Airbus shares fly higher on raised guidance and production commitment

·Reporter
·2-min read
Airbus shares fly higher on raised guidance and production commitment
An Aegean Airlines Airbus A320 aircraft. Airbus said demand from airlines continued to be strong as the aviation industry recovers from the pandemic. Photo: Nicolas Economou/NurPhoto via Getty

Shares in Airbus (AIR.PA) climbed almost 2% higher in Paris on Thursday after the company raised its profit forecast and cash flow target due to increased demand for its jets.

The European aircraft maker said it now expects earnings before tax to come in at €4.5m (£3.9m, $5.2m), ahead of its previous €4m guidance. Free cash flow is now forecast to be €2.5bn, up from €2bn.

It said demand from airlines continued to be strong as the aviation industry recovers from the pandemic, and global travel restrictions ease.

Profits in the third quarter came in at €666m, down almost a fifth from the previous year, but beating the €648m predicted by analysts polled by Reuters. 

Meanwhile, revenues for the period were €10.5bn, a fall of 6%.

Airbus shares rose on Thursday. Chart: Yahoo Finance
Airbus shares rose on Thursday. Chart: Yahoo Finance

Airbus also stood by an earlier commitment to deliver 600 aircraft by the end of the year. It rounded up its main A320-family production target to 65 a month by summer 2023, slightly later than planned.

In May, Airbus said it was calling on suppliers to secure a firm rate of 64 a month by the second quarter of 2023.

The company said it would increase A330 output from two per month to almost three at the end of 2022, and confirmed it would raise output of the newer A350 from five to six a month.

However, similarly to rivals in the industry, the company is suffering from supply chain disruptions and labour shortages.

It pointed to problems with receiving parts on time, leading to rework on jets, and contributing to stagnant deliveries.

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Guillaume Faury, chief executive, said the firm was aware of “tensions in the supply chain” and that it observed labour shortages around the world.

“We see all the difficulties of going from hibernation for 15 months back to business in a world where many commodities and many sectors are ramping up again,” he said.

Peter McNally, global lead for industrials, materials and energy at Third Bridge, said: “Airbus has gained the upper hand versus its rival Boeing in the key single aisle aircraft market. The stronger backlog at Airbus has allowed for more deliveries which is leading to much strong cash flow as the commercial aerospace industry recovers from the pandemic.

“While Third Bridge experts believe that the 2024 monthly delivery target of 70 A320 aircraft may be a bit ambitious, Airbus still stands to deliver more aircraft to customers than Boeing.”

Boeing (BA) plans to get to 31 deliveries per month of its competing 737 aircraft in 2022.

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