Airbus warns staff on jobs using its 'survival at stake'
27 April, 2020
European planemaker Airbus issued a bleak assessment of the impact of the coronavirus crisis, telling the company’s 135,000 employees to brace for potentially deeper job cuts and warning its survival reaches stake without immediate action.
In a letter to staff, Chief Executive Guillaume Faury said Airbus was “bleeding cash at an unprecedented speed” and a recent drop of a third or even more in production rates did not reflect the worst-case scenario and will be kept under review.
Airbus said it did not comment on internal communications.
The letter was delivered to employees late on Friday, days prior to the company is due to give first-quarter results overshadowed by a pandemic which has left airlines struggling to survive and practically halted jet deliveries since mid-March.
Airbus has begun implementing government-assisted furlough schemes you start with 3,000 personnel in France, “but we might now need to plan for more far-reaching measures,” Faury said.
“The survival of Airbus is involved if we don’t act now,” he added.
Industry sources have said a fresh restructuring plan similar to its 2007 Power8 which saw 10,000 job cuts could be launched in the summer, but Faury indicated the company was already exploring “all options” while looking forward to clarity on demand.
People familiar with the matter say Airbus is also in active discussions with European governments about tapping schemes to aid struggling industries, including state-guaranteed loans.
It has already expanded commercial lines of credit with banks, buying what Faury referred to as “time to adapt and resize”.
Production cuts
To stem the outflow of cash, Airbus this month said it could slash benchmark narrow-body jet production by a third to 40 jets a month. In addition, it issued targets for wide-body jets implying cuts up to 42 percent compared with previously published rates.
“In other words, in just a little while we've lost roughly one-third of our business,” Faury wrote in the letter, that was earlier reported by Bloomberg News. “And, frankly, that’s not the worst-case scenario we could face”.
Reuters reported on April 3 that Airbus was looking at scenarios involving output cuts of up to a half, and analysts say Boeing is likely to unveil comparable cuts along with lay-offs this week, lowering monthly 787 output to as low as 6 jets.
Faury said Airbus’s new production plan would remain for as long as it took to generate a more thorough assessment of demand, adding this might oftimes be between two and three months.
He said it was too early to guage the condition and pace of a recovery, but mentioned scenarios including a brief and deep crisis with an easy rebound or a longer and more painful downturn with previous demand levels only returning after 5 or a decade.
Analysts and airlines have up to now mostly spoken of a downturn lasting no more than 3 to 4 years.
Rival Boeing, with even weaker finances because of the year-old grounding of its 737 MAX, scrapped a US$4.2 billion tie-up with Brazil’s Embraer on Saturday in a move widely viewed as triggered by the crisis, though it cited contractual reasons.
“Unfortunately, the aviation industry will emerge into this " new world " very much weaker and more vulnerable than we went into it,” Faury wrote.
Source: www.thejakartapost.com
TAG(s):