Airbus’ share price rose at the start of the week’s trading, despite the pessimistic outlook outlined by the firm’s CEO.
In an interview with the German paper Die Welt, CEO Guillaume Faury stated: “For the next two years – 2020/21 – we assume that production and deliveries will be 40 per cent lower than originally planned.
The leading European plane manufacturer had previously said it was cutting output by a third, on average.
The significant blow to the travel industry dealt by the Covid-19 crisis has had a concomitant impact on planemakers such as Boeing and Airbus.
Lockdown restrictions have been lifted across much of the globe, with tourism-dependent economies such as Spain and Greece welcoming visitors. While flight capacity may soon return to normal, the capacity of airlines to complete multi-billion dollar fleet orders will take longer to recover.
Investor sentiment towards aircraft manufacturers has been optimistic in the past month. However, as a V-shaped recovery becomes increasingly less likely the prospect of a prolonged period of stagnation has weighed on this outlook. At the end of last week, for example, Bernstein analyst Douglas Harned downgraded both Boeing and Airbus from buy to hold.
With production lagging so significantly, redundancies are widely expected as part of a long-anticipated restructuring at the French manufacturer. Although Airbus has stated that it will reveal its plans by the end of July, industry sources currently estimate job cuts to range between 14,000 and 20,000.
Speaking to the Die Welt, Faury observed: “It’s a brutal fact, but we must do it. It is about the necessary adjustment to the massive drop in production. It’s about securing our future.”
By mid-afternoon trading, Airbus’ share price stood at €64.03, up 3.47 per cent. Although the company now trades 7.5 per cent higher than it did one month ago, it has fallen 51 per cent since the start of 2020.