Turbulence on the horizon for Boeing, with company facing possible cuts
It was a busy weekend for Boeing. Earnings are out this week, and the company bailed on a major acquisition.
Boeing has been working for two years to buy an 80% stake in Brazilian jet maker, Embraer. It pulled out of the $4.2 billion deal late Friday, when a negotiated deadline passed.
Boeing wanted to grab the company, which makes smaller jets, to help it compete with rival Airbus in the regional jet market. Boeing said Embraer failed to meet certain guidelines. Embraer said that while it had asked for more time to finalize the deal, it did not do anything to warrant the walk-away. Embraer plans on seeking damages on the now-scuttled deal.
The move saves the company a ton of cash, which it desperately needs as the global airplane market continues to dry up. Some experts say worldwide sales are doing to drop more than $300 billion this year. Roughly 64% of the world’s airplanes are currently parked as demand for flights has disappeared during the global health crisis.
Boeing is holding its shareholders meeting on Monday and will release its earnings on Wednesday. It’s expected CEO David Calhoun will announce production and job cuts.
Some analysts expect the company to trim its 160,000 employee workforce by at least 10%. Some expect production cuts to follow Airbus’ own 30% reduction.
Boeing is reportedly ready to cut 787 production by 50%, to just seven Dreamliners a month.