Airbus announced a significant revision to its 2024 financial and operational targets, resulting in a sharp 9% decline in its stock price on Tuesday. The aerospace giant revised its expected adjusted earnings before interest and taxes (EBIT) for the year to approximately 5.5 billion euros, a steep reduction from the previously forecast range of 6.5 billion to 7 billion euros, a figure that was reaffirmed as recently as April 25.
The company also adjusted its delivery expectations, now aiming to hand over about 770 commercial aircraft in 2024, down from its earlier target of around 800. This adjustment coincides with a delay in the ramp-up of production for its A320 series aircraft. By the close of trading, Airbus shares had tumbled by 9.6% on European markets.
The downward revisions are attributed primarily to ongoing supply chain issues within Airbus’ commercial aircraft sector. “Airbus is facing persistent specific supply chain issues mainly in engines, aerostructures, and cabin equipment,” the company detailed in its announcement.
Moreover, Airbus is contending with rising costs in its space systems division, prompting the company to record substantial charges. “Commercial and technical challenges” have led Airbus to account for approximately 900 million euros in charges for the first half of 2024. These charges relate to “updated assumptions on schedules, workload, sourcing, risks, and costs over the lifetime of certain telecommunications, navigation, and observation programmes,” as per the company’s statement.
These financial updates come ahead of the half-year results, scheduled for release on July 30. Earlier in the year, Airbus reported a weaker-than-expected operating profit for the first quarter, with CFO Thomas Toepfer describing the earnings as “not particularly strong” in a statement to CNBC.
This series of setbacks highlights the challenges Airbus faces in a turbulent global supply chain environment, casting a shadow over its operational and financial performance for the year.