The Aviation Industry Hit Hard by COVID-19, Facing Massive Layoff Storm

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] The aviation industry, hit hard by the novel coronavirus disease (COVID-19), is set to undergo massive layoffs.

According to the Wall Street Journal (WSJ) and others on the 30th (local time), European aircraft manufacturer Airbus announced plans to cut a total of about 15,000 jobs by the summer of 2021. Airbus has a total of approximately 135,000 employees, so this represents about 11% of its workforce. Specifically, about 5,000 jobs will be cut in France, 5,100 in Germany, 1,700 in the United Kingdom, 900 in Spain, and around 1,300 in other European regions. Airbus plans to begin layoffs as early as the second half of this year.

Guillaume Faury, CEO of Airbus, stated, "As air travel demand is not expected to recover to 2019 levels until 2023 to 2025, we must take additional measures," adding, "Airbus is facing the most severe crisis in its history."

In April, Airbus significantly reduced production rates due to order cancellations and delays from customers. The production of the most popular model, the A320, was cut to one-third, and production of the A350 and A330 models was also reduced by more than 40%. Airbus recorded a loss of 488 million euros in the first quarter of this year.

Air France, a major customer of Airbus, also announced plans to cut a total of about 7,500 jobs by 2022. Air France has a total of 41,000 full-time employees. The airline recorded a loss of 1.8 billion euros (approximately 2.4 trillion KRW) in the first quarter of this year.

Air Canada also announced on the same day that it will suspend operations on 30 domestic routes and close eight regional airports. This follows its earlier announcement in May to cut more than half of its workforce, about 20,000 out of 38,000 employees.

An Air Canada representative said, "We expect it will take at least three years for the aviation industry to recover."

Meanwhile, last month the French government announced a plan to support the aerospace industry with 15 billion euros (approximately 20 trillion KRW). Of this, 7 billion euros (about 9.5 trillion KRW) is planned to be allocated solely to Air France. On the other hand, Airbus is unlikely to receive government support at this time due to sufficient cash reserves. Earlier, G?rald Darmanin, France's Minister of Budget, stated, "Airbus currently does not require state intervention."