ii view: Airbus commercial plane deliveries grow

Full-year 2024 commercial aircraft deliveries

Commercial Aircraft head Christian Scherer said: 

“2024 confirmed sustained demand for new aircraft. We won key customer decisions with most important customers and saw phenomenal momentum for our widebody orderbook, complementing our leading position in the single aisle market."

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ii round-up:

Airbus SE (EURONEXT:AIR) announced 2024 aircraft deliveries marginally shy of expectations, but with the plane maker confident in overcoming previously flagged supply chain challenges to increase medium-term production.

Annual deliveries of 766 passenger planes rose from 735 in 2023, but that was less than management’s previous forecast of 770 commercial aircraft. And that was down from Airbus’s previous estimate of 800. Troubled rival Boeing Co (NYSE:BA) is estimated to have delivered fewer than 400 planes in 2024.   

Shares in the CAC-40 company rose by 1% in early European trading having come into this latest news up 11% over 2024. Incident prone and strike hit Boeing fell by almost a third. 

Airbus makes commercial passenger planes such as its popular A320 series used by airlines such as easyJet (LSE:EZJ) and British Airways owner International Consolidated Airlines Group SA (LSE:IAG), along with military and space related equipment and helicopters.

The City expects 2025 deliveries to rise to around 826 planes, a potential increase of 7% over 2024. Despite continuing supply chain challenges, Airbus is hopeful that it can increase production by 10% to 15%.   

The Dutch headquartered company’s backlog of plane orders stood at 8,658 aircraft in late December, providing around a decade of production visibility. 

Broker Morgan Stanley reiterated its overweight stance on Airbus shares post the update. Full-year results are scheduled for 20 February.  

ii view:

Tracing its commercial aircraft history back to 1967, Airbus today employs over 145,000 people, largely across Europe. Commercial aircraft generate most of its sales at just over 70%, followed by Space and Defence and including fighter jets at almost a fifth and helicopters, previously called Eurocopter, the balance of around a tenth. Geographically, Europe accounts for its biggest slug of sales at almost two-fifths, followed by Asia Pacific at just over a quarter and North America around a fifth.  

For investors, supply chain issues initially suffered during the pandemic, and now likely hindered by raised global geopolitical tensions, are creating operational difficulties. Costs for businesses generally remain elevated. Skilled worker shortages persist, while heightened geopolitical tensions and the ongoing war in Ukraine offer potential for disrupted air travel, potentially reducing new plane demand.  

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On the upside, challenges for arch-rival Boeing are offering opportunity for Airbus with it delivering to 86 customers worldwide in 2024. Pressure for airline customers to reduce their environmental impact via more efficient aircraft is ongoing. Group-wide restructuring in the wake of the pandemic generated sizeable cost cuts, while a forecast dividend yield of around 1.4% compares to a dividend freeze at Boeing.

On balance, and despite ongoing risks, Airbus’s position as one of two major global commercial aircraft makers continues to justify its place in many long-term focused investor portfolios. 

Positives: 

• A duopoly passenger plane supplier
• Diversity of product and geographical region

Negatives:

• Supply chain challenges
• Concerns for aviation’s impact on climate change

The average rating of stock market analysts:

Buy