Boston, Mass. 29 March 2020. GE (NYSE:GE) Chairman and CEO H. Lawrence Culp, Jr., issued the following message to GE employees:
As COVID-19 continues to spread, the leadership team and I remain focused on three areas during these unprecedented times: protecting the safety of our employees, continuing to serve our customers in their critical time of need and preserving the strength of our businesses. Today, I am writing to you to give you an update on the latest steps we are taking to aggressively mitigate the impact of the pandemic, starting with GE Aviation.
The aviation industry is feeling the impact of this global pandemic most acutely. The rapid contraction of air travel has resulted in a significant reduction in demand as commercial airlines suspend routes and ground large percentages of their fleets. As a result, GE Aviation is announcing several steps that, while painful, preserve our ability to adapt as the environment continues to evolve.
GE Aviation is announcing plans that impact its U.S. population, while the business works with the appropriate parties to properly address its global workforce:
- GE Aviation is planning to reduce approximately 10% of its total U.S. workforce.
- There will be a temporary lack of work impacting approximately 50% of its U.S. maintenance, repair and overhaul employees for 90 days.
- These actions build on those the business already has taken, including a hiring freeze, the cancellation of the salaried merit increase, a dramatic reduction of all non-essential spending, and a significant decrease in its contingent workforce.
- Starting April 1, David Joyce, vice chairman of GE and president and CEO of GE Aviation, will forgo half of his salary.
Taken together, we expect these cost and cash actions will preserve $500 million to $1 billion in 2020.
As David Joyce wrote in his note to GE Aviation employees earlier, “Our hardworking, determined employees are the heart of our business, and it is difficult to have to take these steps due to external factors like this. But we must respond immediately with every action within our control to protect our ability to serve our customers now and as the industry eventually recovers.”
I feel the same way. That is why I will forgo my full salary for the remainder of 2020.
GE Aviation is not alone in the challenges it faces. Each GE business and Corporate will need to adjust. For example, GE Healthcare is managing through reduced demand for certain equipment as elective procedures are postponed or canceled around the world. At the same time, our GE Healthcare team is working heroically to increase manufacturing capacity and output of equipment – including CTs, ultrasound devices, mobile X-ray systems, patient monitors and ventilators – important in the diagnosis and treatment of COVID-19 patients. I know our business teams are working hard to understand our new realities.
With regard to our financial position, our company is sound. However, what we don’t know about the magnitude and duration of this pandemic still outweighs what we do know. Closing the sale of BioPharma to Danaher will help us solidify our financial position further, and in a critical milestone last week, we announced that we have satisfied all required regulatory clearances and expect to close the transaction on March 31.
I also want you to know that we are supporting efforts by the U.S. government to preserve the aviation industry and protect the broader economy, and we have not sought any provisions in stimulus bills that would benefit GE exclusively.
While it doesn’t make today’s news easier, I want to remind you what a different financial position we are in currently thanks to your efforts to strengthen our company over the past years. We have endured crises before, though of a very different nature and on a very different scale. But just as we did then, this organization continues to show tremendous grit and resilience and we will come out of this stronger. Thank you for your hard work during this difficult time.