Airbus partially resumes production as Boeing enacts temporary shutdowns

March 23, 2020
The American Institute of Aeronautics and Astronautics has asked policy makers to bolster the supply chain in the civilian and defense aerospace sector.

WASHINGTON - The aerospace world from component providers to massive multinational companies are in the midst of navigating business in a world addressing a pandemic. Airbus, who announced a temporary shutdown of facilities in Spain and France last week have partially reopened as of March 23. The same day, Boeing announced it will be enacting a temporary shutdown of its facilities in the Puget Sound region, which is among the hardest hit areas in the United States with people suffering from symptoms associated with the novel coronavirus (COVID-19).

"These actions are being taken to ensure the well-being of employees, their families and the local community, and will include an orderly shutdown consistent with the requirements of its customers," the company said in a statement. "Boeing plans to begin reducing production activity today and projects the suspension of such operations to begin on Wednesday, March 25, at sites across the Puget Sound area. The suspension of production operations will last 14 days, during which Boeing will continue to monitor government guidance and actions on COVID-19 and its associated impacts on all company operations. During this time, we will be conducting additional deep cleaning activities at impacted sites and establishing rigorous criteria for return to work."

Puget Sound area-based employees who can work from home will continue to do so. Those who cannot work remotely will receive paid leave for the initial 10 working days of the suspension – double the company policy – which will provide coverage for the 14 calendar day suspension period.

"This necessary step protects our employees and the communities where they work and live," said Boeing President and CEO Dave Calhoun. "We continue to work closely with public health officials, and we're in contact with our customers, suppliers and other stakeholders who are affected by this temporary suspension. We regret the difficulty this will cause them, as well as our employees, but it's vital to maintain health and safety for all those who support our products and services, and to assist in the national effort to combat the spread of COVID-19."

The Chicago-based company announced on Friday that Calhoun and board chair Larry Kellner will forgo pay until the end of the calendar year, dividends to shareholders will be suspended until further notice, and Boeing will extend its pause on repurchasing shares. The stock buyback program was suspended in April of last year.

European actions 

European aerospace giant Airbus announced that it was partially resuming assembly work at its facilities in France and Spain, which were shut down after an employee at its Madrid facility tested positive for COVID-19.

"Airbus has carried out extensive work in coordination with its social partners to ensure the health and safety of its employees, while securing business continuity," said the company in a press release. "The implementation of these measures required a temporary pause in production and assembly activities at the French and Spanish sites for a period of four days. Work stations will only re-open if they comply with the new health and safety measures in terms of hygiene, cleaning and self-distancing while improving the efficiency of operations under new working conditions."

Airbus CEO Guillaume Faury said, "“Health and safety is our number one priority at Airbus so the work stations at our sites in France and Spain will only re-open if they meet the required standards. I’d like to salute the strong commitment from our employees to ensure business continuity in close cooperation with our social partners and other stakeholders. At the same time we are doing all we can to support those on the frontline to fight the coronavirus and limit its spread. We try to live up to our values, humbled by the complexity of the situation, and contribute as much as we can to society in these very difficult times."

Airbus also announced that it was taking measures to bolster liquidity and balance sheet in response to the pandemic. In another release, the company said that "Airbus’ management has received approval from the Board of Directors to: secure a new credit facility amounting to €15 billion in addition to the existing €3 billion revolving credit facility; withdraw the 2019 dividend proposal of €1.80 per share with an overall cash value of approximately €1.4 billion; and suspend the voluntary top up in pension funding. Given the limited visibility due to the evolving COVID-19 situation, the 2020 guidance is withdrawn. Operational scenarios, including measures to minimize cash requirements, have been identified and will be activated depending on the further development of the pandemic."

Eye on defense 

The American Institute of Aeronautics and Astronautics (AIAA) has asked policy makers to bolster the supply chain in the civilian and defense aerospace sector.

"Here in the United States, the aerospace and defense industry supports more than 2.5 million jobs and 17,000 suppliers from large manufacturers to small businesses that form the backbone of the supply chain," AIAA said in a release. "It represents more than $928 billion in economic output for the United States and more than $237 billion in wages. The industry has improved our quality of life by transforming transportation, medicine, defense, and security, among other things."

AIAA continued, "In times such as these, the aerospace and defense sector is essential to protect our national security and provide much needed logistics capability to bring critical supplies to areas of need. Its highly skilled workforce has made significant advances in areas such as autonomy, cybersecurity, air mobility, and space exploration. The aerospace and defense workforce is an essential driver of innovation for the U.S. economy, our national security, and expanding the utilization of space for future generations. We need the industry to survive the crisis and build our future."

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