BY RACHIT VATS
(Reuters) - The collapse of global air travel has stopped General Electric Co's turnaround plan in its tracks and the company will have to convince investors on Wednesday that it is on course to reduce cash burn through the rest of 2020.
The manufacturing icon has predicted a cash outflow of between $3.5 billion and $4.5 billion for the second quarter, following a $2.2 billion outflow in the first quarter, as the crisis halts orders and deliveries for clients across the aviation business.
Chief Executive Officer Larry Culp said in May the company would do better in the second half of 2020 while admitting that for the full year it would be in negative territory on cashflow.
If GE does not stop haemorrhaging in the next two quarters, however, Wall Street analysts will be forced to revise their current estimate of an outflow of $2.5 billion for the year to a far bigger number.
GE's ability to generate cash has been one of its strengths historically and particularly for manufacturers is viewed as a good indicator of a company's performance and ability to grow its business.
"COVID-19 overnight stalled GE's turnaround," said Nicholas Heymann, industrial analyst at brokers William Blair.
"It's not a sinking boat but it is sitting dead in the water. (The) job for the rest of the year is to get it out of the water."
Waiting for the walking papers to arrive