Bank of America has adjusted its valuation of Airbus, lowering the price target to €255 from €259 but leaving its Buy rating unchanged. The bank cited cost pressures stemming from disruptions to primary aluminum supplies after missile and drone strikes on smelters in the Gulf region.
The strikes, carried out by Iranian forces, targeted aluminum production sites in the United Arab Emirates and Bahrain over the weekend. The attacks damaged the Al Taweelah operation in Abu Dhabi, which is run by Emirates Global Aluminum, as well as Bahrain's Alba facility. In the aftermath, Alba declared force majeure on deliveries.
Together, the two plants produced approximately 1.6 million metric tons of aluminum each in 2025, an amount Bank of America notes is roughly equivalent to 4% of global aluminum supply. Following the strikes, London Metal Exchange aluminum prices have moved higher - up about 6% since the attacks and roughly 15% above pre-war levels, according to the bank's assessment.
Bank of America said the supply shock will act as a headwind for Airbus through 2026 and 2027. The firm quantified the expected inflationary impact at about 100 million in 2026 and 200 million in 2027, and stated that achieving price-cost neutrality in 2026 now appears unlikely.
As a result of anticipated supply chain disruption, the bank trimmed its delivery forecasts for Airbus: it now expects 860 aircraft in 2026 and 960 aircraft in 2027. It also pushed back the expected timeline for a gross margin inflection on the A350 program by one to two years.
Those revisions feed directly into earnings estimates. Bank of America said its adjustments translate into a 5% to 8% reduction in EBIT projections for 2026 and 2027. On the market, Airbus shares were trading at 159.18.
Clear summary
Bank of America cut its price target on Airbus to 255 while maintaining a Buy rating, citing cost pressures from disrupted aluminum supplies after missile and drone strikes hit Gulf smelters. The attacks damaged major facilities, prompted a force majeure declaration by Alba, lifted LME aluminum prices, and led BofA to lower delivery and earnings forecasts for 2026-2027.
Key points
- Bank of America reduced Airbus' price target to 255 from 259 and kept a Buy rating.
- Strikes on Gulf aluminum smelters damaged the Al Taweelah and Alba facilities; Alba declared force majeure on deliveries.
- BofA cut delivery forecasts to 860 aircraft in 2026 and 960 in 2027, and lowered EBIT estimates by 5% to 8% for those years.
Sectors impacted
- Aerospace - through higher input costs and delivery adjustments affecting OEM performance.
- Base metals and commodities - aluminum supply and pricing volatility on the LME.
- Supply chain and manufacturing - potential ripple effects from force majeure and plant outages.
Risks and uncertainties
- Extent and duration of the aluminum supply disruption, which Bank of America anticipates will create headwinds through 2026 and 2027.
- Price-cost neutrality for Airbus in 2026 now appears unlikely, increasing earnings risk for that year.
- Possible further delays to program margin improvements, exemplified by a one- to two-year pushout of the A350 gross margin inflection.
These observations and forecasts are reported as presented by Bank of America. The bank's estimates drive the changes to price target, delivery expectations, and EBIT projections described above.