Airbus SE (AIR) EUR1

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Airbus reported a 6% rise in full-year revenue to €69.2bn, driven by growth across all business units. The group delivered 766 (2023: 735) commercial aircraft, in line with prior guidance.

Underlying operating profit fell 8% to €5.4bn. Rising profits from Commercial Aircraft and Helicopters was more than offset by losses in the Defence and Space division due to charges relating to previous contracts.

Free cash flow rose 9% to €4.5bn due to higher levels of cash generation. The net cash position improved 10% to €11.8bn at year-end.

In 2025, Airbus expects to deliver “around 820” commercial aircraft and underlying operating profits of around €7.0bn.

An 11% rise in the full-year dividend to €2 per share, and a €1 special dividend was announced

The shares fell 2.4% in early trading.

Our view

Airbus’ full-year results were largely as expected, with demand remaining strong across all business segments. Importantly, the group managed to come good on its guidance, delivering 766 commercial aircraft in 2024. But the outlook for 2025 was a touch softer than markets were hoping for.

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 swelled to 8,658 aircraft at the end of 2024. 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 have been a major issue in recent times, with some struggling to keep up with the high demand. While that’s a problem affecting the whole industry, it does raise some concerns about Airbus’ ability to meet future guidance, weighing on investor sentiment.

Plans are afoot to remedy the situation, with Airbus set to acquire parts of one of its key suppliers. But to fully iron out the issues will require a lot of work, money and time, with that process not set to complete fully until 2028. As a result, there could be some weakness in the short term.

The Defence and Space division offers some diversification and has the potential to be a great asset for the company in the current elevated threat environment. Recent performance has been painful though, after a new management team conducted an in-depth review and had to book significant charges due to mispricing previous contracts. That looks to have been the reset needed, and we’re cautiously optimistic that it can contribute positively from here.

The balance sheet is in great shape, with net cash coming in at €11.8bn at year-end. Management’s returning some of this surplus cash to investors in the form of a special dividend and there’s plenty left over to cover regular dividend payments in our view. But remember, shareholder returns can vary and are never guaranteed.

The valuation’s sitting slightly 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. Of course, this isn’t a simple task and there are no guarantees so expect some turbulence along the way.

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 Refinitiv. 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.

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