Airbus to Cut 3,700 European Jobs on Production Cuts

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Boeing Co. (NYSE: BA) is not the only aircraft maker having trouble with a new military airplane. European aircraft giant Airbus confirmed on Wednesday that it has adjusted production rates for both the superjumbo A380 passenger jet and the military A400M multipurpose airlifter.

The company said the adjustments will affect up to 3,700 jobs in France, Germany, the United Kingdom and Spain. A380 production drops to just six planes per year (from 12 currently) beginning in 2020, and A400M production drops to eight per year (from 15 currently) beginning the same year.

One might even argue that Airbus’s problems with the A400M are worse than Boeing’s issues with the KC-46A tanker that continues to miss delivery dates and pile up charges. In the fourth quarter of 2016, Airbus took a charge of €2.2 billion (about $2.73 billion) on the A400M and added another €150 million (about $186 million) in charges in 2017.

The much bigger issue for Airbus is cranky customers for the A400M. The company faces late delivery charges totaling some €8.5 billion (about $10.5 billion) from customers for the turboprop airlifter. There’s almost no chance that charges of that magnitude will be levied against the company by customers who are also stakeholders, but the delays will cost Airbus something.

As of January, the company had delivered 18 of 22 orders to the United Kingdom and 15 of 53 to Germany. France had received 13 of 50 while Spain has received two, Turkey received four and Malaysia received four of four ordered. All told, Airbus delivered 19 A400Ms last year, according to Flightglobal, its highest level since beginning deliveries in 2013.

The order backlog was 118 from European buyers, including first deliveries to both Belgium and Luxembourg. Airbus said it will produce 15 A400Ms this year and 11 in 2019 before going to eight in 2020.