(BFM Bourse) – The aircraft manufacturer significantly increased its delivery pace in June by 72 units, showing that the group is on track to meet its annual target of 720 aircraft. See more?
After the disappointment of last year, with an annual delivery target lowered and then abandoned, Airbus now appears to be on the right track. Deliveries, which are published each month with the group’s orders, are closely watched by the market and analysts because the payment for an aircraft is mostly made when the customer receives the aircraft. The company’s liquidity therefore depends to a large extent on the good performance of the aircraft manufacturer’s production and shipments.
This monitoring of supplies and therefore of cash is all the more crucial as the group had indicated that it would assess its options to improve its shareholder return policy – with potential share buybacks – when its cash position would exceed €10 billion (knowing that it amounted to 9.4 billion by the end of 2022).
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“A solid performance”
Airbus is used to starting the year cautiously on its deliveries to ramp up and finish with a bang in the months of November-December. But with ongoing difficulties in the supply chain, be it parts, engines, labor problems at the group, but especially at some of its suppliers far upstream in this chain, the company still needs to reassure. Especially since the last year was finished very far from its original target (661 aircraft against 720 targeted at the base).
But after an already encouraging May, June was very good. Airbus thus delivered 72 aircraft in the sixth month of the year, a significant increase in the rate compared to the previous month, of 63 units, as well as compared to the figure for the same month in 2022 (60). The target for 2023 of 720 delivered aircraft is a little more within reach for the company.
“This is a solid performance that has driven shipment growth of 6% year-to-date, which we believe ensures the achievement of the target of 720 shipments, although H2 shipments still need to grow 10% year-on-year to reach it.” Jefferies said.
“We are pleased with the delivery levels for the month of June. What struck us most about the figures published were the 57 A320/A321s delivered (25 and 32 respectively) as they indicate a steady improvement over the 42 April deliveries . This could be a sign that the supply chain problems are now tending to be mitigated on this important Airbus platform and that the promotion efforts are finally bearing fruit”, appreciates Deutsche Bank for its part.
On the way to good surprises?
It is clear that the summer months (July and August) should mark the time somewhat due to the vacations of the various employees.
Still, a good surprise cannot be ruled out. Airbus’ commercial chief, the down-to-earth Christian Scherer, told Reuters in June that the group saw a “more predictable” industrial trajectory, which the agency said indicated a better trend in deliveries.
On the Paris exchange, Airbus shares rose 1.4% to 131.3 euros in early afternoon trading, outperforming the CAC 40 (+0.6%).
Deutsche Bank maintained its “hold” recommendation on the value, valuing the title at 123 euros and 132 euros using two different methods. The bank explains that based on projections for 2025, its valuation would rise to 156 euros. But it means that the group’s production targets are reached “with certainty”, she adds.
Airbus is targeting a production rate of 75 aircraft per month on the A320neo family, the single-aisle aircraft that make up its ATM, by the end of 2025.
“Current supply chain issues still prevent us from taking this bolder valuation approach, but June deliveries send a positive signal,” Deutsche Bank concluded.
Airbus publishes results for the second quarter and first half of the year on July 26. Positively for this publication, Jefferies estimates that the adjusted operating income for the second quarter of the commercial aviation division could show a strong increase of several hundred million euros compared to the same figure for 2022.
Julien Marion – ©2023 BFM Bourse