Airbus stock price has imploded in the past few weeks as investors reacted to Donald Trump’s tariffs and the potential supply chain issues. It has crashed from a high of €177.20 in March this year to the current €140. This article explains why the stock is a good beneficiary for the ongoing trade war.
The main reason why the Airbus share price is a good buy is its exposure to the Chinese market.
China currently has over 7,500 planes, a figure that will continue growing in the next few years as demand rises.
Donald Trump’s trade wars have hurt Boeing as the number of deliveries has plunged over the years. Data shows that Boeing’s market share has continued falling, and has not had major orders since 2017.
Chinese airlines have focused on Airbus because of the relatively friendlier relations between the two regions. Many also abandoned Boeing because of its many issues, especially on the 737 MAX plane. China Southern canceled 100 orders in 2023, and several other airlines have rejected some of their orders.
Therefore, Airbus will likely continue growing its market share in China, a giant market that is expected to grow in the next few years.
Airbus also sees more orders worldwide, a trend that may continue as Boeing planes get more expensive because of Trump’s tariffs. Airbus has a backlog of about 8,658, while Boeing has just 5,595.
Airbus’s growing market share means the company will have more pricing power over time, boosting its market share.
At the same time, Airbus will compete well with COMAC, the fast-growing Chinese airline manufacturer.
The other competitive advantage is that Airbus has a better manufacturing presence in more countries than Boeing.
Airbus has manufacturing locations in France, Germany, UK, the United States, and China. This means that its business will be less hit by Trump’s tariffs than Boeing. For example, its US deliveries will not be hurt by these tariffs.
Similarly, its deliveries in other countries will avoid these tariffs. Instead, most of Boeing’s manufacturing plants are in the United States. This means that raw materials to manufacture its planes will be tariffed, raising the cost of doing business and hitting its margins over time.
All these factors means that Airbus business will thrive when the anticipated supply chain issues end.
The most recent results showed that Airbus revenue rose from €22.8 billion in Q4’23 to €24.7 billion in Q4’24. In contrast, Boeing had limited growth in 2024 as it was forced to ground the 737 Max plane.
Airbus had an EBIT of €2,424 billion, up from €1.45 billion a year earlier. The net income also jumped to €2.43 billion. This growth means that the firm will continue growing its dividends and buybacks.
AIR chart by TradingView
The weekly chart shows that the Airbus share price has been in a strong uptrend in the past few months. It remains above the ascending trendline that connects the lowest swings since September 2020.
The stock remains significantly higher than the 200-week moving average, a sign that bulls are in control for now. Therefore, the Airbus share price will likely continue rising in the coming weeks, with the next key level to watch being at €169.56.
However, a drop below the 200-week and the ascending trendline will validate the bearish view of the double-top chart pattern and point to more downside. In the long term, however, the stock will likely bounce back because of its strong fundamentals.
