Supply Chain Challenges Test Airbus’s Production Goals Amid Strong Demand

Airbus reported third-quarter results that surpassed analysts’ expectations, reinforcing its lead over Boeing (BA) in the commercial aviation sector. The European aerospace giant achieved a 5% revenue increase to €15.69 billion, while net profit rose 22% year-over-year to €983 million. Its adjusted earnings before interest and taxes (EBIT), a preferred profitability metric, climbed 39% to €1.41 billion. These results underscore Airbus's resilience amid ongoing supply-chain disruptions and its capacity to navigate challenges in a highly competitive market. This performance comes as Airbus prepares for a leadership shift in its commercial aircraft division. CEO Guillaume Faury announced that Lars Wagner, currently CEO of MTU Aero Engines, will take over from Christian Scherer next year. Airbus has also reaffirmed its goal to deliver 770 aircraft by year-end, a revised target set in June due to component shortages. By September’s end, the company had delivered 497 planes, highlighting the pressure to accelerate production in the final quarter. Market Overview:

• Airbus exceeded Q3 expectations with €15.69 billion in revenue and €983 million in net profit.
• The company reaffirmed a 2023 target of 770 aircraft deliveries, down from an initial 800.
• Supply-chain challenges continue to impact Airbus’s production and delivery rates.

Key Points:

• Lars Wagner will succeed Christian Scherer as CEO of Airbus’s commercial aircraft division in 2024.
• Adjusted EBIT grew 39% to €1.41 billion, outpacing analyst forecasts of €1.20 billion.
• Airbus received new orders for 60 A321neo planes from Saudi Arabia’s Riyadh Air.

Looking Ahead:

• Airbus projects adjusted EBIT of €5.5 billion and free cash flow of €3.5 billion for the year.
• Production goals include 75 A320s monthly by 2027 and 12 A350s by 2028.
• Backlog of 648 net orders poses ongoing production challenges amidst supply constraints.

Airbus’s steady growth trajectory highlights its strategic advantage as Boeing faces continued setbacks, including job cuts and production halts due to a machinist strike. Despite facing its own hurdles in the supply chain, Airbus remains well-positioned, buoyed by robust demand and a steady stream of orders. The company’s focus on ramping up production capacity and maintaining a disciplined financial outlook will be critical as it navigates a competitive and supply-constrained environment. Looking forward, Airbus’s ability to balance production expansion with supply-chain resilience could determine its competitive edge. With high demand across its A320 and A350 lines, Airbus is positioned to capitalize on the global recovery in air travel, provided it can secure essential components and manage workforce transitions effectively.