Exclusive-Airbus targets 10% cost cuts over global uncertainty and supply snags
By Tim Hepher
Airbus Implements New Cost Containment Measures Amid Industry Challenges
PARIS, May 19 (Reuters) - Europe's Airbus has ordered a fresh 10% reduction in most non-industrial spending as global uncertainty and supply chain problems continue to squeeze its core jetliner business, three industry sources said.
Scope and Focus of the Cost Cuts
The clampdown is aimed at the planemaking division and headquarters-related activities but will not affect production, they said. It has been in effect for several weeks and comes on top of a cost-saving project called LEAD launched in 2024.
Targeted Areas for Cost Reduction
The new "cost containment" measure aims in particular to curb the use of external contractors, traditionally a key resource for the world's largest planemaker, the sources told Reuters.
Toulouse-based Airbus declined to comment.
Industry Context and Economic Pressures
The previously unreported move echoes efforts by Western companies to rein in spending in response to economic uncertainty and costs arising from the Iran war and wider trade tensions.
Global Financial Impact
A Reuters review of statements by companies listed in the United States, Europe and Asia, published on Monday, found that companies face a bill of at least $25 billion as they grapple with soaring energy prices and fractured supply chains.
CEO Perspective on Market Conditions
Airbus CEO Guillaume Faury told analysts last month that there was no immediate disruption stemming directly from the war, but that the group was worried about the potential impact of higher oil prices on the cost of derivative products.
Financial planning had already been disrupted by a problem with fuselage panels for the A320-series planes late last year.
'BUILDING STRESS'
Operational Challenges and Supplier Disputes
Airbus is also locked in an ongoing dispute with one of its main engine makers, Pratt & Whitney, which has raised doubts over the number of engines available for deliveries.
Headaches over the integration of part of defunct aerostructures supplier Spirit AeroSystems also continue to weigh especially on A350 parts production, the sources said.
Impact on Deliveries and Production Goals
Aircraft deliveries, which drive profits, fell 16% in the first quarter as supply pressures amplified seasonal patterns.
That shortfall narrowed to 6% by April but industry sources said Airbus' new cost reduction effort highlighted the task ahead in catching up on the deliveries.
Airbus is targeting a roughly 10% increase in deliveries to around 870 aircraft this year.
According to Cirium data, Airbus has delivered around 27 aircraft so far this month.
Analyst Insights on Delivery Targets
"I can't see much acceleration, that's the problem," said aviation analyst Rob Morris. "They are building stress in the system if they are going to make 870 deliveries."
Resolution Efforts for Supply Chain Issues
Faury told analysts in April that the vast majority of A320-family aircraft affected by flawed panels from a Spanish supplier would be delivered by the end of June.
(Reporting by Tim Hepher; Editing by Emelia Sithole-Matarise)
