Raytheon Technologies Corp. aims to cut 15,000 jobs -- sharply more than previously planned -- and review its factory footprint as Chief Executive Officer Greg Hayes prepares to capitalize when commercial air travel recovers from the coronavirus pandemic.
The plans could result in more than the $2 billion in cost cuts already targeted by the company, which plans to preserve $4 billion in cash through additional measures. In July, the maker of jet engines and other aircraft parts projected it would cut about 8,500 jobs.
"Given the slope of the recovery, I think the folks have taken a more aggressive look at head count, and we're really pushing through trying to exceed that $2 billion," Hayes said Wednesday at a Morgan Stanley conference. "We're going to look for additional savings this year."
The deeper reduction in payroll -- most of which is expected this year -- highlights the continued pain that the drop in global airline traffic has inflicted on suppliers as carriers ground jets, retire planes early and delay nonessential fleet maintenance.
Raytheon rose 2.44% to $62.94 Wednesday in New York. The stock had tumbled 30% this year through Tuesday, while the S&P 500 gained 5.3%.
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The review of Raytheon's manufacturing assets includes several high-cost facilities, Hayes said. The process has begun and will continue over the coming months. He cautioned that closing or moving production is a multiyear effort that would involve consulting labor unions and other stakeholders.
"We don't want to screw anything up but we want to make sure that when this pandemic does end -- whenever that is -- that we're actually in a position to have a lower cost structure than when we started," Hayes said. He played down the potential for cost cuts to boost earnings in 2020 but said they "should generate significant earnings growth next year."
Third-quarter repair work at Raytheon's Collins Aerospace unit declined 50% through August from a year earlier, while orders for commercial spare parts slumped 65%. But the figures were slight improvements from the second quarter, Hayes said.
Shop visits at the Pratt & Whitney engine unit fell 60% for the same period, which Hayes said was in line with expectations, given the state of airline travel.