Financial
Statements

2018Financial
Statements

02

Airbus / Financial Statements 2018

1

Airbus SE IFRS
Consolidated Financial Statements

2

Notes to the IFRS
Consolidated Financial Statements

3

Airbus SE IFRS
Company Financial Statements

4

Notes to the IFRS
Company Financial Statements

5

Other Supplementary Information
Including the Independent Auditor’s Report

Airbus / Financial Statements 201803

Chapter

1

04

Airbus / Financial Statements 2018

1

Airbus SE
IFRS Consolidated
Financial Statements
Airbus SE – IFRS Consolidated Income
Statement for the years ended
31 December 2018 and 201706

Airbus SE – IFRS Consolidated Statementof Comprehensive Income for the years ended
31 December 2018 and 201707

Airbus SE – IFRS Consolidated Statementof Financial Position for the years ended
31 December 2018 and 201708

Airbus SE – IFRS Consolidated Statementof Cash Flows for the years ended
31 December 2018 and 201710

Airbus SE – IFRS Consolidated Statementof Changes in Equity for the years ended
31 December 2018 and 201711

Airbus / Financial Statements 201805

Airbus SE – IFRS Consolidated Financial Statements /Airbus SE – IFRS Consolidated Income Statement
for the years ended 31 December 2018 and 2017
(In € million)

Note

(1)

10

Revenue

Cost of sales (1)Gross margin (1)

10

2018

2017

63,70759,022(54,920)(52,149)

8,787

6,873

Selling expenses

(861)

(872)

Administrative expenses(1,574)(1,567)

Research and development expenses

11(3,217)(2,807)

Other income

13

1,656

981

Other expenses

13

(182)

(336)

Share of profit from investments accounted for under the equity method (1)

12

330

311

Other income from investments

12

Profit before financial result and income taxes (1)

109

82

5,048

2,665

Interest income

208

189

Interest expense

(440)

(517)

Other financial result (1)Total financial result (1)Income taxes

(1)

(531)

1,489

14

(763)

1,161

15

(1,274)(1,462)

3,011

2,364

3,054

2,361

(43)

3

Profit for the period (1)Attributable to:Equity owners of the parent (Net income) (1)Non-controlling interests

(1)

€

€

Basic (1)Earnings per share
16

3.94

3.05

Diluted (1)

16

3.92

3.04

(1) Previous year figures are restated due to the application of IFRS 15.

The accompanying notes are an integral part of these Consolidated Financial Statements (IFRS).

06

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Airbus SE – IFRS Consolidated Financial Statements /Airbus SE – IFRS Consolidated Statement of Comprehensive
Income for the years ended 31 December 2018 and 2017
Note

2018

2017

3,011

2,364

Remeasurement of the defined benefit pension plans

(552)

116

Change in fair value of financial assets (2)

(249)

0

(In € million)

Profit for the period (1)Other comprehensive income
Items that will not be reclassified to profit or loss:

Share of change from investments accounted for under the equity method
Income tax relating to items that will not be reclassified

15

3

61

(2)

(26)

108

(526)

Items that may be reclassified to profit or loss:
Foreign currency translation differences for foreign operations(2,959)10,636

Change in fair value of financial assets (2)Change in fair value of cash flow hedges

35

(80)

396

Share of change from investments accounted for under the equity method

(11)

(3)

Income tax relating to items that may be reclassified

15

728

(2,881)(3,014)

7,773

(3)

10,137

Equity owners of the parent (1)72

10,099Non-controlling interests (1)

(75)

38

Other comprehensive income, net of tax

Total comprehensive income for the period(1)

Attributable to:1(1) Previous year figures are restated due to the application of IFRS 15.
(2) IFRS 9 new classification category (prior year-end: change in fair value of available-for-sale financial assets).

The accompanying notes are an integral part of these Consolidated Financial Statements (IFRS).

