Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

Hyperloop

Is Airbus Making Money?

There is an interesting way to potentially invest in the Hyperloop. It is to buy stock in the European aerospace and defense giant Airbus SE (EPA: AIR).

The Airbus subsidiary that builds airliners just happens to be based in Toulouse, France, the same city where HyperloopTT or Hyperloop Transportation Technologies is building its test track. This is not a coincidence because the Hyperloop is designed to propel large passenger and freight carrying pods through a low-pressure environment at speeds of hundreds of miles or kilometers an hour.

Airbus is already in that business, it builds pressured vehicles; jets, that are propelled through a low-pressure environment the atmosphere at speeds of hundreds of miles an hour. The difference is that HyperloopTT’s pods are designed to sit on the ground and be pushed along by a combination of magnetic levitation and electric motors. Lower pressure is achieved by sitting the pod inside a tube from which the air is partially sucked out.

There are some serious advantages to the Hyperloop, no jet fuel is needed, there’s no need for airports, and less noise. Hyperloop is not vulnerable to the weather because it is inside a tube, and Hyperloop tubes can be built to a lot of places airplanes cannot land – such as downtown.

Therefore it is easy to see why Airbus would be interested in Hyperloop and why HyperloopTT would locate in Toulouse near Airbus’s factories. A Hyperloop system would require hundreds if not thousands of vehicles and somebody would have to build them. Probably aircraft manufacturers like Airbus and its American rival Boeing (NYSE: BAE).

Can Airbus Make Hyperloop a Reality?

Airbus also has the money to make Hyperloop a reality. It reported $16.151 billion in cash in on December 31, 2017, for example.

Airbus also reported $66.767 billion in revenues and a gross profit of $59.16 billion in December 2017, Morningstar reported. There was also a net income of $2.873 billion and an operating income of $2.738 billion on the same day.

Unlike HyperloopTT and its rival Virgin Hyperloop One, Airbus is building and successfully selling products right now. More importantly, Airbus has a vast amount of experience in the transportation business.

Airbus sold 731 airliners in 2016 and booked orders for 321 more in December 2016, Business Insider reported. Business Insider estimated that Airbus had a backlog of 6,874 airplanes valued at more than $1 trillion in January 2017.

Such orders give Airbus the resources to play around with things like the Hyperloop if it wants to. Airbus has racked up some pretty impressive technological achievements include supplying the airliner that makes the world’s longest flight.

An Airbus A350 XWB Family now has a range of 11,000 miles. That allows it to fly the 9,521 miles between New York City and Singapore; a trip of 20 hours, The Daily Post reported.

Why Airbus Wants Hyperloop

This brings us to another reason why Airbus might be interested in Hyperloop, the airline system has reached its limits. The world’s population is growing, getting richer, and traveling more but there is only a limited number of airports.

More flexible ground-based transportation systems that can take at least some of the world off the air-traffic system are needed. Hyperloop is a potential solution that might be cheaper, and faster than high-speed rail. One advantage to Hyperloop is that it might be able to run under some bodies of water in large tubes.

 

One way the Hyperloop can do that is to replace planes for many short-haul and regional trips, such as New York to Richmond, or Las Vegas to Los Angeles. It would also be possible to redirect flights away from busy urban airports; like New York’s La Guardia, if something like Hyperloop were available. For example flights from Europe might land in Albany or Rochester instead of NYC, passengers would then take Hyperloop to Manhattan.

Hyperloop would be the perfect system to haul people and freight to the airport. That would create more business for airlines and for Airbus because air travel would be easier to access.

The best part of Airbus is that it is not a speculative investment like HyperloopTT which is crowdsourced. Instead, it is making off products that it sells right now. That makes Airbus an excellent Hyperloop investment for real people that need a return on their investment in the near future.

Airbus Stock was fairly valued at the €96.93 ($117.56) it was trading for on April 27, 2018. If you are looking for a smart value investment for the future of transportation Airbus is well worth a look.