Finimize - ✈️ Airbus hits turbulence

What’s going on here?

Airbus lowered its profit outlook for this year by 20%, as the European aircraft manufacturer ran out of engine power – literally.

What does this mean?

Airbus’s woes have nothing to do with folk switching to helicopters or making peace with Boeing. The outlook downgrade was due to supply chain kinks, which have lingered since the pandemic. Engine manufacturers Pratt & Whitney and CFM International are stuttering and sputtering when it comes to production. So much so that Airbus, like any unhappy customer, is considering asking for compensation. Now, Airbus expects to deliver 770 aircraft this year. And although that’s only down from 800 – a drop of 4% – the knock-on effect on profit is going to be a lot bigger. Investors aren’t waiting around to find out: the company’s share price fell by 9% on Tuesday.

Why should I care?

Zooming in: Double trouble.

Together, Airbus and Boeing have total control of the world's airplane production. That said, Boeing’s run of mid-air mishaps has forced it to slow down the giant conveyor belts. So now that even frequent flyers are hoping their plane tickets don’t read “737”, Airbus is in prime position to bump up its market share. Problem is, Airbus can’t even fulfill its own order book this year, let alone pick up Boeing’s slack. So without an industry titan to rely on, airlines are simply making do by refurbishing their existing planes, which is only making new parts even more scarce.

The bigger picture: Slowly, slowly.

Supply chains are crucial for companies, and the more spread out they are, the more that can go wrong between factory and delivery. That’s why many firms have been bringing production sites closer to home, in a process called “onshoring”. And to its credit, Airbus is trying to iron out its situation by buying one of its suppliers, which should lead to a smoother ride.

What’s going on here?

The European Union (EU) has hung both Apple and Microsoft out to dry, charging the tech titans with breaching the region’s tech rules.

What does this mean?

The EU’s Digital Markets Act is partly designed to stop tech giants from hogging too much of the market. That way, smaller companies get a look-in, and customers have more choice. And now, the EU has accused Apple’s App Store of stopping developers from directing customers to alternative, cheaper ways of buying services and products. If found guilty, Apple could face fines of up to 10% of its global annual revenue, or tens of billions. Repeat offenses would see this double. And Microsoft hasn't escaped the spotlight either. The tech giant is facing antitrust charges for the first time in over a decade, with the EU accusing the firm of anti-competitive shenanigans – specifically, by bundling the Teams app with the Office suite.

Why should I care?

Zooming out: There’s no euro summer for tech giants.

The EU might be playing a dangerous game – especially if it wants innovation in the region. After all, Apple recently announced that it won’t launch AI features in Europe this year because of regulatory hurdles. Meta has delayed its own European AI launch, too, after Ireland’s Data Protection Commission blocked the company from using public Facebook and Instagram content to train its AI models.

The bigger picture: If it sounds too good to be true….

Even market darling Nvidia has been having a hard time. The chipmaker’s stock – the priciest in the S&P 500 – has tumbled 8% over the past week, wiping $270 billion from its market value. Investors are concerned that Nvidia’s towering stock could be toppled if the market decides it’s overpriced, see, so some are taking their money and running while they can. The course of AI-fueled world domination never did run smooth, as they say.