General Electric CEO Larry Culp on Thursday characterized temporary job cuts in the aviation business as a defensive move that will allow the company to play offense in the year ahead.
He told CNBC’s Jim Cramer that GE is facing the pressure from the damage inflicted on the travel and hospital industry, including aircraft makers. GE Aviation is a top plane engine manufacturer that supplies most commercial air carriers.
“We’re not immune from a rapid contraction that we’re seeing in travel and hospitality, the direct effect that’s had on our airline customers and certainly our airframers like Boeing and Airbus here as well,” Culp said in a “Mad Money” interview. “So we’re doing all that we can to support our customers at this time of rapid change and uncertainty.”
GE decided to furlough half of the engine manufacturing staff in the aviation segment, which makes up more than 34% of the business, due to the ongoing impacts of COVID-19 on the airliners. Those workers will be allowed to return after four weeks.
The staff reduction follows a move by GE last month to cut 10% of the unit.
Boeing also on Thursday said it would offer voluntary layoffs and early retirement to employees to mitigate the financial blow to the plane manufacturer amidst the global pandemic. With people across the world practice social distancing and travel restrictions in place to stop the spread of the deadly virus, demand has shriveled and airliners have delayed orders for new planes.
“At the same time we’re doing what we need to do to address cost and cash actions so that we can weather the storm however it plays out and be ready on the other side,” Culp said, “because there will be, Jim, let us never forget, there will be another side, here.”
GE shares fell about 2% to $6.90 during Thursday’s session as the broader market saw a positive day.
Disclosure: Cramer’s charitable trust owns shares of General Electric.