Airbus expands virus precautions across production lines, company

By Scott Hamilton

Guillaume Faury

March 23, 2022, (c) Leeham News: Airbus is working to make its production lines safe, but will have lower rates than before the coronavirus pandemic caused lockdowns in France and Spain, the CEO said today.

Airbus temporarily shut production lines in these two countries last Monday. Production resume at a low, unspecified rate. He said initially production “efficiency” may be very low.

Guillaume Faury, the CEO, however, pointed to China as perhaps an example to follow with its other lines.

The Tianjin line was shut down for several weeks as the COVID-19 virus spread across China. It recently resumed and is back near the pre-shut down level of 6/mo. Faury said 99% of the employees are back at work.

Chinese airlines are back to 30% of pre-grounding levels.

European production

Faury said wide-body demand will be significantly weaker while he expects single-aisle demand to remain stronger. However, he did not provide any new guidance for anticipated deliveries this year. The previous guidance, given only a month ago at the annual financial results for 2019. Airbus’ 1Q2020 press conference will be next month, at which time new guidance may be given.

Faury acknowledged that conversations have been held with every customer scheduled for delivery this year. LNA provides an outlook in this post, prepared before today’s events.

Steps to maintain health

Airbus’ four-day production pause in France and Spain allowed the company to engage in deep cleaning and to establish precautions to ensure health safety when production resumes today. Health and safety precautions are being taken at the other production sites in Germany and the US, in addition to broadly across the company.

Faury said so far, no Airbus employee has been diagnosed with the virus.

This contrasts with Boeing, where in the greater Seattle area nearly two dozen workers, most of whom are assigned to the Everett (WA) wide-body lines, were diagnosed with coronavirus. One worker died Sunday.

Boeing so far declined to suspend production at Everett. The 737 MAX production line was halted in January because of the extended grounding of the airplane. Employees at the Renton line have worked at improving efficiencies for when production resumes.

Airbus sent the A330-800 test airplane to China to ship two million masks back to Europe. Faury said most will be distributed to health care workers and hospitals, with some being retained by the company for its workers. More flights are planned.

“We are doing whatever we can to fight this pandemic while keeping our employees safe,” Faury said. “We support all government actions to flatten the curve.”


Airbus arranged a new credit facility, which with other actions, gives the company €30bn in liquidity. These actions are detailed here.

Faury said Airbus is not seeking government support. Boeing asked Congress for $60bn for itself and the supply chain, although no public breakdown of how much is for Boeing and how much is for the suppliers has been made.

Airbus has halted discretionary spending and is reining in capital expenditures for “non-urgent” projects. The short-term priority in the next 12 months is to minimize expenses.

9 Comments on “Airbus expands virus precautions across production lines, company

  1. I am confused, Airbus the company which according to some is a government employment programme is taking reasonable steps to survive without need for aid. Boeing on the other hand, the bastion of capitalist endeavour is demanding a massive bailout. Perhaps if Boeing had not paid massive dividends and buybacks over the recent years they would be in a slightly better position.

    Can someone explain to me this dichotomy please?

    • @Sowerbob: The answer to your question is called the MAX.

      • And the $50bn cash ripped out of the company in the past 5 years possibly Scott? I think in terms of magnitude the buybacks and dividends are far more significant. In the past I have been critical of the relative financial performance on Airbus when compared to Boeing but in terms of resilience to economic shock there is no contest, Boeing has been run as a shareholder cash machine and is suffering as a result

    • Modern US corporate management philosophy assumes investors are best positioned to allocate excess capital. So rather than keep capital in the company to allow it to weather downturns, the capital should be returned to investors who can then make other investments. This even makes sense in a way if you have 10 companies making widgets, as an investor why have widget company A build up a big war chest, better have it return the money and let you the investor put the money into company B, C and D. If A falters, well the world still needs widgets so the others will benefit and so will you the investor. Moreover if A is failing due to bad decisions the war chest might not help, it will just be good money thrown after bad. A corporation is just seen as a money spinner with no intrinsic value. A bit like an anonymous chicken in egg laying plant, it is the health of the flock that matters not individual chickens.

      Now we don’t have 10 air-framers (any more). So Boeing has huge value to society, but in some ways this just makes it even better for the investor, if Boeing is considered too big to fail, then there is still no reason to leave money in the company, rather you can bet on a bailout.

      In Europe companies are seen to have social value and are (at least in theory) in a compact with society. They are thought to have a value and are not expendable so it makes sense they take steps to survive even if that runs counter to shareholder value.

      Of course cynically Airbus may be thinking, “wow we may be last one standing so best invest to ensure we will be able to profit from that”.

      • Stock buy backs occur when the management of the company has a significant positive cash flow, and they cannot think of anything that they can invest in that would be as profitable as their existing business.

        Doing a stock buy back is the most tax efficient way of taking money from the company and giving it to shareholders. The very act of buying shares makes them more scarce and so they increase in value. Much better tax rate if investors sell part of their increased value stock, compared to the rates on dividends.

    • Stock buybacks were all about share price. Should be illegal.
      Was illegal until 1982, when they were allowed if the Corp. announced purchase in advance. Before were considered stock manipulation by SEC and a punishable felony.
      Buybacks will certainly not be allowed in any bailout bill.

      • Its all about avoiding US double taxation of dividends, once as profits from the company and again when the shareholder gets it. In theory the tax is payable when shares are sold at a higher price , but at a lower rate and at a time of your choosing
        Many other countries allow tax paid dividends from companies to be tax free in shareholders hands.

  2. I think investors should reasonably expect more detail from Airbus. On the now standard senior remuneration (sharing the pain) for one. But more importantly on the minimum production rates Airbus’ cash position is capable of maintaining for 12-18 months (whichever is now considered the best guess of vaccine availability) such that the supply chains don’t collapse, and on how soon Airbus will switch to these rates.

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