Airlines of all shapes and sizes had their operations rocked following the rise of the global health crisis. As a result, they desperately needed to revisit their strategies to ensure that they could cope with the pressures. During the MAKS-2021 airshow in Moscow, Russia, which Simple Flying attended last week, Airbus EVP, Head of Region & Sales Europe Wouter Van Wersch explained that amid the concerns, his company had to renegotiate 1,000 contracts related to aircraft supplies.
A significant change of plane
Carriers across the globe had the bulk if not all of their services suspended for much of the year following the start of the pandemic in early 2020. With the significant passenger downturn, the requirement for new aircraft just wasn’t there. In fact, several airlines took the opportunity to reshuffle their fleets and let go of many existing types in an effort to cut costs.
Therefore, with all the uncertainty surrounding the future of the market, carriers were keen to have another look at their agreements in the hope that manufacturers would empathize with the difficulties. For instance, when it comes to Airbus, Cathay Pacific signed an agreement to defer deliveries of its A350-900s, A350-1000s, and A321neos. The flag carrier of Hong Kong sought to preserve cash with this deal.
A well-publicized renegotiation involved easyJet, which worked out a deal with Airbus for 22 of its jets on order to arrive up to five years behind the intended schedule. Notably, the deal would end up with the airline paying a higher price.
Working things out
Van Wersch expresses that there were more than a handful of renegotiations across the board. However, with productive communication, his firm avoided the worst-case scenario. Moreover, the economics worked out in the long run.
“We had to renegotiate about 1,000 contracts with existing supplies. Using this method to very good form, we have had no cancellations,” Van Wersch shared at MAKS-2021.
“So, we continued to maintain our backlog… From a financial perspective, the value of the aircraft worked out.”
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Adapting to the climate
Airbus’ sites were affected in following the complications of the pandemic. Production had to be cut down as businesses tried to cope with the new climate.
Nonetheless, Airbus delivered 566 planes in 2020. This figure wasn’t the worst yearly number that the manufacturer recorded in the decade that preceded. Also, the company no longer has any white tail aircraft across its facilities. Therefore, it managed to overcome the hurdles by refining its approach.
What are your thoughts about Airbus having to renegotiate so many contracts amid the pandemic? What do you make of the way the company handled the challenges? Let us know what you think of the overall situation in the comment section.