Airbus Cuts Production, New Plant Due to Pandemic
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Airbus Cuts Production, New Plant Due to Pandemic

Photo by:   Image by 272447 from Pixabay
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Alicia Arizpe By Alicia Arizpe | Senior Writer - Mon, 04/13/2020 - 11:06

Years of continuous growth have grinded into a halt for aerospace giant Airbus as it cuts down production and shelves its plans for a new plant due the COVID-19 outbreak.

Airbus started 2020 with a positive outlook thanks to its strong backlog of 7,482 airplanes. It had closed the previous year with 768 new aircraft orders and broke its own deliveries record with 863 total aircraft delivered that year. The OEM had been ramping up for years, reporting a 37 percent increase in deliveries in only five years. This growth period was drastically cut short as COVID-19 ravaged through the aviation industry. The outbreak led governments to close borders and passengers to cancel their flights to avoid the virus, sending the aviation industry plummeting as the rate of commercial flights decreased at double digits across the globe.

The grinding halt in international air travel has left airlines’ fleets grounded, leading some to second guess pending aircraft orders, which in turn has hit airplane manufacturers. The situation led Airbus to cut down its production by a third, reducing production of its A320 from 60 to 40 jets per month and its A350 from 10 to six. This sharp drop brings Airbus’ manufacturing capacity to lows not seen since 2012, which also had an impact on the OEM’s shares. Moreover, it also led the planemaker to cancel an assembly line for the A321 that it had just announced in January when its main concern was fulfilling the high demand.

The cuts in production are raising concerns throughout Airbus’ supply chain. IATA had warned that the current COVID-19 crisis could cost the entire aviation industry up to US$252 billion and cost the sector almost 25 million jobs. At this point, the aerospace giant is readjusting its production and pausing new investments in order to maintain its liquidity in order to overcome this crisis.

Photo by:   Image by 272447 from Pixabay

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