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May 8, 2020

Raytheon announces $2B cost-cutting initiative amid pandemic

Photo | Raytheon Technologies A Tomahawk cruise missile made by Raytheon Technologies.

Newly-minted defense manufacturer Raytheon Technologies Corp. announced Thursday it will cut $2 billion in costs including furloughing workers, as the aerospace sector declines amid the COVID-19 pandemic.

The Massachusetts-based company reported its first quarterly earnings following the $180 billion merger completed last month between Farmington-based United Technologies Corp. and Raytheon. 

Raytheon CEO Gregory Hayes said in a quarterly earnings call that while both companies came into the merger in strong positions -- with a combined $70-billion contract backlog -- the pandemic necessitates cost-saving action, especially regarding the company's aerospace business.

"The pandemic has led to unprecedented economic uncertainty, and of course a huge slow down in commercial aerospace," Hayes said. "While both standalone UTC and Raytheon began the year with a strong start, it's clear the rest of the year's going to be under significant pressure as a result of the pandemic."

Hayes also said during the call that beginning June 1, the company will cut pay by 10% for all salaried employees at corporate offices, and  subsidiaries Pratt & Whitney in East Hartford and Collins Aerospace. He had announced the pay cuts and furloughs on Raytheon's website last month.

The company is also suspending share buybacks. 

Raytheon's first quarter earnings reflect the economy's change in dynamic.

In the first three months of 2020, Raytheon lost $83 million, or 10 cents per diluted share, compared to a $1.3 billion profit in the year-ago period. 

The numbers in Raytheon's report include UTC's aerospace business, former subsidiaries Otis elevator and HVAC manufacturer Carrier. It does not include pre-merger Raytheon.

Otis, now called Otis Worldwide Corp. also held its inaugural earnings call Thursday, and reported a nearly 40% drop in first-quarter profits as global demand for elevators and repair services declined amid the coronavirus pandemic.

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