The devastating contraction of commercial aviation shows no sign of abating with the latest bad news coming from engine maker GE Aviation, which announced Monday (4 May) that it was going to cut thousands of jobs as the COVID-19 pandemic continues its march around the globe, killing more than 250,000 people as of 5 May.
An estimated 13,000 jobs will cut through “voluntary and involuntary actions” and amount to about 25 percent of the company’s worldwide workforce. GE Aviation had earlier in March announced it would cut 2,600 positions in the US and these latest cuts are in addition to those.
“As this pandemic continues to advance, our understanding of its impact on our industry and our business has also evolved. The deep contraction of commercial aviation is unprecedented, affecting every customer worldwide,” said GE Aviation President and CEO David Joyce. “Global traffic is expected to be down approximately 80 percent in the second quarter when compared to the start of the pandemic’s effect in China in early February. Our aircraft manufacturers have announced reduced production schedules that will extend into 2021 and beyond reacting to the projected prolonged recovery. 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.”
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Joyce said the company is also looking to cut US$1 billion in costs and conserve US$2 billion in cash in 2020, which includes the job cuts. GE earlier reported that installations have dropped 45 percent for new engines in the second quarter and slid 60 percent for spares.
GE Aviation’s move is not unexpected as plane makers like Boeing and Airbus have also announced production cuts to survive not only the pandemic but the economic recession it has caused with millions of people unemployed and international travel basically shut down.
The global airline industry is expected to reach only 60 percent of its typical traffic by year-end, Alexandre de Juniac, CEO of the International Air Transport Association (IATA), said Monday. IATA has estimated that the aviation industry could lose US$314 billion in revenues this year.
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