GE to Slash 13,000 Jobs in Aviation Amid Air Travel Plunge
GE to Slash 13,000 Jobs in Aviation Unit Amid Air Travel Plunge
(Bloomberg) -- General Electric Co. will cut about 13,000 jobs from its jet-engine operation, in the latest sign of the devastating impact of the coronavirus outbreak on global air travel.
The reductions, going well beyond cuts announced in March, will include “voluntary and involuntary actions” affecting about 25% of GE Aviation’s workers worldwide, the company said Monday in a statement. The total includes a previously announced move to cut about 2,600 positions in the U.S.
“The deep contraction of commercial aviation is unprecedented, affecting every customer worldwide,” GE Aviation Chief Executive Officer David Joyce said in the statement. “We have responded with difficult cost-cutting actions over the last two months. Unfortunately, more is required.”
The job cuts, coming after GE last week reported deep financial strains in its jet-engine manufacturing division, underscore the severe impact of the pandemic on aviation and the broader economy. Planemakers Boeing Co. and Airbus SE, along with airlines worldwide, have launched desperate efforts to preserve and raise cash as demand has fallen sharply.
For GE, in particular, the stress on a key business threatens a broader turnaround effort as CEO Larry Culp attempts to shore up the balance sheet and pull the company from one of the deepest slumps in its history. GE Aviation had been a bulwark for the Boston-based company as it dealt with depleted cash and a slump in the power-equipment business.
Permanent Cuts
The aviation job cuts, which will be permanent, will be rolled out “over the coming months,” Joyce said. GE previously announced employee furloughs in addition to layoffs.
The latest moves are part of a $3 billion plan announced last week to reduce costs and preserve cash in the engine unit. GE said when it reported quarterly earnings that installations have dropped 45% for new engines in the second quarter and slid 60% for spares.
The global airline industry is expected to reach only 60% of its typical traffic by year-end, Alexandre de Juniac, CEO of the International Air Transport Association, said Monday on a French business news TV program. The trade group in mid-April estimated that the industry would lose $314 billion in ticket sales this year. In the U.S. alone, air traffic is less than 10% what it was a year ago.
GE fell 4.2% to $6.23 at 10:27 a.m. in New York. The stock plunged 42% this year through May 1, while the S&P 500 fell 12%.
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