For the first quarter of 2016, the worst performing stock in the Dow Jones Industrial Index is Boeing Co. (NYSE: BA), which is down 12.19%. Over the past five trading sessions, Boeing’s stock has dropped about 3.9%, with the biggest part of the dip coming since last Wednesday.
That was the day Boeing announced that it would cut 4,000 jobs in Washington state through attrition and voluntary retirements. Instead of lifting the share price — something layoffs nearly always do — Boeing saw its stock get pounded.
The main reason for that is that the company seems to be running scared of archrival Airbus. In an internal Boeing webcast to employees last month, Ray Conner, CEO of the commercial aircraft division, basically said that Airbus is eating Boeing’s lunch, having reduced Boeing’s share of the total backlog to 46% and a desire to push that target to 40%.
And Airbus is doing this by undercutting Boeing’s prices. Boeing plans to strike back by cutting billions from its costs by the end of the year. Squeezing suppliers and shedding ancillary costs helps, but if the company is serious about cutting billions from the operating budget to improve cash flow by the end of 2016, the only way to do that is to cut jobs.
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