2023-04-17 11:00:00 ET
Summary
- Airbus SE can buy up to 10% of its issued stock back.
- A dive in the repurchase activity shows that just a fraction of the authorization is actually being used.
- Airbus does not use share repurchases to boost shareholder value.
- Airbus recently shared its March order and delivery numbers, and while hardly satisfying, the stock is performing well.
Airbus SE ( EADSF , EADSY ) stock is up year-to-date, and while I do believe that the long-term underlying business trend is up for commercial airplane manufacturers, there is not a lot specific to Airbus that gives a solid support to higher share prices. That support is actually more found in high expectations for demand, but in the near term the growth numbers in orders and deliveries for Airbus are somewhat lackluster as I discussed in a previous report . Following questions from readers, in this report I will discuss to what extent stock repurchases have driven Airbus share prices up this year.
Airbus Shares Outperform
Year-to-date, Airbus stock has appreciated 16.2% compared to 6.6% for the broader markets. There is some positive momentum in the stock price due to orders from India and in the geopolitical spectrum Airbus seemingly has a slightly better positioning that its biggest competitor, but actual delivery performance of commercial airplanes has been underwhelming.
A Look At The Share Repurchase Authorization
In April 2022, Airbus shareholders approved the repurchase of up to 10% of the company’s issued shares. By March 2022, 788,136,199 shares were issued, giving the company more or less the space to buy up to 78.9 million shares, which should in theory boost share prices by 10%.
Airbus Share Repurchase Activity | |||
Day | Shares | Weighted price | Repurchase Total |
27/02/2023 | 34,250.0 | € 124.02 | € 4,247,580.47 |
28/02/2023 | 34,250.0 | € 124.00 | € 4,247,135.87 |
01/03/2023 | 34,250.0 | € 123.42 | € 4,227,250.80 |
02/03/2023 | 34,250.0 | € 122.12 | € 4,182,679.15 |
03/03/2023 | 34,250.0 | € 123.72 | € 4,237,438.53 |
06/03/2023 | 34,250.0 | € 124.04 | € 4,248,300.71 |
07/03/2023 | 34,250.0 | € 123.87 | € 4,242,379.23 |
08/03/2023 | 34,250.0 | € 124.92 | € 4,278,437.15 |
09/03/2023 | 34,250.0 | € 124.25 | € 4,255,533.70 |
10/03/2023 | 34,250.0 | € 122.07 | € 4,180,827.56 |
13/03/2023 | 68,463.0 | € 118.70 | € 8,126,356.27 |
14/03/2023 | 47,123.0 | € 120.42 | € 5,674,423.30 |
15/03/2023 | 68,500.0 | € 118.11 | € 8,090,479.38 |
16/03/2023 | 68,500.0 | € 118.26 | € 8,100,511.13 |
17/03/2023 | 68,500.0 | € 118.55 | € 8,120,898.45 |
20/03/2023 | 21,414.0 | € 117.58 | € 2,517,870.45 |
Total | 685,000 | € 121.14 | € 82,978,102.15 |
Source: Airbus website .
I analyzed the share repurchase activity, and what I found is that in four tranches Airbus bought back 685,000 shares valued nearly €83 million for an average price of €121.14. One thing that should be noted is that since 2018, there is an authorization that is without exception confirmed each year to buy up to 10% of the stock. The reality, however, is that the share repurchase authorization is actually barely used. Only 6.85% of the authorization has been used.
By the start of 2023, there were 787,557,508 shares outstanding and there now are 790,395,611 shares outstanding. So, while Airbus does have an authorization to repurchase up to 10% of its stock, it is not offsetting at the slightest the share count growth. There were an additional 3.5 million shares in circulation, of which Airbus bought back only 20%, so the company is not using the share repurchases to significantly boost shareholder value.
Conclusion: Share Price Performance Driven By Sentiment And Long-Term Expectations
It could very well be that announcements of share repurchases boosted Airbus stock, but if we look at how the authorization to repurchase stock is being used, then we see that it is not really done to create significant shareholder value. There are 3 billion shares authorized, and so far this year, the number of issued shares net of share repurchases has grown by 3.5 million. In a relative sense, that number is extremely small, so certainly no reason for concern, but I think it is important to keep in mind that there is a big difference between actually having the authorization to buy back stock and actually doing it in the quantities stipulated by the authorization.
Airbus SE is most certainly not doing share repurchases to boost the stock price, and that is not a bad thing as it means that the company doesn’t rely on boosting its stock prices by repurchases but needs to focus on engineering excellence, which is a mindset I am more than happy with.
For further details see:
Airbus Repurchases Stock: Not A Tangible Share Price Boost