Airbus’ Defense Unit To Cut More Than 2,300 Jobs

European airline manufacturer Airbus said it plans to cut more than 2,300 jobs at its Munich-based space and defense division by the end of this year, citing “flat space market and postponed contracts on the defense side.”

Of those reductions, 357 jobs will be cut in the U.K., 829 in Germany, 630 in Spain, and 404 in France. A total of 2,362 jobs will vanish.

In Britain, many of the job losses will occur in the southern port city of Portsmouth.

Airbus Defense and Space, which makes fighter planes, drones and satellites, among other things, employs a total 34,000 workers, including 13,000 in Germany.

The defense unit accounts for about one-fifth of the company’s total revenues.

Airbus’ defense business has suffered a number of recent setbacks -- chronic technical problems with the A400M Atlas four-engine turboprop military transporter led the German air force to reject delivery of two of the aircraft models late last year.

Airbus lost 1.2 billion euros ($1.3 billion) due to problems at its A400M military transport program.

The company posted a loss of 1.36 billion euros ($1.47 billion) in 2019, including a charge of 3.6 billion euros ($3.9 billion) to cover settlements with authorities in the U.S., France and Britain over huge bribes it paid to secure deals in China, Taiwan, and Malaysia, among other countries.

In addition, Germany’s ban on military exports to Saudi Arabia meant Airbus lost a potential customer. That ban cost the company about 221 million euros ($239 million).

The defense and space division “will provide updates on its plans and continues a constructive dialogue with employee representatives,” Airbus said in a statement. “Further financial implications are under assessment and will be communicated at a later stage.”

Airbus added that "while the underlying business perspectives, especially in the core business, remain solid,” the job cuts were needed after its book-to-bill ratio fell below 1 for the third consecutive year.

Airbus had also hoped to jointly develop fighter jets and military drones with France after German lawmakers allocated €80 billion ($86.4 billion) for the test phase of the project. But Germany's Defense Ministry has yet to approve the deal.

"We no longer want to make all our profitability depend on a few 'white elephants,' i.e. very large contracts," Airbus Executive Chairman Guillaume Faury said. "We want our business model to be profitable with the normal flow of activity and to reduce the dependence on these big contracts.”

Airbus Defense and Space chief executive officer Dirk Hoke told Reuters: “We will enter the first talks soon with the European works council [body representing employees]. The works councils know that I will fight to keep every job I can. We won’t come with disproportionate numbers.”

Hoke also noted that job cuts will depend upon capacity utilization and project pipeline at various facilities.

“Here I have to tell local politicians that the guarantees to keep plants open that many of them demand depend on projects,” he said.