Boeing freezes hiring as stocks plunge
Thursday, March 12, 2020
Boeing stocks have reportedly dropped to a 46-year low, as airline travel restrictions and new reports of company malfeasance further limit buyer confidence and challenge the company’s ability to withstand vulnerable market forces.
Boeing shares dropped 18% to $189.08 on March 11 — the largest single-day percentage drop in decades: “Boeing’s plunge shaved more than 284 points off the Dow Jones Industrial Average helping send the blue-chip index into a bear market.” Canceled orders are much to blame here, as the company reported February’s overall net order number was down 28 planes.
Boeing also recently declined to bid on the lucrative contract to help build the Air Force’s “ next-generation intercontinental ballistic missile” system sporting nuclear warheads — further impacting company profits.
The one-time leader in the commercial aerospace industry, the company is the largest manufacturing exporter in the U.S. with products worth “hundreds of millions of dollars” requiring “thousands of suppliers.” Now, in an effort to stay afloat by preserving cash in a bear market awash with coronavirus uncertainty, the company has instituted a hiring freeze, with travel and overtime also halted for employees. Axios states that the Council of Economic Advisers has estimated that Boeing’s problems “...cut U.S. GDP in Q2 2019 by 0.4 percentage points.”
Boeing's performance impacts overall economic health, and we haven’t seen the worst of it yet.
Cost-cutting undermined safety. Mistakes led to software malfunctions. A company “culture of concealment” withheld critical information. Employees had conflicts of interest with the Federal Aviation Administration (FAA). The company exerted influence over FAA protocols. These five problems led to two fatal crashes killing 346 people over one year ago.
These findings will make it harder for Boeing to defend itself in court against 7,000 Max pilots who have launched a class-action lawsuit arguing “that the company’s practices put the lives of pilots, crew members and passengers at risk.”
In fact, the one-year anniversary of Boeing’s Ethiopia crash was March 10. Now, a new interim report from Ethiopian Ministry of Transport’s Aircraft Accident Investigation Bureau shifts blame from the carrier or employees to the company and its faulty equipment, stating: “Boeing’s Maneuvering Characteristics Augmentation System (MCAS) made it impossible for crew to regain control of the aircraft.”
This viewpoint further strengthens victims’ families and pilots’ cases that lives have been recklessly endangered by greed and malfeasance. Crash victims have criticized former CEO Dennis Muilenburg’s exorbitant $62 million compensation package, while a company fund has started paying victims' families.
What will become of Boeing in the months ahead is intricately tied to successful coronavirus containment, as ongoing compensation and accountability measures are awaited by company employees and victims’ families.
Boeing union members are currently split on a new contract, while an employee has tested positive for coronavirus — placing unions on high alert as the company’s moves to secure workplace health and safety will be heavily scrutinized in an already hostile work environment.
Attention to employee and consumer safety would be a new ethos for CEO David Calhoun’s company. The “double burden” of globalization’s transportation sector production pressures resulted in criminal decisions that didn’t pay off. Boeing’s current $2.44 billion negative cash flow is a dramatic decline from 2018’s $15.3 billion positive cash flow.
These losses will hit Boeing employees hard as the European travel ban takes effect, victims’ families are slowly paid, and employees make their case in court against the former aviation giant turned criminally negligent aircraft manufacturer.
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