Al Root
Boeing is struggling through issues that have depressed its stock price for years. Things have been tough for rival Airbus, too.
Wednesday, Airbus announced it was laying off 2,043 workers in its Defense and Space business. The layoffs amount to about 5% of that business and should be completed by mid-2026. The reductions "aim to reduce the company's fixed cost base, with almost all of the positions affected being so-called overhead positions," said Airbus in an emailed statement.
The Airbus cuts come weeks after new Boeing CEO Kelly Ortberg announced plans to reduce Boeing's global workforce by about 10%, or some 17,000 workers.
Boeing's cuts are related to several significant problems with its 737 MAX jet, a big reason the company hasn't reported a full-year profit since 2018. Boeing recently sold more than $20 billion in equity and equity-linked securities to repair its ailing balance sheet. Boeing's defense business has lost money on fixed-price contracts that aren't as attractive after years of inflation.
Profits in Airbus' defense segment have struggled, too, and the company is expected to post a loss for the unit in 2024. Operating profit margins in 2023 came in at 2%, down from 6% in 2020.
Airbus' defense sales in 2024 should amount to about $13 billion; Boeing's defense business will approach $25 billion.
What hasn't been a problem for either company is commercial aerospace demand. Both companies have backlogs that stretch out years. Building the planes has been tougher.
Airbus is expected to deliver about 760 jets in 2024. That's still shy of the record 863 delivered in 2019. Supply-chain problems continue to constrain aerospace production.
Boeing is expected to deliver about 360 jets in 2024, far shy of the 806 Boeing delivered in 2018, the year before the second tragic 737 MAX crash that grounded the jet worldwide between March 2019 and November 2020.
Wall Street doesn't expect Boeing to ship more than 800 jets in a year until 2028, according to FactSet.
Airbus stock was flat in overseas trading Thursday, leaving shares up about 10% this year.
Boeing stock was up 0.6% at $159.15, while the S&P 500 was flat and Dow Jones Industrial Average was off 0.2%.
That leaves shares down about 39% this year and down about 36% since an emergency door plug blew out of a 737 MAX flight on Jan. 5.
Shares are also down about 3% from prestrike levels. Boeing workers walked off the job for more than 50 days in September after their labor agreement expired. The strike was resolved in early November.
Write to Al Root at allen.root@dowjones.com
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(END) Dow Jones Newswires
December 05, 2024 11:43 ET (16:43 GMT)
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