Airbus said Tuesday it needs to cut 15,000 jobs — or 17% of its commercial jet workforce — within the next year in response to the COVID-19 crisis that has devastated the airline business.
“Airbus is facing the gravest crisis this industry has ever experienced,” said Airbus CEO Guillaume Faury. “The measures we have taken so far have enabled us to absorb the initial shock of this global pandemic. Now, we must ensure that we can sustain our enterprise … adjusting to the overwhelming challenges of our customers.”
The company said after an “in-depth analysis of customer demand,” it does not expect air traffic to recover to pre-pandemic levels before 2023, and potentially as late as 2025.
“To confront that reality, we must now adopt more far-reaching measures,” Faury said.
Faury said in a news teleconference that because commercial jet revenue is now 40% below pre-pandemic levels, the job cuts would be much worse without support Airbus is receiving from European governments.
Aside from the prospective 15,000 job cuts, many Airbus employees are now working part-time, with their respective governments paying them unemployment benefits for the hours not worked, through September and in some cases beyond.
In France, all 29,500 employees in the commercial aircraft division are in some way adjusted to part-time work, depending on their activities, with an overall cut in work time of 30%, according to Airbus.
In Germany, about 14,000 workers are on such part-time employment furloughs, amounting to a 20% reduction in work capacity. In the U.K., Airbus has about 3,700 employees working part-time and it has another 3,100 employees in Spain.
Faury thanked the governments for this employment support.
“They have helped mitigate very much the impact of the pandemic,” he said. “It could be, by far, much worse without all the systems that have been put in place and this is protecting a lot of jobs.”
Faury said because it’s important to preserve the talent Airbus needs for an eventual recovery, he hopes for agreements with governments that would allow the company to rotate workers over the next two years through such partial furloughs so their skills can stay current while “the majority of their salaries will be paid by governments.”
He noted that though Airbus has lost 40% of its business, the proposed job cuts amount to a 17% cut to its worldwide commercial jet workforce of about 90,000.
The job losses will be distributed so about 5,100 will be cut in Germany, 5,000 in France, 1,700 in the U.K., 900 in Spain and 1,300 elsewhere, mainly in China, the United States and Canada.
These new cuts because of the pandemic come on top of previously announced unrelated losses of 2,600 jobs in the Defense and Space division and another 900 jobs from the restructuring of an Airbus subsidiary in Germany that produces commercial jet parts.
Lower production rates
In March, the European jet maker reduced production of its single aisle A320 aircraft by one third and of its widebody jets by 37% to 42% compared with pre-pandemic rates.
On Tuesday, Faury said production in the months ahead is likely to be cut some more, though not significantly.
In comparison, Boeing in late May announced job cuts of about 13,000 workers worldwide, about 9,300 or 70% of them from its commercial jet workforce of about 64,500. In total, that’s a 14% cut to commercial, an 8% cut to Boeing’s total employment of 160,000 people.
(Airbus has a much smaller military division and employs a total of 135,000 people.)
Boeing also reduced the planned ramp-up next year of its grounded 737 MAX production rates by more than 26% and cut widebody jet production by between 30% and 40%.
Faury said Airbus is working with the unions in each country to reach agreement on the job cuts by this fall.
Airbus will try to avoid involuntary layoffs, he said, but “compulsory actions cannot be ruled out.”