European aircraft manufacturer Airbus announced on Wednesday its decision to reduce its workforce by 2,500 employees as part of an effort to revitalize its struggling defense and space division.
The company stated that it would also initiate various organizational transformations as it navigates difficulties within the defense and space sector, which have been attributed to several factors including disrupted supply chains, the fast-paced changes in warfare strategies, and rising operational costs.
This announcement follows prior organizational adjustments made by Airbus in the division last year, which the company noted are beginning to show positive results.
Mike Schoellhorn, CEO of Airbus’s defense and space division, emphasized the need for the organization to adapt swiftly to remain competitive in a continuously evolving market. “We want to shape the division so it can act as a leading and competitive player in this ever-evolving market,” he stated, highlighting the necessity for a more agile and efficient operation.
Last year was challenging for Airbus’s defense and space sector, particularly with a significant financial blow of 477 million euros (approximately $511 million) related to the persistently problematic A400M military transport aircraft, a situation worsened by unusual inflation rates.
The European aerospace industry also faced setbacks, most notably the loss of access to Russian Soyuz rocket launchers and the unsuccessful launch of the Vega-C rocket shortly after its takeoff from French Guiana in late 2022.
Conversely, aside from the defense and space division struggles, Airbus has experienced significant success in other areas. The company has surpassed Boeing for five consecutive years in both aircraft orders and deliveries, leading to a remarkable increase in its profits.
However, Airbus has encountered difficulties in meeting the soaring demand for commercial aircraft. By June, the French manufacturer reported an extensive order backlog of 8,585 planes.
In contrast, Boeing has faced numerous challenges recently. At the start of the year, it seemed that Boeing was finally beginning to recover from the fallout of two crashes involving the Max jets in 2018 and 2019, which resulted in 346 fatalities in Indonesia and Ethiopia. Nevertheless, complications arose on January 5, when a door plug malfunctioned in an Alaska Airlines 737 Max 9, precipitating further problems for the company.
As a result, Boeing has reduced its production rates following directives from the U.S. Federal Aviation Administration. The company incurred a loss of $355 million in the first quarter due to a decrease in aircraft deliveries and compensation payments to airlines resulting from the temporary grounding of the Max 9s. The Max series was developed as a competitor to Airbus’s A320 family of aircraft.
Airbus currently employs more than 150,000 individuals globally, according to recent statistics.