AIRBUS

Analysis of Airbus share price

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Elements that can influence the price of this asset:

Analysis N°1

Of course, given the activity sector that this company exercises its activities in it is important to closely follow the activities and economical health of the major airlines. This information will of course influence future orders from this aircraft producer.

Analysis N°2

The publication of this company’s financial data takes place every quarter as well as annually and these are also items that should be carefully examined, notably if you compare them with the targets foreseen by the group which are regularly published.

Analysis N°3

It is also possible to anticipate the financial results of the Airbus Company using data related to orders over the last few years. Of course it is also recommended to follow announcements related to the signature of contracts with airline companies.

Analysis N°4

The reputation of Airbus Group aircraft is primordial to the company’s success so it is therefore extremely important to carefully monitor all events that could impact its brand image such as possible technical problems, accidents or the launch of new innovative aircraft.

Analysis N°5

Finally another thing that could indirectly influence the Airbus Group’s activities is related to the fuel price and therefore the petrol price which can be followed on the commodities market.

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General presentation of Airbus

To begin this article we will first provide a general but comprehensive presentation of the Airbus Group and its activities. This information will assist you in better understanding the economical environment of this group and therefore its growth possibilities for the coming future.

The Airbus Group is a French company specialised in the aeronautical, space and defence sectors. In fact Airbus is currently the European leader in this general activity sector and it also holds second position worldwide just after Boeing, the latter is of course its major competitor and we shall examine this company in more detail later on in this article.

To better understand the activities of the Airbus Group it is possible to divide them in different categories according to the turnover that they generate and how they do so:

  • Firstly, the production development of commercial airplanes represents the majority of this group’s activities and in fact the company is the world leader in this sector for airplanes with over 100 seats. These activities generate 74.1% of this group’s turnover.
  • Then we have the activities related to defence and aerospace systems that represent nearly 17.2% of this company’s turnover. These activities are particularly related to military transport airplanes, ocean surveillance aircraft, anti-submarine fighter airplanes, and refuelling aircraft as well as aerospace equipment such as orbital launchers, observation and communications satellites, turboprop aircraft as well as security and defence systems such as missile systems, and electronics and telecommunications systems. It should also be noted here that the group also offers related services such as training and aircraft maintenance.
  • Finally, the remaining 8.7% of the turnover comes from the production of civil and military helicopters.

It can also be beneficial to understand the geographical distribution of the group’s activities. This company in fact achieves only 27.9% of its turnover in Europe, 36.6% of this company’s turnover is from Pacific Asia, 17.5% from North America, 10% from the Middle East, 2.2% is from Latin America and the remaining 5.8% is from other countries around the world.v

Analysis of Airbus share price
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The major competitors of Airbus

As we examined earlier, the Airbus Group currently holds second position in its activity sector worldwide just after the American company Boeing. However, to all intents and purposes these two companies are the only major players and share the vast majority of the global commercial airplane market between them. Understanding and knowing about the Boeing Group is therefore primordial for taking into account this competition when completing your analyses.

The Boeing Company is an American company that is also specialised in aeronautical construction and is currently number one in this activity sector worldwide. In particular it manufactures and sells commercial airplanes as well as replacement parts and provides technical, maintenance, engineering and support services. But Boeing also operates in the defence sector with the production of military aircraft and mobility systems such as airplanes, helicopters, defence missiles, logistical support services, engineering, maintenance and training. Boeing also provides aerospace equipment such as satellites, launch pads and also offers commercial and private aircraft and aeronautical equipment financing. It is of course in the USA that Boeing achieves the majority of its turnover but the group is also very active in Asia, Europe and the Middle East as well as other places around the world.

When you complete your fundamental analyses of the Airbus Group be sure to take into account all the information coming from this sizeable competitor such as major announcements from Boeing, any significant news from this company as well as the launch of new products or publications related to finance.


The major partners of Airbus

The Airbus Group does not only count upon its strategies for growth and in fact it regularly implements major partnerships in order to boost its development. These partnerships are of course highly significant if you wish to trade effectively in this asset as their announcement can have a major impact on traders’ decisions as to how they will trade in the Airbus Company shares.  Here therefore to assist you in understanding the situation better are a few examples of recent partnerships between Airbus and other major companies.

Thales

In 2013 Airbus and Thales signed a long term partnership agreement relating to Airbus Flight Hour Services (FHS) and the Tailored Support Package (TSP) for the production of A320, A330, A340, A380 and A350XWB airplanes. This new partnership related to the supply of stopover replacement equipment and components for maintenance services including of course all tests, support and maintenance, plus rental as well as any necessary exchanges and modifications.

Rolls Royce

In 2015, Airbus and the automobile manufacturer Rolls Royce also decided to become partners in an agreement concerning the specific sector of predictive maintenance for airline companies.

Safran

The Airbus Group and Safran announced the completion in 2016 of the implementation of their joint venture, Airbus Safran Launchers (ASL) the objective of which was to design and build the next generation of launchers for the Ariane 6 space rocket.

Dassault Systems

In February 2019 the Airbus group also implemented a major partnership with the French group Dassault Systems that was very similar to that signed a year before with Boeing. This partnership related to the use by Airbus of the 3DExperience digital platform created by Dassault Systems in order to modernise its industrial procedures. This alliance should lead to the implementation of a collaborative platform for all aspects of the constructor’s civil and military products and should enable Airbus to retain its position against its major competitor. This platform should enable the design and creation of certain products and simulate their operation as well as organise their production and organise their maintenance. With this the Airbus group divisions and its sub contractors should be able to work better together in a collaborative manner on the same communal digital platform both more effectively and rapidly as well as being more precise and less expensive.