Airbus / Financial Statements 201807

Airbus SE – IFRS Consolidated Financial Statements /Airbus SE – IFRS Consolidated Statement of Financial Position
for the years ended 31 December 2018 and 2017
Note

2018

2017

Opening 2017,
restated

Intangible assets

17

16,726

11,62912,068Property, plant and equipment

18

16,773

16,61016,9133

3

5(In € million)

AssetsNon-current assets

Investment property
(1)

7

1,693

1,617

1,569

Other investments and other long-term financial assets

19

3,811

4,204

3,655

Non-current contract assets (1)

20

65

1

0

Non-current other financial assets

23

1,108

2,980

976

Non-current other assets (1)

24

888

975

1,201

Deferred tax assets (1)

15

4,835

4,562

8,080

Non-current securities

34

Investments accounted for under the equity method

10,662

10,944

9,897

56,56453,52554,36421

31,89129,737

28,107
6,383

Total non-current assets (1)Current assets
Inventories (1)
(1)

20

6,078

5,487

Current portion of other long-term financial assets

19

489

529

522

Current contract assets (1)

20

789

496

469

Current other financial assets

23

1,811

1,979

1,257

Current other assets (1)

24

4,246

2,937

2,613

Trade receivables

Current tax assets
Current securities

34

Cash and cash equivalents

34

Total current assets (1)Assets and disposal group of assets classified as held
for sale

Total assets (1)(1) Previous year figures are restated due to the application of IFRS 15.

08

Airbus / Financial Statements 2018

6

1,451

914

1,110

2,132

1,627

1,551

9,413

12,016

10,14358,30055,72252,155

334

202

1,148

115,198

109,449

107,667

FINANCIAL STATEMENTS 2018
Airbus SE – IFRS Consolidated Financial Statements /Note(In € million)

2018

2017

Opening 2017,
restated

Equity and liabilities
Equity attributable to equity owners of the parent
Capital stock

777

775

773

Share premium

2,941

2,826

2,745

Retained earnings (1)

5,923

4,399

2,891

Accumulated other comprehensive income

134

2,742

(4,845)

Treasury shares

(51)

(2)

(3)

9,724

10,740

1,561

(5)

2

(5)

32

9,719

10,742

1,556

Non-current provisions (1)22

11,571

9,779

10,178Long-term financing liabilities

34

7,463

8,984

8,791

Non-current contract liabilities (1)20

15,832

16,013

14,642

Non-current other financial liabilities (1)

23

8,009

6,704

12,965

Non-current other liabilities (1)

24

460

298

310

15

Total equity attributable to equity owners of the parent
Non-controlling interests (1)Total equity(1)

Liabilities
Non-current liabilities

(1)

1,318

1,002

1,104

Non-current deferred income (1)

40

42

133

(1)

44,69342,822

48,123

5,941

Deferred tax liabilities

Total non-current liabilities

1

Current liabilities
Current provisions (1)

22

7,317

6,272

Short-term financing liabilities

34

1,463

2,212

1,687

Trade liabilities (1)20

16,237

13,406

12,921

Current contract liabilities (1)20

26,22925,94325,655Current other financial liabilities (1)

23

2,462

2,050

5,644

24

5,288

3,909

3,421

732

1,481

1,126

Current other liabilities(1)

Current tax liabilities
(1)

626

506

602

Total current liabilities (1)60,35455,77956,997

Current deferred income

432

106

991

Total liabilities (1)Disposal group of liabilities classified as held for sale6

105,479

98,707106,111

Total equity and liabilities (1)115,198

109,449

107,667(1) Previous year figures are restated due to the application of IFRS 15.

The accompanying notes are an integral part of these Consolidated Financial Statements (IFRS).

