Shares of General Electric (NYSE: GE) were down 6% in afternoon trade on Monday after the company announced job cuts at its Aviation division due to aircraft groundings and flight cancellations caused by the current health crisis.
In the wake of the coronavirus pandemic, several airlines have cancelled their flights and grounded significant portions of their fleets leading to lower demand and reduced air travel. In this scenario, GE Aviation has decided to cut its total US workforce by around 10%.
The company also said that around 50% of its maintenance, repair and overhaul employees in the US will face a temporary lack of work for 90 days. These actions come on top of the ones the company has already taken which include a hiring freeze, cancellation of the salaried merit increase, cost reductions and job cuts.
David Joyce, CEO of GE Aviation will forgo half of his salary from April 1, while Larry Culp, CEO of GE has decided to forgo his full salary for the remainder of 2020. These actions are expected to save $500 million to $1 billion in 2020.
GE also said that its Healthcare division is seeing reduced demand for certain equipment due to the cancellations of elective procedures. However, the company is working to increase the manufacturing capacity and output of equipment such as CTs, mobile X-ray systems and ventilators, which are important in the diagnosis and treatment of coronavirus patients.
Last week, GE announced that it expects to complete the sale of its BioPharma business to Danaher (NYSE: DHR) on March 31. The company believes this transaction will help strengthen its financial position.