Economy

Airbus Says Probable Future Of Airline Sector Grim

Despite a move by major airlines to drop fees to lure customers, the chief operating officer of Airbus said Saturday (Oct. 3) the outlook for the aviation industry is grim as COVID-19 infections rise and travel restrictions resume, Reuters reported.

Michael Schoellhorn, an executive of the world’s largest airliner manufacturer based in the Netherlands, said air travel is at a fraction of normal levels and airlines have slowed deliveries of new aircraft, the report stated. As a result, Airbus said it plans to shed at least 15,000 jobs worldwide.

At the close of last year, Airbus had almost 135,000 employees, according to Statista.com. The cuts would total nearly 11 percent of its workforce at minimum.

Schoellhorn told The Handelsblatt, a German business newspaper published in Düsseldorf, that travel in early autumn is worse than the company had expected. He said with air travel at a fraction of normal levels due to restrictions and travelers’ fears of getting the virus, airlines have slowed orders of new aircraft, he added, Reuters reported.

While some Airbus factories had slowed production prior to the pandemic, labor unions fear management could shutter them, according to Reuters. Last month, Airbus CEO Guillaume Faury said the airplane maker would do its best to cut costs without resorting to “compulsory redundancies,” but it could not guarantee they won’t happen.

A compulsory redundancy happens when companies terminate employees based on poor performance.

Faury warned staff in a letter that Airbus may have to implement layoffs because air travel has failed to take off from the pandemic as quickly as expected, Reuters reported.

In August, United Airlines, Delta Air Lines and American Airlines, looking to draw customers back during the pandemic, dropped change fees for domestic flights, saving customers about $200.

United Airlines CEO Scott Kirby said he doesn't see a good year ahead for airlines. He said a vaccine would be the only way airline business could fully return to normal.

The airlines have been ravaged by the pandemic and are wrestling with having to furlough thousands of pilots. At the close of September, federal funding for airlines expired. Action is unlikely by lawmakers in the short term.

MarketWatch reported Saturday (Oct. 3) that Senate Majority Leader Mitch McConnell has canceled Senate votes that were scheduled for the next two weeks after at least three Republican senators tested positive for COVID-19.

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