Seeking Alpha
Conglomerates, long-term horizon, aerospace, oil & gas
Profile| Send Message|
( followers)  

Summary

  • 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)

Airbus Group

2013

2012

2011

2010

2009

Revenue

$81,773

$77,942

$67,797

$63,138

$59,094

EBIT

$3,672

$2,941

$2,226

$1,638

-$524

EBIT

4.49%

3.77%

3.28%

2.59%

-0.89%

FCF

-$1,151

$887

$2,996

$3,852

$767

EPS

$2.55

$2.07

$1.75

$0.94

-$1.30

Dividend

$1.04

$0.83

$0.62

$0.30

$0.00

Dividend Yield

1.42%

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)

Commercial20132012201120102009
Revenue$55,047$50,981$42,999$38,189$36,391
EBIT$2,201$1,553$749$402$533
EBIT4.00%3.05%1.74%1.05%1.46%

The commercial aircraft division is the largest revenue generator. EBIT is rising even when the A350XWB project is experiencing higher costs.

Defence20132012201120102009
Revenue$8,247$10,862$11,464$11,891$10,485
EBIT$596$315$497$647-$1,820
EBIT7.23%2.90%4.33%5.44%-17.36%

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.

Space20132012201120102009
Revenue$7,982$8,027$6,850$6,904$6,623
EBIT$479$431$825$391$355
EBIT6.00%5.36%12.05%5.66%5.36%

Space generates a stable revenue and profit. Because of the budget cuts no major increase of revenue should be expected.

Helicopters20132012201120102009
Revenue$8,690$8,644$7,473$6,665$6,307
EBIT$548$429$357$253-$226
EBIT6.30%4.96%4.78%3.79%-3.59%

Airbus Helicopters consist of both military and commercial helicopters with production centres in France (former Aerospatiale) and Germany (former Messerschmitt Bölkow Blohm)

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.

AIRLINER TYPES

Airbus has the following airliners in production or under development. All narrow body airliners are called the A320 family.

Narrow body

A319 (short fuselage)

A320

A321 (long fuselage)

Wide body

A330

A350XWB

A380

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

CFM is a joint venture between General Electric (NYSE:GE) and Safran (OTC:SAFRF).

The PW1000G is a joint venture between Pratt & Whitney, which is a division of UTC (NYSE:UTX) and German MTU Aero Engines (OTC:MTUAF).

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.

AIRLINER PRODUCTION

(Source chart: Confero)

Delivered

2009

2010

2011

2012

2013

Narrow body

402

401

421

455

493

Wide body

96

109

87

103

133

Total

498

510

508

558

626

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)

A319

131

A320

3067

A321

1100

A330

267

A350

812

A380

182

Total

5559

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

Data sources

All (financial) data used is published by Airbus Group investor relations, press releases or visits to Airbus facilities. When other sources are used there are links to the data.

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.

Source: Airbus Group: Europe's Growing Giant In The Aerospace Industry