The "rapid contraction" of air travel has resulted in a drop in demand for aviation equipment as airlines suspend routes and ground substantial parts of their fleets, according to a letter by Chairman and CEO Larry Culp. In response, GE said it is planning to reduce 10% of its U.S. workforce in the aviation business, and a temporary lack of work will affect 50% of the company's U.S. maintenance, repair, and overhaul workforce for 90 days.
In addition, the division's CEO David Joyce will forgo half his salary. The moves are expected to save $500 million to $1 billion in 2020, Culp said.
GE is also seeing an impact of COVID-19 on its GE Healthcare business. The division is seeing "reduced demand for certain equipment as elective procedures are postponed or canceled around the world," the company said.
At the same time, the division is working "heroically" to increase manufacturing capacity for types of equipment that are needed to diagnose and treat COVID-19, such as CT and ultrasound scanners, mobile x-ray systems, and ventilators and patient monitors, Culp said.
Finally, the company noted that its financial position should be solidified once it sells its BioPharma unit to Danaher. The company said it had satisfied regulatory requirements for the deal, which is expected to close on March 31.
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