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As expected, the Commerce Department says the U.S. economy shrank substantially in the first quarter. And a company that usually represents American economic might had bad news of its own. Boeing reported a $641 million loss for the first quarter and announced it will be cutting back airplane production and eliminating thousands of jobs. From Chicago, NPR's David Schaper reports.
DAVID SCHAPER, BYLINE: Boeing's poor earnings report was not a surprise. Air travel has plummeted more than 95% because of the pandemic. Airlines are burning through cash, losing billions, and they're not buying new planes anytime soon.
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DAVID CALHOUN: This virus is a body blow to the aviation industry, to the airlines, to the flying public...
SCHAPER: Boeing CEO David Calhoun held a conference call today with reporters.
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CALHOUN: ...And then ultimately to Boeing, its competitors and the supply chain that underlies the manufacturing sector.
SCHAPER: Boeing is a manufacturing behemoth. It's the nation's largest exporter, accounting for an estimated 1% of GDP. Its supply chain has 17,000 manufacturers making the engines, wheels, wings, seats and countless other parts, so Boeing's cuts will ripple across the country and around the world.
Calhoun announced today that Boeing will reduce the size of its global workforce by 10%, eliminating about 16,000 jobs. Many of the cuts will be achieved through attrition but others by layoffs. Asked if there could be more job cuts in the future, Calhoun says there are no such plans right now.
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CALHOUN: We think we're being conservative here, and we think we have adjusted to the right levels to carry us at least a couple of years out. So no, we don't have any hidden second plan.
SCHAPER: But there's a caveat - more cuts could come if the pandemic is not contained soon or the coronavirus reemerges in the fall. Aerospace analyst Sheila Kahyaoglu of Jefferies and Co. (ph) anticipated the cuts and expects Boeing's rebound to lag behind an eventual resurgence in air travel.
SHEILA KAHYAOGLU: There's going to be a big recovery. People will want to travel again. People will get on aircraft. And right now, I think we're modeling a pretty dire scenario, and it's probably all upside from here.
SCHAPER: Kahyaoglu and others expect demand to return to 2019 levels within two to three years. But analyst Scott Hamilton of Leeham Co. says that forecast may be overly optimistic.
SCOTT HAMILTON: We think it'll be more like four years - best case - before you see passenger traffic return into pre-COVID levels and at worst case, eight years. And then, of course, the production of new airplanes will trail that.
SCHAPER: If true, that would be a devastating blow to Boeing, which is already reeling from the long grounding of the 737 MAX, its best-selling jet ever. Asked about the status of the troubled plane, Calhoun says the company continues making progress towards meeting regulators' demands as it addresses flaws that contributed to two deadly crashes.
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CALHOUN: Most of our work now is all about documentation. It's been that way for quite some time. And the documentation effort - it's a mountain of work to do.
SCHAPER: Boeing CEO David Calhoun says he believes the plane is still on track to be recertified and back in service by the end of September. But in the current environment, airlines may not need to fly them anytime soon.
David Schaper, NPR News, Chicago.
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