Airbus warns employees of deeper layoffs as Coronavirus threatens its survival

In its recent update of the impact of COVID-19 on performance, Airbus (EPA: AIR) warned its employees that they should brace for deeper layoffs in the upcoming months. The world’s largest airplane manufacturer currently employs 135,000 people. As per the company, the pandemic is threatening its survival and immediate action is required to remedy the situation.

According to CEO Guillaume Faury’s letter to employees, the current rate at which the European airplane manufacturer is bleeding cash is unmatched in history. Airbus slashed its production rate by more than a third recently. But it wasn’t the worst-case scenario, as per Faury.

Airbus didn’t comment any further on the news.

Airbus to release Q1 financial report next week

The Coronavirus pandemic has brought the global travel and tourism industry to a near halt. The airlines’ demand for jets is currently at an all-time low. Owing to plunging demand, Airbus is expected to announce a significant hit as it releases its Q1 financial report next week.

Airbus is already relying on government-supported furlough schemes that began with 3,000 employees in France. In the upcoming months, however, Faury said that the company may have to take a more aggressive stance.

According to industry sources, the airplane manufacturer may have to resort to a restructuring plan in the summer, identical to Power8 that laid off 10,000 Airbus workers in 2007. Sources also informed that Airbus is currently negotiating with European governments to devise schemes or offer stage-guaranteed loans to support industries that are struggling amidst the health crisis.

Airbus expands its commercial credit facilities

Airbus recently sought banks’ support to expand its commercial credit facilities in an attempt to buy time to resize and adapt to the prevailing circumstances.

In a bid to further preserve cash, the manufacturer also announced to have slashed production for its benchmark narrow-body airliner by a third, earlier this month. Airbus also plans on implementing an up to 42% cut on the production of its wide-body airliner.

At £44 per share, Airbus is currently around 60% down year to date in the stock market. The company hit a record-high of £121 per share earlier this year in January. Its performance in 2019, on the contrary, was reported broadly upbeat with an annual gain of more than 50%.

At the time of writing, Airbus currently has a market cap of £34.50 billion.