Airbus (AIR) share price has remained on edge this year as supply chain issues have offset its strong demand and growing market share. The stock has barely moved and is about 18% below its highest level in 2024.
Airbus is doing well
Airbus is a leading manufacturing company that makes its money in three key areas: civil aviation, helicopters, and defense and space.
Most of its revenue, or about 73%, comes from the civil aviation business, followed by defense and space (17%) and helicopters (10%).
The company has come into the spotlight in the past few months as Boeing, its biggest competitor has moved from one crisis to the other.
Just this week, Boeing announced that it would raise $15 billion as it seeks to maintain its investment grade rating. It will use these funds to boost its balance sheet and to acquire Spirit AeroSystems.
Boeing is also facing the challenge of higher operational costs as some of its employees remain on strike. It is also considering strategic alternatives for its vulnerable space business.
These woes have pushed more customers to embrace Airbus, which has become the biggest player in the industry.
The most recent example is Riyadh Air, a company that announced a huge order for Airbus planes this week. It will start receiving 61 A321neo planes in 2026, a big victory for Airbus since most analysts were expecting these orders to move to Boeing.
Airbus has also launched the A321XLR plane, which is a single-isle extra long-range plane with a capacity of 220 customers. The plane has a range of 4,700 miles or 7,563 kilometers and burns about 30% less fuel.
A321XLR plane is ideal for airlines like IndiGo, Qantas, JetBlue, Iberia, and United Airlines that want to embrace a point-to-point business model.
Analysts believe that the plane will now be a big challenge to other planes like Boeing 787 and Boeing 777.
Airbus’ success is evidenced by the substantial backlog. It ended the last quarter with a backlog of 8,750, much higher than Boeing’s 5,400 planes. If this trend continues, it means that Airbus will have double Boeing’s backlog.
Supply chain challenges remain
The biggest challenge that Airbus is facing is that supply chain issues are affecting its manufacturing. In a statement, the CEO said:
“We are constantly adapting to a complex and fast-changing operating environment marked by geopolitical uncertainties and specific supply chain challenges that have materialised in the course of 2024.”
At the same time, the company needs to expand its manufacturing capacity to meet the rising demand for its planes.
Its rising backlog could also push customers back to Boeing because of its potentially shorter delivery periods.
The most recent financial results shows that Airbus business did well in the first nine months of the year.
It delivered 497 planes as its order book rose by 9.5% to 8,749. Its helicopter orders rose by 61.3% to 308, while its order book rose by 22.8% to 922.
The company is also benefiting from the ongoing geopolitical issues, which have led to more defense spending by Western governments. Its order intake in the defence and space revenue rose by 29.5% to 10,971.
Airbus’s civil aviation revenue rose by 4.4% to €32.8 billion, while its helicopter business grew by 4.6% to €4.875 billion. The defense and space revenue rose by 6.7% to €7.6 billion.
Fundamentally, I believe that Airbus will continue doing well in the coming months as it addresses its supply chain issues.
Airbus stock analysis
Airbus chart by TradingView
The daily chart shows that the Airbus share price formed a strong double-bottom pattern at €126.65. In most periods, this is one of the most bullish chart patterns in the market.
Airbus stock has moved above the 50-day and 200-day Exponential Moving Averages (EMA). It has also formed a bullish flag, a popular bullish sign.
Airbus is also hovering near the neckline of the double-bottom pattern. Therefore, the stock will likely have a bullish breakout, in the coming months. If this happens, it will rally to the next key resistance level at €150.
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