Airbus to lay off 2,500 as it tries to turn around its space and defense division

European aircraft maker and Boeing rival Airbus said Wednesday that it was laying off 2,500 workers as it tries to turnaround its struggling defense and space division.

Airbus said it would implement other organizational changes as it faces ongoing challenges in the defense and space sector, including disrupted supply chains, the rapid growth of warfare tactics and increasing costs.

The announcement comes after the corporation had already begun making organizational changes in the division last year, which it said have begun “bearing fruit.”

“We desire to shape the division so it can act as a leading and competitive player in this ever-evolving trade,” said Mike Schoellhorn, the CEO of Airbus’s defense and space division. “This requires us to become faster, leaner and more competitive.”

The corporation’s defense and space business struggled last year, notably taking a 477 million euro ($511 million) setback on the long-troubled A400M military transport plane, in part linked to unusually high worth rise.

The European space sector also was hit by the setback of access to Russia’s Soyuz rocket launchers and the setback of a recent Vega-C rocket soon after takeoff from French Guiana in late 2022.

Outside of that division, business has been booming for the aerospace giant. Airbus has outpaced Boeing for five straight years in plane orders and deliveries and its profits have soared.

The bigger issue for Airbus has been keeping up with demand for commercial airplanes. As of June, the French manufacturer had an order backlog of 8,585 commercial aircraft.

Meanwhile, Boeing can’t seem to correct its ship.

At the beginning of the year, Boeing seemed finally to be recovering from two crashes of Max jets in 2018 and 2019 that killed 346 people in Indonesia and Ethiopia. Then, on Jan. 5, a door plug blew out of an Alaska Airlines 737 Max 9, and the Virginia corporation has been reeling ever since.

Boeing has since slowed manufacturing at the order of the U.S. Federal Aviation Administration. It lost $355 million in the first quarter because of a decline in aircraft deliveries and compensation it paid to airlines for a temporary grounding of Max 9s. The Max was Boeing’s respond to Airbus’ A320 household of planes.

Airbus employs more than 150,000 people worldwide, according to FactSet.