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Sep 16, 2020

Raytheon deepens job cuts to 15,000, sees long road to recovery

Displays of missiles stand at the Raytheon International Inc. chalet on day two of the Farnborough International Airshow (FIA) 2018 in Farnborough, U.K., on Tuesday, July 17, 2018. The air show, a biannual showcase for the aviation industry, runs until July 22.

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Raytheon Technologies Corp. plans to cut 15,000 jobs -- sharply more than previously planned -- saying the commercial aerospace market will likely take several years to recover from the coronavirus pandemic.

The reduced payroll is part of a push to cut US$2 billion in costs this year and save $4 billion in cash as the pandemic crushes airline travel and saps demand for new planes, Chief Executive Officer Greg Hayes said. In July, the maker of jet engines and other aircraft parts projected it would cut about 8,500 jobs.

“We see a gradual return to flight across all commercial markets but probably not a full return to 2019 levels until somewhere around 2023,” Hayes said Wednesday at a Morgan Stanley conference. “It really depends on the timing of a vaccine.”

The deeper job cuts -- most of which are expected this year -- highlight the continued pain that the drop in global airline traffic has inflicted on aerospace suppliers as carriers ground jets, retire planes early and delay nonessential fleet maintenance.

Third-quarter repair work at Raytheon’s Collins Aerospace unit declined 50 per cent through August from a year earlier, while orders for commercial spare parts slumped 65 per cent. But the figures were slight improvements from the second quarter, Hayes said.

Shop visits at the Pratt & Whitney engine unit fell 60 per cent for the same period, which Hayes said was in line with expectations, given the state of airline travel.

Raytheon rose 2.6 per cent to US$63.04 at 11:24 a.m. in New York. The stock had tumbled 30 per cent this year through Tuesday, while the S&P 500 gained 5.3 per cent