Boeing (BA) has resumed production of the troubled 737 Max jet, though regulators haven't cleared it to re-enter passenger service. Boeing stock slashed gains as the broader market reversed lower on China tensions.
XProduction was halted in January amid a prolonged grounding, which began last in March 2019 after the second of two fatal crashes.
But the Boeing 737 Max still must be re-certified to fly again and faces a collapse in travel demand that has forced customers to cancel orders and defer deliveries.
The Boeing 737 Max saw 108 additional net order cancellations last month, as airlines rush into survival mode. In March, Boeing customers canceled a total of 150 Boeing 737 Max orders.
Earlier Wednesday, Boeing told employees that it will make nearly 7,000 involuntary layoffs, continuing efforts to cut costs as aircraft demand remains depressed.
Last month, the aerospace giant said it planned a 10% reduction in its workforce of about 160,000, implying 16,000 jobs. It already offered buyouts and other voluntary reductions, which total about 5,500.
The more than 12,000 in combined job reductions announced to date are already near Boeing's target.
"Following the reduction-in-force announcement we made last month, we have concluded our voluntary layoff (VLO) program," CEO Dave Calhoun said in a note to employees. "And now we have come to the unfortunate moment of having to start involuntary layoffs (ILO). We're notifying the first 6,770 of our U.S. team members this week that they will be affected."
The latest cuts come as Boeing and Airbus (EADSY), along with health and aviation regulators, reportedly discussed how to mitigate coronavirus risks for air travelers, while a major customer deferred more aircraft orders.
Experts from the Centers for Disease Control and Prevention had a call with the aerospace giants along with the Federal Aviation Administration to discuss ways to make way air travel safer as scientists learn more about the spread of Covid-19, according to the Wall Street Journal on Tuesday.
While airplane filters are effective in removing pathogens circulated in the air, the inability to social distance makes it difficult to prevent spread from a sick passenger coughing on his or her seatmates.
U.S. carriers have encouraged mask-wearing and Southwest Airlines (LUV) and Delta Air Lines (DAL) are leaving seats empty in an effort to encourage social distancing. But it's not enough for a long-term solution.
Boeing is reportedly looking at providing research grants and is looking at using ultraviolet light as a disinfectant and antimicrobial coatings on high-touch surfaces, sources told the Journal.
Boeing is also working on a computer model that would simulate the cabin in an effort to understand any potential risks.
Earlier this month, Boeing launched its "Confident Travel Initiative" to come up with ways to minimize air-travel health risks and named Mike Delaney to lead it.
Boeing Stock
Shares rose 0.2% to 149.82 on the stock market today, well off early highs of 156.70. President Donald Trump plans to hold a Friday press conference on China, coming after Beijing imposed a national security law on Hong Kong. The stock market overall reversed lower while Boeing is among those companies that could get caught in the crossfire.
Boeing stock has largely moved sideways for more than two months and remains over 60% below recent highs. Top Boeing 737 Max supplier Spirit AeroSystems (SPR) gave up early gains to fall 5.8%. Engine supplier General Electric (GE) reversed lower to drop 7%.
Airbus and Boeing stock still face major headwinds for years to come as travel demand is expected to recover slowly, forcing airlines to hold off on taking delivery of new planes.
AerCap (AER), which buys aircraft and leases them to airlines, on Tuesday said it's deferring delivery on 37 more aircraft to 2023 and later from 2021-2022 as the the company looks to conserve cash.
More than 100 aircraft that were supposed to be delivered over the next two years have been rescheduled, saving the company $4.7 billion in capital spending, AerCap said.
"We have taken these steps to better align our delivery schedule with the needs of our airline customers and our OEM partners during this period of market dislocation," CEO Aengus Kelly
Air travel fell 96% in April and the International Air Transport Association estimates that passenger traffic won't return to pre-pandemic levels until 2023.
Follow Gillian Rich on Twitter @IBD_GRich for aviation news and more.
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