European plane maker Airbus has told its 135,000 employees to brace for potentially deeper job cuts amid the Covid-19 crisis, as the company’s survival is at stake without immediate action.
CEO Guillaume Faury said in a letter to staff the company is “bleeding cash at an unprecedented speed” and that the recent drop of a third or more in production rates does not reflect the worst-case scenario and would be kept under review.
According to Faury, Airbus has begun implementing government-assisted furlough schemes starting with 3,000 workers in France, but may need “to plan for more far-reaching measures.” The CEO said “The survival of Airbus is in question if we don’t act now.”
Industry sources told Reuters a new restructuring plan, similar to Airbus’s 2007 Power8 which saw 10,000 job cuts, could be launched in the summer. Faury said the company is already exploring “all options” while waiting for clarity on demand.
Airbus is in active discussions with European governments about tapping schemes to assist struggling industries (including state-guaranteed loans), the sources said. The company has already expanded commercial credit lines with banks.
The aerospace giant said this month it would reduce narrow-body jet production by a third to 40 jets a month. It also issued targets for wide-body jets, with cuts of up to 42 percent compared with previously published rates.
“In other words, in just a couple of weeks we have lost roughly one-third of our business,” Faury wrote in the letter, which was seen by Bloomberg. “And, frankly, that’s not even the worst-case scenario we could face.”
Analysts and airlines have so far mostly indicated a downturn lasting no more than 3-4 years. According to Faury, it is too early to judge the shape and pace of recovery, but possible scenarios include a short and deep crisis with a fast rebound or a longer and more painful downturn with previous demand levels only returning after 5-10 years.
“Unfortunately, the aviation industry will emerge into this new world very much weaker and more vulnerable than we went into it,” Faury wrote.
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