Coronavirus Pandemic Crisis Forces Airbus To Scuttle Plans For New A321 Plant

In what was the latest exemplification of the impact of the coronavirus pandemic ripping through the global airline industry, the plans of aircraft making giant Airbus to create a new assembly line for its A321 airliner has have been cancelled by the company.

The plans for the creation of the line at its Toulouse base in south-west France was announced by the company back in January this year. At that point in time, the primary concern for the company was to enhance capacity to meet the record demand for the jet which has the capacity of flying more than 200 passengers and is suitable for short- and medium-haul routes.

Just a day before the Airbus announcement, the decision to defer the delivery of 24 Airbus planes was announced by the budget airline easyJet. This measure was taken by the airline to meet the demands made by the airline’s founder and largest shareholder, Stelios Haji-Ioannou, who had been demanding that the airline cancel the order altogether.

On Wednesday, Airbus gad said that it would be cutting down the number of aircraft that it would build by at least one third in response to the anticipation that the coronavirus pandemic will continue to be adversely impacting the global aviation industry for a longer time even after the easing of travel restrictions.

There can be a 44 per cent drop in industry passenger revenues compared to the numbers of 2019 at $252bn, according to an estimate published by the International Air Transport Association (IATA) last month.

“Our plans for an A321 line in Toulouse are paused, on hold,” said an Airbus spokesman. “When we see rates going up again, we will reconnect to the plans.”

Airbus would “hibernate” new investments to save cash, said Guillaume Faury, the chief executive of the aircraft maker.

French unions said they would fight for the A321 plant.

“Unlike Guillaume Faury who wants to halt non-essential investment, we think the arrival of a new A321 line … factory must be maintained,” said the CGT union official Xavier Petrachi.

It was just about a fortnight ago that the IATA had published the latest estimates about the impact on the industry of the coronavirus pandemic.

“The airline industry faces its gravest crisis. Within a matter of a few weeks, our previous worst-case scenario is looking better than our latest estimates. But without immediate government relief measures, there will not be an industry left standing. Airlines need $200bn in liquidity support simply to make it through. Some governments have already stepped forward, but many more need to follow suit,” said the trade body’s chief executive, Alexandre de Juniac.

(Adapted from TheGuardian.com)



Categories: Economy & Finance, Regulations & Legal, Strategy, Sustainability, Uncategorized

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