Raytheon Plans To Cut Over 15,000 Jobs Due To Aviation Crisis

Raytheon Technologies’ CEO Greg Hayes said that the company plans to eliminate more than 15,000 jobs this year amid the coronavirus-led downturn in the airline industry. The aerospace and defense company had previously estimated job cuts of 8,500.

Raytheon’s (RTX) CEO said on Sept. 16 that these “cost actions include the elimination of more than 15,000 positions across our commercial aerospace and corporate organisation.” Through these job cuts, Raytheon expects to reduce general and administrative expenses by 20%. The move would also cut expenses at subsidiary Collins Aerospace by 12%.

In addition, the company is also looking to cut the amount of office space globally by 20-25% over the next four or five years. Previously, Raytheon said it expected to reduce office space by 10%. Raytheon is “eliminating structural costs in our businesses, so that we emerge a stronger, higher-margin business when air traffic does recover over the next few years,” Hayes said. (See RTX stock analysis on TipRanks).

On Sept. 8, Morgan Stanley analyst Kristine Liwag initiated coverage of the stock with a Buy rating and a price target of $89 (41.5% upside potential). However, currently, she is cautious on the aerospace industry, amid challenges including an aircraft production crisis because of the 737 MAX halt and slowdown in air travel due to COVID-19. The analyst does not expect aerospace stocks to trade at a premium to the market until there are signs of new and increasing aircraft production.

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 6 Buys and 3 Holds. The average price target of $76.63 implies upside potential of about 21.8% to current levels. Shares have declined 28.8% year-to-date.