Airbus’s Chinese Windfall Masks the Sting of a 52% Profit Plunge

Airbus posts 52% profit drop and negative cash flow amid delivery delays, while securing a $21.4B A320neo deal with China Southern and Xiamen Airlines.

The contrast between Airbus’s order book and its factory floor has rarely been starker. The European planemaker secured a blockbuster deal from China Southern Airlines and its subsidiary Xiamen Airlines for 137 A320neo-family jets, valued at roughly $21.4 billion at list prices, while simultaneously reporting a first-quarter profit that fell by more than half. The disconnect underscores just how far demand has outpaced the company’s ability to deliver.

Adjusted operating profit landed at €300 million for the three months ended March, down from €624 million a year earlier — a 52% slide. Revenue slipped 7% to €12.7 billion, and Airbus handed over just 114 commercial aircraft to customers, 22 fewer than in the same period of 2025. That tally allowed Boeing to overtake its European rival in quarterly deliveries for the first time in years.

Three Bottlenecks, One Weak Quarter

CEO Guillaume Faury did not sugarcoat the performance, calling it “weak,” but pointed to three temporary snags. Administrative holdups tied to deliveries for Chinese customers have delayed nearly 20 completed aircraft. A quality issue with fuselage panels, first flagged last year, continues to require inspections and repairs, with the drag expected to persist into the second quarter. And a persistent shortage of Pratt & Whitney engines is constraining production ramp-ups not only this year but also in 2027.

The cash flow picture was even more punishing. Free cash flow before customer financing swung to negative €2.5 billion, compared with a negative €310 million in the first quarter of 2025. Net liquidity dropped from €12.2 billion at the end of last year to €9.8 billion by March 31. Management attributed the outflow to planned inventory buildup and the delivery logjam, but expects free cash flow to turn positive again in the second quarter as the backlogged aircraft are finally handed over.

Defence Provides a Counterweight

While the commercial aircraft division struggled, the defence arm delivered a robust performance. Airbus Defence and Space booked nearly €5 billion in orders, almost double the prior-year period, and its adjusted EBIT rose to €130 million from €77 million.

The Chinese order, meanwhile, provides a strategic buffer. Deliveries under the A320neo deal are slated to begin in 2028, meaning it will not immediately ease the current production strain, but it solidifies Airbus’s foothold in Asia’s largest aviation market. Industry-standard discounts are expected on the headline $21.4 billion price tag.

Guidance Unchanged Despite the Turbulence

Airbus held firm on its full-year targets: around 870 deliveries, adjusted EBIT of roughly €7.5 billion, and free cash flow before customer financing of about €4.5 billion. The order backlog swelled to 9,037 aircraft, 4% higher than a year ago. The long-term production goal of 75 A320-family jets per month has been pushed back to the end of 2027.

The stock gained 1.1% on the day of the earnings release, suggesting investors were more comforted by the stable outlook and the Chinese order than rattled by the profit drop. BofA Research reiterated its buy recommendation, though it acknowledged a weak start to the year. Year-to-date, the shares have lost roughly 17%, and they trade more than 25% below their 52-week high. The relative strength index has sunk to an extremely oversold reading of 10.9, signaling that the selloff may be overdone.

Whether Airbus can hit its annual targets hinges largely on how quickly Pratt & Whitney ramps up engine deliveries. Faury expects the fuselage panel issue to be largely resolved by the end of the second quarter. If that timeline holds, the delivery backlog could begin to unwind — and the gap between orders and output might finally start to close.