(AOF) – Fitch Ratings has revised Airbus SE’s outlook to positive from stable, while affirming its Long-Term Issuer Default Rating (IDR) and senior unsecured ratings at ‘A-‘. “The positive outlook reflects our expectation that Airbus will continue to improve its earnings and free cash flow (FCF) generation in the short to medium term and will likely achieve Ebitda and FCF margins that, coupled with the structure of the capital and the group’s already solid commercial profile, would support an upgrade of the rating”, explains the rating agency.
The ratings reflect Airbus’ strong business profile, characterized by leading positions in the commercial aerospace markets (albeit with some platform concentration), helicopters and some defense segments, broad diversification geographic and customer base, as well as a very large order book for commercial aircraft offering good visibility on medium-term revenues.
Additionally, a strong capital structure and historically high net cash position reinforce the group’s financial flexibility.
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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 China’s Comac and the MC-21 from Russia’s 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.