PARIS — Airbus announced plans on Wednesday (Oct 16) to cut up to 2,500 jobs in its Defence and Space division after spending months taking a deep dive into heavy losses in its satellites business.

The European aerospace group said it aimed to carry out the cuts, which represent seven per cent of the workforce in its second-largest division, by mid-2026 after talks with unions but would hold off taking an immediate restructuring charge.

Airbus builds satellites and transporters and has key shares in European missile, fighter, and space-launch programmes.

It has been hit by 1.5 billion euros (S$2.1 billion) of charges in space systems in recent quarters, led by the high-tech OneSat project, and delays and rising costs in defence.

The job cuts, first reported by French news agency AFP, come on top of a more than year-long efficiency review in the defence and space business, code-named ATOM.

Mike Schoellhorn, CEO of Airbus' second-largest division by revenue, said it was time to take further steps in an "increasingly difficult space market".

"This requires us to become faster, leaner and more competitive," he said in a statement.

Airbus has been drawing up specific turnaround plans for its struggling Space Systems business without waiting for the outcome of recent satellite consolidation talks that include Italy's Leonardo as well as France's Thales.

Job cuts will also be felt in the Germany-based defence unit's headquarters.

Airbus is based in France with core operations also in Germany, Britain and Spain. Governments of the four host nations have been briefed on the restructuring plans, sources said.

Talks with unions, host nations

Airbus now faces months of negotiations with unions and host nations on where the axe will fall in high-tech manufacturing, a politically sensitive topic that could lead to some fine-tuning.

"The horse-trading is starting now," a person familiar with the discussions said.

Airbus is bracing for new provisions to reflect the costs of the restructuring but these will not be taken immediately, with the company still in the early stages of assessing the impact, analysts were told in a webcast ahead of results due on Oct 30.

The plane maker has been ploughing through its books to try to gain a complete picture of losses embedded in complex forward services contracts for satellites such as the re-programmable OneSat.

The pre-results webcast, recently introduced following new European market guidelines, indicated there would be no new charges in third-quarter results.

Analysts expect the bulk of the job losses to be covered by retirements or voluntary departures.

Reuters reported in July that Airbus had launched an urgent cash containment plan across the Defence and Space unit, where managers have declared the cost situation "critical".

Group CEO Guillaume Faury said earlier this year that Airbus was looking at opportunities to create scale in defence, space and particularly satellites where traditional players have been heavily disrupted by the success of new constellations.

European nations hiked defence spending following Russia's invasion of Ukraine in 2022 but some of the re-armament spending has gone to non-European suppliers and the most urgent needs do not involve the large platforms on which Airbus is most focused.

"There has been no upside for military aircraft producers from Ukraine; the area where the upside is occurring is in munitions and missiles," Agency Partners analyst Sash Tusa said.

Source: Reuters