Aerospace & Defense: Despite strong fundamentals: investors are cautious into 2Q A&D earnings

Research evidence excerpt

Aerospace & Defense: Despite strong fundamentals: investors are cautious into 2Q A&D earnings

agement’s outlook could be strong catalysts for the stock.

Commercial Aerospace & BizJets

Middle East – Should I stay or should I go?

On-and-off war in the Middle East has created an uncertain outlook across commercial

aerospace despite solid fundamentals across OEMs, AM and BizJets. Jet fuel prices fell

after US-Iran de-escalation but remain elevated amidst the conflict’s topsy turvy

dynamic. This week’s CPI print showed a ~27% m/m increase in airline fares while

United and Delta both report that travelers continue to purchase tickets despite

increasing airfares. According to Airlines for America, jet fuel prices are 34% higher at

major US airports thus far in July. Whether the conflict generates travel demand

destruction ultimately depends on its duration, which is anybody’s best guess.

Emirates, Qatar Airways and Etihad Airways are among the Middle East conflict’s most

affected airlines. Gulf SuperConnectors have largely cut back operations already but

they’re set to be further impacted since the European Union Aviation Safety Agency

(EASA) raised its threat level for airlines in the Middle East this week. Airspace over

Bahrain, Kuwait, Qatar, United Arab Emirates and the Gulf of Oman must be avoided

through July 29 based on EASA’s update. We view this as an indication that commercial

aerospace names will be pressured through the end of the month as tensions re-

escalate.

OEM Deliveries – Airbus regains the throne in 2Q

In 2Q26, Boeing delivered 171 commercial aircraft, which broke down as 129 737s, 10

767s, seven 777s, and 25 787s. That’s up ~20% q/q from 143 commercial deliveries in

1Q26. In 1H26, Boeing delivered 314 commercial aircraft, comprised of 243 737s, 16