2 April 2020: Astronics Corporation addressed the impact of COVID-19 on the aerospace industry, their business and future actions taken by the company to fight the crises.
In a public statement Peter Gundermann, Astronics Chairman and CEO said, "This is an unprecedented situation in our industry and we have to take measurable actions. First and foremost is the safety of our team members. We have implemented enhanced cleaning protocols, spacing of workstations, work-from-home wherever possible, minimization of visitors, meetings and travel, emphasizing the importance of personal hygiene and responsibility. The aerospace industry has been significantly impacted and airlines are dealing with a precipitous drop in passenger traffic. Accordingly, we are taking swift actions to address the reduction in demand we are likely to see in the aftermarket, which is approximately 25 per cent of our business. These actions will be difficult for our Company and our employees, but they are necessary in the face of the COVID-19 threat."
Operational Status and Actions Being Implemented:
- As an essential business serving the defence industry, the majority of Astronics operations remain functional except its Test Systems engineering center in India, which is closed by government mandate.
- The Company has had four other locations closed temporarily for deep cleaning, but all have reopened as of today.
- Astronics drew down USD150 million from its existing line of credit to augment cash on hand, which was USD31.9 million at December 31, 2019. The Company has also engaged in preliminary discussions with its agent bank around potential modifications to its loan agreement that may be required as a result of the COVID-19 impacts to the aerospace industry.
- The Company is minimizing its planned capital expenditures, which are now expected to be less than USD10 million for all of 2020, down from previous expectations of USD 22 million to USD 25 million.
- In the area of employment costs, Astronics has frozen hiring, suspended all wage adjustments and bonus programs, and is adjusting its work force to align with demand.
- The Company expects these initiatives will reduce its overhead and labour costs this year by approximately USD 55 to USD 60 million beginning in the second quarter.
Mr. Gundermann concluded, "These actions, combined with others we have taken in recent weeks, position us well to survive the COVID-19 market disruption that we anticipate. The earlier actions include the restructuring of our systems certification and antenna businesses, the launch of Avenir for the VVIP inflight entertainment/connectivity market, and the suspension of our share buyback program and acquisition activity. Collectively, these are significant steps that position the Company as well as possible for the immediate future, realizing that the future is not clear. We will continue to monitor the situation closely and make necessary course corrections as appropriate. We appreciate the collective efforts of our entire team in this trying time."