TOULOUSE- European Aerospace giant Airbus plans to cut 2,500 jobs within its Defense and Space division by mid-2026, representing 7% of the division’s workforce.
The company attributes this decision to ongoing challenges in its satellite operations and broader market complexities.
Airbus to Cut 2,500 Jobs
The restructuring targets the company’s space systems sector, which has incurred losses of 1.5 billion euros ($1.63 billion) in recent quarters. Significant setbacks stem from the OneSat project’s technical challenges and mounting defense sector expenses.
Defense and Space Division CEO Mike Schoellhorn emphasizes the necessity for enhanced operational efficiency amid intensifying market pressures.
The division, which produces satellites, and military transporters, and maintains strategic positions in European missile, fighter, and space-launch initiatives, seeks to streamline operations through this workforce reduction.
This workforce reduction extends beyond the previously implemented ATOM efficiency program. The company now pursues specific recovery strategies for its Space Systems unit, operating independently from ongoing satellite industry consolidation discussions involving Leonardo and Thales.
The restructuring impact will reach the division’s German headquarters, signaling a comprehensive organizational transformation.
Restructuring Strategy
Airbus operates across major European industrial centers in France, Germany, Britain, and Spain, necessitating careful coordination with multiple government stakeholders. The company has initiated briefings with all four national governments regarding its restructuring strategy.
The aerospace manufacturer confronts challenging negotiations with labor unions and national authorities to determine specific job reduction locations within its high-tech manufacturing facilities. This process carries significant implications for local industrial bases and skilled workforce communities.
Internal documents revealed through Reuters in July exposed an urgent cash preservation initiative across the Defence and Space division. Division leadership characterized the financial situation as “critical,” prompting immediate action.
Airbus Group CEO Guillaume Faury identified strategic opportunities for expansion in defense and space sectors, particularly targeting satellite operations. This focus responds to market disruption from emerging constellation projects and changing industry dynamics.
Despite increased European defense spending following Russia’s 2022 invasion of Ukraine, domestic defense manufacturers report limited benefits.
A significant portion of European military procurement continues to favor U.S. suppliers, challenging local industry growth prospects.
Loss in H1 2024
Airbus achieved consolidated revenues of €28.8 billion in the first half of 2024, marking a 4% increase from €27.7 billion in the same period of 2023. Commercial aircraft deliveries and expanded Air Power operations in the Defence and Space division drove this revenue growth.
The Defence and Space division recorded an EBIT Adjusted loss of €807 million, contrasting sharply with its €78 million profit in the first half of 2023.
Space Systems operations incurred significant charges of €989 million due to revised completion estimates, severely impacting the division’s financial performance.
The A400M military transport aircraft program continues its technical development to meet updated capability requirements. Airbus coordinates closely with customers on aircraft retrofitting activities. While the first half of 2024 showed no material financial impact from the A400M program, several challenges persist.
Key risks facing the A400M program include technical capability qualification hurdles, operational reliability concerns, cost reduction targets, and securing sufficient order volumes under the revised baseline plan. These factors create ongoing uncertainty for the program’s financial outlook.
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