- Airbus Group is steadily growing in revenue to $81b and profit to $3.5b.
- Production capacity is rising with an order book of more than 5500 aircraft.
- Dividend is increasing.
- Airbus Group is a good and safe investment.
The Airbus Group (OTCPK:EADSF) is one of the largest aerospace manufacturing companies in the world. Airbus is growing at a steady pace and is increasing profitability and production capacity while increasing the dividend.
The airliners of the commercial division are the only true competitor for Boeing (NYSE:BA) as described in Boeing And Airbus: The Battle For Leadership In The Aerospace Industry. The other 2 major airliner manufacturers are Bombardier (OTC:BOMBF) and Embraer (NYSE:ERJ) compete for the third and fourth place as described in The Battle For Bronze.
AIRBUS GROUP FUNDAMENTALS
The Airbus Group (previously named European Aeronautic Defence and Space Company) was created in 2000 by the merger of several French, German and Spanish aerospace companies (which already had a lot of experience working together in joint ventures)
Since January 2014 the Airbus Group restructured into divisions Airbus [A], Airbus Defence and Space [B] and Airbus Helicopters [C].
Before the reorganization Airbus (EADS) was divided in divisions Airbus [A/B), Eurocopter [C], Astrium [C] and Cassidian [B].
The division Defense and Space is divided in seperate Defence and Space components to enable comparison with the past.
(Source chart: Confero)
The revenue is composed of a web of separate consortia, joint ventures and equity. These results are consolidated in the Airbus Group results.
(click to enlarge. Source: Airbus Group Structure)
AIRBUS GROUP DIVISIONAL FUNDAMENTALS
(Source chart: Confero)
The commercial aircraft division is the largest revenue generator. EBIT is rising even when the A350XWB project is experiencing higher costs.
The defence division has lower revenue, which is caused by lower defence budgets in a lot of countries. Production of the A400M tactical airliner is starting to generate revenue and profit after the long delays.
Space generates a stable revenue and profit. Because of the budget cuts no major increase of revenue should be expected.
Overall the profitability of Airbus is rising, despite higher one-off costs on the A350XWB and restructuring. Revenue is rising for the commercial aircraft with an impressive order book, while space and defence have decreasing revenues because of budget cuts by many governments.
Airbus has the following airliners in production or under development. All narrow body airliners are called the A320 family.
A319 (short fuselage)
A321 (long fuselage)
Development of the Airbus A320neo Family
The A320neo is planned to have its maiden flight this autumn. Development also Neo stands for New Engine Option and has the option of a CFM LEAP-1A of Pratt & Whitney PW1000G. New engines and other improvements should make the A320neo 15% more fuel efficient
Development of the Airbus A350XWB
The Airbus 350XWB is not in production yet and is designed to compete with the Boeing 787 Dreamliner. According to Airbus it wants to make the A350XWB more fuel-efficient and cheaper to operate than Boeing's Dreamliner. The A350XWB will have Rolls Royce Trent engines.
All engine manufacturers mentioned are described in other articles in the aerospace industry series and in Winners To Pick In The Aerospace Industry aerospace engine manufacturers and what company to invest in are described in more detail.
(Source chart: Confero)
Airbus assembles the airliners mainly in Toulouse, France and Hamburg, Germany. Parts are produced all over the world.
According to Airbus it spends more than $13B a year in the US and this is increasing with the starting of the assembly line in Mobile. Airbus says it is the largest export customer of the US aerospace industry.
Assembly of Airbus airliners in China
Since 2009 Airbus assembles Airbus 320 family (A319,A320 and A321) in Airbus Tianjin Delivery Centre in Tianjin. More than 150 aircraft were assembled in China already with a production capacity of 4 aircraft per month.
Assembly of Airbus A320 Family in the U.S.
In April 2013 construction started in Mobile, Alabama of the Airbus assembly facility. In January 2014 the first manufacturing employees started.
In February 2014 Airbus started the first manufacturing job openings for the Mobile, Alabama A320 narrow body assembly line. The first Mobile assembled Airbus 320 will be delivered in 2016.
The Mobile assembly line will produce 4 Airbus 320's a month; the same as the Chinese Airbus 320 assembly line.
In 2016, Q2 production of the A320 series will reach 46 aircraft/month, which will be an increase of 4 aircraft a month with current production and 10 A320's a month compared with 2010.
BACKLOG AND ORDER BOOK
Currently the order book of Airbus consists of more than 5000 aircraft. Only firm orders are taken into account. This is more than 8 years of production.
Order book (firm orders only)
INVESTING IN AIRBUS
Airbus Group is a good and safe company to invest in:
- Increasing profitability
- 1.42% dividend yield (which is rising)
- Backlog amounts to more than 8 years of production
- Increasing production capacity
- Leveraging political and economic response by spreading production (of aircraft and parts) over Europe, U.S. and Asia
- Huge network of cooperation with other aerospace manufacturers all over the world
The following is used for the calculations:
- Exchange rate USD/EUR 1.38
- Stock price USD 72.75 / EUR 52.72
All spelling used is consistent with Airbus own communications. Defence is U.K. English (which is used by most European countries) and Defense is U.S. English.