EUROPE AEROSPACE & DEFENSE 1H26 Earnings Previews

Research evidence excerpt

EUROPE AEROSPACE & DEFENSE 1H26 Earnings Previews

Goldman Sachs Europe Aerospace & Defense

Aerospace

Q2 ‘26 overview and market feedback

Civil Aerospace: De-escalation unwinds risk premium (but re-escalation now a clear

watch item); Buy-rated Airbus looks attractive into Q2/Farnborough

Since Q1’26 earnings, the civil aerospace aftermarket debate had become more

constructive as the Middle East conflict appeared to de-escalate, easing concerns

around a potential earnings shock and supporting strong share price performance

across the sector, including record highs for Rolls-Royce and Safran.

However, the renewed escalation over the last two days is likely to refocus investors on

oil prices, airline capacity and aftermarket demand risk, making this a key watch item for

the sector.

During the conflict we argued that share prices had moved to discount a worst-case

scenario across the group. De-escalation subsequently unwound part of that risk

premium and shifted focus back to supportive aerospace fundamentals ahead of results.

However, renewed escalation could see that risk premium re-emerge, particularly

around oil prices and airline capacity concerns. That said, we have seen no meaningful

increase in retirements, and our near-term aftermarket thesis remains underpinned by

high utilisation, low retirement rates, constrained new aircraft supply and large

shop-visit backlogs.

For Airbus, Q2 has seen an improved delivery cadence, partly reflecting the ~20 China

deliveries delayed in Q1 on administrative issues and the ongoing rectification of the

fuselage panel issue. This has lifted investor sentiment, with the shares up >20% since

Q1’26 results as expectations shift towards a catalyst-rich H2 and a back-end-loaded

FY26 delivery profile.