Airbus starts layoffs

  • Thursday, January 17, 2002 9:00pm
  • Business

Herald Staff and

ASSOCIATED PRESS

PARIS — Airbus said Thursday it plans to cut about 1,000 jobs, or 2.2 percent of its workforce, amid a decline in new orders from airlines suffering from a devastating industry slump.

The announcement came as the European jet maker released year-end figures that show it narrowly edged the Boeing Co. in net sales for the year. Boeing, however, delivered about 200 more planes.

Airbus officials said they plan to cut staff through voluntary retirement packages and by not replacing other employees who leave. Airbus also plans to sharply cut work hours, they said.

Chief executive Noel Forgeard said the reductions will not involve any direct firings, but that a round of layoffs may be needed if an economic downturn further reduces demand for new planes. "We do not think it is necessary so far," Forgeard said.

He said Airbus is confident about its prospects, but acknowledged that the company has suffered from an economic downturn and fallout from the Sept. 11 terror attacks.

Airbus employs about 45,000 employees, and the total staff should fall to 44,000 by the end of the year. But company officials said the total reduction in work hours would be the equivalent of reducing an additional 5,000 jobs.

"In terms of labor cost, we save the equivalent of 6,000 jobs without firing them — 1,000 through early retirement and attrition, 1,000 through the reduction of part-time work and 4,000 through the termination of temporary contracts," said Philippe Delmas, an executive vice president at Airbus.

Airbus also said it was forced to cancel 101 orders last year, giving it a net of 274 for the year, down from the 375 it previously had announced. The company’s 274 orders are worth $37.3 billion.

Boeing took new orders for 335 jets in 2001, but saw 63 previous orders canceled or deferred, for a net of 272 for the year.

Airbus delivered 325 aircraft in 2001, generating record revenues of $20.5 billion — up from 312 aircraft and revenues of $17.2 billion a year earlier. Boeing delivered 527.

The figures allow both companies to proclaim industry dominance for the year. Airbus crowned itself the "world-leading aircraft manufacturer" on the strength of its sales. Boeing last week played up the fact that it delivered 62 percent of new jets entering service last year, which it contends is more significant because airlines pay upon delivery.

In a statement, Airbus said 90 percent of its 2001 cancellations are "the result of companies faced with bankruptcy," although it did not specify which ones. However, two of Airbus’ European customers — Belgium’s Sabena and Switzerland’s Swissair — have gone bankrupt since Sept. 11. And U.S. customer TWA was bought out by American Airlines’ parent company, which canceled a number of TWA orders with both Airbus and Boeing.

The canceled orders "may yet re-enter the order book," Airbus said.

Forgeard said he believes Airbus will deliver 300 aircraft in 2002, and deliveries in 2003 should come in at slightly below 300.

However, analysts believe that’s an overly optimistic number. A recent survey by the Reuters news agency found most believe Airbus will deliver about 285 jets in 2002 and about 250 in 2003.

Boeing meanwhile is aiming for 350 to 400 deliveries this year and somewhat fewer in 2003. The company is expected to release updated production figures when it makes its year-end financial report next week.

Herald writer Bryan Corliss contributed to this report.

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