✈️ Aviation titans compared: Airbus, Boeing, Embraer - who will take off? 🚀

Company presentation

Airbus is a leading European aerospace company based in the Netherlands that develops and produces civil and military aircraft, helicopters, satellites and launchers.

Boeing is an American aerospace and defense company that produces both civil and military aircraft and is the world's second largest manufacturer in this sector.

Embraer is a Brazilian aircraft manufacturer recognized as the fourth largest producer of commercial aircraft in the world, producing both civil and military aircraft.

Historical development

Airbus was founded in 1970 and some of the most significant milestones include the introduction of the A300 (1974), the A320 family (1988) and the A380 (2007).

Boeing was founded in 1916, with the B-17 (1935), the B-747 (1970) and the B-787 (2011) standing out as defining developments.

Embraer was founded in 1969 as part of a Brazilian government aviation program, with important models such as the EMB 110 Bandeirante (1968) and the E-Jet family (2004) standing out.

Business model and core competencies

$AIR (+3,4 %) focuses on the manufacture of commercial aircraft, military aircraft, helicopters and space technology. Its core competencies lie in aircraft design and production.

$BA (-0,65 %) covers the areas of civil aviation, defense, space and security, with aircraft construction and defense systems representing the core competencies.

$EMBR3 focuses on regional and business aircraft as well as military applications, with the company particularly strong in the construction of smaller commercial aircraft and business jets.

Future prospects and strategic initiatives

Airbus is focusing on sustainable aviation technologies, digital transformation and the development of hydrogen drives as a strategy for the future.

Boeing is investing in autonomous aircraft systems, electrification and the use of sustainable fuels.

Embraer is planning to further develop its e-jet family and enter new market segments such as electrically powered vertical take-off and landing (eVTOL) aircraft.

Market position and competition

Airbus and Boeing jointly dominate the market for wide-body aircraft and form a duopoly. Since 2019, Airbus has overtaken Boeing as the largest aircraft manufacturer.

Embraer is the market leader in the regional aircraft segment and competes with Bombardier and ATR.

Total Addressable Market (TAM)

The global market for commercial aircraft is estimated to be worth around USD 7.2 trillion by 2041.

Share performance

- Airbus: 0.72 %

- Boeing: -27.4 %

- Embraer: +150.7% %

Compared to today, Airbus' share price performance since 2005 is 456%, Boeing's is 235% and Embraer's is 144.21%

Performance

In terms of current sales, Boeing is slightly ahead of Airbus, but the difference is not significant. Embraer, on the other hand, remains significantly smaller compared to these two industry giants and operates at a much lower turnover level.

In terms of sales growth, all three companies - Airbus, Boeing and Embraer - are at a similar level, although they each come from different starting positions.

Embraer performs best in terms of gross profit, followed by Airbus. At Boeing, on the other hand, it remains questionable how the company can operate so poorly despite stock-based compensation and other factors.

In terms of net profit margin, Embraer is currently ahead of Airbus, although both companies have comparatively low margins. While Embraer is showing an upward trend, Airbus' margin is falling. Boeing, on the other hand, is currently operating with a negative net margin and it is unlikely that this situation will improve in the near future. For me, this is a clear no-go from a business perspective.

Airbus' EPS (earnings per share) is the best among the three companies and is well above that of its competitors, but shows a downward trend. Boeing continues to operate with a negative EPS, while Embraer is becoming increasingly profitable.

Not only does Boeing operate with negative margins, but investors also have to accept an extreme dilution of the shares, which can hardly be justified.

Airbus and Boeing buy back shares here and there, but in very volatile quantities. In the case of Boeing, however, the buyback is not nearly enough to compensate for the strong dilution of the stock-based comp.

In terms of free cash flow (FCF), both Embraer and Airbus are in positive territory, even if margins are becoming increasingly tight. Boeing, on the other hand, has recorded a strongly negative FCF this year, which has already been seen several times in the past.

In terms of the net debt ratio, Airbus is technically in the red, which is a solid position. Embraer shows a rising net debt, but not to a significant extent. Boeing, on the other hand, has its usual disastrous net debt, which is well above average.

In terms of net debt to EBITDA, Airbus is in the red, which indicates a healthy financial position. Embraer is just in positive territory, while Boeing's debt is far too high.

Part 2:https://getqu.in/6e0Iw7/

✈️ A comparison of aviation titans: Airbus, Boeing, Embraer - who will take off? 🚀 Part 1: https://getqu.in/Xfmo8G/

Bidding according to the EV to EBITDA ratio $AIR (+3,4 %) and $EMBR3 the same value on the stock market, while Boeing is clearly overpriced, as usual, and this time this should not be viewed positively.

In the shareholder yield comparison $BA (-0,65 %) significantly better than Airbus. Whereby Embraer is particularly high with a value of 13.25%. However, it remains questionable why Boeing offers such a high yield despite its weak business results.

Looking at the ratio of research and development (R&D) to sales, Airbus is in the best position and keeps this value stable. Boeing's R&D ratio has risen slightly in recent quarters, while Embraer's is on a smaller scale. Although research never hurts and every model builds on existing technologies, it is clear that Embraer uses its R&D expenditure much more efficiently in product development.

In terms of ROIC (Return on Invested Capital), all three companies do not perform particularly well, with Boeing again being negative. Unfortunately, ROIC is below 10% for all of them.

In terms of ROE (return on equity), Boeing and Airbus are on a par, although they come from different starting points. Embraer shows an increasing ROE and all companies are above the 10% mark. However, it remains questionable why Boeing is keeping up at all if the company is performing so poorly overall.

In terms of ROCE (Return on Capital Employed), Airbus and Embraer are on a par, while Boeing again performs negatively. Unfortunately, all companies are below the 10% mark.

Conclusion:

It depends on what you are looking for, but there are mainly two options: Airbus or Embraer, although you can also consider both as they do differ. Choosing Boeing is nothing more than a risky turnaround bet with nothing to back it up. It is completely incomprehensible why the company is still worth so much with such weak figures and an overall poor performance - and not just recently.

Airbus presents itself as a clear investment option: the company operates in the duopoly market, works positively and does not dilute its shareholders significantly. Even if margins are currently falling and there are many challenges, the long-term prospects are hopeful. In addition, there is still considerable room for improvement in areas such as defense and other markets, which investors can view positively. With a solid foothold in the Netherlands, Airbus also has a good basis for further growth.

At Embraer, it is remarkable how efficiently the company has been operating for years, especially with regard to its minimal research and development activities. The group plans to achieve much more and has a dedicated engineering team. Nevertheless, Brazil is a location to consider as geopolitical aspects can be challenging at times, especially in the military sector.

My recent entry into Airbus was at 130 euros. If there is another correction in Embraer, I plan to make a small entry there as well.