Airbus Rides Defence Surge as Civil Jet Deliveries Stall in Q1

Airbus Q1 results show defence profit soaring 69% while commercial deliveries drop 16%. Strong order intake offsets production woes, with full-year targets maintained.

The first quarter of 2026 has delivered a tale of two businesses at Airbus. While the commercial aircraft division stumbled through a 16% drop in deliveries, the defence and space arm posted a stunning 69% jump in adjusted operating profit, offering investors a reason to look past the near-term turbulence.

Shares in the European aerospace giant edged up 1.1% to €165.17 following the release, as the market chose to focus on the blistering pace of order intake rather than the production bottlenecks plaguing the civil side. The stock remains roughly 13% below its 200-day moving average, suggesting the recovery is still fragile.

Defence Division Delivers the Firepower

Airbus handed over just 114 passenger jets in the first three months of the year, down from 136 a year earlier. Revenue in the commercial aircraft segment slid to €12.7 billion, while adjusted EBIT collapsed to €81 million from €494 million in the prior-year period — a drop of more than 83%.

The defence and space business painted a radically different picture. Revenue climbed 7% to €2.8 billion, and adjusted EBIT surged to €130 million, powered by a near-doubling of order intake to €5.0 billion. The air power segment was the standout performer, with deliveries including two A400M military transporters.

Helicopter sales were less buoyant, with net orders of 79 units falling short of the 100 recorded a year earlier.

Engine Woes Ground the A320 Ramp-Up

The civil delivery shortfall stems largely from persistent problems at Pratt & Whitney. The engine maker’s supply constraints are holding back the production ramp of the crucial A320-family narrowbodies, a bottleneck the company expects to persist into 2027. Airbus has turned to rival CFM International, builder of the LEAP engine, for additional support.

Chief Executive Guillaume Faury pointed to a disconnect between production and delivery, with administrative delays holding up the handover of nearly 20 aircraft destined for China. The logjam has tied up working capital and contributed to a free cash outflow of €2.5 billion in the quarter.

Despite the sluggish start, management is holding firm on its full-year targets. Airbus still expects to deliver around 870 commercial aircraft in 2026 and generate adjusted EBIT of €7.5 billion. Achieving that will require a dramatic acceleration in the remaining three quarters, with a longer-term goal of reaching monthly A320-family production rates of 70 to 75 units by the end of 2027.

Orders Surge as Airlines Bet on New Generation

The demand side of the equation remains emphatically strong. Net orders for commercial jets rose 95% to 398 units in the quarter, swelling the total backlog to more than 9,000 aircraft. Airlines are clearly voting with their order books for the latest generation of fuel-efficient models.

The A321XLR, Airbus’s new long-range narrowbody, made its commercial debut in March when Air Canada took delivery of the first example. The model has already amassed over 500 orders, underscoring the market’s appetite for extended-range single-aisle jets.

Financial Firepower and Currency Cover

Airbus enters the delivery push from a position of financial strength. The group’s liquidity stands at over €30 billion, and a comprehensive hedging programme covering roughly $77 billion shields it from the weak US dollar. The currency protection provides a crucial buffer given that aircraft sales are priced in dollars while much of the cost base is in euros.

The disconnect between booming orders and constrained deliveries remains the defining challenge for 2026. Whether the engine supply chain can catch up in the second half will determine if Airbus can turn its record backlog into the cash flow that investors are waiting for.