Boeing to Cut Jobs, Starting With Management -- Update

By Jon Ostrower 

Boeing Co. said it plans to cut management jobs as part of a cost-cutting drive, as the aircraft builder deals with rising competition.

The proposed cuts were announced by Boeing Commercial Airplanes Chief Executive Ray Conner during a wide-ranging internal presentation, according to two people who attended the Wednesday morning webcast event.

Mr. Conner spoke candidly to employees during the event about his concerns regarding Boeing's loss of market share to rival Airbus Group SE and emerging players, the people said.

As a path back to regaining lost share to Airbus, Mr. Conner told the attendees that he wanted the company to make a decision about developing an all-new jetliner as early as this year.

Boeing confirmed the webcast and said it would use attrition and voluntary layoffs. "We will start reducing employment levels beginning with executives and managers first," said a spokesman. "The overall employment impact will depend on how effectively we bring down costs as a whole."

Boeing's top leadership has long sounded an upbeat assessment of its future, but Mr. Conner, a Boeing employee since 1977, was described as "anguished" during the presentation, according to some of those present, lamenting the market dynamics and the company's competitive position relative to Airbus.

A Boeing spokesman said Mr. Conner's "passion to win was clear and was entirely positive about our ability to meet and surpass the challenge."

Boeing has been weighing developing an all-new jet in recent years that would be larger than its biggest single-aisle jet, but smaller than its 787 Dreamliner. Various concepts have been considered ranging from a derivative of an existing product all the way to an entirely new design. Mr. Conner's preference, a significant vote in determining the company's strategic future, is toward an all-new aircraft, the people present said.

In the near term, he told employees that customer feedback had identified executive management as a source of cuts to reduce costs. The people said executive cuts were the first step, and could expand to salaried employees, adding that its unions had already agreed to begin voluntary layoffs.

Airbus, founded in 1970, has slowly chipped away at 99-year-old Boeing's dominance selling jetliners to the world's airlines. On its next-generation single-aisle jets, despite having nearly 3,100 to build, Boeing trails Airbus by more than 1,300 orders.

Mr. Conner spoke of its European rival undercutting its products on price, despite what Boeing claims is an edge in performance. Airbus is offering prices for its 220-seat single-aisle jet equal to a Boeing model that seats 30 fewer passengers. The same was true of its twin-aisle A350 jetliner, priced lower than Boeing's advanced 787 Dreamliner, the people said.

"I wouldn't agree that we're offering our products for lower prices than Boeing," said Simon Pickup, Airbus director of strategic marketing at an industry event outside of Seattle.

Write to Jon Ostrower at [e-mail]

(END) Dow Jones Newswires

February 10, 2016 17:17 ET (22:17 GMT)

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