Airbus' survival at risk due to the Coronavirus Pandemic

Airbus family formation flight. Photo by Airbus

In its recent update of the impact of COVID-19 on performance, Airbus warned its employees that they should brace for deeper layoffs in the upcoming months. The world’s largest airplane manufacturer currently employs 135,000 people, and the negative effects of the pandemic are threatening its survival. The company needs to take immediate action to remedy the situation. In a letter to staff, Chief Executive Guillaume Faury said Airbus was “bleeding cash at an unprecedented speed” and that a recent drop of a third or more in production rates did not reflect the worst-case scenario. He added that the company must “act urgently” to stay afloat.

Photo by Max Sutter | AeroNewsX

The Coronavirus pandemic has brought the global travel and tourism industry to a crawl. The industry demand for jets is currently at an all-time low. Recognizing the plunging demand, Airbus will possibly announce a significant hit as it releases its Q1 financial report next week. Airbus is already relying on government-supported lay off strategies that began with 3,000 employees in France. In the upcoming months, however, Faury said that the company may have to take a more aggressive position. Airbus recently sought-after bank support to expand its commercial credit facilities in an attempt to buy time to resize and accommodate the current circumstances.

In a bid to further preserve cash, the manufacturer also announced to have slashed production for its benchmark A320 Family narrow-body airliner by a third. Airbus also plans on implementing an up to 42% cut on the production of its wide-body airliner. “Unfortunately, the aviation industry will emerge into this new world very much weaker and more vulnerable than we went into it,” Faury wrote. Faury also noted Airbus’s new production plan would remain for as long as it took to make a more thorough assessment of demand, adding this would probably be between two and three months. He said it was too early to judge the shape and pace of a recovery, but mentioned scenarios including a short and deep crisis with a fast rebound or a longer and more painful downturn with previous demand levels only returning after 5 or 10 years.