Delta orders 34 more Airbus A321neo jets in fleet renewal push | ReutersSkip to main content[Exclusive news, data and analytics for financial market professionalsLearn more aboutRefinitiv]An Airbus A321neo aircraft built for Pegasus Airlines, without engines that are scheduled to be supplied by CFM International, is seen at the planemaker's factory in Toulouse, France, March... [Purchase Licensing Rights, opens new tab] Read moreCHICAGO, Feb 27 (Reuters) - Delta Air Lines [(DAL.N), opens new tab] said on Fr ...

Core Insights - Vanguard Industrials ETF (VIS) provides concentrated exposure to the industrial sector with 97.4% of its assets allocated to over 500 holdings, including major companies like GE, RTX, and Caterpillar [1] - The ETF has achieved a year-to-date gain of 12.51%, closely mirroring the performance of its main competitor, the Industrial Select Sector SPDR Fund [1] - Manufacturing value-added reached $2.95 trillion in Q3 2025, showing a growth acceleration of 3.2% after a period of cyclical weakness [1] ETF's Intended Portfolio Role - VIS serves as a precise tool for sector allocation, focusing solely on industrials and eliminating exposure to other sectors, which allows investors to capitalize on cyclical recovery themes [1] - The fund's holdings include key subsectors such as aerospace and heavy equipment, providing diversification within the industrial theme [1] - With a dividend yield of only 1.02%, VIS is positioned as a growth-focused investment rather than an income-generating vehicle [1] Performance and Returns - VIS has successfully captured the industrial sector's cyclical upswing, benefiting from its exposure to leading companies in aerospace and heavy equipment [1] - The ETF's low fees enhance its attractiveness, allowing investors to fully benefit from the industrial recovery without incurring high expenses [1] Tradeoffs and Considerations - The cyclical nature of the industrial sector introduces significant risk, as evidenced by the year-to-date gains occurring alongside rising jobless claims and a contraction in manufacturing [1] - The lack of defensive exposure means that during economic downturns, VIS offers no protective buffer against losses [1] - Active monitoring of economic indicators and cycle positioning is essential for investors, as the industrial sector can experience rapid shifts in performance [1]

Core Viewpoint - Airbus has reduced its 2026 commercial delivery outlook due to significant engine shortages from Pratt & Whitney, impacting cash flow and delivery timelines [2][3][4]. Delivery Outlook - Airbus now expects to deliver approximately 870 aircraft in 2026, which is below previous analyst expectations that were closer to 900 or more [3]. - The company anticipates A320 family production to reach 70 to 75 aircraft per month by the end of 2027, a revision from its earlier target of 75 per month [5]. Supply Chain Issues - The primary issue affecting Airbus is a material shortage of engines from Pratt & Whitney, which cannot be easily compensated by alternative suppliers [4][9]. - Airbus has initiated contractual dispute mechanisms with Pratt & Whitney, indicating the potential for escalation if the situation is not resolved [4]. Market Reaction - Following the announcement, Airbus shares fell approximately 6% to 8%, with related impacts on shares of RTX (Pratt's parent) and Boeing, as investors view these companies as interconnected [6]. Financial Implications - The reduction in delivery guidance affects cash flow, as aircraft manufacturers typically receive most payments upon delivery, pushing cash receipts further into the future [7]. - This situation also undermines Airbus's recent reputation for stable execution, as the company now faces its own production constraints [8].

Core Viewpoint - American Airlines has selected CFM International's LEAP-1A engines for its upcoming Airbus A321neo jets, indicating a strategic move to streamline operations and reduce costs by maintaining a single engine type across its fleet [1]. Group 1: Company Decisions - American Airlines placed an order for 260 new aircraft in March 2024, which includes 85 A321neo jets, with the remaining orders divided between Boeing and Embraer [1]. - CFM International, a joint venture between GE Aerospace and Safran, will provide long-term maintenance support for the LEAP engines, ensuring operational reliability for American Airlines [1]. Group 2: Industry Context - The decision to use CFM engines aligns with industry trends where airlines prefer a single engine type for specific fleet segments to simplify operations and lower costs [1]. - CFM International competes with Pratt & Whitney, a unit of RTX, in supplying engines for Airbus' narrowbody aircraft, highlighting the competitive landscape in the aerospace engine market [1].

Core Viewpoint - Airbus has adjusted its jet production targets downward due to significant engine supply shortages from Pratt & Whitney, impacting its production goals and financial guidance for the upcoming years [1]. Group 1: Production Targets - Airbus now aims for a narrowbody output rate of 70 to 75 jets per month by the end of next year, stabilizing at 75 per month beyond 2027, down from a previous target of 75 jets per month in 2027 [1]. - The company has been in discussions with Pratt & Whitney regarding engine supply volumes for 2026 and 2027, which are typically agreed upon 18 months in advance [1]. Group 2: Financial Performance - In the fourth quarter, Airbus reported an adjusted operating profit of €2.98 billion, reflecting a 17% increase, while revenue rose by 5% to €25.98 billion [1]. - Analysts had anticipated a profit of €2.87 billion on revenues of €26.51 billion, indicating that Airbus exceeded expectations [1]. - For 2026, Airbus forecasts 870 jet deliveries, an increase from 793 in the previous year, with an adjusted operating profit projected at around €7.5 billion [1].

