Airbus is taking immediate steps to weather the economic downturn and sustain short-term profitability ahead of next month's implementation of a €1.5 billion ($1.6 billion) cost- saving programme to ensure its 2006 financial targets are met.

"The [difficult] situation today could last for some time to come," says Airbus chief executive Noel Forgeard, adding that measures are needed to "safeguard our profitability" which is threatened by the weak US dollar and the soft airline market. Two sets of cost-saving measures are being launched, one to save g1 billion in cash this year, and the other, announced last month, to save €1.5 billion - or 10% of the manufacturer's cost base - by 2006 (Flight International, 11-17 March). Forgeard says that the areas of cost savings for 2003 have already been "clearly identified".

Airbus chief financial officer Gustav Humbert says that there is "great uncertainty" about what Airbus's final delivery total will be for 2003 - forecast at around 300 - and it is impossible to call for 2004. However his view is that next year will be the trough in the cycle and that production will fall below 300, before increasing "maybe in 2005, for sure in 2006-7".

Humbert says that the company's flexibility meant that measures implemented after 11 September 2001 enabled it to ride out the after-effects of the terrorist attacks, without any layoffs. However, he says if aircraft deliveries fall from the current 300 to "200-250" next year, redundancies may be unavoidable. "Cuts would start with white collar workers," he adds.

The €1.5 billion savings plan will focus on optimising Airbus's core processes across all its functions. Due to be finalised early next month, implementation will begin immediately to ensure all measures have been actioned by the end of 2005.

Source: Flight International