Boeing (BA) plans to cut up to 8,000 jobs this year at its commercial airplane division, according to two people familiar with the matter, a move that could slash $1 billion in costs and help it battle for sales against European rival Airbus.
Boeing on Wednesday acknowledged plans to cut about 4,000 jobs in its commercial airplanes division by mid-year, and another 550 jobs in a unit that conducts flight and lab testing.
Sources said the company’s broad goal is to cut employment by 10% at its commercial airplane unit, which has about 80,000 employees.
Boeing said the 8,000 figure is hypothetical and that it does not have a specific goal for job cuts.
“There is no employment reduction target,” spokesman Doug Alder said. “The more we can control costs as a whole, the less impact there will be to employment.”
The job reductions are part of a broad cost-cutting drive at the Chicago-based aerospace and defense company.
Boeing is enjoying the biggest peacetime boom in its 100-year history and increasing jetliner output to historic levels.
But it is using fewer workers than in the past, and cutting other costs as part of an effort to compete with Airbus for sales.
The savings are necessary to “win in the market, fund our growth and operate as a healthy business,” Ray Conner, chief executive of the airplane business, told employees last month.
A reduction of 8,000 jobs, including managers and executives, could save the company $1 billion in labor costs, said Peter Arment, analyst at Sterne Agee CRT. The airplane unit “is targeting ‘billions’ of cost reduction by year-end,” which will help the company remain competitive, he said.
The 4,000 job cuts in the commercial airplanes division by mid-year will include about 1,600 through voluntary layoffs and 2,400 by leaving open positions unfilled, Alder said.
The numbers disclosed on Wednesday caught the company’s unions by surprise. “We have not been notified of these types of reduction numbers,” said Jon Holden, president of the International Association of Machinists District 751. The union said more than 1,000 of its members had applied for voluntary layoffs.
Boeing’s other major union, the Society of Professional Engineering Employees in Aerospace, said some of its members had been notified that they might be eligible for voluntary layoffs but none had been authorized.
Both unions said the prospective job reductions showed the need for Washington state lawmakers to enact measures to ensure Boeing maintains or increases its workforce in the state in exchange for $8.7 billion in tax incentives.
Boeing’s shares were down 1.6% at $128.82 in mid-afternoon trading on the New York Stock Exchange.
Reuters reported last month that Boeing was considering offering voluntary layoffs to its professional engineers and technical workers. The Seattle Times first reported Boeing’s job cuts could reach 8,000 this year.