Please ensure Javascript is enabled for purposes of website accessibility

Airbus Cuts Production as COVID-19 Impairs Customer Base

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

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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."

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Airbus Stock Quote
$25.16 (3.58%) $0.87
The Boeing Company Stock Quote
The Boeing Company
$139.84 (2.28%) $3.12

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/04/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.