Company report. Airbus Group SE. More production – weak competition. With a major backlog into the downturn of the market.
The Airbus Group is the second largest Aerospace Company in the world in regards to aircrafts produced. In addition to obtaining 70% of revenues from Civil Aircrafts, Airbus is also active in Defence & Space (20%) and Helicopter (10%). It is present in all major countries with sales and service points but producing only in France, Germany, Spain, UK, China and the US.
The Airbus Group SE consists of three operating business units: Civil Aircrafts, Defence & Space and Helicopters. Each will be presented individually in the following paragraphs [...]
Table of Contents
Company overview
CIVIL AIRCRAFTS
DEFENCE & SPACE
HELICOPTERS
Management & Governance
ORGANISATIONAL STRUCTURE
SHAREHOLDERS
GROWTH STRATEGY
RESTRUCTERING PLANS
WTO
Industry overview
MACROECONOMIC CONTEXT
PRODUCT & REGIONAL TRENDS
COMPARABLE COMPANIES
Valuation
MAIN VALUE DRIVERS FORECAST
COST OF CAPITAL
SUM-OF-PARTS VALUATION
Multiple Valuation
Sensitivity Analysis
Annexes
Research Objectives & Core Topics
The primary objective of this report is to provide a comprehensive financial valuation of Airbus Group SE, assessing its future growth potential in the aerospace and defence industry by conducting a sum-of-parts analysis based on detailed production forecasts and market trends.
- Strategic analysis of Airbus' three core business segments: Civil Aircrafts, Defence & Space, and Helicopters.
- Evaluation of the impact of the Group's restructuring plans and organizational changes on future cost structures.
- Examination of macroeconomic and geopolitical factors, including WTO subsidy disputes, on long-term market share.
- Application of DCF (Discounted Cash Flow) and multiple-based valuation methodologies to determine a FY17 price target.
- In-depth competitive benchmarking against key industry players such as Boeing, Bombardier, and Embraer.
Excerpt from the Report
Civil Aircrafts
The aircrafts produced service the transportation of people, civil aircraft fleet, and goods, cargo fleet. Key revenue driver here is the A320 family. It is by far the most sold product of Airbus, accounting for around 80% of this business line’s revenues. The base model is the A320, which is 38m long. Three derivatives exist: the 6m shortened A318, the 4m shortened A319 and the 7m stretched A321, which is the longest version with the highest passenger capacity. The A320family was originally introduced in the 80’s but modified several times. A completely new development, also called a clean-sheet design, is not expected until 2025. In 2016, a new engine option (neo) was introduced. It promises to lower the operational costs and increase the competitiveness against its main market rival from Boeing. Besides a new engine, minor aerodynamic improvements such as winglets were introduced. At the beginning, this project had major roll-out issues, mainly due to the engine manufacturer as Airbus itself does not build the engines. Pratt & Whitney, a unit of United Technologies Corp., builds the plane’s geared turbofan engine for the neo version. Alternatively, CFM International, a venture between General Electric Co. and Safran SA can be chosen as engines manufacturer. CFM hasn’t seen delays. The problem with Pratt & Whitney will be fixed in Q3 2016 and predictably back on track during Q4.
Summary of Chapters
Company overview: Provides a breakdown of the three main business units and identifies the A320 family as the primary revenue driver for the civil aircraft sector.
Management & Governance: Details the company's structural evolution, ongoing restructuring efforts, and the changing role of government shareholders toward a more market-driven corporate model.
Industry overview: Analyzes the cyclical nature of the aerospace industry, the impact of macroeconomic variables, and the competing business models of Hub-and-Spoke versus Point-to-Point.
Valuation: Outlines the DCF and multiple-based methodology used to calculate the firm's equity value and derives a price target for 2017.
Multiple Valuation: Compares Airbus against a peer group of major aerospace companies to validate the internal valuation results.
Sensitivity Analysis: Examines how variables like new market entrants and shifting market shares affect the valuation and highlights key risks in the long-term outlook.
Annexes: Includes historical and forecasted financial statements, production data, and detailed airline market share analyses.
Keywords
Airbus, Aerospace, Defence, Civil Aircraft, Valuation, Discounted Cash Flow, A320neo, Production Forecast, Market Share, Boeing, WACC, Restructuring, Equity Research, Industrial Strategy, Aviation.
Frequently Asked Questions
What is the central focus of this report?
The report provides a thorough financial valuation of the Airbus Group, utilizing a sum-of-parts approach to assess the company's performance, strategic orientation, and future share price potential.
Which business units are analyzed?
The study evaluates the three core operating segments: Civil Aircrafts, Defence & Space, and Helicopters.
What is the primary valuation goal?
The goal is to determine an equitable share price for the Airbus Group for the fiscal year 2017 based on projected free cash flows and peer-group multiple comparisons.
Which scientific methodology is applied for the valuation?
The report employs a Discounted Cash Flow (DCF) model to derive business unit values, supported by WACC calculations and a multiple-based cross-check.
What is the main topic addressed in the industry analysis?
It examines macroeconomic drivers such as oil prices and GDP growth, alongside the strategic tension between the Hub-and-Spoke and Point-to-Point airline business models.
What characterizes the competitive landscape in this report?
The landscape is described as a high-barrier, capital-intensive duopoly dominated by Airbus and Boeing, with emerging competition from new entrants like Bombardier, Embraer, and COMAC.
How do restructuring plans impact the outlook?
The report estimates significant potential cost savings from merging group structures and reducing headcount, which supports leaner operations and digital transformation.
How is the impact of market share loss addressed?
Through a sensitivity analysis, the report tests the company's resilience against the risk of new market entrants and shifting global aircraft demand in the wide-body segment.
- Citation du texte
- Terence Kappel (Auteur), 2017, Airbus Group SE. Company Valuation. More production, weak competition, Munich, GRIN Verlag, https://www.grin.com/document/385360
