Airbus suffers pandemic blow, cuts A350 production
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Airbus has cut production on its A350 wide-body airliners following tepid market conditions during the coronavirus pandemic and a larger than expected loss in the second quarter.
Announcing its half-year results for 2020, the firm said revenues decreased to €18.9bn (£17.1bn) in the first half of the year - a sizeable fall from the €30.9bn revenues achieved in the same period last year.
The fall was blamed on the difficult market environment impacting its commercial aircraft business due to the collapse in global air travel as the pandemic took hold.
Airbus said it had reduced its commercial aircraft production rates in accordance with its new plan, announced in April 2020, in response to the Covid-19 situation. For the time being, it has dropped the production of its A350 from six to five aircraft a month.
Potential customers have become wary of buying new aircraft as the number of people who travel by air are not expected to return to pre-pandemic levels for some time.
In April, EasyJet founder Sir Stelios Haji-Ioannou tried to force the firm to terminate its £4.5bn deal with Airbus, which was due to build the low-cost airline 107 new planes.
His request was ultimately refused, as Airbus said it would have to pay back discounts it had received on aircraft that had already been delivered.
“The impact of the Covid-19 pandemic on our financials is now very visible in the second quarter, with H1 commercial aircraft deliveries halving compared to a year ago,” said Guillaume Faury, Airbus CEO.
“We have calibrated the business to face the new market environment on an industrial basis and the supply chain is now working in line with the new plan. It is our ambition to not consume cash before M&A and customer financing in H2 2020. We face a difficult situation with uncertainty ahead, but with the decisions we have taken we believe we are adequately positioned to navigate these challenging times in our industry.”
He added: “We believe it is going to be a long and slow recovery.”
The crisis has particularly affected demand for wide-body long-haul jets, which are expected to be the slowest to recover once demand returns to normal levels, which Airbus says could take until 2023 or 2025.
Airbus is shedding up to 15,000 jobs - approximately 11 per cent of its workforce - to cope with the crisis, which it expects to keep output down by 40 per cent for some two years compared with pre-crisis levels.
Airbus posted an adjusted second-quarter operating loss of €1.2bn, which included €900m balance sheet impairment charges related to the industry’s worst crisis.
Analysts said the report on cash, a key issue for investors as companies seek to stay afloat, was better than expected.
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