Any hopes of a quick recovery and return to the old normal have been dashed, with Airbus now weighing painful cuts as it fights to adapt and survive.
Airbus CEO Warns Of Painful Cuts
Guillaume Faury, CEO of Airbus, told employees that the European planemaker is burning cash far too quickly and would need to make rapid and radical changes in order to survive.
“We’re bleeding cash at an unprecedented speed, which may threaten the very existence of our company. We must now act urgently to reduce our cash-out, restore our financial balance and, ultimately, to regain control of our destiny.”
While unbridled spending may indeed threaten the existence of Airbus, the company is not in a fight for existence. As a powerful defense industry conglomerate and employer of high wage jobs across the European Union and United Kingdom, there is virtually zero change Airbus would ever go under.
But with airlines fighting for survival and many deferring new aircraft deliveries, Airbus must quickly adapt to a new world of weakened demand…and timing is everything.
Job cuts are inevitable, but the question is how many. If Airbus sheds too many workers, it will be unable to ramp up production if demand returns sooner than forecast. If it sheds too few, it will suffer further liquidity issues and may be forced to make more drastic cuts later on.
What The Future Looks Like
Predicting the future thus becomes far more about a strategic gamble than a clear choice. Faury added:
“The aviation industry will emerge into this new world very much weaker and more vulnerable than we went into it.”
At this point, with demand down over 90% in much of the world, that is a given. But Airbus now carefully weigh if airlines will have an appetite for new aircraft or whether, like Cathay Pacific and Lufthansa, new orders will likely be scrapped.
3,000 French Airbus workers have already been furloughed and more cuts are on the way. After burning through billions in cash last quarter, Airbus must now stop the bleeding. Not that it is much consolation, but Boeing finds itself in an even less envious position. With the cancellation of the Embraer deal and ongoing 737 MAX issues, Boeing faces many of the same struggles Airbus now faces with an even grimmer prospect for the future.
> Read More: Lufthansa And Cathay Pacific May Cancel 777-9 Orders