Airbus to cut aircraft production by 30% on Covid-19 aviation headwinds

Airbus, Europe’s largest manufacturer, will cut aircraft production of its core three aircraft models by roughly a third, the company said in a release on Wednesday April 8.

The aircraft manufacturer will sharply reduce production from the bestselling A320 single-aisle jet to 40 per month from 60 per month previously, assembled in Toulouse and Hamburg.
It will also cut production of the A350 jet to six a month and the A330 to two a month.
“Our airline customers are heavily impacted by the Covid-19 crisis. We are actively adapting our production to their new situation and working on operational and financial mitigation measures to face reality,” Airbus chief executive officer Guillaume Faury said.
“The impact of this pandemic is unprecedented, At Airbus, protecting our people and supporting the fight against the virus are our chief priorities at this time,” he added.
With these new production rates, Airbus preserves its ability to meet customer demand while protecting its ability to further adapt as the global market evolves, the company said.
Airbus has already canceled orders in its backlog. In March, 36 aircraft were delivered across the different aircraft families, down from 55 in February 2020.
In 2019, Airbus generated revenues of €70 billion ($76 billion) and employed a workforce of around 135,000. The aircraft maker also supports about 2,500 firms in its supply chain.
The spread of the Covid-19 virus and subsequent drop in international air travel is forcing aerospace companies to put in place drastic revisions to adapt to the new market environment.
Airbus' competitor, Boeing, has already suspended operations indefinitely, taking account of the spread of the virus, government recommendations and supply chain reliability.
Howmet Aerospace - created in March by the separation of Arconic Inc into two standalone companies - is also reducing costs and suspending its dividend in response to the halt of customer operations. 
The aerospace sector is a key consumer of aluminium. Global demand for the light metal has been stifled, with the virus causing major disruptions to supply chains, and in turn sending global premiums down.
Fastmarkets assessed the aluminium P1020A premium, ddp Midwest US at 10.5-12.5 cents per lb on Tuesday April 7, down by 8% from 11.5-13.5 per lb at the end of February and off by 24.6% from 14.5-16 per lb at the start of this year.

Cristina Belda

cristina.belda@fastmarkets.com

Published

Cristina Belda

April 09, 2020

13:14 GMT

Madrid