The longtime dismantlement of Triumph Group is about to explode further, with the company collapsing about three dozen sites to nine, workforce cuts of more than 4,000, the sale of aerostructures programs and other actions in the wake of COVID-19.
CEO and President Dan Crowley said May 28 the Berwyn, Pennsylvania-based holding company of numerous Tier 2 or so aerospace and defense parts and systems is taking “aggressive” actions, including furloughing or laying off half of its workforce, to manage through the “painful downturn.” While the company has been shopping its aerostructures businesses for a year, it will accelerate its transformation into focusing on being an engineering and MRO provider and becoming cash positive, likely around fiscal 2023.
“We will size the business to the new commercial realities while growing our business in healthier markets,” he said. “We continue to act with velocity to rightsize the operations to reflect the market reality and position for the future state of the company.”
In recent weeks, the company has:
• Reached agreement to sell its G650/G700 wing business to Gulfstream of General Dynamics and resolved open commercial issues and secured price increases on work it retains. The transaction is expected to close in early fiscal year 2021, which began April 1. Details were not provided.
• Secured purchase orders from Boeing Commercial Airplanes across multiple programs, including building at a rate of 15-20 for the 737 MAX, as the OEM seeks to support its lower-tier supply chain. Triumph and Boeing also resolved open claims and deferred a majority of its advance repayments out of fiscal 2021.
• Reached agreement with Israel Aviation Industries to accelerate transfer of the G280 wing program to it and Korean Aerospace Industries by July. Only two completed wings remain to be delivered from Triumph’s Tulsa Oklahoma plant and then it will be closed by September.
• Decided to advance the sale of more “noncore” structures sites through investment banker Lazard, with deals expected this calendar year.
According to executives, the combined actions will reduce the number of Aerospace Structures sites from 34 to nine, remove occupied space by 4.4 million sq. ft., and cut staffing levels by more than 4,000 employees.
The news came as Triumph released fourth-quarter and full fiscal 2020 results. For the year, net sales were $2.9 billion compared with $3.36 billion for the year before. Net loss decreased to $28.13 million against $321.77 million.
In April 2019, Triumph announced a comprehensive review of its structures business. It has divested its 10 build-to-print machine shops, five fabrication shops, two metal finishing facilities, and its 2 million-sq.-ft. Nashville large structures plant. Additionally, the Bombardier Global 7500 wing program, G650 wingbox assembly operation, and Embraer E2 fuselage contracts were all transferred to their new owners.
Earlier this year, Triumph completed its final Boeing 747 fuselage panels in its Hawthorne, California, factory, which is planned to be closed later this calendar year. Work on Boeing 767 structural assembly in the Grand Prairie, Texas, plant is nearing completion and production is eyed to be stopped in early calendar year 2021. In total, more than 1 million annual hours of structures work has been outsourced.
Increasingly, however, the coronavirus pandemic is seen as having a significant effect. In the near term, the Systems and Support division could see 30-35% less production for commercial OEM customers and about a 45-55% reduction in MRO activity. Triumph also assumes step-downs in interiors revenue from MAX production rate reductions of 30-35%. The interiors factory in Mexicali, Mexico, has resumed production, but it is not expected to return to prior rates until about 2022. “We’ve aggressively reduced headcount in the interim,” Crowley said.
Triumph is not providing a financial forecast for fiscal 2021.
