Aviation and Defense Stocks Drop Despite Global Tensions

War is not always good for defense companies. While Iran and the United States have been at war for two months, aircraft and aerospace parts sellers have seen their stocks plummet. Since February 28, when the Israeli-American offensive against Iran began, Thales’ stock has dropped by nearly 5%, while Dassault Aviation and Airbus have fallen by over 9%, and Safran’s by almost 20%.

At first glance, this trajectory seems illogical, as the intensification of military conflicts should lead countries worldwide to order more military equipment and weapons. This is because sales of parts and aircraft to armed forces account for between 70% and 80% of Thales and Dassault’s sales, and between 20% and 30% of Airbus and Safran’s activities.

However, before the global rearmament positively impacts equipment suppliers’ orders, it is their civilian clients who suffer from the increase in geopolitical tensions.

Three Companies Highly Dependent on Civil Flights

The results of industry leaders in aviation partly depend on civilian air traffic. On Tuesday, Pascal Bouchiat, Thales’ General Manager of Finance and Information Systems, stated that several airlines had decided to halt flights that were no longer profitable due to rising fuel prices. The less planes fly, the less airlines and lessors have to maintain and replace their equipment.

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