Executive Summary

This report provides a comprehensive fundamental analysis of Airbus SE (“Airbus” or “the Company”), a global leader in the aerospace and defense industry. The analysis reveals a company defined by a powerful central tension: a dominant, competitively advantaged commercial aircraft franchise with a multi-year, multi-trillion-euro backlog providing exceptional revenue visibility, set against severe near-term operational headwinds from a fragile global supply chain that constrains production and delivery growth.

The Commercial Aircraft division remains the undisputed core of the company, driven by the market-leading A320neo family of narrow-body jets. Airbus has solidified its competitive position against its primary rival, Boeing, capitalizing on the latter’s persistent production and quality control challenges. This has resulted in a commanding market share in the industry’s most critical segment. Strategic initiatives, such as the launch of the A321XLR and a focused expansion into the higher-margin, less cyclical services business, are poised to be significant long-term value drivers.

However, the path to realizing this value is obstructed by significant near-term obstacles. Persistent supply chain disruptions, most acutely manifested in engine shortages from key suppliers like Pratt & Whitney, are throttling the company’s ability to ramp up production to meet voracious airline demand. These constraints delay revenue recognition, inflate working capital, and represent the most significant risk to achieving near-to-medium-term financial targets.

The company’s diversification provides mixed results. The Helicopters division is a model of stability and profitability. Conversely, the Defence and Space segment presents a more complex picture; while positioned to benefit from rising geopolitical tensions and increased European defense spending, its overall performance has been severely hampered by significant financial charges within its Space programs, masking the underlying strength in its military aircraft business.

Financially, Airbus stands on solid ground. A robust balance sheet, distinguished by a substantial net cash position, provides considerable resilience and strategic flexibility. This strength is underpinned by a unique business model that benefits from billions in customer pre-delivery payments, effectively creating a “negative working capital” dynamic where customers finance a significant portion of the production cycle.

From a valuation perspective, Airbus shares trade at multiples that appear to look through the current operational difficulties, pricing in the eventual and successful conversion of its massive order backlog into future earnings and cash flow. This optimism creates a potential valuation risk should the production ramp-up be delayed further than currently anticipated. The investment case hinges critically on management’s ability to navigate the complex supply chain environment and execute on its production targets over the coming years.

Business Model and Strategic Positioning

Core Operations: A Diversified Aerospace & Defence Conglomerate

Airbus SE operates as a diversified global leader across three primary business segments, each with distinct market dynamics and strategic importance.

Commercial Aircraft (Airbus): This segment is the company’s primary engine of revenue and profitability. For the fiscal year (FY) 2024, it generated €50.6 billion in revenue, constituting approximately 73% of total consolidated revenues.¹ The division is responsible for the design, manufacturing, marketing, and sale of a comprehensive portfolio of jetliners. This includes the A320 family (the world’s best-selling narrow-body aircraft), the A330 and A350 families of wide-body aircraft, and the smaller A220 regional jet.¹ The business model is defined by extremely high barriers to entry, significant capital intensity, decades-long product cycles, and exceptional long-term revenue visibility, a direct result of its massive order backlog which represents years of future production.

Helicopters (Airbus Helicopters): This segment is a consistent and profitable contributor to the group, generating €7.9 billion in revenue in FY2024, or about 11% of the total.¹ Airbus Helicopters holds a formidable market position in both the civil and military rotorcraft markets. Its product line includes well-established platforms such as the H145, H160, and the NH90 military helicopter.² The segment’s financial stability is enhanced by a balanced revenue stream derived from both new platform sales and a growing, higher-margin services business that supports the large in-service fleet.¹

Defence and Space (Airbus Defence and Space): This division provides a wide array of products and services to government and institutional customers. It generated €12.1 billion in revenue in FY2024, accounting for roughly 17% of the consolidated total.¹ Key offerings include military aircraft, such as the A400M tactical airlifter and the Eurofighter Typhoon combat aircraft; a comprehensive portfolio of space systems including satellites and launchers; and secure communications and intelligence solutions. The performance of this segment is intrinsically linked to government defense budgets, long-term procurement programs, and the geopolitical landscape. While offering diversification from the commercial aviation cycle, it has recently faced significant operational and financial challenges, particularly within its Space programs, which incurred charges of €1.3 billion in FY2024.¹ This development has obscured the positive performance in other parts of the division, notably the Air Power business, which was the primary driver of revenue growth for the segment.¹ This highlights a critical dynamic for the company: while the headline consolidated EBIT Adjusted figure for FY2024 showed an 8% decline to €5.35 billion, this was entirely attributable to the loss in Defence and Space. The core Commercial Aircraft and Helicopters segments both posted year-over-year increases in adjusted EBIT, indicating underlying operational strength in the majority of the business that was masked by project-specific issues in the Space division.

