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Airbus Considers Wider Cuts in Output, Employment

June 4, 2020
As aircraft demand declines, Airbus is considering how to match employment costs to the forecast output rate for its various aircraft series, suggesting job cuts could be higher than expected.

Airbus S.A. is considering wider cuts in aircraft production rates and employment as it grapples with the scope of the downturn in commercial aircraft demand, with one report indicating it may cut its output for the single aisle A320 and A220 series by 40% from the early 2020 projections.

Having announced in April a plan to cut overall production by about 33%, to adapt to "the new coronavirus market environment," the jet-builder now is seeking to tie those rate cuts to reductions in its total employment. An output cut of that scale could allow Airbus to reduce its 35,000-person total employment to around 20,000.

The April plan would reduce the output of Airbus' best-selling A320 series by one-third, to 40 aircraft a month. The wide-body A350 jets would be reduced by about 40% to six aircraft per month; and the A330 series would be reduced more than 40% to two aircraft per month, based on the most recently published Airbus production figures.

Reuters reported Airbus is seeking to tie the "labor intensity" for its different aircraft series to the targeted employment level, so that the reduced output of new aircraft will have corresponding reduction in labor cost, as indicated by the number of workers needed to complete an individual jet.

The Reuters report did not cite its sources, but it further suggested the production cuts could extend as long as two years and lead to further job cuts for the European jet manufacturer.

The global COVID-19 pandemic has impacted the aerospace and commercial aircraft sectors significantly, disrupting supply chains and deliveries, but also resulting in reduced demand for new aircraft. Airlines that have for the past decade forecast growing traffic volumes and a need to introduce new aircraft with lower fuel-consumption rates now are reducing or cancelling previous orders.

Airbus and its rival Boeing, as well as major jet-engine manufacturers, have implemented significant reductions in employment totals.

Airbus has been working to reduce its total employment for more than a decade, but the new production rates may introduce the prospect of plant closings, which would intensify the group's disputes with labor unions in France, Germany, Spain, and the U.K.