Raytheon Technologies (RTX) – Get Report shares were slipping on Thursday after the aerospace and defense giant said the company would be eliminating more than 15,000 jobs due to the slowdown in the airline industry brought on by the coronavirus pandemic shutdown.
“Those head-count reductions are nearly double the previous estimate of about 8,500 that we gave you back in July,” Chief Executive Greg Hayes said on a Morgan Stanley investor-and-analyst call on Wednesday.
Shares of the Waltham, Mass., company at last check were down 1.2% to $62.15.
Hayes said selling, general and administrative expense would be cut roughly 20% at Pratt & Whitney of East Hartford, Conn., and about 12% at Collins Aerospace, based in Charlotte.
The job cuts are part of $2 billion in overall cost reductions and $4 billion in cash conservation for the company in 2020.
Hayes said the company’s defense business “remains resilient and strong” and Raytheon would “probably hire” 8,200 people on that side of the business.
Raytheon is also looking to cut the amount of office space globally by 20% to 25% over the next four or five years.
Hayes said the company is “eliminating structural costs in our businesses, so that we emerge a stronger, higher-margin business when air traffic does recover over the next few years.”
“And we’re not done yet looking for further ways to reduce structural costs in all of our businesses,” Hayes told the analysts on Wednesday’s conference call. “Not just on the commercial side but on the defense side as well.”
The airline industry has been devastated by the coronavirus outbreak as consumers eliminated or severely curtailed their travel plans.
Hayes said that as of September 4, commercial air traffic is down about 45% globally compared with a low of 80% in March.
China is leading the recovery, he said. “They’re down about 5% domestically, but still down 74% internationally; Europe is down 43% down versus 90%; and North America as you know is down about 39% off of the low of 75%.”