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Airbus Now Considering Compulsory Layoffs

Sept. 23, 2020
CEO Guillaume Faury cautioned workers that the 15,000 job cuts announced in June will not be enough to address the loss in revenue stemming from shrinking aircraft demand forecasts.

Airbus SE chief executive officer Guillaume Faury has notified the manufacturer's 130,000 employees that it cannot ensure there will be no compulsory layoffs as it works to reduce operating expenses amid a shrinking commercial aerospace sector.

"I owe it to you to be transparent: it's unlikely that voluntary departures will be enough," Faury wrote to Airbus employees late last week, and first reported by Reuters. Airbus began to implement its downsizing plan in June, targeting 15,000 jobs for elimination as it reduced aircraft output by 40%.

"Unfortunately, the recovery in airline traffic over the summer period has not been at the level the industry was counting on … We must now prepare for a crisis that will probably be even deeper and longer than the previous scenarios suggested."

Airbus, along with its rival jet builders and suppliers like jet engine producers and airframe manufacturers, are aggressively reducing their payrolls to adjust to newly pessimistic forecasts of aircraft demand. Until Q2 of 2020 the industry had expected global aircraft orders to increase by several thousand over the next decade, but the Covid-19 pandemic has altered air carriers' requirements.

"The crisis is existential," Faury said in a radio interview, echoing the crisis tone he offered with the first statement on downsizing, in June. "Our life as a business is potentially at risk if we don't take the right measures.

"The situation is so serious, and we are faced with so much uncertainty, that I think no one can guarantee there won't be compulsory redundancies if we're to adapt to the situation, especially if it evolves further," Faury said.

While rival Boeing has endured hundreds of cancelled orders for its 737 MAX series jets, Airbus customers have cancelled 28 A320 jets, 17 A350s, 16 A220s, and four A330s. 

The problem for the sector's manufacturers is compounded by the current diminished rate of commercial air travel, which reduces the need for aircraft maintenance and the steady revenue that provides to manufacturers like Airbus.

According to the International Air Transport Association, July 2020 air traffic was down 80% from its July 2019 pace. The IATA maintains that international air-travel restrictions due to the pandemic make it difficult for airlines to plan future capacity requirements.

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