Boeing halts hiring, limits overtime to preserve cash, stock falls most since 1974
- Boeing said it would suspend hiring and limit overtime to preserve cash.
- The company is already in crisis over two fatal crashes of the 737 Max, which has been grounded for a year.
- Boeing also reported earlier that it had more cancellations than orders in February.
Boeing is immediately suspending most hiring and implementing other measures to preserve cash as the rapid spread of the coronavirus roils the air travel industry, sending the manufacturer's stock to the lowest level since mid-2017.
Shares of the manufacturer plunged more than 18% — their biggest one-day percentage drop in more than four decades — to $189.08. Boeing's plunge shaved more than 284 points off the Dow Jones Industrial Average, helping send the blue-chip index into a bear market.
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The company also is drawing down earlier than expected the entirety of a $13.8 billion loan it secured in January to give it a cushion to weather the turmoil.
Boeing is already reeling from the damage of two fatal crashes of its 737 Max and the worldwide grounding of the planes, which hits the one-year mark on Friday.
"On top of the work of safely returning the 737 MAX to service and the financial impact of the pause in MAX production, we're now facing a global economic disruption generated by the COVID-19 coronavirus," Boeing's CEO, Dave Calhoun, and CFO Greg Smith wrote in a note to employees Wednesday.
The company is not laying off workers at this time, a Boeing official told CNBC. Boeing also doesn't currently have plans to make any changes to its dividend, the official said.
The company is also limiting travel and discretionary spending. It will also limit overtime to work necessary for its efforts to bring the 737 Max back in service and "other key efforts in support of our customers," the executives wrote to employees.
Boeing is facing other challenges, including an increase in cancellations over new orders for its commercial planes, which generate the majority of the company's revenue. Earlier Wednesday, it reported net cancellations, including for several 737 Max planes, in February.
"Even as we take these steps to protect the business, we ask you to double down on the work you're doing to improve safety and first-time quality in everything that we do," they wrote in the memo.
"In the meantime, you'll hear from us often through this uncertain period ahead," they added. "We'll be clear about the challenges. And we'll be transparent as we consider additional affordability measures. Your respective functional and business leaders will share more information on these steps shortly."
Boeing said three of its own employees at its facilities in Everett, Washington, have tested positive for the virus and are in quarantine "until they've made a full recovery and are no longer infectious."
Correction: Boeing is not laying off workers at this time, a company official told CNBC. An earlier version misstated the person's remarks.