Airbus group: On the stock market, Airbus still holds its own against Boeing despite its recent clash with the market

(BFM Bourse) – The European aircraft manufacturer dampened the markets this week by lowering its targets for the current year. But its stock market performance remains above that of its eternal American rival, and its problems remain of a very different nature.

This was one of the highlights of the stock market week: Airbus froze the market on Tuesday by lowering its outlook for 2024. The company reduced its forecast for aircraft deliveries to 770 for 2024, compared to 800 previously, and also slashed its adjusted operating profit and cash generation projections.

This is due to even greater difficulties than expected in the space sector and an unexpected resurgence of tensions which has occurred in its logistics chain, particularly in terms of engines.

The setback is a major setback for the former EADS. Deutsche Bank has called the profit warning “staggering” and Royal Bank of Canada fears investors will put the stock in a “penalty box” because of its not-so-reproachable execution.

The market punished Airbus accordingly, and the stock lost 9.4% on Tuesday, its biggest fall in a session since November 2021, when fears of a new variant of Covid-19 had frightened the markets.

But, to quote the words (spoken in 2022) of Guillaume Faury, the executive chairman of Airbus, “when I look at myself I feel sorry, when I compare myself I console myself”.

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Boeing significantly underperforms on the stock market

While Airbus has irritated the market, Boeing is still lagging far behind its big European rival on the stock market. Since the beginning of the year, Airbus has indeed lost 7.7%.

, but Boeing fell much more heavily (-30%). Over ten years, Airbus shows an increase of 162% while Boeing is four times less (+43%).

Although this indicator may have its limitations, the percentage of analysts advising to buy the European group is higher. According to investing.com, it stands at 71% for Airbus against 64% for Boeing.

Beyond the simple stock market comparison, it should be remembered that while Airbus undoubtedly has problems, these problems are very different from those of its American competitor.

Boeing has inevitably suffered on the stock market from the setbacks on its 737 Max family, single-aisle aircraft which compete with Airbus’ A320 neo family, the A320 XLR making it possible to serve certain long-haul flights.

The 737 Max experienced two accidents in 2018 and 2019 which caused 346 deaths. The US Department of Justice also warned in May that it could criminally prosecute Boeing for not having respected an agreement reached in January 2021 following these two crashes.

In January, the detachment of a door stopper – which blocked an emergency exit – of an Alaska Airlines 737 Max-9 again highlighted the technical problems of a plane that is similar to a “cursed” aircraft for Boeing. The FAA, the American aviation regulator, had temporarily grounded 171 737 Max 9 aircraft. The American group then had to submit an action plan to remedy “systemic quality control problems” and thus achieve the standards required by the FAA.

In addition, the regulator has also opened an investigation into Boeing’s flagship 787 long-haul jet to determine whether mandatory inspections were carried out and whether documents were falsified.

Managerial uncertainty at Boeing

In addition to these industrial problems, the announced departure of Boeing CEO Dave Calhoun, expected at the end of the year, creates additional uncertainty. As well as the potential acquisition of Spirit Aerosystems, a key supplier to Boeing (and its former subsidiary) but also to Airbus. Spirit is itself in the sights of the FAA regarding the defects spotted on the 737 Max 9.

All of these elements put Boeing in a particularly delicate situation. “As Boeing continues to face production quality issues and increased regulatory scrutiny, Airbus has gained significant market share despite also facing a constrained supply chain,” Royal wrote in May Bank of Canada.

With a “neutral” rating on Boeing, Bank of America believes that the group is certainly well positioned to take advantage of demand linked to the growth in air traffic, given its duopoly with Airbus. “However, the recovery of operations could take time and uncertainties remain in the near future (conclusion and financing of the Spirit Aero transaction, search for a CEO, union negotiations, among others)”, writes the bank.

“Airbus is in a much better position than Boeing, it is a ‘no brainer’ (obvious, Editor’s note). There is a culture of quality at Airbus which is a company of engineers, while Boeing has a culture financial and is experiencing significant quality concerns,” explains an analyst.

A long-term story intact for Airbus?

“The fact remains that investors are not happy (with the profit warning) from Airbus, even though the group has an avenue since Boeing is doing badly. Investors can very well play something other than Boeing and Airbus on the stock market,” he continues.

“After the warning there is always a negative sentiment effect for the Airbus share which can last for some time and then it can start again,” qualifies the same analyst.

Airbus therefore has execution problems where Boeing’s difficulties are deeper. The question is whether, despite the recent fall in the stock, the long-term promises displayed by the European group remain sufficiently attractive for investors.

Airbus still plans to produce 75 aircraft per month of its A320 neo family, its best-seller, in the medium term. A trajectory synonymous with a significant improvement in its results. But this objective was pushed back this week to 2027 compared to 2026 previously.

Deutsche Bank downgraded its rating to “hold” from “buy” previously. “The dust needs to settle before we can turn positive again,” the bank said.

Other research firms have maintained their purchase recommendations, such as Oddo BHF (at “outperformance”, more precisely). “The adjustment on Airbus is relatively limited and the competitive environment leaves the ‘investment case’ (the investment thesis, Editor’s note) intact in our eyes,” explains the broker.

“Ultimately, we believe that Airbus’ long-term equity story remains intact, as demand for Airbus products remains strong and the ramp-up of production has not failed, but is ‘only’ delayed”, concludes Stifel.