Boeing Issues Layoff Notices
TradingBanks | Aug 22, 2016 10:47AM ET
Boeing Company (NYSE:BA) issued around 100 layoff notices in Washington last Friday as the company arranged the creation of the low-rate initial production aircraft. The American company bid goodbye in the production of the legendary Boeing 747.
After the controversial lay-off incident at Cisco (NASDAQ:CSCO), Boeing issued the 60-day notices to the 16 workers in the Commercial Airplanes division while the rest were taken from its defense division and corporate units. Also, staff from the flight test unit at Boeing Field was included.
Boeings spokesperson Doug Alder said ‘In many cases, employees find another job in the company or someone else retires or moves on.”
Prior to the decision of the aircraft company, it had around 75,700 people in July. Boeing had mentioned before that it would end up reducing its workforce in case the target cost savings were not met and would initially perform reductions through attrition and buyouts.
Boeing made the biggest layoff in September 2001, where 31,000 workers lost their job in the company after being hit by the massive economic slowdown and the post-911 concerns. During that time, the aerospace and defense division of the company was highly affected by the sudden drop of profits which left the company cutting down its workforce.
In 2013, Boeing also cut 1,500 I.T. jobs in Washington in combination of attrition, relocation and layoffs. According to reports, the company had relocated around 600 jobs each to St. Louis, Missouri and South Carolina.
Boeing KC-46A Production
Meanwhile, the aircraft giant received a $2.8 billion contract from the Air force to build a low-rate initial production Lots 1 and 2 for the illustrious KC46A tanker program.
Leanne Caret, president and chief executive of Boeing Defense and Space, said ‘“It’s an important day for the company and program. We’re excited about building low-rate initial production aircraft, and it’s only possible because of the hard work of the joint Boeing-Air Force team.”
Mr. Caret also added that the KC46A- would provide the Air Force unprecedented refueling capabilities, operational flexibility and combat readiness.
Boeing Stock Performance
Last Friday, shares of Boeing Company traded 0.21 percent higher to $135.00 with a market capitalization of 84.04 billion. The stock had a price earnings ratio of 24.79 and a dividend yield of 3.23 percent.
As seen in the image below, BOEING went close to the outerband indicating a strong trend for the stock (1). Also, it remained steady (2), which meant that volatility would probably increase and would cause trading opportunity. However, after contraction (3) there's a chance that it will expand in the next sessions as high volatility is usually followed by low volatility.
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Conclusion
Typically, a company will likely implement lay-off in times of keeping only those who are essential in the business. The rationale dictates if other employees can do the job, then why not let go of those who are not essential anymore. However, this is not what Boeing perceives.
Back in February, Boeing also considered cutting its workforce as it planned to create a new midsize airplane to counter Airbus’ success in sales of the A321neo. Basically, the company does job cuts in preparation of another project or unit. Inevitably, the company will likely need billions of dollars to meet the financial needs. Boeing has clearly put a lot at stake in this, given it is a financial strategy -- or not.
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