Airbus’ revenue rose 3% to €29.6bn in the first half. A small decline in commercial aircraft revenue due to lower deliveries (306 aircraft vs 323 in the prior year) was more than offset by double-digit growth in its Helicopters and Defence & Space divisions.
Underlying operating profit jumped 58% higher to €2.2bn, driven by a sharp return to profitability in the Defence & Space division.
Free cash outflows worsened from €0.6bn to €1.6bn, reflecting a planned build-up of inventory to support production later in the year. There was a net cash position of €7.0bn at period-end.
Full-year guidance has been maintained, with Airbus expecting to deliver “around 820” commercial aircraft. Underlying operating profit and free cash flow are expected to be around €7.0bn and €4.5bn respectively.
The shares were broadly flat in early trading.
Our view
Airbus had a good first half, driven by a sharp return to profitability in the Defence & Space division. And while aircraft deliveries have got off to a slow start, management has doubled down on its full-year guidance, confident that the pace will pick up over the second half.
At its core, Airbus builds aircraft using thousands of parts from companies worldwide. Market dynamics are very favourable given it’s dominated by just two companies, with the split standing at roughly 60/40 in Airbus’ favour. Meanwhile, high barriers to entry help to keep outside competition at bay.
Demand is strong as airlines try to upgrade their fleets after years of COVID-19 underinvestment. As a result, the order backlog rose to 8,754 aircraft. That’s more than 11 times the number of planes Airbus delivered in the whole of 2024, giving the group great revenue visibility.
Issues with suppliers continue to be the main bottleneck to Airbus meeting demand. While that’s a problem affecting the whole industry, it does raise some concerns about Airbus’ ability to meet its aircraft delivery guidance, weighing on investor sentiment.
We should point out that current guidance excludes the impact of tariffs. We view the direct impact as likely to be a low single-digit percentage knock to the group’s €7bn underlying operating profit target this year. But the picture on tariffs has been changing quickly and is likely to continue doing so before year-end.
The Defence and Space division offers some diversification from the current macroeconomic uncertainty. After a tough period of write-downs, performance has picked up significantly, and the division is back to turning a profit. With Europe looking to ramp up its defence spending in the coming years, Airbus looks well placed to deal with the shifting landscape and increasing demand.
The balance sheet is in great shape, with net cash standing at €7.0bn. That means regular dividend payments are well covered, and we see scope for increased shareholder returns if cash levels improve further. But remember, shareholder returns can vary and are never guaranteed.
The valuation’s sitting a touch above the long-run average, but we don’t see that as too demanding given its market position and strong demand outlook. If Airbus can iron out supply chain issues, there could be a long runway of growth ahead. But execution risk and the uncertainty surrounding tariffs mean there could be some turbulence along the way.
Airbus key facts
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