Table 1: Revenue & EBIT Breakdown by Segment (FY2023-2024)

Segment	Revenue FY2023 (€M)	Revenue FY2024 (€M)	% Change	EBIT Adjusted FY2023 (€M)	EBIT Adjusted FY2024 (€M)	% Change	EBIT Margin FY2024 (%)
Commercial Aircraft	47,763	50,646	+6.0%	4,818	5,093	+5.7%	10.1%
Helicopters	7,337	7,941	+8.2%	735	818	+11.3%	10.3%
Defence and Space	11,495	12,082	+5.1%	229	-566	N/A	-4.7%
Total/Consolidated	65,446	69,230	+5.8%	5,838	5,354	-8.3%	7.7%

Note: Data sourced from Airbus FY2024 financial results.¹ Total/Consolidated figures may include intersegment eliminations and other items.

Revenue & Geographic Footprint

Airbus operates a global business, which provides significant market diversification but also exposes it to a wide range of regional economic and political factors. The geographic breakdown of revenue is well-balanced: Europe is the largest market, contributing approximately 40% of total revenue, followed by North America at around 30%, the Asia-Pacific region at 20%, and the rest of the world accounting for the remaining 10%.³ This global presence is a key strategic advantage, allowing the company to capture growth in both mature and emerging economies and mitigating the impact of a downturn in any single region.

Strategic Initiatives & Growth Levers

To secure its long-term competitive position and drive future growth, Airbus is pursuing several key strategic initiatives.

New Aircraft Programs (A321XLR): The A321XLR (Xtra Long Range) is arguably the company’s most important recent product development. It is a derivative of the best-selling A321neo, engineered to fly routes up to 4,700 nautical miles (8,700 km), a range previously achievable only by more costly wide-body aircraft.⁴ This unique capability allows airlines to open new, long and thin point-to-point routes with the superior economics of a single-aisle jet. The aircraft has garnered significant market interest, with a substantial order book from major global carriers including IndiGo (69 aircraft), United Airlines (50 aircraft), and American Airlines (50 aircraft).⁵ The A321XLR began entering service with its first operators in late 2024, marking a critical milestone.⁵ This program is pivotal for extending Airbus’s established dominance in the upper end of the narrow-body market, a segment where its primary competitor currently has no direct answer.

Services Business Expansion: A core pillar of Airbus’s long-term strategy is the expansion of its high-margin services business. While new aircraft sales are cyclical, the aftermarket services sector—encompassing maintenance, repair, overhaul (MRO), spare parts, and training—provides a more stable, recurring revenue stream. The growth of the global in-service fleet, which Airbus projects will nearly double to over 49,000 aircraft by 2044, creates a powerful secular tailwind for this business.⁶ The company forecasts that the commercial aircraft services market will grow at a compound annual rate of 3.5%, expanding from $150 billion in 2024 to $290 billion by 2043.⁷ Airbus is strategically positioning its Customer Services division to capture a larger share of this market by leveraging its digital platform, Skywise, for predictive maintenance, and by expanding its offerings in end-to-end supply chain management and the use of cost-effective used serviceable materials (USM).⁶ This strategic focus on services is crucial for de-risking the overall business model from the inherent cyclicality of aircraft manufacturing and for enhancing long-term profitability.

Sustainability & Future Technologies: Airbus has placed decarbonization at the center of its long-term strategy, viewing it not only as an environmental imperative but also as a critical competitive differentiator. The strategy is multi-pronged:

• Sustainable Aviation Fuels (SAF): Airbus is a vocal champion for the adoption of SAF, which can reduce lifecycle carbon emissions by up to 80% compared to conventional jet fuel.⁸ All current-generation Airbus aircraft are certified to operate on a 50% SAF blend, with the company targeting 100% SAF capability by 2030.⁸
• Hydrogen-Powered Aircraft (ZEROe): In a more revolutionary step, Airbus is pursuing its ZEROe initiative, an ambitious program to develop and bring a hydrogen-powered commercial aircraft to market by 2035.⁸ This involves developing novel propulsion systems based on hydrogen combustion and fuel cell technology.
• Corporate Emissions Targets: The company has committed to ambitious, science-based targets, including a 63% reduction in its own Scope 1 and Scope 2 industrial emissions by 2030 from a 2015 baseline, and a 46% reduction in the CO2 emissions intensity of its commercial aircraft in service (Scope 3).⁹ These investments are essential for ensuring the long-term viability of its products in a world increasingly focused on climate change and regulatory pressure.

Industry Dynamics and Competitive Landscape

Market Environment: A Sector in Recovery and Transformation

The global aerospace and defense sector is navigating a period of robust recovery coupled with significant operational and geopolitical shifts.

