September 24, 2020

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Airbus survival at stake without immediate action: CEO memo

European planemaker Airbus has issued a grim assessment of the impact of the coronavirus crisis, telling the company’s 135,000 staff to brace for potentially deeper job cuts and warning its survival is at stake without immediate action.

In a letter to staff, Chief Executive Guillaume Faury said Airbus was “bleeding cash at an unprecedented speed” and 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.

Airbus said it did not comment on internal communications.

The letter was sent to 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 lockdowns in mid-March.

Airbus has begun implementing government-assisted furlough schemes starting with 3,000 workers in France, “but we may now need to plan for more far-reaching measures,” Faury said.

“The survival of Airbus is in question if we don’t act now,” he added.

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 reduced targets for larger jets implying cuts up to 42% compared with previously published rates.

“In other words, in just a couple of weeks we have lost roughly one-third of our business,” Faury wrote in the letter, which was earlier reported by Bloomberg News. “And, frankly, that’s not even the worst-case scenario we could face”.

He said the new production plan would remain in place for as long as it took to make a more thorough assessment of demand, adding this would probably be between two and three months.

Faury said it was too early to judge the shape and pace of the eventual market recovery, but that the aviation industry would emerge “very much weaker and more vulnerable”.

(Reuters)