LONDON (Reuters) - British engineering company Meggitt (MGGT.L) said it planned to shed about 1,800 jobs as part of a cost cutting plan to cope with a contraction in the world’s air travel market due to the coronavirus pandemic.
Meggitt, which makes parts used in planes, said on Thursday that it was too early to provide guidance for this year given the coronavirus crisis, and its focus was on cutting costs.
It said it would reduce its cash expenditure by 400 million to 450 million pounds ($494 million - $556 million) in 2020 through the job cuts, plus 20% salary reductions for executives and from lowering capital expenditure and inventory.
The company said that it would cut jobs equivalent to 15% of its global workforce of 12,000 people, but a spokesman said there was no clarity on where those jobs would be lost. Meggitt has facilities in the UK, the U.S., China and elsewhere.
“This action will ensure that our internal capacity across our civil aerospace business reflects the reduction in demand,” said the company, which makes wheels and brakes.
In response to coronavirus, planemakers like Airbus (AIR.PA) and Boeing (BA.N) have suspended or cut production after demand for air travel collapsed and most airlines found themselves unable to take delivery of aircraft.
Meggitt said, however, that its defence business, which supplies components to military jets, has grown strongly so far this year and it expects that trend to continue throughout 2020.
Last year, over one third of Meggitt’s revenues came from its defence business.
($1 = 0.8089 pounds)
Reporting by Sarah Young; editing by James Davey and Paul Sandle