Commercial Aviation Demand: The rebound in air travel following the COVID-19 pandemic has been vigorous. Global passenger traffic, measured in revenue passenger kilometers (RPKs), surpassed pre-pandemic 2019 levels in 2024.¹² The International Air Transport Association (IATA) forecasts that this growth will continue into 2025, albeit at a more normalized year-over-year rate of 5.8%.¹⁴ This sustained demand serves as the primary catalyst for new aircraft orders, driven by two main factors: fleet renewal, as airlines replace older, less fuel-efficient aircraft to reduce operating costs and meet environmental targets, and fleet expansion to accommodate long-term traffic growth. Airbus’s own market forecast projects a near-doubling of the global fleet by 2044, requiring approximately 43,400 new passenger and freighter aircraft over the next two decades.⁶

Defense Spending: The geopolitical landscape has shifted dramatically, leading to a paradigm change in defense spending, particularly in Europe. The conflict in Ukraine has acted as a catalyst, prompting NATO members to significantly increase their defense budgets to meet and, in some cases, exceed the alliance’s 2% of GDP spending target.¹⁷ Germany, Europe’s largest economy, has announced plans to potentially double its defense spending to reach 3.5% of GDP.¹⁹ Concurrently, the European Union has launched new funding mechanisms, such as the €150 billion Security Action for Europe (SAFE) program, to facilitate joint procurement of military hardware among member states.²⁰ This environment creates a strong demand tailwind for Airbus’s Defence and Space segment. However, this opportunity is not without its complexities. The segment’s recent financial performance has been marred by issues in its Space division, and increased budgets do not guarantee contracts. Airbus faces intense competition from other European and American defense contractors, and procurement processes are often long and subject to national industrial priorities.¹⁷

Supply Chain Constraints: The most significant headwind facing the entire industry is the persistent fragility of the global supply chain. Demand for new aircraft is currently far outpacing the manufacturing sector’s ability to supply them.¹⁷ Widespread labor shortages, raw material cost inflation, and lingering logistical bottlenecks have severely constrained production rates for all original equipment manufacturers (OEMs). This has led to record order backlogs that now stretch for a decade or more for the most popular aircraft models, creating a challenging environment for both manufacturers and their airline customers.¹⁷

The Enduring Duopoly: Airbus vs. Boeing

The market for large commercial aircraft remains a duopoly, with the competition between Airbus and Boeing defining the industry’s landscape.

Narrow-Body Dominance: The narrow-body, or single-aisle, segment is the largest and most lucrative part of the commercial aircraft market, and it is here that Airbus has established a clear and commanding lead. The A320neo family has decisively outcompeted the Boeing 737 MAX in recent years. As of mid-2024, the A320 family had accumulated over 15,000 total orders since its inception, surpassing the 737 family’s total of approximately 14,300.²⁵ This trend has accelerated dramatically; in the decade spanning 2015 to 2024, Airbus secured 8,950 net aircraft orders compared to Boeing’s 5,012.²⁶ By July 2025, Airbus was on the cusp of overtaking Boeing in total lifetime deliveries of single-aisle jets, a historic milestone.²⁷

This market leadership is not based solely on product merit—though the A320neo family is widely recognized for its fuel efficiency, wider cabin, and the unique capabilities of the A321XLR.²⁵ A significant contributing factor has been the severe and prolonged operational turmoil at Boeing. The 737 MAX’s 20-month grounding following two fatal accidents created a deep crisis of confidence and a significant pause in its production and delivery momentum.³¹ Subsequent and ongoing quality control failures have led to regulatory intervention, with the U.S. Federal Aviation Administration (FAA) imposing production caps on the 737 MAX program.³¹ This has fundamentally constrained Boeing’s ability to compete on volume. While Boeing targets a production rate of 38 aircraft per month, Airbus is confidently progressing towards its target of 75 A320 family aircraft per month by 2027.³² For airlines in urgent need of new narrow-body capacity, Airbus is often the only viable option, granting it significant pricing power and market share control that is likely to persist for the medium term.

