Hayes predicts Raytheon will reduce office space by 25%

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Apr. 8—Raytheon Technologies Corp. is likely to shed a quarter of its 32 million square feet of office space in the wake of remote working practices that took hold during the COVID-19 pandemic, CEO Gregory J. Hayes said Wednesday.

"Fundamentally, the office has changed," Hayes told David M. Rubenstein, president of the Economic Club of Washington, D.C., in a livestreamed interview.

Hayes noted that the merger of the former United Technologies Corp. and Raytheon closed April 3, 2020, shortly after offices had shut down due to the pandemic. The combined company's headquarters are in Waltham, Massachuetts, but Hayes said he's never held an in-person board meeting.

Within two weeks after pandemic lockdowns began, half of Raytheon's 200,000 employees worldwide were working remotely, he said.

"It was an incredible experience to see how people adapted," Hayes said.

The company also cut thousands of jobs — eliminating 16,500 positions and laying off 4,500 contractors at Collins Aerospace and Pratt & Whitney after a steep global downturn in the commercial aviation sector.

And while Raytheon's business suffered from that dramatic drop in commercial air travel — particularly at East Hartford-based Pratt & Whitney and at Collins Aerospace, which has major facilities in Windsor Locks — Hayes said he saw firsthand the time savings in being able to meet remotely.

He noted that he had held a meeting with people in Singapore via technology, while in the past he would have spent 20 hours on a plane. That's a problem for airlines, he said.

Although personal travel will rebound "relatively quickly" as more people are vaccinated, business travel will come back more slowly, Hayes predicted.

"We've found we don't need to travel as much," he said.

And airlines need business travelers, who typically pay more for their tickets, to make money, he added.

The wide-ranging interview — which covered topics such as the possibility of hypersonic air travel, noisy airplane engines, and defense strategy — touched briefly on recent problems that have grounded Boeing 777 planes with Pratt & Whitney engines after two mid-air engine explosions.

Rubenstein asked Hayes about a February incident in which an engine on a United Airlines flight blew apart near Denver, raining debris on suburban neighborhoods.

Although aviation officials have focused on a blade in the engine, Hayes pointed to a cowling around the engine that came apart, with pieces landing in streets and yards. The cowling is not made by Pratt, he said.

"The cowling didn't work as planned" to contain the engine, he said, adding that Pratt is working with the plane's maker, Boeing, "to make sure that doesn't happen."

On the topic of defense spending, which has been a steady source of contracts for Raytheon companies, Hayes said he doesn't expect to see large increases in the future — meaning that some existing programs will end to free up money for new developments.

Defense agencies need to think about new equipment to counter weapons now in development rather than "selling equipment that won the last war," he said.