China Aviation Supplies Holding Company

In March 2019 it was with a large Chinese group, the China Aviation Supplies Holding Company, that the Airbus group implemented a partnership. This was notably related to the acquisition of 300 Airbus airplanes by Chinese airline companies. More precisely these were 290 airplanes from the A320 range and 10 from the A350 range that were ordered through a contract following a rise in demand from this country’s airlines covering the majority of this market’s sectors notably with the interior national flights, low cost flights, regional flights and international long haul flights. However this partnership opens up interesting future possibilities for Airbus with the Chinese market as analysts predict that China will require more than 7,400 new passenger and freight aircraft during the next 20 years which represents nearly 20% of the global requirement for a single market.

RATP

More recently, in May 2019 to be more precise, the Airbus Group also signed a beneficial national partnership with the French RATP group concerning a feasibility study of urban aerial mobility services in the Ile de France. More precisely, this new project that integrates well with the larger MaaS sector (Mobility as a Service), if it is successful, should enable the possibility of point to point services for travellers by enabling them to benefit from the most advanced innovative services from both companies in terms of long term and shared mobility, in the same way as with autonomous electric vehicles. Initially, the work completed by Airbus and the RATP will consist of analysing the conditions for developing this type of service with a calculated cost. They will also work on the subject of intermobility and urban insertion with the aim of making futuristic flying cars available to a major part of the population. The two companies will therefore collaborate to create a large ecosystem of pertinent partners to develop this new range of transport vehicles in other major cities around the world.

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The factors in favour of a rise in the Airbus share price:

First of all, the positioning of the Airbus Group on the global market of the aeronautics, space and defence industry is of course a major advantage. It should be remembered that the group's only competitor remains the American group Boeing, with which it is constantly competing for the leading position.

As we have seen above through the presentation of this company, Airbus is active in various fields, mainly in civil aeronautics, of course, but also in defence and space and helicopters. This division of the group's activities into different segments and subsidiaries provides a form of protection against the risk associated with one and the same topical sector.

The fact that the sector of activity in which the Airbus Group operates is not very competitive is of course another advantage that you must take into account here. Indeed, it should be noted that this sector of activity is a sector with high barriers to entry and therefore limits the number of new players. This characteristic also makes it easier for the group to set prices that allow comfortable margins.

We also appreciate the good visibility offered by the Airbus group with regard to its future revenues. Indeed, the group's order book offers visibility over several years.

The Airbus group also offers the advantage of having an interesting positioning from a geographical point of view with sales in many countries of the world but above all a good presence in emerging markets which today represent more than half of the company's activities.

Finally, for several years now, the Airbus group has been pursuing a policy of increasing the rate of redistribution to shareholders, which naturally attracts investors.

The factors in favour of a drop in the Airbus share price:

Firstly, it is regrettable that the Airbus Group has a poor distribution of its turnover among its various subsidiaries. Indeed, it should be recalled that the vast majority of the group's revenues still come from the sole activity of commercial aircraft construction. A loss of momentum or a drop in demand from this sector could therefore present a major risk to the profitability of the Airbus group.

Similarly, the Airbus group must, in order to compete with its American competitor, be increasingly innovative. To do so, it must therefore invest a great deal of money in research and development, which has a major impact on its results. Indeed, it should be remembered that the group's current investments in R&D represent more than 4% of the company's total turnover, despite numerous efforts to reduce these expenses.

Although the Airbus group enjoys a strong reputation and a certain success in the field of commercial and civil aviation, it is regrettable that it is not able to achieve the same success in the field of aviation and military systems. Of course, we recall the Group's persistent difficulties with the commercial failure of its A400 aircraft in 2016, which weighed very heavily on Airbus' overall profitability by leading to significant costs.

In the space sector, Airbus may also fear stronger competition than in other segments. Indeed, the Space X group has been facing very strong competition for several years now, which could lead to a further loss of market share in the years to come.

Finally, the Airbus group's last weak point concerns its strategic control of operating profitability. This profitability has disappointed investors a great deal in the past years and, although it has been better controlled in 2018, investors are more cautious about publishing future financial results.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions.

Frequently Asked Questions

On which indices is the share of the Airbus group listed?

The share of the Airbus group is of course one of the best known and most popular shares on the French stock market. Airbus is also a company with a very large market capitalization. It therefore enters into the calculation of the French benchmark CAC 40 stock market index and is therefore among the 40 French companies with the largest capitalization. It also joins the Eurostoxx 50 index and is therefore one of the 50 largest capitalizations in Europe.

What underlying trend has been observed for the Airbus share?

In general, the price of Airbus shares has followed an upward trend since its first listing and today. We can therefore say that this title is relatively interesting in the long term. However, you must also take into account micromovements which can lead to lasting declines depending on the economic situation and the news of the group but also according to global strategies based on technical analysis.

What indicators to favor for the Airbus share?

Many indicators are to be preferred to anticipate future movements in the Airbus share price. In particular, we will appreciate direct economic information such as the group's order book, which provides a fairly reliable vision of future results, or even more indirect elements such as the health of the commercial and travel aviation sector, on which some of the activities of the group and therefore the attractiveness of its stock market activity.

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