Airbus / Financial Statements 201809

Airbus SE – IFRS Consolidated Financial Statements /Airbus SE – IFRS Consolidated Statement of Cash Flowsfor the years ended 31 December 2018 and 2017
(In € million)

Operating activities:
Profit for the period attributable to equity owners of the parent (Net income) (1)Profit (loss) for the period attributable to non-controlling interests (1)Adjustments to reconcile profit for the period to cash provided by operating activities:
Interest income
Interest expense
Interest received
Interest paid
Income tax expense (1)Income tax paid
Depreciation and amortisation
Valuation adjustments (1)Results on disposals of non-current assets
Results of investments accounted for under the equity method (1)Change in current and non-current provisions (1)Contribution to plan assets
Change in other operating assets and liabilities: (1)Inventories
Trade receivables
Contract assets and liabilities
Trade liabilities
Other assets and liabilities and others
Cash provided by operating activities (2)Investing activities:
Purchases of intangible assets, property, plant and equipment, investment property
Proceeds from disposals of intangible assets, property, plant and equipment and investment property
Acquisitions of subsidiaries, joint ventures, businesses and non-controlling interests (net of cash)
Proceeds from disposals of subsidiaries (net of cash)
Payments for investments accounted for under the equity method, other investments andother long-term financial assets
Proceeds from disposals of investments accounted for under the equity method, other investments
and other long-term financial assets
Dividends paid by companies valued at equity
Disposals of non-current assets and disposal groups classified as assets held for saleand liabilities directly associatedPayments for investments in securities
Proceeds from disposals of securities
Cash (used for) investing activities
Financing activities:
Increase in financing liabilities
Repayment of financing liabilities
Cash distribution to Airbus SE shareholders
Dividends paid to non-controlling interests
Payments for liability for puttable instruments
Changes in capital and non-controlling interests
Change in treasury shares
Cash (used for) provided by financing activities
Effect of foreign exchange rate changes on cash and cash equivalents

Note

2018

2017

3,054
(43)

2,361
3

(208)
440
186
(292)
1,274
(897)
2,444
(1,849)
(261)
(330)
1,952
(2,519)
(633)
(671)
(881)
(684)
2,294
(691)
2,318

(189)
517
149
(501)
1,462
(152)
2,298
(1,341)
(773)
(311)
1,018
(458)
361
(2,112)
(47)
2,572
829
(881)
4,444

(2,285)213
129
0(2,558)
177
(23)
377

(707)

(913)

597
191

532
218

6

320
(2,010)1,917(1,635)893(3,767)2,534(2,530)

34
34
32

103
(2,411)(1,161)
0
179
117
(49)
(3,222)
(54)

1,703
(419)
(1,043)
(3)
0
83
0
321
(374)

9

6
6

7

Net (decrease) increase in cash and cash equivalents(2,593)

1,861

Cash and cash equivalents at beginning of period

12,021

10,16034

9,428

12,021

34
6

9,413
15

12,016
5

Cash and cash equivalents at end of period
thereof presented as cash and cash equivalents
thereof presented as part of disposal groups classified as held for sale

(1) Previous year figures are restated due to the application of IFRS 15.
(2) Cash provided by operating activities has been positively impacted by certain agreements reached with the Company’s suppliers and customers relating to the settlement ofclaims and negotiation on payment terms.

The accompanying notes are an integral part of these Consolidated Financial Statements (IFRS).

10

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Airbus SE – IFRS Consolidated Financial Statements /Airbus SE – IFRS Consolidated Statement of Changes in Equity
for the years ended 31 December 2018 and 2017
Equity attributable to equity holders of the parent
Accumulated othercomprehensive income(In € million)

Foreign
Financial
Cashcurrency
CapitalShare Retained assets atflow translation Treasury
Note stock premium earnings fair value hedges adjustments shares

Balance at
31 December 2016,as reported

Noncontrolling
Total interests

Total
equity

773

2,745

4,987

770

(7,153)

1,538

(3)

3,657

(5)

3,652

Restatements (1)00(2,096)

0

0

0

0

(2,096)0(2,096)

Balance at
1 January 2017,
restated (1)

773

2,745

2,891

770

(7,153)

1,538

(3)

1,561

(5)

1,556

Profit for the period (1)

0

0

2,361

0

0

0

0

2,361

3

2,364

Other comprehensive
income

0

0

151

369

7,757

(539)

0

7,738

35

7,773

Total comprehensive
income for the period (1)

0

0

2,512

369

7,757

(539)

0

10,09938

10,137

Capital increase

32

2

81

0

0

0

0

0

83

0

83

Share-based payment(IFRS 2)

