According to an announcement by Boeing Co (BA) on Monday, company employees will be offered a voluntary layoff package with pay and benefits for the second time in 2020 amid reduced global demand for air travel due to the coronavirus pandemic.
The package is to be offered to persons employed in Boeing’s commercial airplanes and services businesses, according to Chief Executive Officer David Calhoun.
Boeing shares closed lower for the fifth time in the past ten trading sessions in New York on Monday. The stock went down 3.41% ($6.07) to $172.01, after touching an intraday low at $171.46, or a price level not seen since August 10th ($171.38).
Shares of Boeing Company have retreated 47.20% so far in 2020 compared with a 4.68% gain for the benchmark index, S&P 500 (SPX).
In 2019, Boeing’s stock went up 1.01%, thus, it again underperformed the S&P 500, which registered a 28.88% gain.
“Unfortunately, layoffs are a hard but necessary step to align to our new reality, preserve liquidity and position ourselves for the eventual return to growth,” David Calhoun said in a note to employees, cited by Reuters.
“We anticipate seeing a significantly smaller marketplace over the next three years,” he also noted.
According to Calhoun, the decision to bring total workforce cuts beyond the company’s original target of 10% comes in response to employee feedback.
The US plane manufacturer had announced in April intentions to reduce its global workforce of about 160,000 by 10%. Most of the layoffs were expected to be carried out by the end of 2020 at Boeing’s commercial aircraft unit.
Analyst stock price forecast and recommendation
According to CNN Money, the 23 analysts, offering 12-month forecasts regarding Boeing Company’s stock price, have a median target of $165.00, with a high estimate of $270.00 and a low estimate of $125.00. The median estimate represents a 4.08% downside compared to the closing price of $172.01 on August 17th.
The same media also reported that at least 14 out of 26 surveyed investment analysts had rated Boeing Company’s stock as “Hold”, while 9 – as “Buy”. On the other hand, 2 analysts had recommended selling the stock.