Yahoo Finance Coronavirus: Airbus expects 40% drop in production over next two years
Guillaume Faury, the chief executive of Airbus (AIR.PA), expects production at the European aircraft manufacturer to be down 40% this year and next year due to the impact of the coronavirus pandemic.
In an interview with Die Welt newspaper published on Monday, Faury said that airlines’ struggles at the moment have a knock-on effect on Airbus.
“For the next two years, ie 2020/2021, we assume that production and deliveries will be 40% lower than originally planned,” Faury told Die Welt. “We are trying to coordinate the production with the handover of the aircraft to the customers.”
Airbus had announced previously that it would cut production by one-third on average. In April, Faury told employees in a memo seen by media outlets including Reuters and Bloomberg that the company is “bleeding cash” and needs to rapidly cut costs in order to survive the impact from the coronavirus pandemic.
READ MORE: Coronavirus: Airbus CEO warns cost cuts needed as it's 'bleeding cash'
The Toulouse-based company made a loss of €481m (£439m, $541m) in the first quarter of this year as the coronavirus pandemic devastated the aviation industry.
“In April/May we were up to 80 % below our plan. Only 14 instead of 75 aircraft were delivered in April,” Faury told Die Welt. “On the one hand, due to the travel restrictions, airline crews could not take delivery of their aircraft, on the other hand, there was no financial security at the airlines, but gradually it is getting better.”
German flag carrier Lufthansa (LHA.DE) secured its survival last week, after shareholders voted to accept the terms of the €9bn (£8bn, $10bn) German government bailout. The government now has a 20% stake in Lufthansa.
Likewise, in France and the Netherlands, the governments of both countries have agreed to multi-billion-euro bailouts for Air France-KLM (AF.PA).
READ MORE: German and Dutch governments put up billions to save airlines
The Airbus chief executive said that the 40% drop in production may make job cuts unavoidable.
“The crisis in the industry is huge — we have to react to it and adapt,” he said. We employ around 90,000 people in our commercial aircraft division. As we already said several times, we will announce what the personnel adjustments will look like before the end of July.”
