Airbus begins biggest revamp with 15,000 jobs to go

PARIS: Airbus SE embarked on the most extensive restructuring in its history, setting out plans to cut 15,000 civil-aerospace jobs as it attempts to steer through the crisis brought on by the coronavirus pandemic.

The European planemaker will eliminate more than 10,000 positions across its main bases in Germany and France, part of an 11% reduction in global headcount, according to a statement.

Chief executive officer Guillaume Faury has said the company’s output would be 40% lower than expected for two years due to a dramatic slump in demand for aircraft, and has previously warned it is bleeding cash.

“The crisis the aviation sector is facing will be of a length and magnitude that calls for more structural and wide-ranging actions,” the CEO said in a video message.

“We need to act now by adapting our workforce to reflect the new situation.”

Airbus will look to cut 1,700 jobs in the UK, 900 in Spain and about 1,300 in other countries by mid-2021, the jet maker said.

Voluntary measures such as early retirement would be the main part of the process, with compulsory cuts a “last resort,” Faury said. Airbus slipped 0.3% yesterday in Paris. The shares have declined more than 50% this year.

The plans will be subject to union agreement, and faced swift criticism from the French government. The extent of the job cuts is “excessive,” the finance ministry said in a statement, adding that the company must do all it can to limit the number of forced retrenchments.

While the French government has been vocal in rejecting job cuts at companies in which it has a stake, including Renault SA, Air France-klm, it has also acknowledged that revamps are needed in light of the economic shock.

Airbus has about 135,000 employees globally, with almost 81,000 of those in the hard-hit commercial-aviation division.

Airlines and their workers have felt the initial impact from the travel slump, while their suppliers like Airbus and engine maker Rolls-royce Holdings Plc have seen prospects dwindle, forcing tough decisions.

Air France is preparing to announce about 7,500 cuts, part of a total that surpasses 160,000 across European airlines, aerospace manufacturers and airports, based on data compiled by Bloomberg.

Caught in an aircraft-market slump that Airbus said could last three to five years, the company is striving to bring down costs while avoiding political and labour tensions in its home nations.

US rival Boeing Co is in a similar predicament, and said in late April it would reduce its workforce by about 10%, or about 16,000 jobs, to conserve cash.

“This is a prudent move by Airbus because things will be very different post-covid-19,” said Shukor Yusof, founder of aviation consulting firm Endau Analytics in Malaysia.

“In the next two to three years, there are going to be more casualties among airlines.”

Unions criticised the move, with the IG Metall labour group dismissing the announcement as “short-sighted” and accusing Airbus of using the virus as a pretext for reducing the workforce. The Unite union, which represents Airbus’ UK workers, called on the British government to “step up to the plate” to protect the sector like their French and German counterparts.

“I know everybody would like to see me saying there will be no forced layoffs,” Faury said on a call with reporters.

“I cannot exclude that at the end we will not get there. That’s the hard reality I don’t like, that probably governments and my social partners don’t like either.”