Airbus Warns Of Further Job Cuts To Save Cash

In a letter sent to staff on Friday, the CEO of Airbus warned the company’s 135,000 employees of potentially deeper job cuts. The European planemaker’s management said that its survival is at stake without immediate action to save cash.

A320 factory
In a letter to staff, Airbus CEO warns of potentially further job cuts. Photo: Airbus

Survival in question

Earlier this month, in a bid to save money and ensure employee safety, Airbus reduced its plane production by one third. Now, it seems that it may not have been enough financially. In an internal memo shared with staff and seen by Reuters, Airbus Chief Executive Guillaume Faury reportedly asked his workers to brace for potentially more job cuts.

The letter informed the employees that the company was “bleeding cash at an unprecedented speed” and that it had still not reached its worst-case scenario for the drop in production rates. As reported by the news outlet, Faury told staff:

“The survival of Airbus is in question if we don’t act now (…) In just a couple of weeks we have lost roughly one-third of our business. And, frankly, that’s not even the worst case scenario we could face.”

The bleak picture painted by the internal memo comes just days before Airbus is set to present its first-quarter results for 2020 on Wednesday this week.

Simple Flying has reached out to Airbus for comment but, at the time of publication, we have yet to receive a reply.

Airbus CEO letter job cuts
Airbus is releasing its first-quarter results on Wednesday. Photo: Airbus

Deep and swift, or prolonged and painful

The company has already begun implementing government-assisted furlough schemes beginning with 3,000 workers in France. “…but we may now need to plan for more far-reaching measures,” the company CEO said.  It has also expanded commercial credit lines with the banks and is in conversation with other governments about tapping schemes, including state-guaranteed loans.

Reuters further reports that industry sources have said that Airbus could see a restructuring plan implemented by summer – one that could resemble its 2007 Power8 program, responsible for 10,000 job cuts. However, the letter said the company was exploring all options while waiting for clarity on demand.

Scenarios reportedly include a short and deep crisis followed by a quick rebound, as well as more extended, more painful outlines with demand levels back to pre-corona only after five or ten years.

Airbus Warns Of Further Job Cuts To Save Cash
The A321XLR launch will go ahead as planned. Photo: Airbus

Employer of 135,000 people

Airbus has already slashed production of commercial narrowbody jets by a third, down to 40 a month. However, the launch of its A321XLR program is still on track. Targets for widebody production are also being cut by potentially up to 42%. This new production plan will probably last between two and three months.

Airbus employs just under 135,000 people worldwide, but some of its departments were struggling already before the corona-crisis. Back in February, the aerospace manufacturer announced it would lay-off 2,300 staff from its Defense and Space division before the end of 2021. The company cited a flat space market and delayed defense contracts as reasons for the cuts.

What is your take on the recovery scenarios? Will we see a V-shaped recovery with a quick bounceback, or are we in it for the ten years before demand resumes? Let us know your thoughts in the comments.