Airbus (OTC: EADSY) stock sank 2.2% in afternoon trading, 3:10 p.m. ET, on news of a bit of a management shake-up.
As Reuters reports, Airbus named Remi Maillard, currently head of Airbus India and South Asia, to lead its Research & Technology division as “Head of Technology Airbus” at the same time as he runs engineering at the company’s core commercial airplanes business. Curiously, Airbus seems to have eliminated the title of “Chief Technology Officer” from its management team, however.
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What’s going on at Airbus?
Sources suggest the change has something to do with Airbus plans to introduce a successor to its popular A320neo airplane toward the end of this decade. While company CEO Guillaume Faury says technology remains “absolutely instrumental to the future of Airbus,” at least one source believes the company is de-emphasizing technology (and maybe research and development spending), perhaps in an effort to cut costs.
So what are investors to make of this?
Perhaps nothing. Executives come and go and move around plenty in a large aerospace company like Airbus. One promotion does not a business shift make — necessarily. But if Airbus is cutting costs in commercial airplanes, this would line up nicely with efforts to cut costs in the company’s space division, for example, where layoffs and other cuts have been ongoing the past two years.
Is Airbus stock a buy?
If cost cuts are happening, this could be good news for investors. Priced at 28 times earnings and expected to grow earnings nearly 24% annually over the next five years — and paying a dividend yield of nearly 2% — Airbus stock already looks attractive.
Cut costs and boost profits even just a little bit, and the stock could easily become cheap enough to buy.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
