Airbus May Slash 10,000 Jobs As Aircraft Orders Canceled, Demand Wanes

European aircraft manufacturer Airbus may cut a significant chunk of its workforce as it restructures to cope with falling demand and a wave of canceled orders.

The Daily Telegraph reported that Airbus may slash 10% of its employees, which suggests at least 10,000 jobs will go.

“Boeing (BA) cut 10% of its workforce and something along the same lines is expected [at Airbus],” a source said.

One source told the Telegraph the job cuts will be “imminent and savage.”

The French-based company has already entered into discussions with labor unions in Germany, France and Spain to consult on job cuts. Airbus executives are expected to present an initial plan next week, but the final number of redundancies could take months to determine.

Under French law, Airbus cannot reveal restructuring plans internally before consulting with trade unions. This cannot be accomplished until at least the end of May.

A spokesperson for Airbus stated: “Over the last few weeks, Airbus has implemented a number of financial, operational and social measures in order to adapt to the severe health and economic impacts of the Covid-19 crisis. The company will continue to take all necessary measures to ensure the future of Airbus in cooperation with its social partners. Airbus doesn’t comment on speculation relating to internal meetings.”

Airbus CEO Guillaume Faury had warned last month that the company was bleeding cash and needed to take drastic steps, including the initial furlough of 6,000 workers, in order to guarantee its survival.

Under an updated scheme, Airbus will reportedly first scale back on its temporary and subcontracted workers, including 1,100 such employees in Germany.

Airbus's biggest division, commercial aircraft, will likely suffer the heaviest job losses, on the premise that the widebody aviation sector will take the longest to recover.

French Transport Minister Jean-Baptiste Djebarri said on Thursday that Airbus’ could suffer from lower production activity for two years.

Airbus must also deal with an aging workforce – some 37% of its 135,000 staff are expected to retire within a decade. The company may offer some of these employees early retirement. Many of these workers will not be replaced as the company moves towards increased digitalization.

Airbus may also seek to shrink its bloated pool of senior executives.

For the moment, Airbus is dependent upon government-backed furlough schemes in France, Germany and Britain to reduce staff costs.

"The prospect of job losses across the aerospace industry has been rumbling around now for at least a month," said Sandy Morris, an analyst at Jefferies. "Aircraft deliveries cannot come down by 35% [as has occurred at Airbus] without there being consequences."

Airbus shares have plunged more than 60% this year.

Airbus received some more bad news from Qatar Airways which is seeking to defer delivery on some aircraft orders from both Airbus and Boeing for several years.

“We are in negotiation with them, so I don’t want to talk about this, but yes it will be deferred for several years,” Qatar Airways chief Akbar al-Baker told the South China Morning Post.

Qatar Airways currently has more than 200 Airbus and Boeing aircraft on order.

In addition, budget airline Ryanair will cancel leases for Airbus A320s for its Austrian Lauda subsidiary and will probably replace 30 Airbus jets at Lauda with Boeing 737s,

“We have [Airbus] aircraft that are due to be delivered over the next 12 months and we will cancel almost all of those deliveries,” said Ryanair Chief Executive Michael O’Leary. “As long as we can reach an acceptable outcome with Boeing, the Boeing orders we have in place would readily replace -- I think Lauda will have a fleet of about 30 Airbus aircraft -- we would probably replace those Airbus with Boeing over the next couple of years.”