Airbus provided further proof of this this morning with the revision of its earnings forecasts for 2024. Operating profit is likely to be one-fifth lower than the initial expectations, which were strongly reiterated just two months ago.
The manufacturer blames "persistent problems in the supply chain". Are we to read between the lines that the inflationary push is having a harsh effect on its budgets? Undoubtedly, and it's no surprise that price rises by suppliers - who are themselves under pressure - are cascading down the line.
Let's not forget that this is not a first for Airbus, whose valuation, it has to be said, recently got out of hand in the wake of Boeing's setbacks.
MarketScreener subscribers will recall the reservations we expressed in our last commentary on the manufacturer's results. Although duopolistic and protected by immense competitive advantages, its business is nonetheless chronically unable to generate free cash flow.
Over the past decade, nine-tenths of operating cash flow has been reinvested in fixed assets or acquisitions. If the grace of its status had not made it so easy for Airbus to borrow on the capital markets, dividend distribution would have been far more complicated.
As Airbus' business is not characterized by strong growth, we have always found it audacious to bet on increased returns of capital to shareholders - even with Boeing struggling.