GE GE Aerospace

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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