Airbus Chief Warns Of Drastic Measures As Company Bleeds Cash, Cuts Production

European aviation giant Airbus is "bleeding cash at an unprecedented rate" and may need to slash more jobs as it continues to deal with the ongoing negative impacts of the coronavirus pandemic.

Guillaume Faury, the chief executive of Airbus, the world’s largest commercial aircraft manufacturer, warned his 135,000-strong workforce in a letter on Friday that the company’s very survival was at stake as airlines continue to cancel or postpone new orders for aircraft. For example, in early April, British budget carrier EasyJet said it would defer delivery of at least 24 Airbus aircraft.

Last week, Airbus commenced a government-aided furlough program with some 3,000 of its workers in France, but Faury warned “we may now need to plan for more far-reaching measures.”

“The survival of Airbus is in question if we don’t act now,” he added.

Carter Copeland, an analyst at Melius Research, estimates that Airbus burned through a record 6.5 billion euros ($7.04 billion) in the first quarter alone.

Airbus, which has already cut production of its popular A320 single-aisle jet by one-third, is expected to deliver its first quarter financial results on Wednesday.

“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,” Faury wrote. “Unfortunately, the aviation industry will emerge into this new world very much weaker and more vulnerable than we went into it. We must now act urgently to reduce our [expenditures], restore our financial balance and, ultimately, to regain control of our destiny.”

Faury added that Airbus had already secured its credit lines to allow it “time to adapt and resize” and that it was exploring "all options.”

Airbus has reportedly been in talks with a number of countries in which it operates on securing state-backed loans.

"Every assumption we had about the industry has been totally upended,” commented Greg Waldron of Flight Global. "The outlook for Airbus has gone from very positive to very negative. There's simply no demand for new aircraft at the moment."

But Waldron thinks Airbus will survive the crisis. "Airbus is a crucially important industrial program for Europe, I think Europe will be committed to keeping Airbus going," he said. "However, there's going to be a great deal of pain to go through. If they cut production rates quite significantly you're going to see large numbers of layoffs. I would expect in a few years you'll see a smaller, leaner Airbus than what we have now."

Sash Tusa, an aerospace & defense analyst at Agency Partners, said he expects Airbus will have to cut production by an additional 30% to respond to an anticipated fall in aircraft demand over the next two to three years.

Simple Flying noted that some segments of Airbus were struggling even before the arrival of the coronavirus pandemic. In February, the company said it would slash 2,300 workers from its Defense and Space division before the end 0f 2021, citing a flat space market and delayed defense contracts.

The governments of Germany, France, and Spain indirectly control about 25% of Airbus. In the past, lawmakers in those countries have pressured the company to refrain from layoffs during downturns.

Airbus cut some 10,000 jobs in early 2007, an action that sparked fury among its unions.