Airbus Defense and Space To Cut 2,500 Jobs Amid Financial Struggles

Airbus Defense and Space has announced plans to cut up to 2,500 jobs by mid-2026, citing a “continued complex business environment, especially in the space systems segment”. The layoffs are part of a larger restructuring effort as Airbus faces financial challenges in its space programs, following nearly two years of significant losses.

The restructuring is aimed at aligning the European aerospace giant with evolving market conditions. Despite maintaining a strong order book, Airbus has struggled to generate profits in its defense and space division, which holds several government satellite contracts.

Financial Pressures

“The defense and space sector has been heavily impacted by disrupted supply chains, rapid changes in warfare, and increased cost pressures due to government budget constraints...In particular, the space market has become increasingly difficult.” - Airbus Statement

Executives of Airbus have stressed the importance of restructuring to adapt to the changing landscape.

“This requires us to become faster, leaner, and more competitive,” - Mike Schoellhorn, CEO of Airbus Defense and Space

The full details of the restructuring plan are expected to be revealed in Airbus’ next earnings report, scheduled for Oct. 30, 2024.

Space Program Challenges

Airbus has faced numerous setbacks in its space initiatives, contributing to nearly $1 billion in losses over the past year.

Much of this has been linked to delays and cost overruns in satellite programs, most notably the OneSat project. OneSat is a key program focused on creating geostationary orbit communications satellites with software-defined payloads, but its progress has been hindered by poor cost management and schedule delays.

Adding to the division’s difficulties, Airbus lost two Pléiades Neo high-resolution imaging satellites due to a launch failure, a significant blow to its satellite portfolio.

Executives have also pointed to budget overruns in Earth observation satellite programs, which have been exacerbated by bottlenecks in testing facilities and the interdependencies between telecommunications and navigation satellite projects. Contracts signed between 2018 and 2021, which lacked proper risk management, further contributed to Airbus’ financial challenges.

To restore financial stability, Airbus is looking to balance risks and rewards in future contracts, particularly in its communication and navigation satellite portfolio, which includes the Eurostar Neo, OneSat, the OneWeb satellite constellation, and several military communication satellites.

Boeing Faces Similar Struggles

Airbus is not alone in its struggles. Boeing, its primary competitor, has also been grappling with significant issues in its defense and space division.

Boeing’s Defense, Space & Security division reported a $2 billion loss in the third quarter of 2024, primarily due to setbacks in major projects such as the Starliner crew capsule and the KC-46 aerial refueling tanker.

Like Airbus, Boeing has been hit hard by supply chain disruptions, cost overruns, and project delays. In response to these challenges, Boeing announced it would lay off 10% of its workforce, amounting to around 17,000 employees.

Both Airbus and Boeing are facing increasing competition in the aerospace sector, along with tightening government budgets. The financial strain on these industry giants is forcing them to reassess their defense and space portfolios as they strive to meet customer demands and stay competitive in a rapidly evolving market.

With both companies undergoing major restructuring efforts, the defense and space sector is poised for significant changes in the coming years.