AirBus Bleeding Cash


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Coronavirus: Airbus boss warns company is 'bleeding cash'

Airbus headquarters in Madrid, Spain.Image copyrightGETTY IMAGES

The chief executive of Airbus has issued a stark assessment of the impact of the coronavirus pandemic on the plane maker.

In a letter to workers, Guillaume Faury warned the company was "bleeding cash at an unprecedented speed".

This month the firm announced it was cutting aircraft production by a third.

It comes as the aviation industry is expected to shrink significantly in the wake of the Covid-19 outbreak.

Mr Faury also told Airbus' 135,000 staff to brace for potentially deep job cuts and warned that its survival was at stake without immediate action.

Airbus is this week due to deliver financial results for the first quarter of the year. Those figures will be overshadowed by the pandemic that has left global airlines struggling to survive and almost completely halted plane deliveries since lockdowns started in March.

Greg Waldron, from the aviation industry news website Flight Global, highlighted the huge impact of coronavirus on Airbus and the sector as a whole, saying: "Every assumption we had about the industry has been totally upended.

"The outlook for Airbus has gone from very positive to very negative. There's simply no demand for new aircraft at the moment."

In response to the pandemic Airbus had already begun implementing government-assisted furlough schemes starting with 3,000 workers in France and said it would lower output of its narrow-body jets to 40 a month.

Airbus has around 13,500 workers in the UK, with most of them making wings at its two major sites in Broughton, north Wales, and Filton, Bristol.

Despite the major blow the coronavirus has dealt to Airbus, Mr Waldron thinks it will survive this crisis but not without significant layoffs.

"Airbus is a crucially important industrial programme for Europe, I think Europe will be committed to keeping Airbus going," he said.

"However, there's going to be a great deal of pain to go through. If they cut production rates quite significantly you're going to see large numbers of layoffs. I would expect in a few years you'll see a smaller leaner Airbus than what we have now."

Airbus did not immediately reply to a request for comment from the BBC.

Meanwhile, Airbus' main rival Boeing is battling another major crisis due to the year-long grounding of its 737 Max passenger jet, which had been its best-selling plane.

On Saturday, the US aviation giant scrapped a $4.2bn (£3.4bn) tie-up with Brazil's Embraer. Some industry analysts saw the move as being triggered by the crises, although the company cited contractual reasons for the decision.

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Lufthansa Consulting sent an e-letter today.  This little gem was at the beginning.

The airline industry has come to a near standstill. From nearly 1.2 million international flights in December 2019, there are fewer than 200,000 scheduled to operate in April 2020. The drastic impact will last for some time. Basic measures for crisis response and cash conservation will not suffice; it is time to act aggressively

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I’m curious to know what they mean by “act aggressively”. Short of shuttering most of the operation and slashing staff numbers, there’s little else they can do. There’s no secondary market for the vast majority of their aircraft and therefore zero motivation for lessors to take back leases early. Same goes for other assets like real estate and support equipment - who’s going to take them? 

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Airbus reports $515M in first-quarter losses

By: Angela Charlton, The Associated Press   1 hour ago
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KRQZR2IYVZDPTNH63LK6QEH45M.jpg 

Several Airbus A400M military transport planes of the German Air Force stand on the runway of a military air base on Jan. 2, 2019, in Wunstorf, Germany. (Thomas Starke/Getty Images)

 

PARIS — Airbus says the aviation industry’s unprecedented troubles are just beginning.

The European manufacturing giant reported €481 million (U.S. $515 million) in losses in the first quarter, put thousands of workers on furlough and sought billions in loans to survive the coronavirus crisis. And its CEO said Wednesday it’s still at an “early stage.”

Even after virus-related travel restrictions eventually ease, Chief Executive Guillaume Faury acknowledged it will take a long time to persuade customers to get back on planes. Just how long, he can’t predict.

CEO of Airbus Defence and Space on what will be vital in 2020
CEO of Airbus Defence and Space on what will be vital in 2020

The defense industry in Europe is "on standby, but political decisions need to be taken first," says Dirk Hoke.

By: Dirk Hoke

“We are in the gravest crisis the aerospace industry has ever known,” Faury said. “Now we need to work as an industry to restore passenger confidence in air travel as we learn to coexist with this pandemic.”

Images shared online of packed planes and maskless, elbow-to-elbow passengers on U.S. flights — despite virus protection guidelines - have worried travelers and airline unions alike. International travel restrictions, meanwhile, have grounded thousands of planes worldwide.

Faury insisted that airplanes are “probably the best place to be” during a virus outbreak because of air filtration systems put in place after previous virus outbreaks and other threats, but said Airbus will work with aviation authorities to try to calm the public.

Shares in Airbus and Boeing have dropped some 60 percent this year as customer airlines collapse or seek billions of dollars in government bailouts.

