The chief executive officer of Raytheon Technologies Corp. said Wednesday the aerospace and defense giant will cut 15,000 commercial aerospace jobs this year at Pratt & Whitney, Collins Aerospace and in corporate offices in response to the steep drop in aviation caused by COVID-19.
CEO Greg Hayes, speaking at an analysts’ conference, said Waltham, Mass.-based Raytheon is nearly doubling the job cuts from 8,500 announced in July “and we’re not done yet looking for further ways to reduce structural costs in all of our businesses.”
It will take until at least 2023 for the air travel business to recover, Hayes said, which will have a lasting impact on East Hartford-based Pratt, which manufactures and services jet engines.
Hayes did not detail how the job cuts would be spread between Pratt, Collins and corporate offices. The impact on jobs in Connecticut is unclear.
The cuts will save about $2 billion in cost reduction and $4 billion in “cash conservation” this year, he said. The reductions represent a 20% cut in sales and administrative costs and at Pratt & Whitney. And the reductions represent about a 12% reduction at Collins, Hayes said.
Collins Aerospace is headquartered in Charlotte, N.C., and employs about 5,000 workers at Windsor Locks and Cheshire.
Mike Stone, directing business representative at the Machinists union that represents about 3,300 Pratt & Whitney workers in East Hartford and Middletown, said he believes furloughs and retirements have been sufficient to satisfy spending cuts.
“Could they drop a bomb on me that I don’t know?” he said. “You know they could.”
As recently as 2019 Pratt had about 13,000 workers in Middletown and East Hartford. In 2018, with aircraft and Pentagon orders surging, Raytheon, then known as United Technologies Corp., announced it planned to hire 35,000 workers over the next five years.
Boeing said last month it’s offering buyouts to employees for a second time this year and Airbus said in June it would slash 15,000 jobs.
Hayes said the defense side of the conglomerate is strong and Raytheon is adding more than 8,000 jobs. But he does not expect a recovery in air traffic to 2019 levels “until somewhere around 2023.”
“Now that whether that’s the beginning of ’23, the end of ’23, it really depends upon the timing of the vaccine,” he said.
As of Sep. 4, commercial air traffic is down about 45% globally, an improvement from a low of 80% in March, Hayes said.
Airlines are deferring maintenance by using up “green time” on engines, or early retirement for planes, allowing fleets to swap engines that still have time for use, he said. For planes still flying but nearing the end of their engine life, swapping in “green-time engines” allows airlines to delay engine repairs.
As a result, Pratt & Whitney has taken a financial hit. It posted a rare loss of $151 million in the quarter that ended June 30. Revenue of $3.6 billion was down 30% from the second quarter of 2019.
Hayes said that in previous downturns, Pratt & Whitney benefited from a spike in engine repair and maintenance.
“But again that is not a today or tomorrow story,” he said. “That is going to be several years out.”
Investors were unfazed. Shares of Raytheon rose 2.4%, closing at $62.92.
Raytheon also will cut costs by reducing office space. The conglomerate is not using “very much” of 31 million square feet and initially aimed to cut it by about 10%, or 3 million square feet, by consolidating offices and quitting leases, Hayes said.
The company now expects to drive that reduction up to 20% or 25% over the next four or five years, he said.
Stephen Singer can be reached at ssinger@courant.com.
