European aircraft maker Airbus is set to furlough more than 6,000 workers in the United Kingdom and France on the basis of the programs announced by the governments of the tow countries. The company had reportedly warned its staff just days ago of threats of burning of cash which would put the very survival of the company under risk.
An agreement has been reached with the unions to furlough 3,200 production workers at its manufacturing site in Broughton, Wales, said the European plane maker in a statement on Monday. Under the UK’s job retention program, the government has pledged to pay 80% of staff salaries of companies, up to a maximum of £2,500 per month.
Airbus said that about 3,000 of its employees have also been furloughed in France under a similar government program.
According to reports published during the weekend quoting the company’s CEO Guillaume Faury, reportedly writing to its staff in an internal letter, saying that the company was “bleeding cash at an unprecedented rate, which which may threaten the very existence of our company.”
“We must now act urgently to reduce our cash-out, restore our financial balance and, ultimately, to regain control of our destiny,” Faury wrote, according to reports.
Airbus did not comment on “internal employee communications” while not disputing the published reports.
The company slashed down the production of its benchmark narrow-body jet s by one third to just 40 planes a month earlier this month in an effort to stop the outflow of cash. The company also issued targets for wide-body jets with cuts of up to 42 per cent compared with rates that were previously announced.
The new reduced production targets will be implemented by Airbus for as long as it would be deemed necessary to get a clearer idea about demand through thorough assessment, Faury said. He indicated that this could be for between two and three months.
Travel restrictions because of the crisis have hit airline industry very hard and many are struggling to survive. Airbus has virtually halted jet deliveries since mid-March.
Last week, Virgin Australia was sent into administration while its sister company in the UK, Virgin Atlantic confirmed on Monday of the company looking out for investors outside in order to keep the airline alive. Billionaire business tycoon and founder of the Virgin Group, Sir Richard Branson, has offered as collateral his luxury island resort to help get a bailout package for the stricken airline Virgin Atlantic from the United Kingdom government. He was seeking a loan and not a handout form the government, Branson said in an open letter to the employees. The amount is predicted to be about £500m.
The pandemic induced crisis has hit airlines all across the world and according to the International Air Transport Association, carriers around the world could end up losing as much as $314 billion in revenue this year. In Europe alone, there are 6.7 million jobs that are at risk because of the collapse in air traffic. The IATA called for urgent government action to “preserve air services”, in a statement issued by the industry body last week.
(Adapted from CNN.com)