30

0

0

36

0

0

0

0

36

0

36

Cash distribution to
Airbus SE shareholders /Dividends paid to
non-controlling interests

32

0

0

(1,043)

0

0

0

0

(1,043)(3)(1,046)

0

0

3

0

0

0

0

3

(28)

(25)

0

0

0

0

0

0

1

1

0

1

Equity transaction(IAS 27)
Change in treasury shares

32

Balance at
31 December 2017,
restated (1)

775

2,826

4,399

1,139

604

999

(2)

10,7402

10,742

Restatements (1) (2)

0

0

187

(367)

172

0

0

(8)

0

(8)

Balance at
1 January 2018,
restated (1) (2)

775

2,826

4,586

772

776

999

(2)

10,732

2

10,734

Profit for the period

0

0

3,054

0

0

0

0

3,054

(43)

3,011

Other comprehensive
income

0

0

(569)

(280)

(2,249)116

0(2,982)(32)(3,014)

Total comprehensive
income for the period

0

0

2,485

(280)

(2,249)

116

0

72

(75)

(3)

Capital increase

32

2

115

0

0

0

0

0

117

0

117

Share-based payment(IFRS 2)

30

0

0

62

0

0

0

0

62

0

62

Cash distribution to
Airbus SE shareholders /Dividends paid to
non-controlling interests

32

0

0

(1,161)

0

0

0

0

(1,161)0(1,161)

0

0

(49)

0

0

0

0

(49)

68

19

0

0

0

0

0

0

(49)

(49)

0

(49)

777

2,941

5,923

492 (1,473)

1,115

(51)

9,724

(5)

9,719

Equity transaction (IAS 27)
Change in treasury shares

Balance at
31 December 201832

1

(1) Previous year figures are restated due to the application of IFRS 15.
(2) Opening balance figures are restated due to the application of IFRS 9.

The accompanying notes are an integral part of these Consolidated Financial Statements (IFRS).

Airbus / Financial Statements 201811

Chapter

2

12

Airbus / Financial Statements 2018

2

Notes to the IFRS
Consolidated Financial
Statements
2.1

Basis of Preparation

15

2.2

Airbus Structure

25

2.3

Segment Information

32

2.4

Airbus Performance

34

2.5

Operational Assets and Liabilities

40

2.6

Employees Costs and Beneﬁts

53

2.7

Capital Structure and Financial Instruments

66

2.8

Other Notes

85

2.9

Appendix “Simpliﬁed Airbus Structure”

88

Airbus / Financial Statements 201813

Notes to the IFRS Consolidated Financial Statements /Contents
2.1
1.
2.
3.
4.

Basis of Preparation
The Company
Signiﬁcant Accounting Policies
Key Estimates and Judgements
Change in Accounting Policies and Disclosures

15
15
15
16
18

2.2
5.
6.
7.

25
25
25

8.

Airbus Structure
Scope of Consolidation
Acquisitions and Disposals
Investments Accounted for under
the Equity Method
Related Party Transactions

2.3
9.

Segment Information
Segment Information

32
32

2.4
10.
11.
12.

Airbus Performance
Revenue and Gross Margin
Research and Development Expenses
Share of Proﬁt from Investments Accounted
for under the Equity Method and Other Income
from Investments
Other Income and Other Expenses
Total Financial Result
Income Tax
Earnings per Share

34
34
35

Operational Assets and Liabilities
Intangible Assets
Property, Plant and Equipment
Other Investments and Other Long-Term
Financial Assets

40
40
43

13.
14.
15.
16.
2.5
17.
18.
19.

14

Airbus / Financial Statements 2018

29
31

36
36
36
37
40

45

20.

24.
25.

Contract Assets, Contract Liabilities
and Trade Receivables, and Trade Liabilities
Inventories
Provisions, Contingent Assets andContingent Liabilities
Other Financial Assets and Other Financial
Liabilities
Other Assets and Other Liabilities
Sales Financing Transactions

48
49
50

2.6
26.
27.
28.
29.
30.
31.

