Boeing airplane unit to cut more jobs in 2017, shares rise

Mon Dec 19, 2016 6:00pm EST
 
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By Alwyn Scott

SEATTLE (Reuters) - Boeing Co's (BA.N: Quote) commercial airplane unit said on Monday it would cut an as-yet-undetermined number of jobs in 2017 after slashing its workforce by 8 percent in 2016, as it struggles to sell planes in the face of a strong dollar.

Chicago-based Boeing and European rival Airbus (AIR.PA: Quote) are battling especially slow demand for their lucrative, long-range twin-aisle jetliners, such as the Boeing 777 and Airbus A330, in a global climate of political and economic uncertainty.

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.

The company did not say how many jobs it will cut next year, noting it is still assessing its 2017 budget and employment needs.

But the announcement shows the world's biggest plane maker is axing jobs more aggressively than it forecast earlier this year, and that it will not let up the pressure to cut costs under the new chief executive of the airplane unit, Kevin McAllister, who succeeded Ray Conner on Nov. 21. Conner is now vice chairman of Boeing Co.

"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 Airplanes employees on Monday, which was made public.

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

Its shares closed up 1.1 percent at $156.18.   Continued...

 
Boeing facilities are seen in Los Angeles, California, U.S. April 22, 2016. REUTERS/Lucy Nicholson/File Photo - RTX2UQSR