Airbus Delivery Delays: A Supply Chain Crisis Threatening Aerospace Investor Gains

The aerospace industry is at a critical juncture. Airbus's struggle to meet its 2025 delivery target of 820 aircraft—despite soaring demand—has exposed systemic vulnerabilities in global supply chains, sparking airline pushback and casting doubt on the sustainability of current valuations. For investors, the question is clear: Can Airbus resolve its engine shortages and production bottlenecks, or is this a long-term crisis that could redefine risk for aerospace equities?

The Supply Chain Showdown: Engines, Tariffs, and Trust

Airbus's Q1 2025 deliveries of 136 aircraft—just 17% of its annual goal—reveal a stark reality: production is lagging behind targets due to engine shortages from CFM International (LEAP-1A for the A320neo) and logistical hurdles tied to U.S.-China trade tensions. As of April 2025, 43 A320neo aircraft sat idle in Toulouse, France, fully assembled but engine-less, dubbed “gliders” by industry insiders. These bottlenecks have forced Airbus to slash A320neo production to 40/month—a full 25% below its 2027 target of 75/month.

The root cause? CFM's inability to scale engine production fast enough. Despite Safran's claims of progress, deliveries of LEAP engines fell 13% year-on-year in Q1, with only 319 units supplied versus 367 in 2024. This mismatch has created a backlog of undelivered aircraft and delayed test flights, compounding delays for airlines like Flyadeal, which received only 2 of 4 expected A320neos in early 2025.

Airline Pushback: The Flyadeal Example

The CEO of Saudi Arabia's Flyadeal, Steven Greenway, has become a vocal symbol of airline frustration. In April 2025, he called Airbus's delays “inexcusable,” citing two grounded aircraft in Toulouse and skepticism over promised third-quarter deliveries. With 70% of Flyadeal's narrowbody fleet orders tied to Airbus, such delays force the airline to lease planes from rivals like Cebu Pacific—a costly stopgap.

This isn't an isolated case. Airlines at the 2025 IATA summit in New Delhi highlighted broader systemic risks, with many questioning whether Airbus can deliver on its 8,726-aircraft backlog—a 14-year fulfillment timeline at current rates.

Financial Fallout: Cash Flow, Valuation, and Strategic Shifts

Airbus's Q1 2025 results underscore the financial stakes. While revenues rose 6% to €13.5 billion, its free cash flow remained negative at €-310 million, reflecting inventory buildup to support production. The company's €26.1 billion cash reserves provide a buffer, but persistent delays could erode investor confidence.

Analysts now question whether Airbus can sustain its €7.0 billion EBIT Adjusted target for 2025. If delivery momentum weakens further—Q2 data is expected post-June—the stock, already down 15% year-to-date, could face a valuation reset. Investors should also monitor its reliance on Spirit AeroSystems, whose work package integration by mid-2025 is critical but fraught with IT and logistics risks.

The Investment Case: Caution Until Supply Stabilizes

For investors, the path forward is fraught with uncertainty. While Airbus's long-term order backlog and defense segment growth (€2.6 billion in orders in Q1) offer resilience, near-term risks are too great to ignore. Key catalysts to watch:

1. June's Performance Update: Will Airbus confirm stabilization in A320neo production? A monthly rate above 50 could restore credibility.
2. Engine Supplier Reliability: Can CFM or alternative suppliers (e.g., Rolls-Royce?) bridge the gap?
3. Airline Pushback Impact: Will delayed deliveries trigger order cancellations or price renegotiations?

Until these questions are answered, caution is warranted. The stock's current valuation—trading at 10x 2025 EBIT estimates—already reflects skepticism about delivery targets. A missed June update or further production cuts could amplify downside risks, while a positive surprise might spark a rebound.

Conclusion: Wait for the Green Light

Airbus's delivery delays are not just a hiccup—they're a symptom of deeper supply chain fragility. With airlines like Flyadeal already losing patience, investors should avoid aggressive bets until Airbus proves it can stabilize production post-June. For now, the aerospace sector's growth narrative hinges on resolving this crisis—and the clock is ticking.

Investment Thesis: Hold Airbus stock until June's production data confirms supply stabilization. Avoid chasing dips until clarity emerges on engine shortages and airline order sustainability.