Airbus to Restructure Defense Unit, Cutting 7% of Workforce
(Bloomberg) -- Airbus SE plans to restructure its defense and space business, slashing almost 7% of the workforce in an attempt to restore profitability at the money-losing operation.
The plan, initially flagged in December, calls for the European planemaker to eliminate 2,362 jobs by the end of 2021, Airbus said Wednesday in a statement. The Munich-based unit has about 35,000 total staff.
“The situation is rooted in a lack of order intake, mainly caused by a flat space market and postponed contracts on the defense side,” division head Dirk Hoke said in a letter to staff seen by Bloomberg. “The numbers send a clear message: we need to take action now.”
Airbus has been scaling back its ambitions in defense and space since 2014, when it acknowledged that the business -- which then had 40,000 workers -- had become a side-show to the far bigger jetliner operation. This latest move was signaled two months ago by Hoke, who cited “unexpected headwinds” that had weighed on orders over the previous three years, and which couldn’t be offset through continuous improvement efforts.
Airbus’s 2019 results included a charge of 1.2 billion euros ($1.3 billion) relating to difficulties with the A400M military transport aircraft program. The company said that it faced a challenging outlook on exports for the program, which hasn’t been helped by a German export ban to Saudi Arabia.
Saudi Arabia is also the top export customer for the Eurofighter warplane, and while current deliveries have been completed the German stance has led to the shelving of a follow-on deal for 48 jets while threatening support contracts.
Around 15% of the company’s overall revenue comes from its defense and space segment. Airbus said at its earnings presentation at its headquarters in Toulouse, France, last week that it would target a restructuring “to address its cost structure and restore profitability to a high single digit margin”.
The majority of the job losses will come in Germany and in Spain, according to Wednesday’s statement. Bases in the U.K. and France will see a smaller toll.
(Updates with earlier scaling back in fourth paragraph)
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