Airbus Delays: A Supply Chain Crisis Threatening Airline Bottom Lines

The aviation industry is in the throes of a supply chain crisis that shows no signs of abating. Airbus, the world's second-largest aircraft manufacturer, has warned airlines that delivery delays will persist through 2027 and 2028, with no clear path to resolution. This prolonged disruption is not merely a hiccup—it's a systemic failure that threatens airline profitability, reshapes market dynamics, and creates both risks and opportunities for investors.

The Supply Chain Stranglehold

Airbus's delays stem from intertwined bottlenecks: engine shortages, aerostructure component delays, and geopolitical risks. Critical suppliers like Pratt & Whitney (GTF engines) and Spirit AeroSystems (fuselage sections for the A350 and A220) are failing to meet demand. For instance, Spirit's Belfast facility, which manufactures wings for the A220, has caused production to stagnate at just 6–8 aircraft per month—far below the 2026 target of 14/month. Similarly, Pratt & Whitney's GTF engine defects have delayed deliveries for Spirit Airlines, airBaltic, and JetBlue, forcing these carriers to ground planes or cancel flights.

The impact is stark: In April 2025, Airbus delivered just 59 aircraft—a 17% drop from March—while its A350 program, designed to deliver 6 planes monthly, managed only 3 units. These figures underscore a production system in crisis.

Airlines Pay the Price

The ripple effects are hitting airlines hard. Carriers like Breeze Airways and airBaltic have postponed route launches and cut capacity due to delayed deliveries. Airlines are forced to extend the lifespans of older fleets, boosting demand for maintenance, repair, and overhaul (MRO) services. However, this comes at a cost: older engines and airframes require more frequent overhauls, straining budgets and squeezing profit margins.

Consider Spirit Airlines, which relied on A220 deliveries to replace its aging Embraer fleet. With engines delayed by 1–2 months, Spirit faced thousands of flight cancellations in 2024 and is now scrambling to manage an aging fleet. The result? Higher maintenance expenses and lost revenue from canceled flights—a pattern repeating across the industry.

Why Investors Must Act Now

The crisis presents two clear investment angles:

1. Short Airline Stocks Exposed to Delivery Delays

Carriers reliant on Airbus deliveries to expand capacity or modernize fleets are particularly vulnerable. Airlines like Spirit (SAVE), Breeze Airways, and airBaltic face immediate revenue shortfalls as delayed aircraft force them to operate older, less efficient planes. Their stock prices are likely to remain under pressure until supply chain issues resolve—a timeline now stretched into 2028.

2. Bet on MRO Services and Supply Chain Alternatives

The prolonged delay in new aircraft deliveries has created a surge in demand for MRO services. Companies like Cubis Aviation (specializing in engine overhauls) and Satair Group (aircraft parts supplier) are poised to benefit. Additionally, investors could explore plays in alternative engine manufacturers, such as Rolls-Royce, which may capture market share if Pratt & Whitney's defects persist.

Airbus's Path Forward—and Its Risks

Airbus is doubling down on supplier consolidation. By acquiring Spirit's work packages by mid-2025, it aims to regain control over critical components. However, even if successful, scaling production to meet its 2027 target of 75 jets/month will require flawless execution—a tall order given its recent underperformance.

Investors must also weigh geopolitical risks. U.S. tariffs on European aircraft could further disrupt supply chains, while Airbus's expansion in Alabama offers limited insulation. For now, the stock (EAD.PA) reflects these concerns, trading at a 12-month low and lagging peers like Boeing (BA).

Conclusion: Act Before the Delays Deepen

The writing is on the wall: Airbus's supply chain crisis is not a temporary setback but a multiyear challenge. Airlines will continue to bear the brunt, with profitability squeezed as they scramble to adapt. Investors ignoring these trends risk missing both the risks and rewards in this sector.

The time to act is now—either by shorting airlines exposed to the delays or investing in MRO and alternative supply chain plays. The sky is not the limit here—adaptability and foresight will define winners in this turbulent aviation market.

Investment decisions should consider individual risk tolerance and portfolio goals. Past performance does not guarantee future results.