WASHINGTON – Airbus’ defense and space division announced plans to cut up to 2,500 positions by mid-2026, citing a “continued complex business environment, especially in the space systems segment,” the company said Oct. 16.
The workforce reduction comes as Europe’s aerospace giant faces mounting financial challenges in its space programs, with executives emphasizing the need for restructuring. The move follows nearly two years of heavy losses, prompting Airbus to adjust to evolving market conditions.
Airbus’ defense and space division, which holds numerous government satellite contracts, has struggled despite a strong order book.
“The defense and space sector has been heavily impacted by disrupted supply chains, rapid changes in warfare, and increased cost pressures due to government budget constraints,” Airbus said in a statement. “In particular, the space market has become increasingly difficult.”
Mike Schoellhorn, chief executive of Airbus Defense and Space, commented on the need for adaptability. “This requires us to become faster, leaner, and more competitive,” he said, hinting at further operational streamlining.
Details of the restructuring are expected to be disclosed during the company’s next earnings report, scheduled for Oct. 30.
Space program woes
Airbus has reported losses nearing $1 billion over the past year due to poor cost management and schedule delays across several satellite projects. One source of trouble is the OneSat program, which focuses on geostationary orbit communications satellites with software-defined payloads.
Compounding these issues, Airbus suffered the loss of two Pléiades Neo high-resolution imaging satellites in a launch failure, further hindering its satellite portfolio performance.
Executives have previously highlighted cost overruns in Earth observation satellite programs, which have been linked to bottlenecks in testing facilities and interdependencies between telecommunications and navigation projects.
Airbus acknowledged that contracts signed between 2018 and 2021 did not adequately balance risks and rewards, contributing to its current challenges. The company’s communication and navigation satellite portfolio includes the Eurostar Neo, OneSat, OneWeb satellite constellation, and several military communication satellites.
Schoellhorn said the restructuring aims to correct these imbalances and restore financial stability to Airbus’ defense and space division.
Boeing facing similar struggles
Airbus’ chief rival, Boeing, has also faced significant challenges in its defense and space portfolio.
Boeing’s Defense, Space & Security division recorded a $2 billion loss in the third quarter of 2024, driven by setbacks in projects such as the Starliner crew capsule and the KC-46 aerial refueling tanker. Much like Airbus, Boeing has struggled with cost overruns, supply chain disruptions, and delays in delivering space and defense programs to government and commercial clients.
Both Boeing and Airbus are under pressure to realign their defense and space businesses in light of increasing competition and tightening government budgets. Boeing’s CEO announced last week the company will be laying off 10% of its workforce, or about 17,000 employees, as it grapples with problems across its commercial and defense operations.