Airbus, a European aircraft maker and rival to Boeing, announced on Wednesday that it would be laying off 2,500 workers as part of efforts to turnaround its struggling defense and space division. The company cited ongoing challenges in the defense and space sector, including disrupted supply chains, evolving warfare tactics, and increasing costs as reasons for the organizational changes. CEO Mike Schoellhorn stated that the goal was to shape the division into a more competitive player in the market by becoming faster and leaner.
The defense and space business of Airbus faced difficulties last year, experiencing a 477 million euro loss on the A400M military transport plane, partly due to high inflation. Additionally, the European space sector suffered setbacks such as losing access to Russia’s Soyuz rocket launchers and experiencing the failure of a new Vega-C rocket launch. Despite these challenges, Airbus has been thriving in other areas, surpassing Boeing in plane orders and deliveries for five consecutive years. The company’s profits have also seen significant growth.
While Airbus is experiencing success in its commercial aircraft business, it is struggling to keep up with the high demand for planes. The company’s order backlog for commercial aircraft reached 8,585 as of June, indicating a strong market presence. In contrast, Boeing has been facing ongoing challenges, starting with the aftermath of two crashes involving its Max jets that resulted in the grounding of the aircraft. More recently, Boeing experienced setbacks when a door plug blew out of an Alaska Airlines 737 Max 9, leading to further disruptions in its operations.
Following the series of incidents, Boeing had to slow down manufacturing at the request of the U.S. Federal Aviation Administration. The company incurred a $355 million loss in the first quarter due to decreased aircraft deliveries and compensation payments to airlines affected by the Max 9 grounding. The Max jets were intended to compete with Airbus’ A320 family of planes, but Boeing has been struggling to regain its footing in the market. With Airbus employing over 150,000 people globally, the company faces challenges in balancing its successful commercial business with the need to revamp its defense and space division.
