Why Airbus is Looking Attractive Now

With demand for new aircraft surging and airlines racing to modernize their fleets, Airbus is entering one of its strongest growth phases in years. A massive 8,700+ jet backlog, rising global air travel, and fresh orders pouring in are pushing the aerospace giant back into the spotlight.

Solid order backlog and strong demand

One of the biggest strengths for Airbus today is its massive order backlog. As of the first quarter of 2025, the company’s commercial aircraft backlog stood at roughly 8,726 aircraft. That backlog reflects consistent demand, especially for narrow body jets such as the A220 and A320neo families, which together represent the bulk of the orders.

In the first half of 2025, Airbus received 494 gross orders, which turned into 402 net orders after cancellations — a significant increase from last year. That shows that despite some headwinds still around, such as supply chain problems, airlines are placing new orders, confident in growth and modernization.

Strong financials and favorable valuation metrics

Recent analysis from Simply Wall St. finds Airbus undervalued based on what its cash-flow potential and growth prospects indicate. Utilizing a discounted cash flow model, Simply Wall St sets a target for the “intrinsic value” of Airbus shares at around 39% higher than the market currently prices in.

• With respect to the P/E ratio, Airbus currently trades at around 31.4×, which contrasts with an aerospace & defense industry average of ~45.5× and is somewhat below its peer group average of ~33.4×.
• A “fair ratio” valuation metric from Simply Wall St stands at ~34.9×, which could indicate that Airbus is moderately undervalued with respect to its earnings growth outlook and risk profile.

Taking these metrics all together paints a picture that Airbus could offer long-term value potential, particularly for investors looking beyond short-term market volatility.

Market context: recovery in air travel and structural demand

The global aviation industry is continuing to bounce back from the pandemic slump. With the recovery of air travel, airlines around the world are seeking to renew their fleets by retiring old aircraft and improving fuel efficiency. This structural tailwind improves demand for next-generation jets, which is favorable for Airbus, particularly in light of the popularity of its A320neo/A220 families.

Moreover, independent ratings agencies are taking notice. Fitch Ratings recently upgraded Airbus’s Long-Term Issuer Default Rating to ‘A’ from A-, with a Stable Outlook – reflecting confidence in Airbus’ financial health, profitability and backlog strength.

All the above points to the fact that Airbus not only survives but also is likely to be well-positioned to thrive in aviation’s recovery and expansion globally..

What Could Derail the Momentum?

Supply chain pressures and delivery delays

The order book has been robust at Airbus, while it has faced significant headwinds on the production side. Early in 2025, the company reported a decline in deliveries: deliveries for January–February were down about 18% compared with the same period of 2024.

The root cause: persistent engine and aero structure supply constraints. Some aircraft remain in the “completed but undelivered” category because engines—especially for narrow-body jets—and other critical components have not arrived in time.

As of mid-2025, there were said to be about 60 such “glider” aircraft waiting for engine installs or other parts – a huge backlog, but also a drag on cash flow.

Because cash only comes in when aircraft are delivered, such delays squeeze liquidity, hurt free cash flow, and delay revenue recognition — bad for near-term financials, even if demand remains strong.

Pressure on 2025 delivery targets

Airbus has publicly committed to delivering around 820 commercial aircraft in 2025, up from 766 in 2024, a 7% increase.

But with current supply chain bottlenecks and delivery lags, reaching that target will require a strong ramp-up in the final months of the year. Some analysts caution that, absent improvements in engine and component availability, Airbus will fall short and may revise the target downward.

If that happens, short-term investor confidence and cash flow could suffer — which might dampen bullish sentiment temporarily.

Mixed signals in overall financial performance

Although the business of commercial aircraft remains strong, the more extensive business segments of Airbus are highly volatile. The company recorded a substantial write-down in its Space division during 2024, partly offsetting the gains from commercial deliveries.

Furthermore, some estimates indicate negative free cash flow in certain quarters of 2025 due to the costs associated with work-in-progress inventory and delayed deliveries.

These mixed financial signals mean that while the long-term outlook looks bright, the short-to-medium-term performance may still be bumpy, and therefore, caution should be warranted.

What Does It Mean for Investors (and Aviation Observers)?

For long term investors: Potential value + growth

If you put on a long-term lens, say 5–10 years, Airbus now makes a pretty strong argument:

• Strong backlog with robust order flow indicates steady revenue potential for several years.
• Valuation metrics, including DCF- and P/E-based, suggest that the stock might be undervalued versus its prospects.
• Demand for fuel-efficient narrow-body jets—especially in markets like Asia, Middle East, and emerging economies—continues to support sustained demand.

If Airbus resolves its supply chain and delivery bottlenecks, this could let the company realize its backlog, convert it into cash flow, and ultimately start benefitting from improving margins over time.

For more conservative or shorter-term investors: Watch delivery execution & supply risks

There are, of course, valid reasons to tread more carefully if you’re more risk averse or focused on short- to medium-term returns during this period.

• Execution risk: delays in delivery, disruption to supply, and capability to deliver targets set for 2025.
• Cash flow pressure due to inventory build-up and undelivered aircraft.
• There is uncertainty from non-commercial segments, such as space and defense, due to mixed performance with occasional write-downs.

In other words, the “bull case” is highly dependent on execution.

Final Verdict: Yes — Airbus Deserves a Fresh Look, But Keep an Eye on Execution

Overall, the recent pickup in orders, massive backlog, favorable valuation metrics, and structural demand in global aviation make a strong case for Airbus as a promising long-term investment. The company seems well positioned to benefit from a rebound in air travel and fleet modernization worldwide.

However, in the near term, disruptions to supply chains, delays in delivery, and inconsistent cash flow do present real execution risks. The potential rewards will likely be substantial if Airbus can navigate those challenges. To investors, this could mean that the coming 6-12 months may prove crucial.

If you like, I can pull up 3 alternate scenarios for Airbus over the next 2–3 years: base case/bullish/bearish. That might help frame potential outcomes more clearly.