ii view: engine supply challenges affect Airbus targets

Full-year results to 31 December

• Revenue up 6% to €73.4 billion (£64.2 billion)
• Adjusted profit (EBIT) up 33% to €7.13 billion

Guidance:

• Expects commercial aircraft deliveries of 870 during 2026
• Expects adjusted profit (EBIT) of €7.5 billion

Chief executive Guillaume Faury said:

“2025 was a landmark year, characterised by very strong demand for our products and services across all businesses, a record financial performance, and strategic milestones."

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ii round-up:

Airbus SE (EURONEXT:AIR) today reported annual 2025 results that broadly matched City forecasts, although the plane maker was cautious about 2026 and has been affected by engine supply issues at maker Pratt & Whitney. 

Full-year adjusted 2025 profit (EBIT) rose by a third to €7.13 billion, aided by defence and aerospace profits of €798 million versus €566 million in 2024. Estimated 2026 commercial aircraft deliveries of 870 is toward the lower end of analyst estimates, with forecast adjusted profit of €7.5 billion well shy of City hopes at around €8.3 billion. 

Shares in the CAC-40 company fell 6% in European trading having risen by just over a quarter in 2025. That’s similar to US rival Boeing Co (NYSE:BA). The CAC-40 index rose by a tenth last year. 

Airbus makes commercial passenger jets such as its popular A320 series used by airlines like easyJet and British Airways owner IAG, along with military and space related equipment and helicopters.

Pratt & Whitney’s challenges now see Airbus downgrading expected A320 production to between 70 and 75 aircraft a month to the end of 2027. That’s down from 75 planes per month previously. Production is then expected to stabilise at around 75 per month from 2028 onwards.   

Total Airbus order intake across all its businesses rose 19% year-over-year in 2025 to €123.26 billion. A 2025 dividend payment of €3.20 per share is up from €3.00 in 2024.  

Broker Morgan Stanley reiterated its ‘overweight’ stance on Airbus shares post the results. First-quarter results are scheduled for 28 April.  

ii view:

Airbus employs over 160,000 people across more than 150 locations worldwide. Direct suppliers globally total around 18,000 companies. Commercial passenger planes generated most profits over the past year at 76%. That was followed by helicopters at 13% and Defence & Space the balance of 11%.  

For investors, supply chain issues have been flagged previously, with the group’s latest external challenges focused on major engine supplier Pratt & Whitney. President Trump's tariffs will now be adding to group costs and particularly to the export of goods to the US. A forecast price/earnings (PE) ratio above the three-year average may suggest the shares are not obviously cheap, while the group’s input in the making of military planes may deter some investors on ethical grounds.  

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More favourably, a near one-fifth increase in order intake year-over-year appears to suggest robust demand for the company’s products. Environmental concerns about reduced fuel usage likely continue to underpin many airlines’ desire for more efficient planes. A diversity of products and geographical customer locations exists, while a forecast dividend yield of around 1.3% compares to a halted dividend payment at Boeing.

On balance, and while exposure to the volatile airline industry should never be forgotten, the company’s position as one of only two major global commercial aircraft makers continues to justify its place in many diversified long-term focused investor portfolios.   

Positives: 

• A duopoly passenger plane supplier
• Diversity of product and geographical region

Negatives:

• Raised global geopolitical tensions
• Ethical concerns given a defence business

The average rating of stock market analysts:

Buy