Failure to launch defence contracts left Airbus workforce to take hit

Posted on 21 Feb 2020 by The Manufacturer

Airbus Defence and Space has announced it will cut more than 2,300 jobs before the end of 2021, owing to a “flat space market and postponed contracts” in its defence division.

The workforce cutbacks became “necessary” after the defence division achieved a book-to-bill ratio below one for the third year in a row

The European multinational, which is one of the largest airliner manufacturers in the world, said in an official statement 357 jobs would be cut from its 4,000 UK workforce, as part of a wider consultation process with Airbus’ European works council on the defence division’s planned restructuring, first announced in 2019.

Airbus, which manufactures everything from fighter jets and drones to satellite systems, currently relies on its defence business for around one-fifth of its total revenue.

The workforce cutbacks became “necessary” after the defence division saw a book-to-bill ratio – which measures the number of orders coming in compared to the number of orders going out for a specific period – below one for the third year in a row.

Airbus attributed its dwindling orders received to the amount billed, to a “flat space market and postponed contracts on the defence side”.

Of the 2,362 positions it plans to cut before the end of 2021, 829 are in Germany, 357 are in the UK, 630 are in Spain, 404 are in France, and 142 will be from various other countries.

Airbus employs some 34,000 staff, with 13,000 of them based in Germany.

Talks with labour representatives are about to get underway following delays to Airbus’ A400M Atlas military transporter.

Repeat technical issues with the four-engine turboprop military transport aircraft forced the German Air Force to refuse delivery of two A400M last autumn, according to the BBC.

Airbus has also taken an estimated £1bn sales hit after Germany banned defence exports to Saudi Arabia, a potential customer.

The group said that while a restructuring of its defence division was necessary, the “underlying business perspectives especially in the core business remain solid”.

The Tempest programme

Eurofighter Typhoon
Eurofighter Typhoon – courtesy of Airbus

Airbus was part of a manufacturing consortium that designed the Eurofighter Typhoon, an air superiority fighter jet primarily used by the British Royal Air Force (RAF), as well as the German, Italian and Spanish Air Forces.

BAE Systems and Leonardo collaborated with Airbus on the aircraft through a joint holding company called Eurofighter Jagdflugzeug.

Latterly, the Ministry of Defence (MoD), Leonardo, BAE Systems, MBDA, and Rolls-Royce have formed the Tempest programme, to replace the Eurofighter Typhoon class by 2035 with a new aircraft (Tempest) that will be able to fly unmanned, incorporate AI, and possess directed-energy weapons such as laser, microwaves and particle beams.

The Tempest programme currently has £2bn of state funding up to 2025.

The Tempest programme is currently under development in the United Kingdom for the Royal Air Force (RAF) and the Italian Aeronautica Militare (AMI).

Speaking to the more than 2,300 jobs set to go before the end of 2021, Airbus said: “Airbus Defence and Space will provide updates on its plans and continues a constructive dialogue with employee representatives.

“Further financial implications are under assessment and will be communicated at a later stage.”