Wide-Body Competition: The competitive dynamic in the wide-body, or twin-aisle, market is more balanced. Historically, Boeing has been the stronger player in this segment. In mid-2025, Boeing was leading in year-to-date wide-body orders with 325 commitments versus 165 for Airbus, a lead substantially driven by a large order from Qatar Airways for the 787 and 777X models.³⁴ Looking at the active global fleet, there are 3,613 Boeing wide-body aircraft in service compared to 2,153 for Airbus.³⁵ In the key product-level matchup, the Boeing 787 Dreamliner has outsold the Airbus A350, with approximately 1,909 total orders versus 1,291 for the A350.³⁶ This is partly attributable to the 787’s earlier market entry and its offering of three variants, which cover a broader capacity range than the two larger A350 models.³⁶ However, economic analyses of the most direct competitors, the A350-900 and the 787-9, indicate that the aircraft are highly competitive, with the A350 demonstrating a slight advantage in cost per seat mile.³⁸

Table 3: Narrow-Body & Wide-Body Market Share: Airbus vs. Boeing

Aircraft Category	Airbus Model(s)	Boeing Model(s)	Metric	Airbus Value	Boeing Value
Narrow-Body	A320 Family, A220	737 Family	Deliveries FY2024	677	396*
Narrow-Body	A320 Family, A220	737 Family	Total Backlog (YE 2024)	~7,500	~4,700
Wide-Body	A330, A350	787, 777, 767, 747	Deliveries FY2024	89	100*
Wide-Body	A330, A350	787, 777	Net Orders YTD (Mid-2025)	165	325

Note: Data compiled from multiple sources.¹ Backlog figures are estimates based on reported totals and segment splits. Boeing deliveries are for calendar year 2024.

Order Book & Backlog Analysis

The scale of Airbus’s order backlog is a cornerstone of its investment profile. At the close of FY2024, the consolidated order book was valued at a record €629 billion.¹ The commercial aircraft backlog alone stood at 8,658 aircraft, heavily weighted towards the in-demand A320neo family.¹ This backlog represents more than a decade of production at current rates, providing an unparalleled degree of revenue visibility that is rare among industrial companies.¹⁷ This visibility provides a significant buffer against economic downturns and allows for long-term planning in production, capital expenditure, and R&D. However, the value of this backlog is contingent on the company’s ability to convert it into deliveries, a process currently hampered by the supply chain constraints discussed in the following section.

Operational Performance and Near-Term Headwinds

Production & Supply Chain Integrity: The Primary Bottleneck

While Airbus enjoys a robust demand environment and a commanding competitive position, its ability to capitalize on these strengths is severely constrained by operational headwinds, primarily within its supply chain.

Production Ramp-Up Targets: The central operational goal for Airbus is to increase its production rate to meet airline demand and work through its massive backlog. The key target is to achieve a monthly production rate of 75 A320neo family aircraft by 2027.³³ Achieving this rate is fundamental to the company’s revenue growth and cash flow generation forecasts. However, this ambition is directly challenged by systemic weaknesses in the global aerospace supply chain.

Engine Supplier Issues (Pratt & Whitney GTF): The most acute and widely publicized supply chain problem centers on the Pratt & Whitney (P&W) PW1000G Geared Turbofan (GTF) engine, one of two engine options for the A320neo family. A manufacturing defect was discovered in the powdered metal used to produce high-pressure turbine and compressor disks, necessitating a massive global inspection and recall program.³⁹

• Impact on In-Service Fleet: The recall affects up to 3,000 engines manufactured between October 2015 and September 2021.⁴⁰ This has forced airlines worldwide—including Spirit Airlines, IndiGo, and Wizz Air—to ground hundreds of A320neo aircraft for extended periods for engine removal and inspection. The disruption is expected to persist through 2026, causing significant operational and financial strain on Airbus’s customers.³⁹
• Impact on New Production: Beyond the recall, both P&W and the alternate engine supplier, CFM International (a GE-Safran joint venture), have struggled to meet their own production targets due to labor shortages, regulatory hurdles, and other bottlenecks.⁴³ This has resulted in a critical shortage of engines for newly assembled aircraft. Consequently, Airbus has accumulated a significant inventory of finished airframes without engines, colloquially known as “gliders.” These aircraft sit at production facilities awaiting engine installation, which ties up billions of euros in working capital, delays deliveries, and postpones revenue recognition.³³

The engine crisis creates a complex dynamic for Airbus. The direct impact is negative, as it constrains the delivery of new, high-value aircraft. However, there is a secondary effect. The widespread grounding of new-generation aircraft forces airlines to extend the service lives of their older planes, increasing demand for MRO services. Furthermore, the massive inspection program for the GTF engines creates a surge in demand for engine MRO capacity and spare parts. While P&W’s parent company, RTX, bears the direct financial burden of the recall, the increased activity benefits the entire MRO ecosystem, in which Airbus Services is a significant participant. This could provide a partial, high-margin revenue offset to the negative impact on new aircraft sales.

Other Supply Chain Constraints: The challenges are not limited to engines. Airbus has also faced shortages and delays for other critical components, including aerostructures from suppliers like Spirit AeroSystems and cabin interior elements, such as lavatory modules for the A350.³³ While these issues are generally less severe than the engine bottleneck, they contribute to production volatility and underscore the fragility of the highly synchronized, multi-tiered global supply chain upon which aircraft manufacturing depends.¹⁷

Geopolitical and Macroeconomic Factors

Inflation and Cost Pressures: The global inflationary environment has increased the cost of raw materials, energy, and labor for Airbus and its suppliers.¹⁷ While long-term sales contracts often include price escalation clauses to mitigate this, a sustained period of high inflation could still pressure profit margins.

