Despite these strong numbers, Airbus’s performance has been shaped by a mix of industry tailwinds and headwinds. Demand for aircraft remains high, with airlines looking to modernise their fleets and cater to a strong rebound in passenger travel. However, supply chain constraints — ranging from shortages in engines and critical components to logistical bottlenecks — continue to challenge the company’s ability to ramp up production.
Airbus is betting big on its A321neo, which has emerged as the most sought-after aircraft in its lineup. The A321neo is the largest variant of the A320 family, offering extended range, better fuel efficiency, and increased seating capacity. Airlines are opting for this model as they seek to cut costs, improve environmental efficiency, and operate longer routes with single-aisle aircraft rather than larger, less fuel-efficient widebodies. This shift in airline preference has resulted in an unprecedented backlog—Airbus currently holds orders for thousands of A321neos, with new commitments continuing to pour in.
The A321XLR, the extra-long-range variant of the A321neo, is a game-changer for airlines looking to fly longer routes with a narrowbody aircraft. Capable of flying up to 4,700 nautical miles, the A321XLR enables airlines to connect distant city pairs that previously required larger, twin-aisle aircraft. This makes it particularly attractive to low-cost carriers, as well as full-service airlines looking to expand transatlantic and intra-Asia routes with lower operational costs. The aircraft is set to enter service in 2025, after some delays due to regulatory scrutiny over its fuel tank design.
The A321neo’s dominance also reflects a broader industry shift. Boeing, Airbus’s main rival, has struggled with supply chain difficulties and certification delays for its competing 737 Max 10—a jet that is meant to challenge the A321neo but is yet to be certified. With limited competition in this segment, Airbus has managed to seize a larger share of the single-aisle aircraft market, putting further pressure on Boeing.
While commercial aircraft sales remain Airbus’s strongest pillar, the company has faced headwinds in its Defence and Space division. In the fourth quarter of 2024, Airbus recorded a €300mn charge, bringing its total yearly losses in the division to €1.3bn. These losses were driven by increasing competition from the US and Chinese space companies, as well as delays and cost overruns in major European defence contracts. CEO Guillaume Faury has been vocal about the need for greater European aerospace consolidation to improve competitiveness in space and defence programmes.
Another area of challenge for Airbus is the freighter market. The company has been working on the A350 freighter, a cargo version of its long-haul A350 widebody. Initially expected to enter service in 2025, the aircraft has now been delayed to the second half of 2027. The cargo market remains a difficult segment, with Boeing continuing to dominate thanks to its established 777 and 747 freighter programmes. Airbus’s entry into this space has been slower than expected, and the delay means Boeing will continue to enjoy a near-monopoly in large freighters for several more years.
One of the biggest industry-wide challenges remains supply chain instability. Airbus, like all manufacturers, is heavily reliant on global suppliers for engines, avionics, and composite materials. In 2024, engine shortages — particularly from Pratt & Whitney and CFM International — forced Airbus to delay some aircraft deliveries. Airlines such as Lufthansa and IndiGo have been forced to ground aircraft due to a lack of spare engines, further exacerbating capacity shortages in the industry.
Airbus is working on stabilising its production system while simultaneously increasing its manufacturing rate. The company has set a target to increase monthly A320 family production to 75 aircraft by 2027. However, ramping up production will depend on whether key suppliers can resolve their own issues, particularly in engine production.
Another strategic shift is happening in Airbus’s sustainability initiatives. The company has now delayed the timeline for its hydrogen-powered “ZEROe” aircraft project, pushing its first commercial hydrogen aircraft beyond 2035. Additionally, Airbus has scrapped its plan to use an A380 as a flying testbed for hydrogen fuel-cell propulsion, citing technical and logistical difficulties. While hydrogen remains a long-term ambition, the company will now focus more on incremental improvements in fuel efficiency and sustainable aviation fuel (SAF) adoption as near-term solutions.
Looking ahead, Airbus is aiming to deliver 820 aircraft in 2025, reflecting a 7% increase from 2024. This target indicates confidence that supply chain issues will ease, allowing for a more predictable delivery schedule. However, suppliers must keep pace, and Airbus will need to navigate geopolitical risks, including ongoing trade tensions and fluctuating energy prices, which can affect raw material costs.
Despite the challenges, Airbus remains in a strong strategic position, and its dominance in the narrowbody sector gives it a competitive advantage over Boeing, which is still grappling with production and regulatory setbacks. In the widebody segment, the A350 continues to perform well, securing recent orders from major airlines, while the A330neo is steadily gaining traction as an efficient alternative for long-haul routes.
Like always, the key to Airbus’s success in the coming years will be execution — whether it can increase production rates, manage supplier constraints, and maintain profitability while investing in future aircraft technology. The aviation industry remains on an upward trajectory, and Airbus is well-positioned to capitalise on airline demand for modern, fuel-efficient aircraft. However, the company’s ability to navigate supply chain risks, geopolitical uncertainties, and competitive pressures will determine just the race against Boeing for the 9 months ahead.
The author is an aviation analyst. X handle @AlexInAir.
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