Airbus Preparing For Thousands Of Job Cuts As Production, Demand Plunge

European aircraft manufacturer is preparing thousands of job cuts as it warned that production will likely plunge by 40% over the next two years due to the ongoing covid-19 pandemic.

The 40% expected drop is relative to the company’s original forecast for the 2020-2021 period.

Airbus Chief Executive Guillaume Faury told the German newspaper Die Welt that the exact number of job cuts will be revealed at the end of July.

“For the next two years – [2020/2021] -- we assume that production and deliveries will be 40% lower than originally planned,” Faury told Die Welt. "We cannot disconnect ourselves from developments [in the aviation industry]… It’s a brutal fact, but we must do it. It is about the necessary adjustment to the massive drop in production. It’s about securing our future.”

The company has already cut production by a third relative to 2019 output levels.

With respect to how the job cuts will be handled, Faury said: “I would like to speak to the employee representatives first. It is difficult to provide guarantees at the moment in a situation that could worsen. So far we are assuming that domestic air traffic will pick up in summer and in international traffic by summer [of] next year. If there is a second wave of the coronavirus pandemic, with longer travel restrictions, the situation would be worse again. So I don't want to make any promises.”

Reuters reported that sources expect between 14,000 and 20,000 job cuts at Airbus based on revised production targets.

Faury expects aircraft output will return to normal by 2025.

He added that he expects demand for single-aisle aircraft to accelerate faster than demand for widebody jets.

As a result, Airbus plans to increase production of its A320 series of aircraft beginning in 2022. Demand for widebody jets will take longer to be restored.

But the aviation giant still plans to build only 40 of its popular A320 jets each month.

Faury pointed out that many new aircraft are sitting idle as airlines were not taking delivery of them.

“We anticipate low demand for wide-body aircraft over the next five years, as there was already an oversupply in the market before the [covid-19] crisis,” he said. “At some point, a large replacement wave is expected for the Boeing 777 and Airbus A330, but [that] is still a long way off.”

Airbus posted a loss of $522 million in the first quarter of 2020 as orders for new planes were crushed by airlines grounded by the pandemic.

Faury also indicated to Die Welt that over the past two months, its airplane deliveries had plunged by 80%. In April, the company delivered only 14 aircraft out of an expected 75.

Airbus commercial aircraft division currently has a total workforce of about 90,000, but Faury noted that none of the company's assembly lines will be permanently closed and that production of all airplane models will continue, but "at a slower pace."

The company’s total workforce amounts to about 135,000.

Faury also said the company plants are exploring other ways to cut costs without necessarily firing workers.

"We will leave no stone unturned," Faury said. “We’re looking into ways to keep as many jobs as possible – but the mitigation solutions available to us won’t be enough.”

Faury, 52, has only led Airbus for a little more than year – instead of expanding the business, he has been forced to retrench during this unprecedented crisis.

“The fundamental question of a structural change could come up later when we have more clarity on how the [aviation] market is developing,” he said.