Customer Financial Health: The financial health of Airbus’s airline customers is a crucial variable. The post-pandemic recovery has been strong, but the airline industry remains highly sensitive to fluctuations in global GDP, volatile fuel prices, and geopolitical events that can disrupt travel patterns.¹⁴ A significant global economic downturn could lead some airlines to request deferrals or, in extreme cases, cancellations of existing orders. The current record backlog provides a substantial cushion against this risk, but it is not entirely immune.

Russian Exposure: As a result of international sanctions, Airbus aircraft operated by Russian airlines have been cut off from spare parts and maintenance support.³⁹ This has led to the grounding of a number of A320neo family aircraft in the country, effectively removing them from the global serviceable fleet and representing a loss of potential future service revenue.

Risk Assessment: Key Vulnerabilities

Market Cyclicality: Despite a backlog that provides years of revenue visibility, the fundamental demand for air travel and, by extension, new aircraft, is cyclical and tied to the global economy.

Single-Aisle Program Concentration: Airbus’s financial performance is heavily dependent on the success of the A320 family. This program is the primary driver of revenue, profit, and cash flow. This concentration, while currently a source of strength, also represents a risk. Any unforeseen technical issue, safety concern, or new competitive threat to this specific product family would have a disproportionately large negative impact on the company’s overall results.

Currency Exposure: A significant and structural financial risk for Airbus is the mismatch between the currency of its revenues and its costs. The vast majority of aircraft sales are priced and invoiced in U.S. dollars (USD), while a substantial portion of the company’s manufacturing cost base is denominated in euros (EUR).⁴⁵ This creates a transactional exposure: a strengthening of the EUR against the USD directly reduces the euro value of its dollar revenues, thereby compressing profit margins. To manage this volatility, Airbus employs a sophisticated and proactive long-term hedging program, using forward contracts to lock in exchange rates for its net USD exposure several years into the future.⁴⁵ While this strategy smooths out the impact of currency fluctuations on reported earnings, it does not eliminate the underlying economic exposure to long-term shifts in the EUR/USD exchange rate.

Regulatory & Certification Risks: The process of certifying new aircraft and major modifications is rigorous, lengthy, and subject to intense scrutiny from aviation authorities like the European Union Aviation Safety Agency (EASA) and the FAA. Any delays in achieving certification for new programs, such as the A321XLR, can postpone their entry into service, frustrating customers and delaying the realization of expected revenues.

Financial Performance and Capital Management

Historical Financial Deep-Dive

An analysis of Airbus’s financial performance over the last decade reveals a company that has navigated significant industry cycles, including the unprecedented disruption of the COVID-19 pandemic, and emerged with a resilient financial profile.

Revenue Trajectory: The company’s revenue path clearly illustrates the cyclicality of the aerospace industry. After reaching a pre-pandemic peak of €70.5 billion in 2019, revenues fell sharply by nearly 30% to €49.9 billion in 2020 as the pandemic brought global air travel to a standstill.³ Since then, Airbus has staged a steady recovery, with revenues climbing back to €58.8 billion in 2022 and reaching €69.2 billion in FY2024, approaching the prior peak.¹

Profitability Metrics: Profitability has followed a similar trajectory. The company reported a net loss in 2020 but returned to profitability in 2021. Net income has shown strong growth in the recovery period, reaching €4.2 billion in 2022 and €4.23 billion in FY2024.¹ Operating margins have also recovered, standing at 8.5% in 2022 and a reported EBIT margin of 7.7% in 2024.¹ The analysis of profitability must account for significant one-off items and adjustments, such as the recent charges in the Space division, to understand the underlying performance of the core business.

Free Cash Flow (FCF) Generation: Free cash flow is a critical performance indicator for Airbus, reflecting its ability to fund operations, invest in future growth, and return capital to shareholders. The company has demonstrated robust cash generation capabilities, even amidst operational challenges. In FY2024, Airbus generated a strong Free Cash Flow before Customer Financing of €4.46 billion, which was largely consistent with the €4.53 billion generated in FY2023.¹ This stability in cash flow, despite production headwinds, is a testament to the company’s financial management and the structural advantages of its business model.