Group 1 - Iran announced the temporary closure of the Strait of Hormuz for live-fire drills, impacting global shipping and U.S. defense contractors as regional tensions rise [1] - The Strait of Hormuz is crucial as it handles 20% of the world's oil, leading to increased scrutiny on tanker companies and defense stocks [2] - As of February 18, Brent crude is trading at approximately $67.63 per barrel, up 0.31%, while West Texas Intermediate is at about $62.40 per barrel, higher by 0.22% [2] Group 2 - Despite military tensions, Iranian Foreign Minister expressed optimism for a sustainable solution during a U.N. disarmament conference, indicating a potential diplomatic opening [4] - U.S. Vice President noted that while some progress has been made in indirect nuclear talks, Iran has not acknowledged certain "red lines" set by the previous administration [4]

RTX has improved its capability to deliver a key missile for the US Navy but the company’s performance remains below expectations, according to a Pentagon assessment https://t.co/fKnVrNt1Kz ...

Core Insights - The International Monetary Fund (IMF) projects global GDP growth of approximately 3.3% for 2026, supported by corporate investment in digital infrastructure and advanced technologies [1] - The global semiconductor industry is expected to reach $975 billion in annual sales in 2026, driven by an AI infrastructure boom [2] - The industrial sector is bolstered by sustained defense spending and strong commercial aerospace backlogs, with U.S. national defense spending exceeding $800 billion annually [7] Technology Sector - AI-driven capital expenditure is a key earnings catalyst in 2026, with major companies like Microsoft, Amazon, and Alphabet investing heavily in AI data centers and cloud infrastructure [4] - The Semiconductor Industry Association anticipates global semiconductor sales to approach $1 trillion in 2026, indicating a 26% growth, primarily due to advanced logic and high-bandwidth memory linked to generative AI workloads [5] - Companies such as NVIDIA, Taiwan Semiconductor, ASML, and Applied Materials are positioned to benefit from this growth, with TSM holding a Zacks Rank 1 (Strong Buy) and the others carrying a Zacks Rank 2 (Buy) [5] Industrial Sector - The industrial sector benefits from strong defense spending and a robust commercial aerospace backlog, with companies like Lockheed Martin and RTX reporting significant backlogs of $194 billion and $268 billion, respectively [7] - Electrification and grid modernization are also key growth drivers, with firms like Eaton and Siemens focusing on data center power demand and energy transition investments [8] - These factors provide substantial backlog visibility and earnings support as the sector moves into mid-2026 [8]

Global Economic Outlook - The International Monetary Fund (IMF) projects global GDP growth of approximately 3.3% for 2026, supported by corporate investment in digital infrastructure and advanced technologies [1] - The U.S. labor market shows resilience, with nonfarm payrolls increasing by 130,000 in January 2026 and an unemployment rate of 4.3% [1] Industry Projections - The global semiconductor industry is expected to reach $975 billion in annual sales in 2026, driven by an AI infrastructure boom [2] - The Semiconductor Industry Association forecasts global semiconductor sales to approach $1 trillion in 2026, indicating a 26% growth, primarily due to advanced logic and high-bandwidth memory for generative AI workloads [5] Sector Performance - AI-linked infrastructure and healthcare innovation are expected to outperform the broader market in 2026, supported by strong demand drivers and favorable earnings momentum [3] - Hyperscalers like Microsoft, Amazon, and Alphabet are significantly investing in AI data centers and cloud infrastructure, which remains a core earnings catalyst [4] Aerospace and Defense - The industrial sector benefits from sustained defense spending, with U.S. national defense spending exceeding $800 billion annually, providing multi-year revenue visibility for prime contractors [8] - Companies like Lockheed Martin and RTX report substantial backlogs, with Lockheed Martin exiting 2025 with a $194 billion backlog and RTX with a $268 billion backlog, indicating extended revenue streams [9] Electrification and Grid Modernization - Electrification and grid modernization are identified as powerful structural drivers, with companies like Eaton and Siemens focusing on data center power demand and energy transition investments as key growth catalysts [10]

Core Thesis - The merger of a $268 billion backlog with the maturation of the Core digital OS is seen as a basis for structural margin expansion, justifying a Strong Buy rating for the company [1] Analyst Position - The analyst has no stock, option, or similar derivative position in any of the companies mentioned and has no plans to initiate any such positions within the next 72 hours [1]