Planemaker Embraer announces massive layoffs

Brazilian jet-maker Embraer announced on Thursday that it will be cutting 2,500 jobs — 1,600 of which will happen through a voluntary redundancy program. The company claims the move is a direct consequence of the aviation crisis sparked by the coronavirus — as well as of the failure of a USD 4.2-billion merger deal with Boeing, the completion of which was also affected by the pandemic.

In Q2 2020, Embraer posted its worst financial results in 20 years, with BRL 1.6 billion in losses. In that period, the company delivered only four commercial planes and 13 executive jets, against 26 and 25, respectively, in Q2 2019.

The company’s redundancy program has been the subject of controversy, with employees accusing management of coercing them into taking voluntary cuts. Labor prosecutors are investigating the claim.

The São José dos Campos-based company spent BRL 485,000 toward integration with Boeing — money that was lost after the U.S. planemaker pulled out of the deal, claiming Embraer failed to meet requirements. The Brazilian manufacturer disputes that claim and has filed a lawsuit in the U.S., seeking compensation.

Unions said the decision was unexpected, but layoffs have been on the cards for Embraer for years. In 2017, consultancy firm McKinsey drew up a restructuring plan to simplify the planemaker’s structure for better financial results. The plan was only partially followed at first, but should now be resumed.

Embraer was the sole major planemaker not to have announced major cuts. Boeing and Airbus, for instance, announced they will each slash over 15,000 jobs.

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