General Electric (GE) - Get Report said on Monday it planned to reduce its global workforce in its aviation unit by as much as 25% this year due to the economic shutdown caused by the coronavirus pandemic.
Shares of the Boston industrial giant at last check were down 4.9% to $6.18.
"To protect our business, we have responded with difficult cost-cutting actions over the last two months," David Joyce, chief executive of the unit, told employees in a memo. "Unfortunately, more is required as we scale the business to the realities of our commercial market.”
Joyce said GE was "developing our plan for permanent reductions to our global employee base that we anticipate will bring our total reductions this year to as much as 25% (including both voluntary and involuntary actions already announced)."
At the start of the year GE's aviation unit had about 52,000 employees.
Last month, the company posted weaker-than-expected first-quarter earnings and warned that the current-quarter results would decline further, amid a "material" hit from the coronavirus pandemic.
"The deep contraction of commercial aviation is unprecedented, affecting every customer worldwide," Joyce said.
"Global traffic is expected to be down approximately 80% 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."
GE had said in early April that it was furloughing half the engine-manufacturing staff for its aviation unit, after previously saying it was dropping 2,600 employees from the aviation unit, or 10% of the unit’s workforce.
The coronavirus has devastated the aviation industry as very few people are flying. And the General Electric unit already was under pressure before the outbreak from the grounding of Boeing’s (BA) - Get Report 737 MAX jet after two fatal accidents. General Electric builds engines for the 737 MAX.
Separately, U.S. airline stocks slumped Monday after the investor Warren Buffett told investors over the weekend that he'd dumped all his holdings in the sector in the wake of the coronavirus pandemic.