Aircraft industry faces shrinking by a quarter with 25,000 jobs lost

Via Yahoo Finance

Plane-makers will have to slash production further, putting tens of thousands more UK aerospace jobs at risk as the economic turmoil caused by coronavirus intensifies.

Trade body ADS is bracing for up to 25,000 aerospace jobs to go – almost a quarter of the total across the sector – because of the collapse in air travel resulting from Covid-19.

Last week, Rolls-Royce announced that 9,000 of its 52,000 jobs worldwide are to be axed, with the cuts falling particularly hard in Britain.

Both Airbus and Boeing have already reduced the number of airliners they build by about a third. The US company has already said it will shed 16,000 staff – 10pc of its workforce – while Airbus is understood to be preparing for “savage” reductions in staff numbers.

The job losses at aerospace firms such as Rolls-Royce come as the global aviation industry has been rocked by the economic fallout from coronavirus.

Last month, British Airways announced plans to lay off 12,000 staff. Virgin Atlantic faces a race to secure a bailout after laying off more than 3,000 of its workforce.

Other airlines, such as Germany’s Lufthansa, are being lined up for state bailouts worth billions of dollars, while some, such as Flybe, have collapsed into bankruptcy as thousands of flights were grounded by the lockdown and strict new travel measures designed to curb the spread of the virus.

The resulting demand for new aircraft has collapsed. Airlines have delayed orders of new planes or cancelled them altogether.

Markets Hub – Rolls Royce

Agency Partners, the analyst firm, warned that Airbus, which had been producing far more airliners than Boeing whose bestselling 737 Max was grounded, had “clearly not made deep enough cuts”.

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The research house predicted a further reduction in output at the European plane-maker, taking output to about a third of pre-coronavirus levels.

Analyst Nick Cunningham added: “Both Airbus and Boeing are being massively optimistic about demand.

“In two years’ time, we might get back to 75pc of where demand was before Covid, meaning the global fleet is a quarter too large. We’re going to see very few deliveries of new airliners over the next few years.”

Agency said that although Airbus’s aircraft assembly plants around the world in France, Germany, the US and China are strategically important to the company, they could become an “unaffordable luxury”.

Wings for all of Airbus’s airliners are built at the company’s plant in the UK, with about half of the company’s 13,500 British staff employed at a giant factory in North Wales.

The warnings about likely job losses came as data from ADS revealed a record low in April for the UK aerospace sector.

The equivalent of just 20 aircraft were delivered during the month, down from 90 a year ago. Year-to-date deliveries also plunged to a new low, at just 192.

Paul Everitt, chief executive of the trade body, warned of “inevitable” cuts to Britain’s aerospace sector, which had been worth £35bn before the pandemic.

He added: “The Government cannot stop this. Airlines are not going to suddenly bounce back.

“What is important is to mitigate the damage as much as possible and retain capability so the industry can come back when demand does recover – which is likely to take at least three years.”

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To support the industry through the downturn, ADS said that the Government should bring forward defence and space programmes to retain key skills and jobs as well as extra funding for new technologies.

Mr Everitt warned that Britain risks losing out in the global aerospace industry which is worth almost $850bn (£698bn) a year.

He added: “Government-backed support schemes for the aerospace industry in France, Germany and the US mean effectively buying future market share by offering backing to companies.”

In the US, however, Boeing said earlier this month that it was ruling out a bailout from Washington, and is instead pursuing a $25bn bond offering.

Congress had earmarked up to $17bn for the plane-maker, viewed as crucial to its defence sector. It said it did not plan to seek further funds.