Coronavirus impact: Airbus warns staff of deeper job cuts, survival being 'at stake'
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Airbus's new production plan would remain for as long as it took to make a more thorough assessment of demand. Analysts and airlines have so far mostly spoken of a downturn lasting no more than 3-4 years.
European planemaker Airbus has issued an assessment of the impact of the coronavirus crisis, telling the company's employees to brace for potentially deeper job cuts and warning its survival is at stake without immediate action.
A letter was sent to its 1,35,000 employees late on Friday, days before the company is due to give first-quarter results overshadowed by a pandemic that has left airlines struggling to survive and virtually halted jet deliveries since mid-March.
Chief Executive Guillaume Faury, in the letter, said Airbus was "bleeding cash at an unprecedented speed". He also said that a recent drop of a third or more in production rates did not reflect the worst-case scenario and would be kept under review.
"The survival of Airbus is in question if we don`t act now," he added.
People familiar with the matter say Airbus is also in active discussions with European governments about tapping schemes to assist struggling industries, including state-guaranteed loans.
Industry sources have said a new restructuring plan similar to its 2007 Power8 which saw 10,000 job cuts could be launched in the summer.
To stem the outflow of cash, Airbus this month said it would slash benchmark narrow-body jet production by a third to 40 jets a month. It also issued targets for wide-body jets implying cuts up to 42% compared with previously published rates.
It was earlier reported that Airbus was looking at scenarios involving output cuts of up to a half, and analysts say Boeing is expected to unveil comparable cuts along with lay-offs this week, lowering monthly 787 output to as low as 6 jets.
Airbus's new production plan would remain for as long as it took to make a more thorough assessment of demand. Analysts and airlines have so far mostly spoken of a downturn lasting no more than 3-4 years.
Rival Boeing, with even weaker finances due to the year-old grounding of its 737 MAX, scrapped a $4.2 billion tie-up with Brazil`s Embraer on Saturday in a move widely seen as triggered by the crisis, though it cited contractual reasons.
(with inputs from Reuters)