Table 2: Key Financial & Operational Metrics (10-Year Summary)

Fiscal Year	Revenue (€B)	EBIT Adjusted (€B)	Net Income (€B)	FCF before CF (€B)	Net Cash/(Debt) (€B)	Commercial Aircraft Deliveries	Order Backlog (units)
2015	64.5	4.1	2.7	2.8	10.0	635	6,831
2016	66.6	3.9	1.0	3.3	11.1	688	6,874
2017	66.8	4.2	2.9	3.8	13.0	718	7,265
2018	63.7	5.8	3.1	4.0	13.3	800	7,577
2019	70.5	6.9	-1.4	3.5	12.5	863	7,482
2020	49.9	1.7	-1.1	-6.9	4.3	566	7,184
2021	52.1	5.3	4.2	3.5	7.6	611	7,082
2022	58.8	5.6	4.2	4.7	9.4	661	7,239
2023	65.4	5.8	3.8	4.5	10.7	735	8,598
2024	69.2	5.4	4.2	4.5	11.8	766	8,658

Note: Data compiled from multiple company financial reports and press releases.¹ FCF before CF is Free Cash Flow before Customer Financing. Backlog units are for Commercial Aircraft at year-end.

Balance Sheet and Capital Structure

Net Cash Position: A defining feature of Airbus’s financial profile is its exceptionally strong balance sheet. The company ended FY2024 with a consolidated net cash position of €11.8 billion, an increase from €10.7 billion at the end of 2023.¹ This substantial cash surplus provides significant financial flexibility to navigate industry downturns, fund large-scale R&D projects, and pursue strategic opportunities without relying on external financing. At year-end 2024, total assets stood at €129.2 billion, with total equity of €19.7 billion.⁵⁰

Working Capital Management: The strength of the balance sheet is profoundly influenced by the company’s working capital dynamics. Unlike a typical manufacturing company that consumes cash to fund growing inventories and receivables, Airbus operates on what is effectively a “negative working capital” model. This is driven by the industry practice of receiving substantial pre-delivery payments (PDPs) from customers years before an aircraft is delivered. These PDPs are recorded on the balance sheet as “contract liabilities.” At the end of 2024, non-current contract liabilities alone amounted to €25.6 billion.⁵⁰ This inflow of customer cash effectively finances a large portion of the work-in-progress inventory, which stood at €37.7 billion.⁵⁰ This structural advantage is a powerful, and often underappreciated, source of financial strength. It reduces the company’s reliance on debt, lowers financing costs, and creates a stable cash buffer that enhances its resilience to operational shocks like the current supply chain crisis.

Capital Expenditures & R&D: The company maintains a consistent level of investment in its future. Self-financed R&D expenses have remained stable at approximately €3.25 billion annually in recent years, reflecting ongoing work on aircraft improvements, decarbonization technologies, and defense programs.¹

Capital Allocation Strategy

Management has demonstrated a disciplined approach to capital allocation, balancing investment in the business with returns to shareholders.

Dividend Policy: Airbus has a track record of consistent dividend payments, paused only during the depth of the pandemic crisis. For FY2024, the Board of Directors proposed a regular dividend of €2.00 per share, an 11% increase from the prior year, supplemented by a special dividend of €1.00 per share.¹ The special dividend reflects the company’s robust net cash position and confidence in its financial outlook. At recent stock prices, the total dividend provides a yield of approximately 1.5%, indicating that the market primarily values Airbus as a growth and capital appreciation story rather than an income investment.³

Strategic Investments: In addition to R&D, Airbus allocates capital to strategic acquisitions and partnerships. A recent example is the ongoing discussion to acquire certain aerostructures work packages from its key supplier, Spirit AeroSystems, a move aimed at gaining greater control over a critical part of its supply chain and supporting the planned production ramp-up.¹

Valuation Analysis

Historical Trading Multiples

Assessing Airbus’s valuation requires a nuanced approach that considers the cyclicality of the industry and the frequent impact of non-cash charges on reported earnings.

Price-to-Earnings (P/E) Ratio: On a trailing twelve-month (TTM) basis, Airbus’s P/E ratio stands at approximately 29-30x.⁵³ This is significantly elevated compared to its 10-year historical average of 7.8x, a figure that is heavily distorted by periods of low or negative earnings, particularly during the pandemic.⁵³ The metric’s historical volatility, which has seen it swing from negative levels to over 500x, underscores its limitations as a standalone valuation tool for a company like Airbus.⁵³

Enterprise Value-to-EBITDA (EV/EBITDA): This multiple, which is less susceptible to accounting distortions, provides a more stable valuation benchmark. As of mid-2025, Airbus’s LTM EV/EBITDA multiple was approximately 15.1x ⁵⁵, with other sources placing it closer to 20x.⁵⁶ This is notably higher than the aerospace and defense industry average of around 10.1x cited in late 2023, suggesting a premium valuation.³ Metrics like Price-to-Sales (P/S), currently around 1.9x on an LTM basis, also offer a useful perspective.⁵⁵

Valuation Relative to Peers

Boeing Comparison: A direct valuation comparison with Boeing is currently challenging. Due to Boeing’s recent net losses, its P/E ratio is negative and therefore not meaningful for comparative analysis.⁵⁷ Comparisons must rely on forward estimates or on revenue-based multiples like EV/Sales, where Airbus’s superior profitability and growth prospects would likely justify a premium.

