Airbus plans to lay off up to 2,500 workers in its defense and space division

Airbus has announced plans to slash up to 2,500 jobs in its defense and space division, citing a “complex business environment” marked by challenges including rising costs and “rapid changes in warfare.”

The European aerospace giant, which competes with beleaguered Boeing (BA) in airplane manufacturing, said Wednesday that it expects to complete the layoffs by the middle of 2026. The company did not say in which countries the cuts — which account for around 1.7% of its total workforce — would be made.

Mike Schoellhorn, chief executive of Airbus Defence and Space, said the sector — and hence the division — had faced “a fast-changing and very challenging business context with disrupted supply chains, rapid changes in warfare and increasing cost pressure due to budgetary constraints.”

The cuts are part of broader restructuring, aimed at making the unit “faster, leaner and more competitive,” Schoellhorn said in a statement.

Airbus’ announcement comes against a backdrop of a global defense and space industry in flux, presenting both challenges and opportunities for companies.

Governments have ratcheted up spending on defense in recent years as security threats have proliferated, including Russia’s full-scale invasion of Ukraine in 2022. The United States is also “investing heavily” in space-based assets to support intelligence gathering and warfare, according to a report this month by analysts at Citi.

But large legacy defense firms like Airbus that should benefit from the boom in demand face stiff competition. “A cadre of new companies have emerged as alternatives to traditional suppliers for the rapid development and deployment of ‘next generation’ capabilities,” the analysts wrote.

The planned job cuts at Airbus are not the first sign of trouble at the planemaker, which, along with Boeing, dominates the global production of full-sized commercial jets. In June, Airbus said supply chain issues had forced it to cut the number of planes it expects to make this year and next.

But its rival’s problems are much bigger. Boeing said earlier this month that it would slash 10% of its global workforce over the coming months. The company’s own defense business posted a $913 million loss in the three months to the end of June. And in September, Ted Colbert, the head of the unit, called Defense, Space & Security, stepped down.

Boeing has racked up core operating losses of more than $33 billion since 2019, and has attracted the scrutiny of regulators after a string of severe, sometimes fatal safety lapses in recent years. About 33,000 of its workers are also currently on strike over pay and conditions.

Olesya Dmitracova contributed reporting.