Airbus shares plummet after planemaker fails to capitalise on Boeing woes

Airbus shares rose as the crisis at Boeing kicked off in January. But now it looks like the hype may have been overblown.

Crisis at the plane-making giant Boeing has been the talk of investors over the first half of 2024 after the fuselage of an Alaska Airlines flight blew out dramatically in January.

Amid a probe from the US Department of Justice, the departure of a host of top level C-suite executives and falling shares, eyes begun turning to Airbus.

At points there was speculation that the long-held duopoly would finally be broken by Brazil’s Embraer.

Airbus shares rose in January and February but now it looks like the hype may have been overblown.

In an update on Monday, the French manufacturer cut its 2024 delivery target from 800 to 770 and delayed increasing output of the A320 to 2027. The A320 is typically what competes with Boeing’s bestselling 737 Max.

Shares fell 11 per cent on Tuesday morning, dragging on Europe’s key exchanges.

It meant Airbus shares are now down around six per cent in the year to date despite the problems at Boeing.

Issues across the supply chain are proving too tough to handle. Demand for planes is soaring as travel demand booms in the post-Covid era yet supply just can’t seem to keep pace.

In the UK, some 312 commercial aircraft were delivered between January and April, 7.4 per cent lower year-on-year, according to the aerospace trade body ADS Group. At the same time, the number of orders for new aircraft rose 64 per cent to 64, up from 38 a year earlier.

“Demand is not the problem; quite the reverse. But if supply can’t keep pace and competition so constrained, it ought to mean airline capacity doesn’t increase too much, which could keep fares higher for longer,” Neil Wilson, chief markets analyst at Finalto, said.

A shortage of engines, seats and cabin parts has proven a key issues and Airbus has borne the brunt of the problems since Covid-19, blaming its suppliers such as RTX subsidiary Pratt & Whitney and difficulty rehiring workers.

CEO Guillaume Faury said on Monday engine makers would have to “face the consequences” of any delays, reportedly referring to penalties.

Airlines have not been shy in voicing their concerns. In a press conference in November, Ryanair chief Michael O’Leary blamed delivery delays at both Boeing and Airbus for hiking air fares across Europe and little has changed since then.

Added to the issues, Airbus has also been forced to stomach a €900m (£760m) charge at its troubled Space Systems segment in Europe. That won’t help earnings forecasts, which have been pushed down to €5.5bn this year, down from prior expectations of as much as €7bn.

The turbulence at Boeing won’t be enough to keep investors on side, it seems.