Airbus Announces Huge Job Cuts 

 Who are Airbus? 

Airbus was founded in 1970 as Airbus Industrie – the idea being to build a collaborative European organisation which would rival the dominance of the American aerospace industry (which remains very powerful to this day). The company’s structure is relatively complex, although has been simplified somewhat in recent years. ‘Airbus Group’ is now the overall holding company, and is made up of numerous subsidiaries (some wholly owned, others not), such as Eurofighter and Elbe Flugzeugwerke.   

Airbus has a very wide range of operations. In its commercial aircraft division (the part most consumers will probably be familiar with the company through), it produces well-known aircraft such as the A320 and A380. It competes directly with other household names like Boeing in these fields. This is by far its most important area in relation to revenue (generating over 70% in relation to the company’s revenue as a whole).

It also produces a lot of aircraft for military applications, such as the A400M Atlas, and numerous space satellites and systems (think NASA, the ESA, etc). In these areas, again, well-established American names like Lockheed Martin are primary competitors. Upcoming rivals include non-Western names like Comac (over in China) too. 

Currently, the company is headquartered in France, but has manufacturing facilities spread across Europe, including Germany and the UK (plus others further afield, including those in the US and Canada). Its operations are massive, with close to 150,000 employees based on current estimates. 

What are the challenges Airbus is facing?

Airbus has been facing numerous challenges – and many of these are being faced by the industry as a whole, so have quite widespread importance. 

For a start, Airbus has been experiencing a number of issue with its supply chain. Perhaps surprisingly, the company admitted earlier this year that it has an overwhelming number of orders, with the primary issue being the fact their supply chain is not set up well enough to meet demand (sometimes referred to as a ‘bottleneck’). While this might sound like a ‘nice’ problem to have, such inefficiencies can be catastrophic when it comes to costs and the bottom line. 

This is compounded further by the fact that Airbus runs on relatively thin profit margins – sales rose 7% last year, but profits still managed to drop by a staggering 22% (partially due to the issues outlined above). 

Another issue has been a sector-specific one – Airbus’ space division (including products such as satellites) has been struggling for a while. Costs have skyrocketed, while competition in the sector has become fiercer than ever.

It may come as no surprise, then, that Airbus had already attempted to bring in new talent at the executive level in order to oversee an overhaul of the way its space division is run (there were even talks of some kind of restructuring or merger at one point earlier this year, but no material outcomes have surfaced there yet). Furthermore, the specific cuts that have been announced in the last few weeks are mostly focused on the space part of its business. 

Other areas have also been problematic. While the ongoing war in Ukraine has generally increased military spending across Europe (which should, in theory, be beneficial to Airbus’ bottom line), rising costs have meant that even its defence sector has been underperforming.  

What are the cuts in question?

 As already discussed, the space arm of Airbus is taking the heaviest of blows here, with 1,128 jobs being lost (compare that to just 250 from its ‘air power’ team). The cuts are relatively spread out and mostly limited to Europe – 689 in Germany, 540 in France, 477 in the UK, and 303 in Spain.  

The response has been quite negative on the whole (as is to be expected generally for any job cutting announcements, but with some particularly specific points here too). Many commentators feel that Airbus appears quite poorly structured to have incurred such losses while demand for many of its products remains quite high, while UK trade unions have been very outspoken in their criticism of Airbus’ management. 

Have Airbus cut jobs before?

This is not the first time Airbus has had to take such steps. Back in 2020, a huge 15,000 jobs were cut globally (including almost 2,000 in the UK) when, understandably, the pandemic’s catastrophic impact on the travel industry meant that aerospace industry companies were massively affected.  

What can aspiring lawyers take from this story?

There are a number of points here which aspiring lawyers – whether future solicitors or barrister, and whether applying to opportunities such as training contracts or pupillages, can discuss. However, most of this story is particularly relevant to future corporate solicitors, who will need to advise clients such as Airbus in practice (and also bearing in mind the very limited contentious aspects of this story so far). 

Naturally, practice areas are a good place to start in terms of unpacking this story. Think about how corporate lawyers will be needed to work alongside accountants, auditors and other finance professionals in order to get to the root of the problems plaguing underperforming clients such as Airbus. Modern lawyers are expected to develop a decent understanding of related areas such as finance (hence why legal training courses such as the SQE, for example, will cover basic accountancy to some extent in modules on business). 

While these areas are certainly useful now, more might become relevant as the story develops, which is something top lawyers should be looking to predict in advance.

For example, if Airbus’ situation were to worsen significantly in the future, could the firm cross-sell their restructuring team to the client, offering advice on how to renegotiate with creditors and stem the losses? If this involves a potential takeover (as was already suggested above), could the firm’s M&A team be of use? Or if the current job cuts were contentious to some extent, would the firm’s employment team be able to step in and act on a matter of litigation?

Also note the very international nature of this story, as is to be expected given Airbus’ very cosmopolitan structure as an organisation in the first place. Lawyers need to think about this carefully. For example, how do the rights of their employees who are being made redundant differ between those based in France or Germany (in the EU) and those in the UK (which has amended some of its legislation post-Brexit)?

Large firms with strong international law capabilities (such as those in the Magic Circle, elite US, and other comparable groups) are well-placed to advise here.