GE Aviation plans to cut 13,000 jobs as coronavirus hits air travel demand

KEY POINTS

• GE is planning to cut about 13,000 of jobs in its aviation unit this year amid a dismal market for new jets.
• Boeing has warned that a recovery in travel demand could take years.
• The 25% cuts will be permanent and include voluntary measures like early retirements.

A General Electric GE9X engine is pictured on a Boeing 777X airplane as it taxis for the first flight, which had to be rescheduled due to weather, at Paine Field in Everett, Washington on January 24, 2020.

Jason Redmond | AFP | Getty Images

General Electric's aviation unit revealed plans on Monday to slash its workforce by 25% — roughly 13,000 jobs — this year as the coronavirus pandemic threatens to drive down demand for new aircraft.

The unit manufactures some of the most commonly used passenger and military aircraft engines and provides services including engine overhauls to the aviation sector. 

"To protect our business, we have responded with difficult cost-cutting actions over the last two months. Unfortunately, more is required as we scale the business to the realities of our commercial market," GE Aviation CEO David Joyce told employees in a memo.

The reductions will include voluntary measures like early retirements.

General Electric fell more than 4% on Monday to close at $6.21, while the S&P 500 ended 0.4% higher.

GE is doubly exposed to the aviation slump through the GE Aviation manufacturing arm and its leasing unit, GECAS, one of the world's largest aircraft lessors.

GE last week reported an 8% drop in first-quarter revenue and said sales in GE Aviation fell 13%.

Boeing said last week it plans to reduce its workforce, which numbered about 160,000 at the end of last year, by 10%, as it faces a dearth of new orders. GE engines are on many Boeing aircraft, and GECAS has been a major purchaser of Boeing planes.