Other Industrial Peers: When compared to a broader set of European industrial and aerospace peers, Airbus’s valuation appears relatively full. Its P/E ratio of ~29x is in line with the European Aerospace & Defense industry average of 33.5x but higher than many other large-cap industrial companies.⁵³

The current valuation levels suggest that the market is looking beyond the immediate operational challenges. The company’s 2025 guidance points to modest growth, with deliveries targeted at around 820 aircraft and EBIT Adjusted of approximately €7.0 billion.¹ These near-term figures alone do not appear to justify the prevailing high multiples. Instead, the valuation seems to be predicated on the assumption that Airbus will successfully execute its long-term production ramp-up to 75 single-aisle aircraft per month by 2027. This would unlock the immense earnings power embedded in its €629 billion backlog at a much faster rate. This creates a significant valuation risk: should the supply chain constraints persist longer than anticipated, forcing a delay in the production ramp-up, the market could be forced to push out its earnings expectations, potentially leading to a de-rating of the stock.

Table 4: Comparative Valuation Multiples (Airbus vs. Peers)

Company	Ticker	Market Cap (USD B)	P/E (TTM)	EV/EBITDA (TTM)	P/S (TTM)	Dividend Yield (%)
Airbus SE	AIR.PA	~165	29.9x	15.1x	1.9x	1.5%
The Boeing Co.	BA	~135	N/A (Negative)	N/A (Negative)	1.7x	0.0%
Safran SA	SAF.PA	~109	N/A (Negative)	16.5x	3.7x	0.9%
BAE Systems	BA.L	~71	26.7x	15.2x	2.1x	2.3%
General Dynamics	GD	~87	24.5x	15.8x	2.1x	1.8%

Note: Data as of mid-to-late 2025, compiled from multiple sources.³ Market caps are approximate and converted to USD for comparison. Some peer multiples may vary based on source and timing.

Yield and Cash Flow-Based Metrics

Free Cash Flow Yield: Based on an LTM free cash flow of approximately $5.1 billion and a market capitalization of around $165 billion, Airbus’s FCF yield is roughly 3.1%.⁵⁵ For a mature industrial company, this yield is a critical measure of the cash return generated for equity holders.

Dividend Yield: The current dividend yield is modest, standing at approximately 1.1% to 1.5%, even when including the proposed special dividend.³ This low yield reinforces the notion that investors are primarily focused on the company’s growth potential and capital appreciation rather than immediate income generation.

Corporate Stewardship and Governance

Leadership Assessment

Chief Executive Officer (CEO) Guillaume Faury: Appointed in April 2019, Mr. Faury has steered Airbus through a period of immense challenge and opportunity.⁶¹ His tenure has encompassed the fallout from the Boeing 737 MAX crisis, which solidified Airbus’s competitive lead; the unprecedented operational shutdown during the COVID-19 pandemic; and the ongoing navigation of severe supply chain disruptions. With a deep background in engineering, flight testing, and prior leadership of the Airbus Helicopters division, he brings extensive operational and technical experience to the role.⁶² His performance is primarily judged on the execution of the critical production ramp-up and the strategic repositioning of the underperforming Defence and Space segment.

Chief Financial Officer (CFO) Thomas Toepfer: Mr. Toepfer is a relatively recent addition to the executive team, having been appointed in September 2023.⁶² He joined Airbus from the materials science company Covestro AG, where he also served as CFO. His key responsibilities include managing the company’s strong balance sheet, overseeing the complex currency hedging program, and ensuring financial discipline as the company invests heavily in production capacity and future technologies.

Board of Directors: The Board is chaired by René Obermann, the former CEO of Deutsche Telekom, who brings extensive experience in managing large, complex international organizations.⁶² The board is composed of 12 members with diverse professional backgrounds spanning industry, finance, technology, and governance, with an average tenure of 6.8 years.⁶¹

Governance Framework

Airbus operates as a Societas Europaea (SE), a corporate structure designed for pan-European companies, and is legally registered in the Netherlands, with its operational headquarters in Toulouse, France.⁶⁴ The Board of Directors has established three principal committees to oversee key areas of governance: the Audit Committee; the Remuneration, Nomination and Governance Committee; and the Ethics, Compliance & Sustainability Committee.⁶³ The presence of the latter committee underscores the increasing strategic importance the company places on ESG matters.

