Airbus, the world’s biggest aircraft manufacturer, warned it may have to resort to mandatory layoffs amid broader cost-cutting measures due to the ongoing, pandemic-driven drop in demand for travel, CEO Guillaume Faury told French radio station RTL on Tuesday.
Faury said Airbus will do its best to meet cost reduction objectives without slashing staff, including voluntary redundancies, but warned there’s no guarantee this won’t happen as the outbreak of the CCP (Chinese Communist Party) virus has hit air travel with a colossal blow. With the pandemic-fueled drop in demand for air travel, airlines have slowed deliveries of new aircraft.
“The crisis is existential. Our life as a business is potentially at risk if we don’t take the right measures. We are taking them,” Faury said.
The planemaker has already committed to cutting 15,000 jobs, with a number of layoffs made through a voluntary redundancy scheme. But on Tuesday, Faury warned some of the cuts may be compulsory.
“The situation is so serious, and we are faced with so much uncertainty, that I think no one can guarantee there won’t be compulsory redundancies if we’re to adapt to the situation, especially if it evolves further,” he added.
“On the other hand, what I say clearly is that we have a lot of work to do, we will do everything we can to avoid arriving at that point,” he told the radio station. “There are lots of measures we can take between voluntary redundancies and compulsory redundancies,” he said.
Earlier this month, in a letter sent to staff, Faury warned Airbus may have to resort to compulsory layoffs as air travel has failed to recover from the pandemic as quickly as hoped.
At the end of June, Airbus announced plans to hold output down by 40 percent for 2 years.
“For the next 2 years—2020/21—we assume that production and deliveries will be 40 percent lower than originally planned,” Faury told the German newspaper Die Welt at the time.
He added that he expects output will return to normal by 2025, while depressed deliveries will catch up with production by the end of 2021.
Airbus is expected to rely partly on early retirements, with around 37 percent of its 135,000-strong workforce due to retire this decade. Its main plants are in France, Germany, Spain, and Britain.
Meanwhile, Republican senators on Monday introduced a bill that would give America’s ailing airline industry more than $28 billion in additional aid as carriers prepare to cut more than 30,000 jobs as restrictions preventing layoffs imposed on air carriers under a previous round of aid lapse at the end of the month.
As part of the CARES Act, Congress approved $32 billion in aid for airlines, on condition that they maintain certain levels of service and don’t cut jobs or pay until Sept. 30. Airlines have warned that without more relief, they will likely have to slash jobs. The new bill would protect jobs until the end of next March.
Reuters contributed to this report.