Lasting effects of COVID-19 will force Airbus to take more production cuts and lay-offs

Following the recent news that Airbus will extend production cuts for two years;

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

“Airbus is planning to extend production cuts of its main commercial platforms by 40% overall for two years. These cuts will further extend previously announced reduction of output which were estimated at -30% overall until 2021. This decision was to be expected as plane manufacturers have tended to be risk averse in their handling of the COVID-19 pandemic and the ensuing collapse of air travel. The A320neo was already supposed to be cut from 60 to 40 units per month, a reduction that always seemed insufficient when sales of the aircraft stalled at 47 net orders in 2020 so far, according to Airbus’ figures. Output could now very well get below 30 units. The same principle extends to the A330 and A350, which registered as many cancellations as new orders this year.

“The months of February and April have been particularly tough with respectively zero and nine net orders. These figures could become the new normal for the next two years as airlines and leasing companies are engaged in fleet reduction. Big clients such as Lufthansa or Kuwait Airways are openly speaking about slimming down their fleets while France-KLM receives state aids and British Airways plans to make 12,000 staff redundant. The dire state of the air travel industry provides few prospect of recovery in the near future. More production adjustments and staff lay-off should therefore be expected from Airbus.”

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