Airbus Announces Lay Off of 2,500 Workers to Address Defence and Space Division Challenges

Airbus, a major European aircraft manufacturer, announced plans to lay off 2,500 employees. This decision is part of efforts to revitalise its defence and space division. The company is facing challenges such as disrupted supply chains and rising costs in this sector. These layoffs follow organisational changes initiated last year, which Airbus claims are starting to show positive results.

The defence and space division of Airbus has been underperforming. Last year, it reported a significant loss of 477 million euros ($511 million) on the A400M military transport plane. This loss was partly due to high inflation rates. Additionally, the European space industry faced setbacks with the loss of access to Russia's Soyuz rockets and a failed Vega-C rocket launch in late 2022.

Challenges in Defence and Space Sector

Mike Schoellhorn, CEO of Airbus's defence and space division, stated, "We want to shape the division so it can act as a leading and competitive player in this ever-evolving market." He emphasised the need for the division to become faster, leaner, and more competitive. These changes aim to position Airbus as a strong contender in the rapidly changing market.

Outside its defence and space division, Airbus is thriving. The company has surpassed Boeing in plane orders and deliveries for five consecutive years. Its commercial aircraft business is booming, with profits soaring. However, Airbus faces challenges in meeting the high demand for its commercial planes.

Commercial Aircraft Demand

As of June, Airbus had an order backlog of 8,585 commercial aircraft. This backlog highlights the company's struggle to keep up with demand. Despite these challenges, Airbus continues to lead in the aerospace industry.

Boeing, on the other hand, is experiencing difficulties. After two fatal crashes involving Max jets in 2018 and 2019, Boeing seemed to be recovering at the start of this year. However, an incident on January 5 involving an Alaska Airlines 737 Max 9 has caused further setbacks for the company.

Boeing's Ongoing Struggles

The US Federal Aviation Administration ordered Boeing to slow down manufacturing following this incident. As a result, Boeing reported a $355 million loss in the first quarter due to decreased aircraft deliveries and compensation paid to airlines for grounding Max 9s temporarily. The Max series was Boeing's response to Airbus's A320 family of planes.

Airbus employs over 150,000 people globally according to FactSet data. Despite challenges in its defence and space division, Airbus remains a dominant force in the aerospace industry. The company's ongoing efforts aim to strengthen its position across all sectors.