Exclusive-Airbus launches cost cuts to ‘save 2024’ after output woes

By Tim Hepher

PARIS (Reuters) -Airbus has launched a programme of cost cuts and a freeze on overall headcount to shore up performance at its core planemaking business in 2024 and beyond, weeks after being forced to cut targets for jet production, industry sources said.

Code-named “LEAD!”, the new initiative will urgently tackle an increase in costs per aircraft and address deeper productivity issues as the world’s largest planemaker braces for the eventual recovery of struggling U.S. rival Boeing (NYSE:).

Some positions may disappear and the overall number of posts will be capped but the company does not plan a “conventional” redundancy plan, planemaking CEO Christian Scherer said in a memo to staff, according to the industry sources.

Costs will be examined “without taboo” but there will be no change of strategy, he added.

An Airbus spokesperson declined to comment on internal memos but confirmed the existence of a performance-improvement plan.

“In view of the continued pressure in the supply chain as well as the overall complex economic situation, there is a need to concentrate our efforts on the fundamentals,” the spokesperson said.

In the memo, Scherer predicted that Boeing’s ongoing corporate and industrial crisis would force Airbus’ main rival to “radically change for the better,” the sources said.

He also drew attention to the steady rise of China as a competitor with strong state backing and a big domestic market.

‘SAVE 2024’

Scherer, who stepped up from chief commercial officer to planemaking CEO in January, blamed “a few of our key suppliers” for recent output problems but acknowledged the company’s core industrial activities have also been lagging, the sources said.

Last month, Airbus cut delivery forecasts and slowed its production ramp-up, citing shortages of engines, interiors and some aerostructures. The move came after a resurgence of industrial problems first reported by Reuters in May.

Staff have been told the first aim of the “LEAD!” initiative is to “save 2024” in terms of deliveries and costs, which have been deviating from their budgeted trajectory, the sources said.

The project is also designed to capture more of the growth in airliner demand and improve efficiency over the longer term.

Coupled with planned increases in production, the freeze on the overall headcount suggests a crackdown on white-collar posts and some secondary projects, the sources said.

At the same time as targeting office jobs, Airbus has also been facing a problem of absenteeism in its factories, as the industry struggles to retain workers following the pandemic.