General Electric (NYSE:GE) is planning deeper cuts to its aviation unit, a fresh reminder that despite progress toward a COVID-19 vaccine, the current commercial aerospace slump is likely to persist through 2021 and possibly beyond.
The conglomerate has already shed about 25% of GE Aviation's pre-pandemic 52,000-person workforce, but according to The Wall Street Journal, division chief John Slattery is warning employees that the business will have to shrink further over the next 18 months.
The pandemic has cut demand for travel, causing airlines to ground planes and cut expansion plans. That's sent a ripple through the commercial aerospace sector, including GE's massive aircraft engine operation.
In a video quoted by the Journal, Slattery said, "The business revenue and profit projections not only for this year, but next year and the year after, are fundamentally lower than what we originally budgeted or expected."
The weakness in aerospace comes at a tricky time for GE, which going into 2020 had hoped to use profits from the aircraft engine business to help fund a turnaround of the company's power and energy units. Despite the pandemic, GE has made progress reducing costs and improving efficiency, late last month saying its transformation is "accelerating."
GE on Tuesday also won an analyst upgrade based on its efforts. Oppenheimer analyst Christopher Glynn upgraded the stock to outperform from perform, saying in a research note that the company is moving in the right direction.