Rothschild Redburn has moved to a Neutral rating on Airbus Group SE and cut its price target to €200 from €230, flagging execution risks tied to Airbus's A320neo and A350 production plans despite strong industry demand.
The broker pointed to recent operational difficulties, including a fuselage panel quality issue identified in December and shortages affecting the PW1100G geared turbofan engine, as factors that cloud the near-term outlook. These setbacks, Rothschild Redburn said, temper confidence around the company meeting its stated production and delivery ambitions for 2026 and 2027.
Airbus has provided guidance for roughly 870 deliveries in 2026 and for an A320 family production rate of 70 to 75 aircraft per month by the end of 2027. Rothschild Redburn's independent forecast calls for 872 deliveries in 2026, which it describes as broadly consistent with Airbus's guidance but slightly below earlier buy-side expectations of about 880 aircraft.
The brokerage emphasized that risks remain with the A320 ramp-up. It noted an absence of firm commitments from engine supplier Pratt & Whitney and warned that the supply chain has not previously supported the higher production rates that Airbus now targets. On that basis, Rothschild Redburn considers it unlikely the programme will sustain a 75-aircraft-per-month full-year run before 2029.
Analysts at the firm also see reduced profit and cash-flow potential over the 2026 to 2029 period, driven by lower delivery assumptions and higher costs. The report said it trimmed EBIT estimates by 12% to 16% across 2026-2029 and cut free cash flow projections by as much as 27% in 2026.
Pressure is not limited to the A320 family. Airbus's plan to double A350 output to 12 aircraft per month by 2028 introduces additional strain in constrained supplier areas such as forgings and castings, the brokerage said.
Rothschild Redburn observed that while Airbus trades on a 5.9% free cash flow yield, below the sector average of 4.5%, that valuation does not fully reflect the downside risks the firm now sees. The analysts concluded that they will revisit the investment case only after production risks have been addressed or retired.
Context and market implications
- Demand for aircraft remains strong and there is no credible competitive threat to the Airbus-Boeing duopoly this decade, according to the brokerage.
- Operational and supply constraints, rather than demand, are the primary drivers of Rothschild Redburn's reassessment of Airbus's near-term financial trajectory.