Airbus is heading into the Farnborough International Airshow on July 20 with investors focused less on flashy new plane unveilings and more on whether the European aerospace giant will lay out clear financial and delivery targets for 2028, according to a note from RBC Capital Markets.
RBC expects Airbus to provide guidance for 2028 of between 1,000 and 1,050 aircraft deliveries, along with adjusted earnings before interest and taxes (EBIT) of 10 billion to 10.5 billion euros. Adjusted EBIT is a measure of operating profit that excludes one-time items, giving a clearer view of ongoing business performance.
What the Farnborough Airshow Means for Investors
Airshows like Farnborough, held every two years in England, are typically big events for the aviation industry, where manufacturers announce new plane orders and sometimes unveil new models. But this year, RBC expects few major product reveals. The main exception could be a stretched version of the A220, a smaller single-aisle jet that competes with the Boeing 737 Max and the Airbus A320neo family.
Instead, the investment bank believes Airbus will use the spotlight to refresh its medium-term guidance. Guidance is simply a company's best estimate of future financial performance, often covering deliveries, revenue, or profit a few years out. For investors, guidance is a key signal of management's confidence in production capacity, supply chain stability, and demand trends.
Airbus has been grappling with supply chain bottlenecks and labor shortages that have slowed aircraft production across the industry. The company has already pushed back some delivery targets for its best-selling A320 family. A clear 2028 target would show whether Airbus expects to resolve those issues and ramp up output significantly.
Why 2028 Targets Matter
The 1,000-1,050 delivery target would represent a substantial increase from current levels. In 2023, Airbus delivered 735 commercial aircraft. Reaching 1,000-plus deliveries by 2028 would imply a compound annual growth rate of roughly 6-7%, which would require a smooth resolution of supply chain problems and sustained demand from airlines.
The adjusted EBIT target of 10-10.5 billion euros would also mark a big jump. In 2023, Airbus reported adjusted EBIT of 5.8 billion euros. Doubling that figure in five years would depend on higher delivery volumes, better pricing power, and cost controls.
For everyday investors, these numbers matter because they underpin the stock's valuation. If Airbus delivers on those targets, earnings per share could rise significantly, potentially supporting a higher share price. Conversely, if the company misses its own guidance, the stock could fall, as seen with other companies that have disappointed on forward-looking targets, such as HCL Tech earlier this year.
What Investors Should Watch For
Beyond the headline numbers, investors will be listening for details on how Airbus plans to achieve those targets. Key questions include:
- Production rates: Can Airbus increase A320 family output to 75 or more per month by mid-decade, as previously planned?
- Supply chain: Are engine and parts shortages easing? Airbus has had to cut delivery forecasts because of delays from suppliers like Pratt & Whitney.
- Order book: A strong order pipeline from airlines, especially in Asia and the Middle East, would support the delivery targets.
- Boeing competition: Boeing's ongoing quality and production problems have given Airbus an advantage, but any recovery at Boeing could change the competitive landscape.
Airbus shares have risen about 10% in 2024 through mid-July, outperforming the broader European market. The stock trades at roughly 25 times expected 2024 earnings, a premium to historical averages, reflecting investor optimism about the long-term recovery in air travel.
Broader Market Context
The Farnborough Airshow comes at a time when the global aerospace industry is still recovering from the pandemic, which crushed air travel and led to massive order cancellations. Since then, demand has rebounded sharply, but supply chains have struggled to keep up. Airlines are desperate for new, more fuel-efficient planes to replace older models and meet sustainability goals.
Airbus's main rival, Boeing, is also expected to attend Farnborough, but its focus will likely be on rebuilding trust after a series of safety incidents and production issues. That dynamic could give Airbus an edge in winning new orders at the show.
For investors, the airshow is a chance to gauge the health of the entire aviation supply chain, from engine makers to parts suppliers. A strong set of targets from Airbus could lift sentiment across the sector.
RBC's note is just one analyst's view, but it highlights the growing importance of medium-term guidance as a driver of stock moves. As seen in other industries, such as bank earnings and Japanese tech companies, clear and credible guidance can reassure investors even when near-term results are mixed.
Whether Airbus delivers on these expectations will become clearer after July 20. Until then, the market will be watching closely.
