Boeing Co (BA) announced that it is laying off another 6,770 employees in the U.S. as the U.S. planemaker is cutting costs to cope with the impact that the coronavirus pandemic is having on the aviation industry.
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Boeing said it is taking these streamlining measures as travel restrictions tied to the coronavirus pandemic have resulted in a deep cut in the number of commercial jets and services its customers need over the next few years. Earlier this month, the planemaker reported that it did not receive a single order in April, while it was also grappling with 108 order cancelations for its grounded 737 MAX plane.
In response to the aviation crisis, Boeing announced in April that it would slash 10% of its global workforce of 160,000 by the end of this year.
In a separate statement, the ailing planemaker said it has restarted 737 MAX production at its factory in Renton, Washington, albeit at a low rate and is planning to gradually ramp up production this year. Temporary suspension of production had begun in January after the company grounded the 737 MAX jet last year following a second crash.
“We are seeing some green shoots. Some of our customers are reporting that reservations are outpacing cancellations on their flights for the first time since the pandemic started,” Boeing President and CEO Dave Calhoun wrote in a letter to employees. “Some countries and U.S. states are starting cautiously to open their economies again. And some parts of our business, most notably on the defense side, will continue hiring to meet customer commitments and fill critical skill positions.”
At the start of the month, Boeing raised $25 billion in debt financing and told investors that as a result it would not need to tap capital markets or the U.S. government for additional funding for now.
Shares advanced 3.4% to $149.52 as of Wednesday’s close, trimming this year’s plunge to 55%.
Four-star analyst Jim Corridore at CFRA yesterday raised the planemaker’s stock to Buy from Hold and boosted the price target to $174 from $112 saying that the company “can weather its current crises and grow over the long term”.
Turning now to the rest of Wall Street, TipRanks data shows that overall analysts are cautiously optimistic on Boeing shares. The Moderate Buy consensus is based on 8 Buy ratings, 11 Hold ratings and 1 Sell rating. The $162.11 average price target implies 8% upside potential in the stock in the next 12 months. (See Boeing’s stock analysis on TipRanks).
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