(BFM Bourse) – The aircraft manufacturer significantly increased the pace of deliveries in June, with 72 units, which shows that the group is on the right track to reach 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 seems to be on the right track. Deliveries, published each month with the group’s orders, are closely watched by the market and analysts because payment for an aircraft occurs, for the most part, upon receipt of the aircraft by the customer. The company’s cash therefore largely depends on the good performance of the aircraft manufacturer’s production and shipments.
This monitoring of deliveries and therefore of cash is all the more crucial since the group had indicated that it would assess its options for improving its shareholder return policy – with potential share buybacks – once its position as cash would exceed 10 billion euros (knowing that it amounted to 9.4 billion at the end of 2022).
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“A solid performance”
Airbus is used to starting the year timidly on its deliveries to ramp up and finish with a bang in the months of November-December. But with persistent difficulties in the supply chain, whether at the level of parts, engines, labor problems at the group but especially at some of its suppliers far upstream of this chain, the company still needs to reassure. Especially since last year it had finished very far from its initial target (661 planes against 720 targeted at the base).
But after an already encouraging month of May, June turned out to be very good. Airbus thus delivered 72 aircraft in the sixth month of the year, a marked increase in the rate compared to the previous month, of 63 units, as well as compared to the figure for the same month of 2022 (60). The 2023 target of 720 aircraft delivered is a little more within reach for the company.
“This is a solid performance, which has driven shipments growth of 6% year-to-date, which we believe secures the achievement of the 720 shipments target, although H2 shipments still need to grow 10% year-over-year to achieve that,” Jefferies said.
“We are pleased with the delivery levels for the month of June. What struck us most about the published figures were the 57 A320/A321s delivered (25 and 32, respectively), as they indicate a steady improvement over 42 April deliveries. This could be a sign that the supply chain problems are now tending to be mitigated on this key Airbus platform and that the ramp-up efforts are finally bearing fruit”, appreciates for its part Deutsche Bank.
Towards good surprises?
Obviously the summer months (July and August) due to the holidays of the various employees should mark time somewhat.
Still, a good surprise cannot be ruled out. Airbus chief commercial officer, the earthy Christian Scherer, told Reuters in June that the group was seeing a “more predictable” industrial trajectory which the agency said suggests a better trend on deliveries.
On the Paris Bourse, the Airbus share rose 1.4% to 131.3 euros, at the start of the afternoon, outperforming the CAC 40 (+0.6%).
Deutsche Bank maintained to “hold” its recommendation on the value, valuing the title at 123 euros and 132 euros according to two different methods. The bank explains that based on projections for 2025, its valuation would rise to 156 euros. But that implies that the group’s production goals are accomplished “with certainty”, she adds.
Airbus is aiming for a production rate on the A320neo family, the single-aisle aircraft that make up its cash machine, of 75 planes per month 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 concludes.
Airbus will publish its second quarter and first half results on July 26. Positive on this publication, Jefferies estimates that the adjusted operating income for the second quarter of the commercial aeronautics division could show a strong increase, of several hundred million euros, compared to the same figure for 2022.
Julien Marion – ©2023 BFM Bourse
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