RTX RTX Corporation

By Doug Cameron 

Raytheon Technologies Corp., the biggest aerospace supplier by sales, said it is cutting 20,000 jobs this year as it adjusts to the shrinking airline industry and the sharp drop in jetliner orders and deliveries.

The company, which supplies engines, aircraft seats and other parts to airlines and plane makers, said the cuts include a 20% reduction in its commercial arm. It is also reducing its office and factory space by as much as a quarter in response to pandemic-driven changes in demand and working conditions.

Raytheon had previously disclosed around 15,000 job cuts at its Collins Aerospace and Pratt & Whitney engine arms. It said Tuesday that contractor hiring had been halved to 4,000, while corporate staff was reduced by 1,000.

Aerospace suppliers are shedding thousands of jobs in response to the collapse of airline traffic, though Raytheon has been able to fall back on military sales such as engines for the F-35 combat jet and Patriot missiles.

Defense rivals in recent days have flagged slowing growth in Pentagon spending because of the soaring federal budget deficit.

"Defense business also gives us the ability to continue to invest through this cycle and to make sure that we have the right technologies for the future," Chief Executive Greg Hayes said on an investor call as Raytheon reported a 77% drop in quarterly profit.

Its shares were recently down more than 4.5%.

Raytheon didn't provide financial guidance for 2020, but analysts forecast sales of around $64 billion that would surpass those of Airbus SE and Boeing Co. for the second year in a row.

Sales at Raytheon's Pratt & Whitney jet engine unit fell by a third in the quarter, while revenue from aircraft parts halved as manufacturers reduced production and airline flying remained subdued.

Raytheon expects its sales of parts and engines to Airbus and Boeing to be down about 40% this year and in 2021 compared with last year, with minimal shipments of parts for the Boeing 737 MAX.

Mr. Hayes said he didn't expect 2019 levels of flying to return before 2023 at the earliest, and the main airline trade group on Tuesday also tempered expectations for an industry recovery.

The International Air Transport Association forecast global airline revenues would be about $400 billion next year compared with an estimated $350 billion in 2019. It pared previous estimates from August because of rising coronavirus cases and pushed back when it expects a vaccine to be widely available.

Airlines have cut back sharply on maintenance spending as they have cut flying, hitting large and small suppliers. Raytheon Chief Financial Officer Toby O'Brien said the health of its own supply chain had improved over the quarter. He said the company had concerns about only some 50 of its 13,000 suppliers.

Write to Doug Cameron at doug.cameron@wsj.com

(END) Dow Jones Newswires

October 27, 2020 13:17 ET (17:17 GMT)

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