General Electric will lay off about 2,600 employees, or 10% of the U.S. workers in its aviation business, a repercussion from the coronavirus crisis and a resulting slowdown in commercial air travel.
With much of travel halted in attempts to prevent the spread of the virus, airlines such as United and Delta have cut capacity by 60% and 70% respectively. That has prompted the staff reduction at GE Aviation, GE Chairman and CEO Larry Culp announced Monday.
“The aviation industry is feeling the impact of this global pandemic most acutely,” he said in a message to GE employees.
Other GE divisions are facing adjustments, too, Culp said. GE Healthcare is attempting to boost production of ventilators, patient monitors, mobile X-ray systems and other equipment needed to help diagnose and treat COVID-19 patients, he said. At the same time, GE Healthcare faces reduced demand for equipment used in elective procedures. “I know our business teams are working hard to understand our new realities,” Culp said.
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In addition to the reduction in GE Aviation’s U.S. workforce of 26,000, about 50% of its maintenance, repair and overhaul employees will be furloughed for 90 days.
“The rapid contraction of air travel has resulted in a significant reduction in demand as commercial airlines suspend routes and ground large percentages of their fleets,” 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.”
GE Aviation, which has 52,000 employees worldwide and also makes engines for military aircraft, had previously begun a hiring freeze, canceled salaried merit increases, reduced non-essential spending, and instituted “a significant decrease in its contingent workforce,” Culp said.
Additionally, starting April 1, GE Aviation CEO David Joyce, who is also a GE vice chairman, will forgo half of his salary.
Culp said he would forgo the remainder of his salary for 2020, also.
Culp said he expected these actions to save the company $500 million to $1 billion in 2020.
“With regard to our financial position, our company is sound,” he said. “However, what we don’t know about the magnitude and duration of this pandemic still outweighs what we do know.”
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