs at the unit.

The company is offering a voluntary layoff program in early 2017, according to Monday’s memo, which added that involuntary layoffs may occur in some cases. A spokesman said employees participating in the voluntary layoff program will receive a lump sum payment of one week’s pay for each year served, for a maximum of 26 weeks.

(Additional reporting by Anya George Tharakan in Bengaluru; Editing by Saumyadeb Chakrabarty and Tom Brown)