A notable feature of Airbus’s ownership structure is the significant stakes held by European governments. The governments of France (through SOGEPA), Germany (through GZBV), and Spain (through SEPI) collectively own approximately 25.8% of the company’s shares.⁶⁴ This government ownership provides a degree of strategic stability and support but can also introduce political considerations into corporate decision-making, which may not always align perfectly with the interests of minority shareholders.

Concluding Analysis and Key Metrics for Monitoring

Synthesis of Findings: Answering the Key Research Questions

This analysis provides the basis for addressing the central questions surrounding the investment case for Airbus SE.

1. How sustainable is Airbus’s competitive advantage in narrow-body aircraft?
   The advantage appears highly sustainable for the medium term (at least 3-5 years). It is built on three pillars: a technically advanced product family (A320neo) with a unique offering in the high-demand A321XLR; a massive, multi-year order backlog that provides significant market inertia; and the profound, self-inflicted production constraints and reputational damage at its sole competitor, Boeing. It would take Boeing many years of flawless execution to close the production gap and a new, clean-sheet aircraft program—likely a decade away—to challenge Airbus’s product-level superiority at the top end of the narrow-body market.
2. What is the realistic production ramp trajectory given current supply chain constraints?
   The trajectory is likely to be slower and more volatile than the company’s stated targets. The engine supply chain, particularly the issues at Pratt & Whitney, represents the single greatest constraint and is not expected to be fully resolved before 2026. While Airbus is making progress, achieving the ambitious target of 75 A320-family aircraft per month by 2027 carries significant execution risk. A more realistic scenario may involve reaching this rate closer to the end of the decade, with continued “waves” of disruption from lower-tier suppliers in the interim.
3. How exposed is the company to a potential commercial aviation downturn?
   Airbus is less exposed than at any point in its history, though it is not immune. The primary shield is the 8,658-aircraft backlog, which provides over a decade of production visibility. In a moderate downturn, the primary impact would likely be a slowdown in new order intake, which the company can easily absorb. A severe, prolonged global recession could lead to customer deferrals and cancellations, but the current supply-constrained environment means there is a long queue of other airlines waiting to take any available production slots. The growing, higher-margin services business also adds a layer of resilience.
4. What are the key value drivers for the next 3-5 years?
   The primary value driver is the execution of the commercial aircraft production ramp-up. Successfully increasing delivery rates, particularly for the high-margin A320neo family, will directly translate the order backlog into revenue, earnings, and free cash flow. Secondary drivers include the continued profitable growth of the high-margin services business and a successful operational and financial turnaround of the Defence and Space segment, particularly its underperforming Space programs.
5. How does current valuation compare to intrinsic value estimates?
   The current valuation appears full and reflects significant optimism about the company’s long-term prospects. Multiples such as P/E and EV/EBITDA are above their historical averages and peer benchmarks. This suggests the market is pricing the stock not on its near-term, supply-constrained earnings power, but on its potential earnings in the latter half of the decade, assuming a successful production ramp-up. The valuation is therefore discounting near-term headwinds and pricing in a high degree of future execution success.
6. What scenarios could significantly impact the investment thesis?

• Bearish Scenario: A failure to resolve supply chain bottlenecks, particularly with engines, leading to a significant delay or downward revision of the production ramp-up targets. This would postpone earnings growth and could trigger a valuation de-rating. A severe global recession causing widespread airline bankruptcies and order cancellations would also be highly detrimental.
• Bullish Scenario: A faster-than-expected resolution of supply chain issues, allowing Airbus to accelerate its production ramp and pull forward revenue and cash flow from its backlog. Continued market share gains from a persistently troubled Boeing and major new contract wins in the Defence segment would provide further upside.

Key Metrics for Monitoring

Investors should closely track the following metrics to assess the company’s progress against its strategic objectives and the evolution of the investment thesis:

• Order Intake and Backlog Evolution: Monitor gross and net orders quarterly to gauge demand trends, particularly for wide-body aircraft. Track the total unit backlog and its value in euros.
• Delivery Rates and Production Ramp Progress: This is the most critical near-term operational metric. Compare quarterly deliveries against company guidance and monitor management commentary on the progress towards the 75/month A320 family production rate.
• Cash Flow Generation and Conversion: Track Free Cash Flow before Customer Financing quarterly. Analyze its conversion from EBIT Adjusted to assess working capital performance and underlying cash generation.
• Market Share Trends: Continuously compare Airbus’s monthly orders and deliveries against Boeing’s to monitor the competitive dynamics in both the narrow-body and wide-body segments.
• Defence and Space Segment Performance: Monitor the segment’s quarterly EBIT margin for signs of a turnaround and track major contract wins and updates on problematic Space programs.

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