Airbus is grappling with significant supply chain challenges, particularly with aircraft engines, which are proving to be the most difficult components to source for the years 2025 and 2026. This situation has resulted in a substantial backlog of aircraft awaiting delivery, even as customer demand continues to remain robust.
During the World Governments Summit in Dubai, CEO Guillaume Faury addressed these issues, highlighting that while the demand for aircraft is high, the company is unable to deliver them promptly due to ongoing shortages. The current supply crunch has hit especially hard in the years 2025 and 2026, with Faury candidly stating that procuring engines remains a primary production challenge.
On a positive note, there is a notable increase in defense product orders, as various governments are expanding their military budgets, which may help mitigate the impact of slower commercial aircraft deliveries. This uptick in defense spending is a favorable trend for Airbus.
Faury has also acknowledged the growing competition from Chinese manufacturers such as Comac, but he remains confident about Airbus”s position in the market. He believes that the aerospace market is large enough to accommodate new entrants without significant repercussions for established players like Airbus.
In a strategic move, Airbus plans to introduce a new short-haul aircraft by the end of the decade, intended to replace the existing A320 family. The new model is expected to enter service in the mid-2030s.
As investors await the company”s fourth-quarter results, scheduled for February 19, analysts project revenues of $31.73 billion, reflecting a 9% growth from the previous year. Earnings per share are anticipated to be $2.90, representing a 5% increase compared to the same period in 2024.
Despite the recent 1.39% decline in Airbus shares, which closed at $230.60 on Monday, analysts maintain a Moderate Buy rating for the stock. With nine analysts recommending buying and four suggesting holding, the average price target stands at $269.77, indicating a potential upside of nearly 17% from current levels.
Faury”s remarks illustrate the complex dynamics Airbus is navigating: strong demand juxtaposed with persistent supply challenges, increasing defense spending, and a growing backlog of orders. The engine shortage does not appear to have a quick resolution, as suppliers cannot simply ramp up production overnight. Airbus is expected to continue facing these constraints through at least 2026.
The competitive landscape also includes challenges from emerging players, particularly those from China, as companies like Comac enhance their capabilities. However, Faury sees sufficient demand to sustain multiple participants in the market.
Faury”s insights at the World Governments Summit shed light on the evolving challenges and opportunities for the European aerospace giant, positioning Airbus to adapt to the shifting landscape of the aviation industry.
