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Airbus Cuts Production as COVID-19 Impairs Customer Base

By Lou Whiteman - Apr 8, 2020 at 4:20PM

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The cuts will last long after the pandemic is behind us.

Airbus (EADSY 3.58%) said Wednesday it was cutting commercial aircraft production to account for falling demand due to the COVID-19 coronavirus pandemic.

The European aerospace giant said it cut production of its A320 narrowbody by one-third, to 40 frames per month, while production of its larger jets would be cut by about 40%, to six A350s per month and two A330s.

Airbus and Boeing (BA 2.28%), along with the commercial aerospace supply chain, are trying to deal with a sudden decline in demand for new jets due to the pandemic. Airlines have seen travel demand evaporate overnight, and in response are grounding planes and cutting expenses.

An Airbus A330neo on the tarmac.

Image source: Airbus.

The company said it delivered 122 aircraft during the first quarter, but a further 60 were produced but remain undelivered.

"The impact of this pandemic is unprecedented," Airbus CEO Guillaume Faury said in a statement. "We are in constant dialogue with our customers and supply chain partners as we are all going through these difficult times together."

The near-term disruptions due to the pandemic are apparent, but Airbus' moves imply the company expects new airplane demand to take a significant amount of time to recover. It seems likely Airbus and Boeing will be dealing with significant order cancellations and deferments in the quarters to come. Boeing has already heard from one major leasing customer cancelling orders for 75 of its 737 MAX narrowbody planes.

Airbus in its statement said with the revised production rates, it "preserves its ability to meet customer demand while protecting its ability to further adapt as the global market evolves."

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