Boeing's job cuts

Boeing said Jan 9, 2009 that it will cut its Commercial Airplanes work force by about 4,500 people in 2009, largely through layoffs, though the figure also includes attrition.

“Initial 60-day layoff notices will be issued on Feb. 20, and most layoffs will occur in the second quarter of the year,” said Scott Carson, chief executive of Commercial Airplanes in an internal message to employees Jan 9, 2009 morning.

Most of the cuts will be in Washington state, where Boeing employs more than 76,400 people. The vast majority of them are in the Commercial Airplanes unit, so this represents more than a 5 percent work force cut.

In his message, Carson called the move “a difficult and painful decision” made necessary by a dramatic slowdown in airline business and the broader impact of the global recession.

What is this "dramatic slowdown in airline business"? Let's review what happened in 2008. On December 9 2008, the Chinese government requested their airlines to cancel or postpone aircraft deliveries in 2009 to counter weakening travel demand. The slow demand comes from the fact that the Olympic had ended. Existing aircraft demands would be absorbed by selling and leasing. New airlines are stopped to start.

Chinese aircraft orders come both at about 12% for Boeing and AirBus. With such review, it is not hard to predict AirBus will have a hard time ahead (they built a factory in China to break Boeing's monopoly).

Looking out of the macro point of view, many companies freeze traveling in 2009. Airlines and aircraft manufactures are good short sell targets.