Airbus Imposes 10% Non-Production Cost Cuts as Pratt & Whitney Delays Leave Jets Marooned on Tarmac

Airbus has ordered thousands of employees in its commercial aircraft division and corporate headquarters to slash non-production spending by a tenth. The directive, which targets external engineering consultants and IT service providers, marks a stark admission that Europe’s largest aerospace group is struggling to convert its record order book into cash.

The immediate trigger is a bottleneck in the supply chain that has left nearly finished A320neo-family aircraft sitting on the tarmac in Toulouse and Hamburg. These so-called “gliders” are missing their engines — specifically Pratt & Whitney’s GTF powerplants. Until the propulsion units arrive, Airbus cannot deliver the jets to customers, and revenue is only booked at the moment of handover. That timing gap is squeezing free cash flow.

First-quarter results laid bare the strain. Revenue fell 7% year-on-year to €12.7 billion, a figure that has also been reported in dollar terms at around $14.8 billion. Adjusted earnings per share came in at $0.22, slightly ahead of some analyst forecasts but still reflecting elevated production costs and a slower delivery rhythm. The civil aircraft division saw its operating profit shrink to just €81 million.

The cost-cutting initiative builds on the existing “LEAD” efficiency programme launched roughly two years ago. Management has been enforcing the new measures internally for several weeks and formally communicated them to staff to signal the gravity of the situation. Reducing dependence on external engineers and IT consultants is seen as a quick way to protect margins without touching the production line.

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Defence provided a counterweight. Italy’s Ministry of Defence ordered six A330 multi-role tanker transport aircraft in a deal worth around €1.4 billion. Separately, Airbus is in talks with French unions over a new profit-sharing proposal for employees, due to be presented at the end of May.

Demand, meanwhile, shows no sign of flagging. AirAsia placed an order for 150 A220-300 jets at the start of May, and International Airlines Group has exercised options for ten additional A320neo aircraft scheduled for delivery in 2030. The A321XLR, Airbus’s long-range narrowbody, has racked up more than 500 orders and is viewed as a medium-term growth driver — provided the supply chain stabilises. The company is sticking to its full-year target of roughly 870 deliveries.

Investor sentiment, however, remains deeply pessimistic. The stock closed at €42.60 on Tuesday before slipping to around €41.60. That puts the shares down roughly 13% since the start of the year and nearly 12% below their 200-day moving average. The relative strength index has fallen to 10.9, a level that signals an extremely oversold condition in technical terms.

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The disconnect between an overflowing order book and a production system that cannot keep pace is now the defining challenge for Airbus. If engine deliveries from Pratt & Whitney improve in the second half of the year, the cost cuts could help shore up margins. Until then, the aircraft parked on the tarmac represent both an operational logjam and a drag on the share price.

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