WASHINGTON ― Raytheon Technologies is cutting 15,000 staff and 4,000 contractor positions, largely at the company’s Pratt & Whitney and Collins Aerospace divisions, due to decreased commercial aerospace sales from COVID-19 pandemic, CEO Greg Hayes said Tuesday on the company’s earnings call.
The Waltham, Mass., aerospace giant is the latest company to announce losses since the pandemic has sent commercial aerospace companies reeling, costing them tens of thousands of jobs and millions in lost profits. Hayes projected the market segment wouldn’t get a sharp rebound, but instead see “a long, slow recovery,” over several years.
“We don’t expect commercial air traffic to return to 2019 levels, until at least 2023. And that’s of course depending upon the timing of a widely distributed vaccine. In the near term, we expect a gradual recovery of commercial air traffic particularly given the recent spike in global cases [of coronavirus],” Hayes said.
“As you know, we set aggressive targets in the first quarter to reduce costs by about $2 billion and to take actions to conserve about $4 billion in cash, making difficult but necessary actions to reduce headcount,” Hayes said.
The ongoing personnel actions will reflect a 20 percent cut at both divisions, and include both temporary furloughs and a hiring freeze. In its merger with United Technologies in April, the company already planned to cut 1,000 jobs, mostly on its corporate side, Hayes said.
The company is also reducing its infrastructure, which takes up 31 million square feet, by more than 20 percent ― beyond an earlier 10 percent goal for the merger. Hayes said that even after the pandemic subsides, it would continue to employ increased remote-work arrangements as part of a multiyear strategy to slash overhead.
An announced aerospace-parts facility in western North Carolina is still in the works, as Hayes said the company would need the capacity when demand returns. “I think by the time this comes online in late 2023, we should see a kind of return to normalcy in commercial aerospace, and Pratt will be well positioned with a much lower cost, much more automated production facility,” he said.
According to third-quarter numbers posted by Raytheon, Pratt & Whitney posted a $615 million loss in operating profit for the quarter versus a $520 million profit for the same period in 2019. Pratt’s military sales rose 11 percent, driven in part by production of the F-35 joint strike fighter.
Collins managed to post an operating profit of $526 million for the quarter, but the number marked a 58 percent drop over the prior year.
Raytheon’s commercial aftermarket business fell 51 percent at Pratt & Whitney and 52 percent at Collins Aerospace, while the company’s military side was up.
Both Raytheon’s intelligence and space and missiles and defense segments offset some of the losses, as the company reported sales of $14.7 billion and an operating profit of $434 million for the quarter.
Raytheon executives were upbeat on the defense business’s backlog of more than $70 billion, and for the quarter, the segment posted $928 million in classified bookings.
Correction: An earlier version of the story misstated the timing of the job cuts. They are ongoing, and most took place prior to Tuesday’s call.