Employees Costs and Beneﬁ ts
Number of Employees
Personnel Expenses
Personnel-Related Provisions
Post-Employment Beneﬁts
Share-Based Payment
Remuneration

53
53
53
53
54
60
62

2.7
32.
33.
34.
35.

Capital Structure and Financial Instruments
Total Equity
Capital Management
Net Cash
Information about Financial Instruments

66
66
67
68
71

2.8
36.
37.
38.

Other Notes
Litigation and Claims
Auditor Fees
Events after the Reporting Date

85
85
87
87

2.9

Appendix “Simpliﬁ ed Airbus Structure”

88

21.
22.
23.

45
46
47

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.1 Basis of Preparation

2.1 Basis of Preparation
1.

The Company

The accompanying IFRS Consolidated Financial Statements
present the ﬁnancial position and the results of operations ofAirbus SE and its subsidiaries, a European public limited-liability
company (Societas Europaea) with its seat (statutaire zetel)in Amsterdam, The Netherlands, its registered address at
Mendelweg 30, 2333 CS Leiden, The Netherlands, andregistered with the Dutch Commercial Register (Handelsregister)2.

under number 24288945. The Company reportable segments
are Airbus, Airbus Helicopters and Airbus Defence and Space(see “— Note 9: Segment Information”). The Company islisted on the European stock exchanges in Paris, Frankfurt
am Main, Madrid, Barcelona, Valencia and Bilbao. The IFRS
Consolidated Financial Statements were authorised for issue
by the Company’s Board of Directors on 13 February 2019.

Signiﬁcant Accounting Policies

Basis of preparation — The Company’s Consolidated
Financial Statements are prepared in accordance with
International Financial Reporting Standards (“IFRS”), issued
by the International Accounting Standards Board (“IASB”) as
endorsed by the European Union (“EU”) and Part 9 of Book 2of the Netherlands Civil Code. When reference is made to IFRS,
this intends to be EU-IFRS.
The Consolidated Financial Statements have been preparedon a historical cost basis, unless otherwise indicated. They areprepared and reported in euro (“€”) and all values are rounded
to the nearest million appropriately. Due to rounding, numberspresented may not add up precisely to the totals provided andpercentages may not precisely reﬂect the absolute ﬁgures.
The Company describes the accounting policies appliedin each of the individual notes to the ﬁ nancial statements
and avoids repeating the text of the standard, unless this isconsidered relevant to the understanding of the note’s content.
On 1 January 2018, the Company has implemented the newstandards IFRS 15 “Revenue from Contracts with Customers”
and IFRS 9 “Financial Instruments”. As a result, the Company
has changed its accounting policies for revenue recognition
and for the accounting of ﬁnancial instruments, as detailed in“— Note 4: Change in Accounting Policies and Disclosures”.
The most signiﬁcant accounting policies are described below,
and have been updated accordingly.
Revenue recognition — Revenue is recognised when the
Company transfers control of the promised goods or services
to the customer. The Company measures revenue, for theconsideration to which the Company is expected to be entitled in
exchange for transferring promised goods or services. Variableconsiderations are included in the transaction price when it
is highly probable that there will be no signiﬁcant reversal of
the revenue in the future. The Company identiﬁes the various
performance obligations of the contract and allocates thetransaction price to these performance obligations. Advancesand pre-delivery payments (contract liabilities) are normal andnot considered a signiﬁcant ﬁnancing component as they areintended to protect the Company from the customer failing tocomplete its obligations under the contract.

Revenue from the sale of commercial aircraft is recognised
at a point in time (i.e. at the delivery of the aircraft). The Company
estimates the amount of price concession as a reduction of bothrevenue and cost of sales.
Revenue from the sale of military aircraft, space systems
and services — When control of produced goods or renderedservices is transferred over time to the customer, revenue isrecognised over time, i.e. under the percentage of completion
method (“PoC” method).
The Company transfers control over time when:
it produces a good with no alternative use and the Company
has an irrevocable right to payment (including a reasonablemargin) for the work completed to date, in the event of contract
termination at the convenience of customers (e.g. Tiger
contract, A400M development performance obligation); or
it creates a good which is controlled by the customer as thegood is created or enhanced (e.g. Euroﬁghter contracts, someborder security contracts); or
the customer simultaneously receives and consumes
the beneﬁ ts provided by the Company (e.g. maintenancecontracts).

