(AOF) – Airbus SE’s underlying credit profile remains unchanged although the company has lowered its aircraft delivery target and EBIT generation forecast for 2024, according to Fitch Ratings. “We continue to expect a gradual improvement in the medium term, although operating profitability margins will likely be under pressure in 2024 and 2025 compared to our previous expectations,” explains the rating agency.
On June 24, 2024, Airbus announced that it planned to deliver 770 units in 2024, up from around 800 units previously expected. Airbus also pushed back its target of producing 75 units of the A320 per month from 2026 to 2027. Ongoing supply chain issues, particularly shortages of engines, aerostructures and cabin interiors, have put pressure on the group’s delivery ramp-up target.
Airbus also revised downwards its forecast for EBIT generation in 2024 to 5.5 billion euros (management calculation), compared to 6.5 to 7 billion euros previously.
“The revised 2024 deliveries and EBIT generation forecasts, however, do not impact our view on the company’s Issuer Default Rating (IDR). Airbus’s new 2024 deliveries target also remains in line with Fitch’s expectations when we placed the ‘A-‘ IDR on a positive outlook on 30 May 2024. Our revised forecasts incorporate EBITDA margins that are 100 basis points lower on average over the 2024-2027 period compared to our previous rating scenario,” Fitch said.
“We do not expect any significant negative impact on Airbus’ capital structure, which we believe will remain strong, and we continue to believe that the group will hold a significant net cash position. This will reinforce the strong financial flexibility of Airbus. “Airbus, which supports its current IDR,” adds the rating agency.
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The end of a duopoly?
For several decades, the American Boeing and the European Airbus have shared 99% of the world market for airliners with more than 110 seats. This market is worth more than 100 billion dollars per year. However, this duopoly appears weakened in 2022 for several reasons. First, for the first time, two medium-haul single-aisle aircraft, the C919 from Chinese Comac and the MC-21 from Russian Irkut, are preparing to enter service. Added to this is the Boeing 737 MAX crisis. With the cessation of deliveries of this aircraft between 2019 and 2021, the production balance has been disrupted. In 2021 Boeing posted 340 deliveries, with Airbus remaining well in the lead, with 611.