Recent Posts

Aerospace: Airbus Provides New Production Schedule To Major Suppliers

We expect minimal supply chain fallout following the production audible called by Airbus last week. Adjustments to the master schedule appear to be fairly modest, while more importantly, the management team is holding to its aggressive long-term single-aisle aircraft production strategy. We also believe lost A320 volume could be partially offset by upward movement in wide-body build rates given recently collected channel intel. Bottomline, the updated Airbus production forecasts account for: the conservative corporate guidance; details included in the aircraft program update; and other updates/commentary offered by aerospace industry bellwethers. Continue reading

Read More »
2:34 AM

Aerospace: Airbus Is Sticking With Its Aggressive Aircraft Production Strategy

Airbus recently sent updated commercial aircraft product schedules to all major suppliers that may contain information likely to become a much-needed catalyst for the aerospace peer group. Contrary to the negative quarterly updates issued by companies levered to aerospace or other industries, the Airbus outlook appears to be holding (for the year and beyond). Surprisingly, the management team refrained from lowering build rate targets to account for macro weakness or global supply chain bottlenecks Continue reading

Read More »
6:48 AM

AERO: Notes From The Airbus Conference Call

Airbus reported 611 total aircraft deliveries for CY21 (+45 jets versus prior year totals), which the surpassed the full-year outlook of 600 on single-aisle demand strength. The full-year breakdown delivery breakdown was: 50 A220s; 483 A320s; 55 A350s; 18 A330s; and 5 A380s. Despite the outperformance, management provided a slightly conservative delivery forecast on 720 jets for CY22 (+18% y/y), Continue reading

Read More »
9:45 AM

Aerospace: The Tailwind May Be Closer Than Expected; Updated Aircraft Production Forecasts

The upstream aerospace supply group appears to be entering an accelerated top-line growth environment primarily driven by single-aisle aircraft parts/materials demand strength. Based on the updated commercial aircraft production forecasts applied to the OEMs, combined with modest inventory overhang adjustment, we now project +19-20% baseline aerospace-related sales growth for the tier-4 global supply chain in CY22 and +15-16% growth in CY23. We expect the material providers and forgers within our coverage universe to realize the benefits of the market tailwinds by 2H22 (if not earlier). Continue reading

Read More »
4:43 PM

Aero Suppliers: The Global Supply Chain Could Be Facing More Bad 787 News

Indications from our latest aerospace channel checks suggests additional downside risk for global suppliers levered to the B787 aircraft program. Industry contacts now report growing demand headwinds associated with extended Dreamliner assembly lines halts and have started to reset 1H22 top-line expectations due to a slower-than-expected production recovery. This morning, we lowered estimates for the main companies in our coverage group to align with more conservative B787 build rate assumptions for CY22.formal issuance of strong LEAP jet engine production guidance. Both items should be considered bullish data points for the specialty materials and upstream aero supply peer groups, and the main drivers behind accelerated top-line growth and strong earnings contribution over the next 2-3 years. Continue reading

Read More »
9:57 AM

Aero Suppliers: Investors Not Ready To LEAP To The MAX Following Release Of Positive Headlines?

We are surprised by the subdued response to the major aerospace industry headlines that were issued yesterday, including the long-awaited recertification of the 737 MAX for Chinese airspace and the formal issuance of strong LEAP jet engine production guidance. Both items should be considered bullish data points for the specialty materials and upstream aero supply peer groups, and the main drivers behind accelerated top-line growth and strong earnings contribution over the next 2-3 years. Continue reading

Read More »
11:17 AM

Aerospace: Updating Our Macro Assumptions Ahead Of New Industry Catalysts

After taking a closer look at aerospace market drivers, listening to the commentary provided by OEMs and Tier-1 suppliers, and collecting early market intel from proprietary survey-work, we remain comfortable with the bullish outlook applied the coverage group. We anticipate the realization of accelerated aero-related sales growth in CY22 for companies levered to aluminum, composite materials, specialty materials, and forging services driven by unit volume strength, better pricing/mix, and distribution channel refill. In today’ s market update, We lowered the CY22 earnings outlook for Hexcel (HXL) to account lost 787 revenues in 1H22. Continue reading

Read More »
5:39 AM

Aerospace: Suppliers Are Reacting To The New LEAP Production Targets

General Electric (GE) held a conference call with its major suppliers to review all details behind the newly implemented LEAP production schedule and to ensure supply chain alertness. Last week, the company effectively raised the CY22 production outlook to 360-370 engines to account for stronger single-aisle aircraft build rates. This was the third major scheduling adjustment announced by the aircraft OEMs and jet engine suppliers, which suggests an upward bias to CY22-23 expectations for the coverage group. Continue reading

Read More »
6:53 AM

Aerospace: Submitting Our Industry Flight Plan For 2021

Ahead of the quarterly updates set to be released by several aerospace-levered companies over the next few weeks, and the swearing-in of President Joe Biden, we are submitting our Aerospace Flight Plan For 2021, broadly defined as an industry preview and data point refresher. The intention of this report is to provide a simple listing of industry headlines expected to materialize over the next twelve months that could sway investor sentiment or become a catalyst for estimate revisions on individual companies. We sat down over the weekend and updated our industry models to fully reflect our increasing conservative macro-outlook and to match some of the new data points provided by channel contacts. Continue reading

Read More »
1:04 PM

Aerospace: Airbus Is Not Budging On The A320

The Airbus management team appears to be sharing their production strategy and updated aircraft build schedules with suppliers this week, which includes an intention of holding the A320 rate steady at 40/month (well into 2021). Granted, there is lingering contact apprehension about the global airline operator willingness to accept these new jets (during the slow season), but today those comments were drowned out by the collective sound of channel relief. As we reported last week, […]

Read More »
3:35 PM
View All Reports