GE to Furlough Thousands of U.S. Aviation Workers Due to Air Travel Slump
April 02 2020 - 6:39PM
Dow Jones News
By Thomas Gryta
General Electric Co. is furloughing half of the U.S.
manufacturing workers in its jet-engine business for four weeks,
citing growing pressure on the global aviation industry from the
coronavirus pandemic.
The move, covering thousands of workers, comes just 10 days
after the division said it would lay off about 10% of its U.S.
workforce, or about 2,500 employees, in one of the first major job
cuts by a large American manufacturer. At that time, GE also said
the division would furlough up to half of its maintenance and
repair employees for three months.
"We appreciate the commitment of all our employees during this
difficult time, and we regret having to take this action," GE said
in a statement Thursday. The furloughed workers, who work on
commercial engines, will continue to get company-paid health
benefits. The exact number of people affected wasn't disclosed.
The aviation division is GE's largest and most profitable; it
makes and maintains engines for planes built by Boeing Co. and
Airbus SE. In early March, GE said it froze hiring, canceled
merit-based raises, trimmed nonessential spending and made cuts to
its contingent workforce.
Thus far, GE's moves to lower labor costs in the aviation
division have only been in the U.S., but additional moves could be
coming in its overseas operations. Last week, GE CEO Larry Culp
hinted at more cuts to come, saying the aviation division is
working "with the appropriate parties to properly address its
global workforce."
GE had about $36 billion in cash at the end of 2019, along with
$35 billion in untapped credit lines, according to its annual
report. Earlier this week, GE closed the sale of its biopharma
division to Danaher Corp. for proceeds of more than $20 billion in
cash.
GE had been restructuring its operations and trying to pull out
of a slump caused by weak demand for its power generation equipment
and troubles in its GE Capital unit. In recent years, GE had
slashed its quarterly dividend to a token penny per share.
Before the coronavirus outbreak, GE had projected improving cash
flow from its industrial operations despite a recent slowdown in
production in the aviation unit.
The division, with about 52,000 workers around the world, has
been hit by the grounding of Boeing's 737 MAX, which cut GE's cash
flow by $1.4 billion in 2019. The division is still important to
GE's turnaround as it produced $4.4 billion in cash flow last
year.
Write to Thomas Gryta at thomas.gryta@wsj.com
(END) Dow Jones Newswires
April 02, 2020 18:24 ET (22:24 GMT)
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