Following the news that Boeing was set to start delivering layoff notices at Puget Sound production sites by the end of the week;

Nicolas Jouan, Aerospace and Defense Analyst at GlobalData, a leading data and analytics company, offers his view on the situation;

“Boeing’s decision to lay off part of its workforce is necessary so that it can readjust its jetliners production to meet declining demand from airlines and leasing companies. These layoffs will primarily touch Boeing’s Puget Sound facility near Seattle, where most assembly lines have already been trimmed – such as for the B787 Dreamliner, which was cut to ten per month. Despite these cuts, production levels are still too high for the actual demand, and more tough decisions had to be taken in order to ensure the company’s survival.

“Boeing is not alone in this situation as Rolls-Royce and Airbus also announced plans to slim down production. Boeing also backtracked from an agreement with regional jet manufacturer Embraer at the end of April, suggesting that demand for short-haul aircraft is not in better shape. Such cuts and caution across the industry are expected to last beyond the COVID-19 outbreak as its main players are now in damage control.

“Air travel has collapsed since the start of the COVID-19 pandemic, which will impose hundreds of billions of dollars of losses on the industry in 2020 alone. Australian flag carrier Qantas has advised that it did not intend to take delivery of new Airbus or Boeing jetliners in 2020 while other clients such as Lufthansa and Kuwait Airways already declared that they intended to reduce their fleet.”