Airbus suspends production in France and Spain, shares slide

By Tim Hepher and Eric M. Johnson

PARIS/SEATTLE (Reuters) – Airbus <AIR.PA> announced plans to halt operations at its plants in France and Spain for four days as the coronavirus crisis spread from battered airlines to the manufacturing sector.

The most serious across-the-board disruption in Airbus production since a strike at then British partner BAE Systems in 1989 pushed its shares down 7% as a rebound in other European shares quickly faltered.

“This will allow sufficient time to implement stringent health and safety conditions in terms of hygiene, cleaning and self-distancing, while improving the efficiency of operations under the new working conditions,” Airbus said in a statement.

The “pause” in output came after Reuters exclusively reported on Monday that Airbus had drawn up contingency plans to slow or stop production if France was placed under a drastic lockdown due to coronavirus.

French President Emmanuel Macron late on Monday ordered stringent restrictions on people’s movements to slow the spread of the coronavirus.

Airbus shares closed down 8.6% versus a 2.8% rise in France’s CAC40 <.FCHI> blue-chip index.

U.S. rival Boeing <BA.N>, which halted production of grounded 737 MAX jets in January, is also weighing contingency plans to halt or slow twin-aisle production, a person familiar with the matter said.

A Boeing spokesman said production continues at this time and the company was closely tracking guidance from government and health officials.

Boeing shares were down 8.4% on Tuesday.

France’s aerospace capital of Toulouse is home to Airbus’s largest assembly plants as well its headquarters. Its suppliers are also expected to be hit hard by the crisis.

It assembles the narrow-body A320 series there as well as all wide-body aircraft such as the A330 and A350 and the last remaining units of the A380, whose output is being wound down.

French factories also provide the cockpit section and central wingbox for all Airbus planes as well as the pylons, which connect engines to the wings.

In Spain, Airbus builds part of the tail section for its aircraft and assembles A400M military transporters.

Other assembly lines include A319, A321 and more A320s in Hamburg, Germany, as well as overseas production outposts for A320 and A321 aircraft in Mobile, Alabama, and Tianjin, China.

Airbus produces the smaller A220 jetliner in Montreal and Mobile after acquiring it from Bombardier <BBDb.TO>.

Factories in Britain, where Airbus makes wings, or Germany, where it builds part of its fuselages and has its second-largest cluster of assembly lines, can operate for several days.

Deliveries have already been disrupted as crisis-hit airlines hold back from taking possession of aircraft in order to conserve cash, industry sources say.

(Reporting by Tim Hepher, Sarah White, and Eric M. Johnson; editing by Keith Weir, Jason Neely and Alexandra Hudson)