Airbus confronts clients’ disengagement as COVID-19 rages

Following the news that Airbus does not exclude prosecuting clients who default on orders and deliveries;

Nicolas Jouan, Aerospace and Defense Analyst at GlobalData, a leading data and analytics company, offers his view on Airbus’ situation:

“The news that Airbus is ready to prosecute clients defaulting on orders, whenever the conditions of the default are not deemed satisfying by Airbus, is a clear sign of mounting tensions in the commercial aerospace industry. These tensions relate to who will bear the brunt of COVID-19, the pandemic that has seen air travel collapsing in the past few months as a result of travel restrictions and lockdown measures.

“Airbus already reduced the production rates of the A320 family, postponed the ramp up of the A220, and furloughed staff in France, Spain and the UK. More production cuts are expected, but the idea of pausing deliveries altogether for more an extended period of time seems unsustainable for the company.

“Poor orders and deliveries figures for the month of May triggered this communication from Airbus’ CEO Guillaume Faury. Only 20 single-aisle and 4 A350s were delivered in the entire month, and not a single new order was registered by Airbus. A growing number of airlines and leasing companies are expressing their willingness to slim down their fleet and see few points in acquiring new jetliners before 2022 at least.

“Qantas and Qatar Airways are among the biggest airlines to tell Airbus and Boeing that no deliveries should be expected in the near future. In this context, the European plane maker is choosing to become more aggressive with defaulting customers – a clear signal of the pressure growing on the company’s balance sheet and the exhaustion of alternative solutions.”

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