Despite all the turbulence, Airbus stock may be flying a little too low.
On Thursday, the European plane maker’s shares dropped about 3% after Airbus announced that it expected to deliver at least 566 commercial aircraft this year—matching 2020 levels. This means that free cash flow for the year would roughly break even. Analysts had loftier expectations, and had penciled in a rise in deliveries that would generate positive cash flow of €500 million, equivalent to $602 million, in 2021, but extra travel restrictions this quarter are clouding the outlook.
It is a blow for investors, who are trained to look forward. Yet positive past performance shouldn’t be disregarded either, and Airbus’ results during the worst year in aviation history are encouraging.
For the year as a whole, the company lost €1.1 billion, which is actually less than in 2019, when losses amounted to €1.4 billion due to a €3.6 billion bribery-settlement fine. Crucially, Airbus turned a €1.6 billion profit in the fourth quarter, which is almost 60% above the median forecast compiled by FactSet.
Delivering 566 jets may not seem like a lot—that number was 863 in 2019—but it is close to heroic during a crisis that has grounded a third of the global airline fleet. Under such circumstances, there is little that carriers want to do less than spend cash to buy more planes.