Airbus output could drop 25% in 2010-11

AIRBUS    AVIATION PRODUCTION    AIR TRAFFIC 

Global - Airbus announced it could reduce output at its European factories by a quarter over the next two years, due to the sharp decline in air traffic and continuing losses at airlines across the board.

Previously, Airbus said it plans to slow production of its A320 single-aisle passenger planes from 40 to 34 per month, while production of its wide-body A330 was frozen at a rate of 8.5 from 10 per month. Deliveries of the double-decker A380 have also been adjusted to 14, from an initial target of 18 per month.

However, these cuts, which amount to a slowdown of approximately 15% could be insufficient due ailing demand from airlines, Louis Gallois, CEO of EADS (the parent of Airbus) said.

"We have the flexibility to go further if needed," Gallois said to the New York Times.

The global financial downturn has badly affected the airline industry this year, with passenger traffic and cargo volumes expected to fall by 8% and 17% respectively.

Recently, the International Air Transport Association (IATA) forecast that the aviation industry could lose approximately $9 billion in 2009 from an earlier estimate of $4.7 billion.

"We are very sensitive to what will happen in the second half of the year, to see if we reach the bottom of the swimming pool... We have no capacity now to see what will be the depth of the crisis," Gallois said.

Thomas O. Enders, CEO of Airbus said if the slump in aviation sector continues, the management at Airbus foresees production cuts "somewhere in the range of between 15-25 %" over the next two years.

According the New York Times, Giovanni Bisignani, secretary general of IATA said this month that global aircraft deliveries could fall by 30% in 2010.

But Gallois and Enders said Airbus is adamant it could absorb the production slowdown without resorting to large-scale layoffs.

"But of course this has a limit... we need to be careful in the way we manage our manpower...[and] have to be able to increase production again when it is needed," said Gallois.

Between 2007 and 2008, Airbus axed approximately 10,000 employees as part of a restructuring process aimed at reducing its euro-denominated cost base.

________________________________________________________

Managing people? For HR and leadership strategy, Human Resources has it covered.

Get your marketing department up to speed with Asia's most read marketing site
marketing-interactive.com