At an investor event during the current Paris Air Show, European aerospace giant Airbus announced far-reaching strategic adjustments aimed at attracting shareholders with higher dividend payouts and increasing profitability across all business areas. In the future, up to half of the company's profit will be paid to shareholders as dividends, a significant increase from the current payout ratio.
This news was received positively by the stock market, underscoring expectations for the company's continued strong business performance. At the same time, CEO Guillaume Faury confirmed the ambitious targets for the current fiscal year, even though Airbus continues to struggle with supply bottlenecks in its largest division, civil aircraft.
Higher dividend payouts: A signal to shareholders
Airbus, one of Europe's leading industrial groups and a key component of the German DAX stock index, has announced its intention to increase its shareholders' participation in the company's success. The payout ratio is to be increased from the current 30 to 40 percent of profit to 30 to 50 percent be increased. For the 2024 financial year, the Group had already paid out a dividend of three euros per share, one euro of which was a special dividend. This increase in the payout ratio is a clear signal to investors, who are increasingly placing value on attractive returns in the current market environment. Such measures can help strengthen investor confidence and support the share price in the long term. The stock market reaction was immediately positive: Airbus shares rose by over three percent on Wednesday, making them the top performer in the DAX. Despite this gain, however, the price was still below its record high of over 177 euros reached in early March.
The new dividend policy is intended to increase the attractiveness of Airbus shares for private and institutional investors. In times of volatile markets and global uncertainty, investors often look for companies that pursue a reliable and attractive dividend policy. Airbus is positioning itself as such a company, convincing not only through solid growth but also through generous shareholder participation. This could also help retain long-term investors and promote share price stability.
Confirmation of annual objectives and challenges in civil aviation
Despite the announced changes in dividend policy, Airbus CEO Guillaume Faury confirmed the ambitious targets for the current financial year. According to this, Airbus plans to generate approximately 820 commercial aircraft Adjusted operating profit (EBIT) is expected to be around seven billion euros and free cash flow before customer financing is estimated at €4,5 billion. These figures reflect management's confidence in the fundamental strength of the civil aircraft business, which remains the Group's largest segment.
Airbus is by no means short of orders in this area. At the end of March, the company had an impressive order backlog of around 8.700 passenger and cargo aircraft. At current production rates, this inventory is sufficient for more than ten years. At the Le Bourget Air Show near Paris, which began Monday, Airbus has already booked additional orders and preliminary contracts for more than 200 aircraft. This contrasts with its struggling US competitor Boeing, which was unable to announce any significant major orders on the third day of the show, underscoring the different financial circumstances of the two aviation giants.
However, Airbus has been struggling with significant Bottlenecks at its suppliersEngine and seat manufacturers in particular are causing delays that are impacting the company's delivery plans. Airbus is still lagging behind its own targets for 2025: With 243 commercial aircraft delivered by the end of May, only just under 30 percent of the annual target had been achieved. These supply chain problems are a recurring issue in the aviation industry and pose a significant challenge to increasing production. Faury and his team are working hard to overcome these bottlenecks, but this often requires long-term solutions and close collaboration with suppliers. The ability to resolve these issues will be critical to achieving the ambitious delivery targets.
Focus on profitability in defense, aerospace and helicopters
While civil aviation remains Airbus’ core business, increasing profitability in the divisions Defense and Space as well as the Helicopter business The Defence & Space division was in the red last year, due to high additional costs for satellite projects and job cuts. Furthermore, continued production of the A400M military transport aircraft was in jeopardy due to a lack of new orders.
Within the A400M Airbus has now been able to gain some breathing space: France and Spain have agreed to take delivery of some aircraft earlier in order to utilize production at full capacity. This is an important step towards stabilizing the program, which has struggled with numerous technical difficulties and cost overruns in the past. Given the current geopolitical situation and the associated Armament in Europe The signs for new defense contracts, for example for the Eurofighter fighter jet, are actually good. Many European countries are increasing their defense budgets, opening up new opportunities for Airbus Defence & Space.
Guillaume Faury is now aiming for a significant increase in profits in this area: The defence and space division is expected to achieve an adjusted operating result of more than one billion euros This would be a remarkable turnaround, considering that the division posted a loss of almost 600 million euros last year. This ambitious target demonstrates management's confidence in the potential of this segment and its ability to improve profitability through efficiency gains and new orders.
The Helicopter business Airbus is also expected to significantly increase its adjusted operating profit, rising from around 800 million euros to over one billion euros Airbus Helicopters is a global leader in the production of civil and military helicopters and benefits from stable demand in various sectors, including emergency services, law enforcement, oil and gas exploration, and the military. Investments in new models and the maintenance of existing fleets are contributing to this growth. However, Airbus did not specify a specific medium-term target for its largest division, the passenger and cargo jet business, suggesting that its focus remains on addressing production bottlenecks and executing its huge order backlog.
The realignment and ambitious goals in the defense, space, and helicopter sectors underscore Airbus' strategy to position itself as a diversified aerospace company. By not only benefiting from the booming civil aviation market but also exploiting the potential in other segments, the company can increase its resilience to market fluctuations and create a broader basis for future growth. The increased focus on these divisions is also a response to the changing geopolitical environment that is driving increasing demand for defense equipment.
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