Supply chain fog clearing for plane suppliers, Constellium says

Constellium reports improved visibility in the aviation supply chain due to Airbus' efforts to mitigate bottlenecks, particularly regarding engines, which had previously impacted aerospace business volumes. Constellium anticipates increased demand within two years, driven by accelerated deliveries from both Airbus and Boeing, the latter following its integration of Spirit AeroSystems, and the reduction of current inventory levels. The long-term outlook for aluminum in aerospace remains positive, supported by Airbus' substantial order backlog for aluminum-intensive models like the A320.

Analysis

Aluminium products manufacturer Constellium (CSTM) reports improving visibility within the aviation supply chain, attributing this to measures taken by Airbus to mitigate previous bottlenecks, particularly concerning engines, which had negatively impacted Constellium's aerospace business volumes since last year. Philippe Hoffmann, president of aerospace and transportation at Constellium, expressed increased reassurance, noting a reduction in industrial 'mist.' Further, Boeing (BA) is anticipated to accelerate its delivery rates following the integration of Spirit AeroSystems (SPR). Consequently, Constellium projects a resurgence in demand across the supply chain within the next two years, driven by these increased planemaker deliveries and the clearing of existing inventory levels. The long-term demand outlook for aluminium in the aerospace sector remains robust, underscored by Airbus's extensive order backlog for aluminium-intensive models such as the A320, with orders extending over a decade. This positive outlook is reflected in an overall strongly positive sentiment score (0.75) for the news, with Constellium itself receiving a positive sentiment score of 0.7.

Key Decisions for Investors

• Investors should consider the aerospace supply chain, particularly aluminum suppliers like Constellium (CSTM), for potential investment as supply chain visibility improves and demand is anticipated to recover, supported by strong long-term aircraft orders.
• Factor in the projected two-year timeline for significant demand uplift and inventory normalization when assessing investment horizons and monitoring key performance indicators for companies in this sector.
• Closely track planemaker delivery rates from Airbus and Boeing (BA), alongside inventory destocking trends, as these are critical catalysts for the forecasted improvement in aerospace supplier demand.