Airbus Holds Firm on 2025 Targets Amid Trade Tensions, but Uncertainty Lingers

Airbus has reaffirmed its 2025 financial targets, projecting 820 commercial aircraft deliveries, €7.0 billion in EBIT Adjusted, and €4.5 billion in Free Cash Flow before Customer Financing, despite escalating trade tensions and supply chain disruptions. CEO Guillaume Faury emphasized that these projections assume “no additional disruptions to global trade or the economy,” yet the company remains in “closely active monitoring” mode as U.S.-EU tariff disputes threaten to upend its plans.

The Tightrope of Trade Policy

The U.S. imposition of tariffs on Airbus aircraft and components—alongside retaliatory measures from the EU—has introduced a layer of unpredictability into an already strained aerospace sector. Airbus’s stance is clear: while it will “adjust accordingly” to tariffs, including potential cost pass-through to U.S. airlines, it warns that such measures could “damage the U.S. more than Europe” by disrupting supply chains and raising consumer costs.

The reveals investor anxiety: U.S. airline stocks like Delta (NYSE:DAL) and United (NASDAQ:UAL) have fallen sharply amid tariff uncertainty, while Airbus’s shares remain volatile as it navigates geopolitical headwinds.

Delta’s Defiance vs. United’s Diplomacy

U.S. airlines are split on how to respond. Delta Air Lines has drawn a hard line, refusing to absorb tariffs on Airbus deliveries and threatening to defer orders of 43 aircraft by year-end 2025. CEO Ed Bastian’s declaration—“We will not pay tariffs”—has put pressure on Airbus to find alternatives, including prioritizing non-U.S. clients if tariffs persist. Meanwhile, United CEO Scott Kirby framed the White House’s policies as “laudable” for job creation, even as they strain the airline’s global supply chain.

This divergence underscores a critical risk: customer fallout. Delta’s fleet modernization plans rely heavily on Airbus models like the A350-1000 and A330-900, and delivery delays could force it to retain older, less efficient aircraft. Airbus, for its part, faces the risk of disrupted delivery schedules and strained relationships with key clients.

Supply Chain Strains Complicate the Outlook

Beyond tariffs, Airbus grapples with longstanding supply chain bottlenecks. A critical issue is the engine shortage from CFM International, leaving 25–30 undelivered aircraft without engines (dubbed “gliders”) at its Toulouse facility. The company also continues to battle delays with Spirit AeroSystems, a key supplier for the A350 and A220 programs. While Airbus aims to finalize its takeover of Spirit’s operations by mid-2025, interim reliance on Boeing’s IT systems at shared facilities highlights the complexity of restructuring.

The integration of Spirit’s work packages is expected to temporarily reduce free cash flow by “mid triple digits” in 2025, though Airbus claims the move will stabilize production in the long term.

Financial Resilience Under Pressure

Airbus’s FY 2024 results offered a mixed picture: €69.2 billion in revenues and €5.4 billion in EBIT Adjusted, but a 8% year-on-year drop in EBIT margins due to defense program charges and restructuring costs. The proposed €3.00 dividend per share (including a special payout) signals confidence in liquidity, but 2025 targets face risks.

Analysts warn that tariffs could erode margins further if costs cannot be passed to airlines. Delta’s refusal to pay tariffs leaves Airbus in a bind: absorbing costs would squeeze profitability, while deferring deliveries risks missing production targets.

The Crossroads of Trade and Strategy

Airbus’s reaffirmation of its 2025 targets reflects strategic confidence in its ability to navigate disruptions. However, the path forward hinges on three critical factors:
1. Tariff Resolution: A U.S.-EU trade deal or tariff suspension could alleviate pressure, but Faury’s warning that tariffs are “more damaging to the U.S.” suggests Airbus may wait for Washington to blink.
2. Supply Chain Fixes: Resolving engine shortages and finalizing Spirit’s integration are prerequisites for hitting delivery targets.
3. Customer Alignment: Convincing airlines like Delta to accept cost-sharing—or finding alternative buyers—will determine production stability.

Conclusion: A High-Stakes Balancing Act

Airbus’s 2025 targets remain achievable, but only if it successfully mitigates trade and supply chain risks. The company’s cash reserves (€26.9 billion) and operational adjustments provide a buffer, yet the interplay of geopolitical tensions and supply chain fragility creates significant uncertainty.

Investors should monitor two key indicators:
- Delta’s Delivery Decisions: If deferrals escalate, Airbus’s delivery count could fall below its 820 target, impacting Free Cash Flow.
- Spirit Integration Progress: A delayed takeover or further production bottlenecks could strain margins, as seen in 2024’s EBIT drop.

The stakes are global: the standoff between Airbus and Delta sets a precedent for how multinational manufacturers and airlines will adapt to trade policy volatility. For now, Airbus bets on its resilience—but the dice remain in the air.