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Airbus has embarked on a cost-containment effort and a mid-term competitiveness plan as part of its effort to turn around its struggling space business, Chief Executive Guillaume Faury said July 30.
The European aerospace company in recent weeks signaled it was considering major changes to its space portfolio after saying it would take a big earnings charge because of problems with some satellite programs. The charge came in at €989 million ($1.07 billion).
The company in June warned investors of the problems in some commercial satellite programs when it adjusted its earnings outlook. At the time, it also cut commercial aircraft delivery plans for the full year and slowed the pace of the ramp-up on narrowbody production owing to supply chain issues.
The cost-containment efforts are more of a short-term fix as Airbus sorts out more far reaching changes in its space business. Those, the company has said, could include partnerships and divestitures. The Toulouse-based company has opened talks about potentially combining some satellite operations with those of Thales Alenia Space to address the slump in demand for geostationary communication satellites.
Faury, on an earnings call, pledged not to take his eyes off the space programs until they are fixed.
Airbus reported a 78% drop in net income to €230 million in the second quarter on €28.8 billion in sales.
The company escaped a charge on the A400M military transport program that has often been a drag on earnings and said it was making progress on meeting customer requirements that have been reset. Still, it warned, “Risks remain on the qualification of technical capabilities and associated costs, on aircraft operational reliability, on cost reductions and on securing overall volume as per the revised baseline.”
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