Aerospace Manufacturers Drastically Cut Jobs During Pandemic
Aviation giants, Airbus SE, and Boeing Co. have notified shareholders that both companies intend to shed around 15,000 employees due to the COVID-19 pandemic’s effect on global air travel. Airbus stated the job cuts, which account for approximately 11% of the total workforce, will occur at the company’s manufacturing sites in France and Germany. Boeing has indicated a similar policy as the company plans to lay off roughly 10% of its 160,000 global employees. According to Airbus, air-traffic is not anticipated to return to pre-pandemic levels until at least 2023.1
Delta Retires Boeing 777 as Global Travel Declines
Delta Air Lines Inc. has said that it will retire Boeing Co.’s 777 aircraft from its fleet by the end of 2020. The Boeing 777 is one of Delta’s largest planes and traditionally operates long-haul international routes. The 777’s retirement comes as no surprise as global air travel has significantly declined due to the coronavirus pandemic. According to Delta CEO Ed Bastian, the company is currently burning roughly $50 million a day, a figure in which the Atlanta-based airline intends to reduce to zero by year-end.2
SpaceX Becomes First Private Company to Send Astronauts into Space
Elon Musk’s SpaceX became the first private company to send astronauts into space in late May. The successful launch is a historic achievement as it reduces the dependence of U.S. astronauts on Russian spacecrafts. SpaceX was founded by Musk in 2002 and has been a co-recipient of more than $7 billion in taxpayer funding.3
Raytheon Aims to Cut $2 Billion in Costs
Raytheon Technologies Corp. announced an initiative to cut $2 billion in costs, suspend share buybacks, and furlough employees within its commercial aviation business. The U.S. defense contracting giant, who only recently finalized its merger with United Technologies Corp., plans to implement these changes immediately and sees further reductions down the road. Raytheon CEO Gregory Hayes stated the newly combined company still intends to return upwards of $20 billion to shareholders but has extended the time frame to four years from a previous estimate of three years.4
Lockheed Remains Unphased by the Pandemic
American defense contracting powerhouse, Lockheed Martin Corp., has shown no sign of instability during the COVID-19 pandemic. Since the start of the crisis in mid-March, Lockheed Martin has hired 8,300 employees and intends to hire an additional 3,200 by year-end. The defense contractor has also sent around $1.1 billion in accelerated payment to support its vast network of suppliers during the pandemic.5
Defense Contractors Rebound as Pandemic Restrictions Scale Back
Defense contractors are getting back to work as the U.S. begins to scale back restrictions induced by the COVID-19 pandemic. According to the Pentagon’s top acquisition official, Ellen Lord, the industry has seen an enormous recovery with only 33 companies in the industrial base that remain closed for business.6
Largest Transactions Closed
- Dynetics, Inc.
- United Technologies Corporate
- Meggitt Training Systems, Inc.
- Pine Island Capital Partners
- Chemring Ordnance, Inc.
- Nammo AS
This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.
EBIT - Earnings Before Interest and Taxes