Airbus targets 10% cost cuts over global uncertainty and supply snags

Europe’s Airbus has ordered a ‌fresh 10% reduction in most non-industrial spending as global uncertainty and supply chain problems continue to squeeze its core jetliner business, three industry sources said.

The clampdown is aimed at the planemaking division and headquarters-related activities but will not affect production, they said. ​It has been in effect for several weeks and comes on top of a cost-saving project ​called LEAD launched in 2024.

The new “cost containment” measure aims in particular to curb the ⁠use of external contractors, traditionally a key resource for the world’s largest planemaker, the sources told Reuters.

Toulouse-based Airbus ​declined to comment.

The previously unreported move echoes efforts by Western companies to rein in spending in response to economic ​uncertainty and costs arising from the Iran war and wider trade tensions.

A Reuters review of statements by companies listed in the United States, Europe and Asia, published on Monday, found that companies face a bill of at least $25 billion as they grapple with soaring ​energy prices and fractured supply chains.

Airbus CEO Guillaume Faury told analysts last month that there was no immediate ​disruption stemming directly from the war, but that the group was worried about the potential impact of higher oil prices on ‌the ⁠cost of derivative products.

Financial planning had already been disrupted by a problem with fuselage panels for the A320-series planes late last year.

‘BUILDING STRESS’

Airbus is also locked in an ongoing dispute with one of its main engine makers, Pratt & Whitney, which has raised doubts over the number of engines available for deliveries.

Headaches over the integration of part of ​defunct aerostructures supplier Spirit AeroSystems ​also continue to weigh ⁠especially on A350 parts production, the sources said.

Aircraft deliveries, which drive profits, fell 16% in the first quarter as supply pressures amplified seasonal patterns.

That shortfall narrowed to 6% ​by April but industry sources said Airbus’ new cost reduction effort highlighted the ​task ahead in ⁠catching up on the deliveries.

Airbus is targeting a roughly 10% increase in deliveries to around 870 aircraft this year.

According to Cirium data, Airbus has delivered around 27 aircraft so far this month.

“I can’t see much acceleration, that’s the ⁠problem,” said ​aviation analyst Rob Morris. “They are building stress in the system ​if they are going to make 870 deliveries.”

Faury told analysts in April that the vast majority of A320-family aircraft affected by flawed panels ​from a Spanish supplier would be delivered by the end of June.