Raytheon Technologies Corp. will lay off 15,000 employees in its commercial aerospace and corporate divisions, as the multinational defense and commercial aerospace conglomerate seeks $2 billion in cost savings.
The layoffs will mark a 20% reduction at East Hartford subsidiary Pratt & Whitney — which makes jet engines — and a 12% cut at Collins Aerospace, a subsidiary in Windsor Locks, Greg Hayes, CEO of Massachusetts-based Raytheon, said at an analyst conference on Wednesday.
Hayes, who was CEO of United Technologies Corp. before its $120-billion merger with Raytheon, said the commercial aerospace sector is down about 40% globally; better than the industry’s COVID nadir in March when it dropped about 80%.
“It’s going to be a slow recovery,” Hayes said. “It really depends on the timing of the vaccine.”
The U.S. Center for Disease Control and Prevention Director Robert Redfield yesterday testified to a U.S. Senate panel that a vaccine won’t likely be widely available until late-2021.
The job cuts Hayes announced are about double the 8,500 layoffs the company had planned as of July.
Raytheon posted a $3.8-billion loss during 2020’s second quarter, largely due to a pandemic-related drop-off of commercial aviation sales.
In the second quarter of 2020, Raytheon lost $3.8 billion or $2.55 per share, compared to a $1.2-billion or $1.38 per share profit in the year-ago period. Raytheon recorded $14 billion in net sales in the second quarter, compared with $11.3 billion a year earlier.
While commercial aerospace sales slumped, as airlines across the world have reduced flights as airline traffic dropped by 96% in April — according to the U.S. Bureau of Transportation statistics — Raytheon’s military segments grew in the second quarter.
During the quarter, Raytheon’s intelligence and space’s sales grew by 9.4%, and its missiles and defense segment increased sales by 11%.
Right now, about one-third of Raytheon’s revenues are coming from commercial aerospace, with the rest coming from the defense side, Hayes said. That’s a departure from their pre-COVID expectations of an approximately 50/50 split.
Defense remains a bright spot at Raytheon, and the company is planning to add about 8,200 jobs in that sector, Hayes said. The recent normalization of relations between Israel and the United Arab Emirates and Bahrain open the door for further weapons sales to those countries, Hayes said.
As part of the cost-savings initiative, Raytheon is also looking to reduce its physical footprint, reducing its 3 million square feet of office space by up to 25% over the next five years.
“The fact is we don’t need all the office space that we have,” Hayes said.