Airbus’ first-quarter revenue fell by 7% to €12.7bn, reflecting a 16% decline in commercial aircraft deliveries to 114 planes, due to a shortage of engines from one of its suppliers. Helicopters revenue was broadly flat, while Defence & Space revenue rose 7%.
Underlying operating profit fell by 52% to €0.3bn (€0.4bn expected), largely due to the decline in aircraft deliveries.
Free cash outflows worsened from €0.3bn to €2.5bn, reflecting an increase in inventory. Net cash stood at €9.8bn, down from €12.2bn at year-end.
Full-year guidance has been maintained, with Airbus expecting to deliver around 870 commercial aircraft. Underlying operating profits and free cash flow are still expected to land at around €7.5bn and €4.5bn, respectively.
The shares rose 1.6% in early trading.
Our view
Airbus’ first-quarter headline figures missed expectations across the board, largely due to recently resolved admin issues in China and a shortfall of engines, which caused a decline in aircraft deliveries. But management reiterated all full-year guidance, which buoyed markets on the day.
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 9,037 aircraft. That’s more than 11 times the number of planes Airbus delivered in the whole of 2025, giving the group great revenue visibility. The conflict in the Middle East hasn’t changed this dynamic, with most airlines unwilling to cancel orders and risk being put to the back of the decade-long queue.
Issues with suppliers continue to be the main bottleneck to meeting demand. While the picture looks to be improving overall, issues with one of its engine suppliers have led Airbus to wind back its production ramp-up until at least 2027. This kind of issue is largely out of the group’s control and likely to remain a key risk moving forward.
As a result, guidance for 2026 was well below market expectations at the time and now looks relatively undemanding. Even if aircraft production falls slightly short, which has been the case in recent years, Airbus is developing a bit of a reputation for still meeting its profit targets thanks to disciplined cost management.
The Defence and Space division offers some diversification from its commercial aircraft operations. 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 €9.8bn. That means the forward dividend yield of 2.2% looks well covered. But remember, shareholder returns can vary and are never guaranteed.
Airbus has a very strong market position and demand outlook. It should be less disrupted by the Middle East conflict than others in the industry, and with the valuation having come under pressure this year, it now looks attractive on a long-term view. However, ongoing issues with key suppliers are unlikely to be resolved quickly, and there’s the potential for disappointments on the delivery front in the near term.
Environmental, social and governance (ESG) risk
The aerospace and defence sector is high risk in terms of ESG. Carbon emissions from products and services and product governance are key risk drivers. Data privacy, business ethics, and security and labour relations are also contributors to ESG risk.
According to Sustainalytics, Airbus’ management of ESG risk is strong.
The Ethics, Compliance, and Sustainability Committee, which reports to the Board of Directors, oversees all ethical and sustainable businesses. The group has developed and implemented very strong programmes to manage bribery and corruption, business ethics and human rights, along with a robust whistleblower programme. Overall, Airbus remains one of the lowest risk companies in the Aerospace and defence industry.
Airbus key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.