European plane making giant Airbus reported a 49 per cent drop in operating profit in the first quarter, at 281 million euros ($304.7m), against a revenue drop of 15 per cent, at 10.631 billion euros ($11.56bn).
The current situation was the “gravest crisis the aerospace industry has ever known”, said Airbus Chief Executive Guillaume Faury.
A negative cashflow of 8.03 billion euros ($8.73bn) was reported by Airbus which included the company paying up a record fine of 3.6 billion euros ($3.91bn) for the purpose of settlement of a bribery and corruption case being investigated in the United Kingdom, France and the United States.
The coronavirus pandemic and the associated travel restrictions have hit plane makers, airlines and suppliers very hard. Governments across the world have imposed lockdowns and put a ban on passenger travel which has crippled passenger travel and push major economies into recession.
“The crisis is really unprecedented,” Faury said on a call. “It’s hitting all regions of the globe and all industries at the same time so the role of governments is obviously key. One of the major risks for us is suppliers going bust.”
The airplane maker has already taken a number of steps in order to cushion the hit by the coronavirus pandemic including cutting down production by more than one third of its capacity and the temporary laying off more than 6,000 staff, which, according to Faury could just be the beginning. He said that the company will review the situation again in June when the direction economic recession as well as the health situation will become clearer.
The present uncertainty surrounding the global economy forced Airbus to suspended its profit outlook as well as it scrapped its dividend while also negotiating new commercial credit lines last month as the operations of airlines got affected by the pandemic which has almost stopped aircraft delivery.
Airbus said it would focus squarely on saving cash.
2020 capital expenditure are planned to be reduced by the France-based group by approximately 700 million euros ($760.91m) to nearly 1.9 billion euros ($2.07bn) as well as defer or suspend activities that are “not critical to business continuity” or meeting other commitments.
(Adapted from AlJazeera.com)