The factors in favour of a drop in the Airbus share price:
Firstly, it is regrettable that the Airbus Group has a poor distribution of its turnover among its various subsidiaries. Indeed, it should be recalled that the vast majority of the group's revenues still come from the sole activity of commercial aircraft construction. A loss of momentum or a drop in demand from this sector could therefore present a major risk to the profitability of the Airbus group.
Similarly, the Airbus group must, in order to compete with its American competitor, be increasingly innovative. To do so, it must therefore invest a great deal of money in research and development, which has a major impact on its results. Indeed, it should be remembered that the group's current investments in R&D represent more than 4% of the company's total turnover, despite numerous efforts to reduce these expenses.
Although the Airbus group enjoys a strong reputation and a certain success in the field of commercial and civil aviation, it is regrettable that it is not able to achieve the same success in the field of aviation and military systems. Of course, we recall the Group's persistent difficulties with the commercial failure of its A400 aircraft in 2016, which weighed very heavily on Airbus' overall profitability by leading to significant costs.
In the space sector, Airbus may also fear stronger competition than in other segments. Indeed, the Space X group has been facing very strong competition for several years now, which could lead to a further loss of market share in the years to come.
Finally, the Airbus group's last weak point concerns its strategic control of operating profitability. This profitability has disappointed investors a great deal in the past years and, although it has been better controlled in 2018, investors are more cautious about publishing future financial results.