EADS has warned that it may have to make up to 1,450 compulsory job cuts as it sheds 5,800 positions, sparking anger from German unions and French politicians.
Tom Enders, chief executive, also raised the possibility of further cuts, if this round of restructuring, expected to take three years, proves to be not enough as European defence sales continue to contract.
“If we can’t get the cost down in the coming years and get the synergies, then this will not have been the last restructuring in this for this area,” he said, adding that he was being proactive. “If you see the wall coming, you hit the brakes.”
Mr Enders was speaking on a media call on Tuesday, following the announcement on Monday of his restructuring plans for EADS’s defence and space divisions which involved cutting about 2,000 jobs in Germany, 1,260 in France, 560 in Spain and 450 in the UK.
Rüdiger Lütjen, chairman of the European Airbus works council, said he was dismayed that EADS had not ruled out compulsory redundancies. He said this was “not an option” as far as the IG Metall union is concerned.
Michel Sapin, French labour minister, said EADS has a duty to avoid dismissals. “[EADS] has the capacity to accommodate all those who could lose their jobs . . . This company makes money,” he said.
In the past, EADS – which has only recently been able to reduce the political meddling by the German and French governments by decreasing the number of shares they control – focused on voluntary redundancies.
This time, EADS is again hoping to make the majority of its cuts by voluntary means, for example through early retirement and by shifting 800-1,000 jobs to Airbus, its far more profitable civil aerospace business. However, Mr Enders warned that they may not be enough.
Moreover further job cuts may need to come at Eurofighter in 2018 unless EADS and its partners, Britain’s BAE Systems and Finmeccanica of Italy, are able to find new export customers for the Typhoon fighter jet, which Mr Enders said was still too expensive.
EADS is looking to sell some of its businesses and close some of its approximately 400 product lines. Military aircraft and space will remain the core of its business, management revealed on Tuesday, raising questions about other areas, such as border security where margins have suffered as EADS has aggressively sought to win export business from its competitors, particularly Thales of France.
Astrium, EADS’s largely unprofitable space business, will lose 2,470 jobs. Mr Enders noted that this month’s launch by SpaceX– a new competitor in the industry – was 30 per cent cheaper than EADS’s Ariane programme.
EADS does not expect political challenges to its restructuring, which will also include the consolidation of sites across the countries in which it operates. But it still has to persuade unions – especially those in Germany – to go along with its plan.
In a stinging rebuke of German chancellor Angela Merkel’s decision to oppose Mr Enders’ attempt to tie up with BAE Systems last year, Mr Enders said he had promised Berlin that the takeover would not lead to any redundancies.
“This was an incentive for the Germans to agree the merger, but that was then,” he said.
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