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Updated: April 29, 2020

Nearly $1 billion of GE earnings was wiped out by coronavirus

HBJ File Photo General Electric's former Fairfield headquarters.
By Matt Egan, CNN Business

General Electric's turnaround has been disrupted by the coronavirus pandemic.

The conglomerate said Wednesday it burned through $2.2 billion of cash during the first quarter as its jet engine business got slammed by a "rapid decline" in global commercial aviation demand in March.

GE estimated the health crisis wiped out about $900 million of its earnings and hurt free cash flow by around $1 billion.

"The impact from COVID-19 materially challenged our first-quarter results, especially in Aviation, where we saw a dramatic decline in commercial aerospace as the virus spread globally in March," CEO Larry Culp said in a statement.

Prior to the crisis, GE was enjoying a comeback driven by efforts to slim down its portfolio, clean up its balance sheet and generate free cash flow by improving its operations. Even GE's critics credited Culp with saving the company from disaster.

Yet GE's industrial free cash flow burn rate nearly doubled during the first quarter as the pandemic struck. Its adjusted profit dropped by a deeper-than-feared 62%.

Earnings at GE's aviation, financial services and renewable energy divisions all fell. GE Power swung to a loss of $129 million. The only division to grow its bottom line was GE Healthcare, which makes MRI machines, CT scans and other medical equipment.

Revenue, however, only fell by 5% to $20.5 billion, beating estimates.

GE promised to take "swift action" in response to the deterioration of the economy. The company plans to cut $2 billion of operational costs and preserve $3 billion of cash. GE is also using proceeds from asset sales to whittle down its pile of debt. GE previously announced plans to cut about 2,600 jobs in its aviation division.

"While there are many unknowns, there will be another side — planes will fly again, healthcare will normalize and modernize, and the world still needs more efficient, resilient energy," Culp said.

GE had warned earlier in the month that its results would be ugly. Yet GE shares retreated in volatile premarket trading on Wednesday.

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