The year 2020 continues to be a bad year for the industrial world. Where most of the businesses have been affected due to the Covid-19 situation, air travel is the one industry that has suffered the most. Traveling got banned in most parts of the world, resulting in financial damages to almost all the air travel companies. Airbus, one of the largest plane manufacturers, is not an exception at all.
Airbus had to suffer through a tremendous loss of $5.2 billion (4.4 billion Euros), a huge sum of money to lose in a single quarter. Resultantly, it has planned to cut down the production of at least one wide-body jet to stabilize its finances owing to a continuous downfall in demand.
In an official statement, Airbus announced that rather than six of the initially planned A350 aircraft, it will now design five of them. As compared to last year, Airbus provided 74 crafts during the quarter at the time when global fleets were restricted. Airbus has set aside 900 million Euros for the fines related to Covid-19. It also has declared that money for future reformation endeavors could reach up to 1.6 million euros.
In a conference call, CEO Guillaume Faury showed the signs of hope but also claimed that this process wouldn’t be easy and swift. He stated that the company is taking a balanced approach and they haven’t lost any hope.
Air travel is trying to come out of the biggest depression since the Covid-19 had shaken the progress of this industry. The CEO of Airbus is trying his best to lower the costs without affecting the arrangement of skilled employees and suppliers. Faury showed his concern about the state of the market as he does not know what would be the situation of the air travel market by the end of 2020 and by half of 2021.
According to his predictions, the production of single-aisle planes could speed up from the year 2022 but getting back the same amount of traffic, as it was before COVID-19, would occur somewhere between 2023 and 2025.
Sandy Morris, an analyst from Jefferies International, gave positive remarks about Airbus. He declared that Airbus is putting enough effort to moderate the support for its employees, supply chain, and customers while showing a satisfactory performance for its shareholders.
The cash burn designated for the quarter was even for the first three months, except for one payment which was used to clear the claims of bribery because the 145 planes were not delivered due to the pandemic situation. The CEO declared that his mission now is to neutralize the cash burn for the second half of the year.