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Airbus CEO sees production down 40% over the next two years

imageStock Markets2 hours ago (Jun 29, 2020 08:10AM ET)


(C) Reuters. FILE PHOTO: Airbus’s annual press conference on Full-Year 2019 results in Blagnac


By Tim Hepher and Johanna Decorse

PARIS/TOULOUSE (Reuters) – Airbus (PA:AIR) was finalising an imminent restructuring plan expected to include thousands of job cuts on Monday as its chief executive confirmed plans to hold output down by 40% for two years.

Europe’s largest planemaker could set out its largest ever reorganisation plan by Wednesday, union sources said ahead of meetings early this week with Airbus, which declined to comment.

Airbus needs to move swiftly to counter the damage caused by a drop of some 40% in its 55-billion-euro jetliner business during the coronavirus crisis, industry sources say.

It has said it will announce job plans by the end of July, but needs to brief unions and governments on any major overhaul before a two-week “quiet period” ahead of its July 30 earnings.

Chief Executive Guillaume Faury set out a bleak backdrop when he confirmed in a German newspaper interview that Airbus was planning for a two-year drop of 40% in jetliner output.

“For the next two years – 2020/21 – we assume that production and deliveries will be 40% lower than originally planned,” Faury told Die Welt.

Output will return to normal by 2025, while depressed deliveries are expected to catch up with production by the end of 2021, Faury added in the interview published on Monday.

Reuters reported on June 3 that Airbus was looking to hold underlying jet output at 40% below pre-pandemic plans for two years as the basis for any restructuring.

It has until now said it was cutting by a third on average.

The latest figures do not imply any immediate new production cut after Airbus reduced output in April pending further review.

But industry sources say the 40% cut in underlying output, based on a weighted internal scale called “single-aisle equivalent” production, is expected to drive the restructuring.

Sources have predicted phased cuts of between 14,000 and 20,000 jobs based on the 40% target, which takes account of the number of workers needed to build different types of jetliner.

One person familiar with the Airbus layout said anything below 25,000 cuts could be seen as conservative in the light of output plans. Unions have warned against over-reaction, however.

Helicopter and Defence divisions, which manufacture some parts on behalf of the jetliner parent, will be affected.

Faury did not comment on specific restructuring plans but said the company would leave no stone unturned to reduce costs.

“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,” Faury told Die Welt.

Airbus is expected to rely heavily on early retirements, with some 37% of its total workforce of 135,000 scheduled to retire over the next decade.

Airbus has its main plants in France, Germany, Spain and Britain. Laws in some of those countries require voluntary schemes to be exhausted before any forced redundancies. Faury told staff in April all available measures would be studied.

Airbus fine-tunes job cuts as CEO confirms 40% output drop

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