GE Moves to Cut Roughly 13,000 Aviation Workers -- Update

General Electric Co. (GE) is cutting roughly 13,000 jobs in its jet engine business, expanding its planned cost-cutting efforts as the coronavirus pandemic cripples the aviation industry.

GE said Monday in a memo to staff that it plans to cut 25% of its global aviation workforce in coming months. The unit, which employed about 52,000 people at the end of 2019, makes engines for Boeing Co. (BA) and Airbus SE. Its biggest customers have cut production as airlines ground hundreds of planes.

GE's move builds on cuts already taking place at the division's U.S. operations and is part of a plan to reduce $1 billion in costs from the business. GE said in March it was laying off 10% of its U.S. aviation workers and also furloughing thousands of maintenance staff.

Last week, GE reported that profits fell 40% in the aviation unit in the first quarter and the company expected a difficult second quarter. GE said commercial repair visits were down 60% so far in April and new engine installations were down 45%.

"As this pandemic continues to advance, our understanding of its impact on our industry and our business has also evolved," GE Aviation CEO David Joyce wrote in Monday's staff memo. Global commercial air traffic is expected to drop about 80% in the second quarter compared with early February, he said, noting that aircraft manufacturers have cut production extending into 2021 and beyond.

GE's aviation business was GE's biggest and most profitable in recent years as it benefited from a booming aerospace market and investments, including the launch of GE's most advanced engine to power Boeing Co.'s (BA) MAX jet. The unit brought in $32.9 billion in revenue last year.

The division, which is based in Cincinnati, has major factories in Lynn, Mass., Asheville, N.C., and Lafayette, Ind. It makes the MAX engines in a joint venture with France's Safran SA.

GE has made cuts in other businesses as well. It laid off 700 workers in the power unit and about 1,200 contractors, it disclosed last week. The company said it was accelerating job cuts and restructuring in its power and renewable energy units, citing a reduced outlook for projects and investments in those sectors.

GE has been restructuring in recent years by selling divisions and other assets, along with cutting jobs, in order to improve its financial condition. CEO Larry Culp said GE could use the coronavirus crisis to speed up its restructuring efforts.

"In the process of reacting to what has hit us here, if we play our cards right we will accelerate the operational and cultural transformation of GE," he said in an interview last week. Overall, the company plans to cut $2 billion in costs this year in response to the pandemic.

The 128-year-old company has already dramatically revamped itself to survive plunging profits and troubles in its power business and legacy insurance operations that prompted GE to slash its dividend and overhaul its leadership. The company ended 2019 with about 205,000 global workers, after shedding about 78,000 jobs last year. In the U.S., its workforce dropped to 70,000.

GE has sold off its locomotive business and oil-and-gas division in recent years. Before Mr. Culp arrived, it had exited the media business by selling NBCUniversal and sold or spun off most of its GE Capital arm.

GE ended March with $47 billion in cash and equivalents, boosted by the sale of its biopharma division to Danaher Corp. for proceeds of more than $20 billion. The company said it is committed to paying down its long-term debts, but it now expects to take longer to reach its goals.

Write to Thomas Gryta at thomas.gryta@wsj.com


  (END) Dow Jones Newswires
  05-04-20 1055ET
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