Is Airbus Medium Term Guidance Feasible? |

Airbus provided its 2026 Business Update at the Farnborough Air Show, including guidance on production and financial objectives for the next three years. Highlights include substantial growth in aircraft deliveries, resulting in substantially improved financial performance. Airbus Targets Remain Aggressive The company guidance includes moving from 793 deliveries in 2025 to 870 in 2026, 979 in 2027, and 1,090 in 2028. Correspondingly, adjusted EBIT company-wide is projected to grow from €7.1B in 2025 to €7.5 in 2026, €8.8 in 2027, €10.7B in 2028 to €12.5-13.5B in 2029. Growth in both deliveries and EBIT would be record levels for Airbus as it outlines its ramp-up plans for commercial aircraft. The targeted production rates to reach these new heights are significant, with A220 reaching rate 13 by 2028, the A320 family to rate 75 by 2029, the A350 at rate 12 in 2028, and the A330 rate 5 in 2028. Each family is currently well below those rates. [caption id="attachment_195733" align="aligncenter" width="488"] Guillaume Faury Airbus[/caption] At the same time, Airbus is looking at product improvements, including an A220 stretch that is likely to launch at Paris 2027 for a 2029 EIS, an A350 stretch to compete with the larger-capacity 777-9 from Boeing, who themselves are looking into a larger 777-10, and the potential for an all-new narrow-body to replace the A320neo family in the 2030 time frame. These are very ambitious targets for Airbus, which, if achieved, will provide the company with a stronger market share and balance sheet as it prepares for the 2030s. The question that arises, given Airbus's prior guidance that has not been met, is whether these numbers are feasible over the next three and a half years. Recent History Has Not Been in Airbus's Favor If we examine Airbus' prior growth targets, rate 75 for the A320 should have already been achieved in 2025 rather than the current 55, the A220 should now be at 12 rather than the 7-8 today, and the A350 should today be at 9 rather than the current 6 per month that has likely constrained sales for this popular program. Simply put, since the global pandemic, Airbus has experienced supply chain issues that have prevented it from meeting its goals, whether fuselage panel quality, engine shortfalls, toilets, or seats. The recent acquisition of a portion of Spirit Aero Systems by Airbus is illustrative of the problems the company is facing. The US operations in Kansas that produce parts for Airbus were sold off, and yellow tape marks the Airbus and Boeing portions of the factory floor until more permanent arrangements are completed. During the transition process, a majority of the employees chose to remain with Boeing rather than transition to Airbus, and a staffing shortage emerged, limiting production throughput and short-term rate increases. Combine that with engine shortfalls and delays in sourcing toilets and aircraft seats, and supply-chain delays have negatively impacted programs. Airbus previously stated that those impacts would likely continue into 2027, and also indicated that deliveries of aircraft on order would likely be 1-2 months late this year. Being 1-2 months late means a shortfall of about 55 to 110 aircraft. Those delays will need to disappear if Airbus is to meet its objectives by year-end in the remaining five months of the year. We track a surrogate of production rates in the number of first flights from the five Airbus assembly facilities in Europe, North America and Asia. Our tracking for July through 70 percent of the month shows that 39 A320neo family aircraft have been produced so far this month, meaning an expected rate of 55 for the entire month. Across all programs, we show 48 first flights through the 21st, which would yield an expected 68 aircraft for the month. With Airbus needing an average of 87 aircraft per month to reach its 870 goal, July is moving the company further from that goal. Then comes vacation-heavy August, and the firm will be under fire for a record 4th quarter. Within the Airbus guidance, the company projected deliveries as follows: Quarter Deliveries Q1 2026 Actual 114 Q2 2026 Actual 237 Q3 2026 Projected 231 Q4 2026 Projected 288 Total 870 While Airbus often has met the 100 deliveries threshold in December, it must average 96 aircraft per month in the fourth quarter if it is to meet it goals. That may be more than the supply chain can stretch in the near term. Airbus' slow start to 2026 may be the largest factor should the company once again fall short of expectations. How Fast can Airbus Grow? Current actual and projected Airbus guidance is shown in the following chart. The projected upticks in deliveries for 2027 and 2028 are plausible, assuming the constraints on obtaining engines and other components are resolved. We’ve heard Airbus project recoveries before, only to be disappointed as 2023, 2024, and 2025 missed their guidance. Let’s hope the supply chain can finally fully support Airbus's production goals in 2026, 2027, and 2028. The double-digit production growth in 2027 and 2028 will exceed historical production growth rates. Increasing production that significantly in three consecutive years presents issues with respect to staffing, training, and parts inventories. With the potential investment in two new aircraft variants looming, Airbus cannot ignore the expenditures necessary to retain quality during production ramp-ups. [caption id="attachment_195723" align="aligncenter" width="580"] image: AirInsight Analysis[/caption] Competitive Dynamics Will Airbus recover as fast as it needs to in order to reach its goals? It had better, as Boeing is poised to increase its narrow-body production to a rate of 57 in 2027 and 69 in 2028 following the return of authorization authorities under its production certificate. Boeing’s production quality and rates have demonstrated stronger performance, enabling those rate increases. If Airbus cannot increase production fast enough, particularly for wide-bodies, Boeing will likely overtake them in revenues, as it is likely to continue to dominate wide-body market share. Forward-looking backlog shows 87% narrow-bodies for Airbus and a near 50/50 split for Boeing, as it has a smaller 737 MAX backlog, albeit with a narrowing gap. The Bottom Line Is it possible to meet its guidance of 870 deliveries in 2026? The answer is yes, but it will be extremely difficult. Airbus will need to deliver 288 aircraft in the fourth quarter, which it has done before on two occasions in 2018 and 2019. Both of these were before the global pandemic, which decimated many supply chain participants. Many small businesses lost business volume and experienced employee turnover, as well as a lack of financial wherewithal to reinvest in their businesses to increase production rates. 2018 and 2019 were also periods during which aircraft manufacturers and suppliers had available inventory. Today, the supply chain is tight, with little or no excess inventory as OEMs and MROs both chase after fewer parts in the post-pandemic environment. In the sixth year after the pandemic, we are still feeling its impacts. If the company meets its goal of 870 aircraft in 2026, we will know that the impact of the pandemic has waned. If not, the lingering effects will prove to have been more damaging than anyone would have believed in 2021 when the comeback began. This could be the year that marks a turning point for the aviation industry in the post-pandemic environment, as we finally close in on pre-pandemic delivery rates.

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