Delivery and profit both downgraded, Airbus European stocks plummeted by 11%!

On Tuesday, Airbus's European stocks plummeted by 11%, with aviation suppliers such as MTU Aero Engines AG and SAFRAN S.A. following suit.

On the news front, Airbus has lowered its full-year profit forecast for 2024, citing challenges such as supply chain issues, with delivery numbers expected to be lower than previously anticipated this year.

After the European stock market closed on Monday, Airbus released a statement:

Lowering full-year performance expectations, the current adjusted EBIT is expected to be around 5.5 billion euros in 2024, lower than the previously anticipated 6.5-7 billion euros on April 25.

At the same time, delivery targets have been revised down, with the 2024 aircraft delivery target reduced from around 800 to 770 aircraft, as supply chain issues will result in slower growth in A320 aircraft production rates than previously expected.

Due to supply chain issues ranging from engines to fuselage structures, the time for the popular A320neo series aircraft to reach record production rates will be delayed by a year to 2027. It is worth mentioning that the Airbus A320neo is a major competitor to the Boeing 737 MAX.

Airbus CEO Guillaume Faury had ambitious plans post-pandemic to quickly restore production rates to meet airlines' demand for new aircraft. Despite accurate market demand forecasts and record-breaking orders in the past two years, supply chain recovery issues have made it difficult to implement this plan.

In addition to supply challenges, Airbus also recorded a loss of 900 million euros in its defense and space division, with the company acknowledging the "business and technical challenges" in this segment.

Citigroup analyst Charles Armitage commented:

It is currently expected that Airbus's profits between 2024 and 2027 will decrease by 12%-19%, but the manufacturer's backlog of 8,500 aircraft orders may support its valuation in the long term.

However, Berenberg analyst Philip Buller believes that Airbus's updated performance forecast reduces the likelihood of increasing shareholder returns through higher dividends or more share buybacks. Philip Buller pointed out:

We believe this will also have a negative impact on market forecasts and intrinsic stock valuations in recent years.

Airbus has already surpassed its American competitor Boeing in terms of delivery volume, becoming the world's largest aircraft manufacturer, and plans to announce its half-year performance on July 30