Airbus share price moved sideways as investors assessed the impact of last week’s recall of its most important jet. AIR was trading at €204, down by 5.35% from its highest point this year. So, will the Airbus A320 recall crash the stock?
Airbus A320 recall
The main catalyst for the Airbus stock price is a major recall of the popular A320 model last week. In a statement, the company ordered over 6,000 A320 planes to make a software upgrade to fix an error of intense solar radiation, which had the ability to corrupt data critical to the functioning of flight controls.
The crisis started when a JetBlue plane experienced an uncommanded and limited pitch-down event. Fortunately, no customer was hurt and the plane landed in a nearby airport.
This recall happened in one of the worst periods, especially in the United States, as millions of people traveled for the Thanksgiving holiday.
Still, the recall will likely have no major impact on Airbus and its operations. For one, reports show that many airlines have conducted the upgrades and restarted flying. In a statement, American Airlines said that all aircraft impacted by the issue have now been fixed.
Other airlines have also reported the fix, with the most notable ones being Air India, Jetstar, and Virgin Australia.
Additionally, historically, product recalls, especially such limited ones, have a limited impact on companies.
Airbus business is doing well
The new crisis at Airbus came as its business is facing several key headwinds, which it revealed in the last financial results.
The company said that its order intake plunged by 20.7% in the first nine months of the year to 514, while its orderbook slipped by 1% to 8,665.
Its helicopter and defense businesses also had lower order books than in the same period last year. The defense orders dropped by 38.4% to 6,753, while its helicopter orders fell by 0.6% to 306.
Still, despite this, its huge backlog helped to ensure that its revenue growth was relatively strong, with the revenue figure moving from €44.4 billion in the first nine months of 2024 to €47.4 billion. It also secured big orders at the Dubai Airshow.
Most of this revenue was from the Airbus brand, which accounts for 70% of sales. It made €33.4 billion in revenues, with its adjusted EBIT rising to €3.2 billion.
Airbus also grew its profitability, with the adjusted EBIT coming in at €4.1 billion from the €2.8 billion it made in the same period last year. One reason for this growth is that the company reduced some of its costs, with R&D budget falling from €2.4 billion to €2.1 billion.
The company is facing some notable headwinds, including the fact that Boeing starting to regain its market share, helped by 737, 777x and 787 Dreamliner.
Airbus share price technical analysis
The daily timeframe chart shows that the Airbus stock price has been in an uptrend this year as investors reacted to its robust demand and improvement in its supply chain issues.
Airbus stock has rebounded from the year-to-date low of €123.62 in April to the current €204.
While the stock has pulled back recently, it remains above the 100-day Exponential Moving Average (EMA). It has also formed a bullish flag pattern, which is made up of a vertical line and a descending channel.
The stock seems to be forming a double-top pattern whose upper side is at €217, and the neckline is at €200.
Therefore, the stock will likely continue rising as bulls target the upper side of the double-top pattern at €217. A move above that level will point to more gains, potentially to €250.
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