Airbus Down 4% YTD, Outperforms Boeing Down 30% YTD

Despite lower guidance, the stock is an attractive buy.

Hi Friends 👋

I was listening to the CEO of Airbus, French engineer Guillaume Faury, this week on CNBC and he continues to give me a good impression. When asked about Boeing, he said he had enough to manage with Airbus to not think of other companies.

What I like about the CEO is that he had a long career of engineer, having worked in testing, safety and R&D in Peugeot & Airbus. That gives him excellent knowledge on how to manage Airbus from a technical perspective, and not only in terms of management.

Here are the earnings release from Wednesday this week also available on Seeking Alpha (link).

For Q2

• Q2 Revenue of €16 bn (+1% Y/Y) 🟢

• Earnings Per Share down to €0.29 🔴

• Net income of €230 mn (-78% Y/Y) 🔴

• EBIT Adjusted €814 mn (-56% Y/Y) 🔴

• EBIT (reported) €847 mn (-43% Y/Y) 🔴

For H1

• EPS of €1.04 🟢

• Revenue of €28.83 bn (+4.2% Y/Y) 🟢

• EBIT Adjusted €1.4 bn; EBIT (reported) €1.5 bn 🔴

• Free cash flow before customer financing -€0.5 bn 🔴

• 323 commercial aircraft delivered 🔴

For 2024

• The company expects around 770 commercial aircraft deliveries (down from 800 previously) 🔴

• EBIT Adjusted of around €5.5 bn (down from €6.5 bn); 🔴

• Free Cash Flow before Customer Financing of around €3.5 bn 🟢

I know how it looks. 🫣 It’s a sea of red when it comes to earnings and guidance. And yet the stock is down only 4% YTD. Do you know why?

Because the company is still:

1. a duopoly

2. has solid fundamentals

3. and management is of excellent quality and shareholder friendly.

So what’s the problem? Simple: deliveries (770 expected instead of 800 this year). Airbus gets paid on every aircraft that gets delivered. And the demand is there, and the deliveries could be much higher.

Unfortunately it is not managing to receive the critical parts from the suppliers (Boeing is facing the same issue, on top of many other issues!) because these suppliers slashed their workforces during the covid years when airline orders for aircrafts were down.

And the lack of inventory and slow production scaling had an immediate effect in 2020 and continues to impact the company since then.

The problem is not Airbus. It’s the suppliers. And in the duel against Boeing, Airbus is the one with solid fundamentals - not Boeing.

Therefore I am long on Airbus and the sea of red in the earnings do not scare me. The company is healthy, the demand is there and the suppliers are slowly ramping up operations - and I am sure that we will see a revenue boost in the next years. The stock is down and attractively valued as you can see in the above chart.

It’s the right time to accumulate shares, in my opinion. It’s not an investment advice. I do have it in my portfolio as one of my top positions.

Thank you for reading. 💚🙏 Which one do you prefer and why, Airbus or Boeing?

Etcaetera