BOSTON (BLOOMBERG) - General Electric's aviation division will cut 10 per cent of its US workforce as the coronavirus outbreak saps demand for air travel and upends the global economy.
The maker of jet engines also plans to reduce some executive compensation and furlough half its domestic maintenance, repair and overhaul employees for 90 days. The moves are designed to save US$500 million to US$1 billion (S$729.6 million-S$1.46 billion) this year, chief executive officer Larry Culp said in a statement on Monday (March 23).
The company's aviation division has 52,000 workers globally, about half of them in the US That implies the loss of about 2,600 jobs under GE's plan. While Monday's actions only affect domestic employees, Culp said GE is working with "the appropriate parties to properly address its global workforce."
The job cuts underscore the deepening economic impact of the pandemic, as employers look to reduce spending and shore up their finances. The Trump administration and Congress are negotiating a broad stimulus package, while the US Federal Reserve is stepping up efforts to backstop the economy.
"The aviation industry is feeling the impact of this global pandemic most acutely," Culp said. "As a result, GE Aviation is announcing several steps that, while painful, preserve our ability to adapt as the environment continues to evolve."
The shares fell less than 1 per cent to US$6.47 at 10:21am in New York. GE had tumbled 42 per cent this year through March 20.
Culp will forgo the remainder of his salary for 2020, while GE Aviation boss David Joyce will give up half of his salary.
GE's financial position remains "sound," Culp said, pointing to the US$21.4 billion sale of the company's biopharmaceuticals business to Danaher Corp, a deal that's expected to close at the end of the month. GE also has about US$17 billion of liquidity in its industrial businesses and access to $35 billion in credit facilities.
"However, what we don't know about the magnitude and duration of this pandemic still outweighs what we do know," Culp said.
While the Boston-based manufacturer supports efforts by the US government to provide aid to the aviation industry and broader economy, Culp reiterated that the company hasn't sought provisions "that would benefit GE exclusively."
