In its first quarter earnings announcement last week, General Electric (NYSE:GE) said it was working on $2 billion of operational cost cuts, as well as $3 billion in cash preservation efforts, to help stem the impacts of the ongoing COVID-19 pandemic. Today, GE Aviation CEO David Joyce detailed some of those cost cutting plans.
GE's aviation division is seeking a 25% cut in its global workforce this year. This includes some previously announced voluntary and involuntary actions and would bring the total reduction to approximately 13,000 employees, according to Bloomberg.
In his letter to GE Aviation employees, Joyce said that as the impacts from the pandemic continue, the company is able to more clearly identify changes in its business. "The deep contraction of commercial aviation is unprecedented, affecting every customer worldwide," he said.
When GE reported first quarter earnings last week, it announced an 8% drop in year-over-year revenue. The company expects further declines as well, since the second quarter will be the first full earnings period experiencing pandemic impacts. GE Chairman and CEO Larry Culp specified the aviation business as the hardest hit, saying "the impact from COVID-19 materially challenged our first-quarter results, especially in Aviation, where we saw a dramatic decline in commercial aerospace as the virus spread globally in March."
Today's announcement said the reductions in GE Aviation will be permanent, as "part of a comprehensive strategy we are developing for resizing the business consistent with the forecast of our commercial market."