Airbus Launches Cost-Cutting Programme and Headcount Freeze

Airbus has initiated a programme of cost cuts and a freeze on overall headcount to improve performance in its core planemaking business for 2024 and beyond. This comes weeks after the company was forced to cut targets for jet production, according to industry sources.

“LEAD!” Initiative:

Code-named “LEAD!”, the new initiative aims to urgently address an increase in costs per aircraft and tackle deeper productivity issues as the world’s largest planemaker prepares for the recovery of its struggling U.S. rival, Boeing.

Key Aspects of the Initiative:

• Headcount Freeze: Some positions may disappear, and the overall number of posts will be capped. However, the company does not plan a “conventional” redundancy plan, as stated by planemaking CEO Christian Scherer in a memo to staff.
• Cost Examination: Costs will be scrutinized “without taboo,” but there will be no change in strategy.
• Performance Improvement Plan: An Airbus spokesperson confirmed the existence of the plan, emphasizing the need to focus on fundamentals due to continued supply chain pressure and the complex economic situation.

Competitive Landscape:

Scherer predicted that Boeing’s ongoing corporate and industrial crisis would force Airbus’ main rival to “radically change for the better.” He also highlighted the steady rise of China as a competitor, supported by strong state backing and a large domestic market.

“SAVE 2024:”

Scherer, who became planemaking CEO in January, attributed recent output problems to “a few of our key suppliers” but acknowledged issues within the company’s core industrial activities. Last month, Airbus cut delivery forecasts and slowed its production ramp-up due to shortages of engines, interiors, and some aerostructures. This move followed a resurgence of industrial problems first reported by Reuters in May.

Goals and Future Prospects:

• Immediate Goal: The primary aim of the “LEAD!” initiative is to “save 2024” by aligning deliveries and costs with budgeted projections.
• Long-Term Goal: The project also seeks to capture more growth in airliner demand and improve efficiency over the long term.
• Focus Areas: The freeze on overall headcount suggests a focus on reducing white-collar posts and some secondary projects. Additionally, Airbus is addressing absenteeism in its factories as the industry struggles to retain workers post-pandemic.

As Airbus navigates these challenges, the company aims to solidify its position in the competitive aerospace industry and ensure sustainable growth in the coming years.