The Gulf Time Newspaper One of the finest business newspapers in the UAE brought to you by our professional writers and editors.
New York / AFP
US aerospace giant Boeing’s shares dived amid speculation that regulators are investigating its accounting for its 787 and 747 aircraft. In midday trade, shares in the Dow member were down about 10 percent at $104.44.
The Securities and Exchange Commission (SEC) has opened a probe on Boeing’s profitability forecasts for the long-haul 787 and 747 jetliners, said a person close to the situation, speaking on condition of anonymity to AFP. The SEC suspects that Boeing had not taken into account all the costs involved in the two aircraft programs in their long-term profitability outlook. Bloomberg reported that at the core of the investigation is Boeing’s financial reporting method known as program accounting. It allows Boeing to spread the upfront costs of manufacturing aircraft over many years.
While the SEC has generally allowed its use in the aerospace industry, the agency now seems to be paying attention to critics who say it gives companies too much leeway in reporting financial results, and hiding eventual losses, Bloomberg said. Boeing and the SEC declined comment to AFP.
Chicago-based Boeing, facing heated competition from European manufacturer Airbus in the single-aisle aircraft market, told AFP earlier that it is planning to cut jobs at its commercial aircraft division, the company’s biggest money-maker, to reduce costs. Ray Conner, chief executive of Boeing Commercial Airplanes, alerted employees to the downsizing in an internal webcast. “To win in the market, fund our growth and operate as a healthy business, we are taking thoughtful steps to reduce the cost of designing and building our airplanes, part of which involves evaluating our employment levels across all of Commercial Airplanes,” Conner told staff, according to a statement from a Boeing spokesman.
The staff reductions will begin with executives and managers, Conner said. He did not give the number of job reductions, through attrition and voluntary layoffs.
But he said that involuntary layoffs may be necessary “as a last resort.”
The jetliner unit employs 82,545 people in a total Boeing workforce of almost 159,500.