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Airbus was unable to deliver 60 planned planes in the quarter because of virus-related problems, and said the second quarter looks similarly rough. Customers are asking for delays, which Faury called “the biggest issue we are managing at the moment.”

Airbus executives expressed hope Wednesday that deliveries could start picking up in the second half of the year. But they refused to issue long-term guidance given that the virus is still spreading, and that governments are reluctant to relax international travel restrictions.

U.S. rival Boeing is facing similar woes. Boeing’s CEO said Monday that it will take years for the aircraft-building business to return to levels seen before the coronavirus pandemic.

Airbus has slashed production by a third since the virus hit, and Faury said Airbus will study “resizing” the company after the crisis ebbs — a worrying prospect on a continent where Airbus has factories in four countries and is one of the region’s industrial leaders.

Already 3,000 Airbus workers in France are on temporary unemployment and the number is expected to grow. In addition, 3,200 workers in the U.K. are on furlough and negotiations are under way to put thousands of German workers on short work plans.

A recent letter by Faury warning workers that the company is “bleeding cash” was a shock to many. But Frederic Romain of French union CFTC said “the situation requires transparency. It allows workers to open their eyes” to what’s ahead.

“Fears? We have a lot of them. For the moment we don’t have a clear vision of what awaits us," Romain said.

Airbus reported a 15 percent drop in revenues to €10.6 billion in the first quarter.

Looking longer term, Faury insisted that Airbus remains committed to reducing airplane emissions but said it’s “less urgent” than before the coronavirus crisis because the company has more pressing problems to solve. “For practical cash reasons," Airbus has stopped or suspended some projects aimed at “decarbonizing” its production, he said.

 
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https://www.forbes.com/sites/marisagarcia/2020/04/29/airbus-marks-competitive-advantage-of-a220-labels-boeingembraer-deal-collateral-damage-of-coronavirus/#53e18a55fcea

Airbus Marks Competitive Advantage Of A220, Labels Boeing/Embraer Deal “Collateral Damage” Of Coronavirus

During an analyst call this morning, updating the European aircraft manufacturer’s first quarter performance, Airbus CEO Guillaume Faury marked the A220 — former Bombardier C-Series aircraft — as a competitive advantage, which along with the A320 family narrow body planes will likely put Airbus at a competitive advantage in a post-coronavirus market.

Delta Air Lines Airbus A220-100

Delta Air Lines Airbus A220-100 aircraft as seen on final approach landing with landing gear down at ... [+]

NurPhoto via Getty Images

“In a crisis like this there is collateral damage,” Faury said of the collapse this weekend of the Boeing/Embraer deal. “I would see it more positively for us..The A220 is well-suited to the post-coronavirus market...It is a very good plane and a very good program at the right point in time for Airbus.”

While announcing that the manufacturer would continue to adjust production during the crisis, to ensure that inventory levels did not pile up and that the company could preserve cash, Faury also said that Airbus would be better positioned for a post-coronavirus recovery than rival Boeing.

“We think our ability to compete in the future is in tact, if not improved,” he said. “Our product range is the right one to get out of the crisis.”

Airbus delivered a total of 122 aircraft in the first quarter of this year, including 8 A220s during the first quarter of this year and 96 A230 family aircraft.

The manufacturer had previously announced that it would reduce its average monthly aircraft production rates by about one third to 40 for the A320 family aircraft, 2 for the A330 and 6 for the A350. Airbus said that the A220 Final Assembly Line in Mirabel, Canada, “is expected to progressively return to a monthly rate of 4 aircraft.”

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In terms of a recovery plan for production, Airbus said it will initially consider only a return to pre-coronavirus production levels of around 60 aircraft per month, and gauge the need for a possible faster ramp-up. Faury left open the possibility that Airbus would establish a second production line in Toulouse for narrowbody aircraft, if there were sufficient market demand to justify an increased production rate.

A220 right sized plane for post-coronavirus market

Faury’s assertion that the A220 aircraft will be an advantage to airlines as they adjust to new demand in a post-coronavirus market is supported somewhat by the aircraft’s utility during the crisis. Delta Air Lines has kept all 31 of its fleet of A220s flying, despite grounding more than half its fleet during the crisis.

AirBaltic, which had made the A220 an integral part of its growth strategy when the aircraft was still produced under the Bombardier name, announced this month that the A220 remains core to the airline’s survival strategy going forward. AirBaltic plans to initially resume operations using its 22 Airbus A220-300 aircraft, with reduced capacity for 2020 and 2021, and foresees a return to growth by the end of 2020, supported by a fleet of up to 50 Airbus A220-300 aircraft.

On Saturday, Boeing announced that it would terminate its agreement to establish joint ventures with Embraer for the development of commercial aircraft which might put Boeing in a position to compete with the Airbus A220. The planned partnership between Boeing and Embraer had failed to gain approval from the European Commission. Embraer is taking Boeing to arbitration over the cancelation of the agreement, and is said to be considering other partnerships in China.

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