-

2

-

For the application of the over time method (PoC method), themeasurement of progress towards complete satisfaction of aperformance obligation is based on inputs (i.e. cost incurred).
When none of the criteria stated above have been met, revenue
is recognised at a point in time. Revenue has been recognised
at the delivery of aircraft under IFRS 15 from the sale of militarytransport aircraft, from the A400M launch contract and mostof NH90 serial helicopters’ contracts.
Provisions for onerous contracts — The Company records
provisions for onerous contracts when it becomes probablethat the total contract costs will exceed total contract revenue.
Before a provision for onerous contracts is recorded, the related
assets under construction are measured at their net realisablevalue and written-off if necessary. Onerous contracts are
identiﬁed by monitoring the progress of the contract together
with the underlying programme status. An estimate of therelated contract costs is made, which requires signiﬁcant andAirbus / Financial Statements 201815

Notes to the IFRS Consolidated Financial Statements /2.1 Basis of Preparation

complex assumptions, judgements and estimates related toachieving certain performance standards as well as estimates
involving warranty costs (see “— Note 3: Key Estimates andJudgements”, “— Note 10: Revenue and Gross Margin” and“— Note 22: Provisions, Contingent Assets and Contingent
Liabilities”).
Research and development expenses — The costs for
self-initiated research are expensed when incurred. The costs
for self-initiated development are capitalised when:
the product or process is technically feasible and clearlydeﬁned (i.e. the critical design review is ﬁnalised);adequate resources are available to successfully complete
the development;
the beneﬁ ts from the assets are demonstrated (a market
exists or the internal usefulness is demonstrated) and thecosts attributable to the projects are reliably measured;
the Company intends to produce and market or use thedeveloped product or process and can demonstrate its
proﬁtability.

-

Income tax credits granted for research and development
activities are deducted from corresponding expenses or from
capitalised amounts when earned.
Capitalised development costs, are recognised either as
intangible assets or, when the related development activities
lead to the construction of specialised tooling for production(“jigs and tools”), or involve the design, construction and testingof prototypes and models, as property, plant and equipment.
Capitalised development costs are generally amortised overthe estimated number of units produced. If the number of units
produced cannot be estimated reliably, they are amortised overthe estimated useful life of the internally generated intangible
asset. Amortisation of capitalised development costs is
recognised in cost of sales.
Inventories are measured at the lower of acquisition cost
(generally the average cost) or manufacturing cost and net
realisable value. Manufacturing costs comprise all costs
that are directly attributable to the manufacturing process,such as direct material and labour, and production related
overheads (based on normal operating capacity and normal
consumption of material, labour and other production costs),
including depreciation charges. Net realisable value is theestimated selling price in the ordinary course of the businessless the estimated costs to complete the sale.
Transactions in foreign currency, i.e. transactions incurrencies other than the functional currency of an entityof the Company, are translated into the functional currency
at the foreign exchange rate prevailing at the transaction3.

-

Non-monetary assets and liabilities denominated in foreign
currencies that are stated at historical cost are translated
into functional currency at the foreign exchange rate in effectat the date of the transaction. Translation differences on
non-monetary ﬁnancial assets and liabilities that are measured
at fair value are reported as part of the fair value gain or loss.
However, translation differences of non-monetary ﬁ nancial
assets measured at fair value and classiﬁ ed as fair value
through other comprehensive income (“OCI”) are included inaccumulated other comprehensive income (“AOCI”).
Hedge accounting — Most of the Company’s revenue isdenominated in US dollar (“US$”), while a major portion of
its costs are incurred in euro. The Company is signiﬁ cantly
exposed to the risk of changes in US$/€ exchange rates.
Furthermore, the Company is exposed, though to a muchlesser extent, to foreign exchange risk arising from costs
incurred in currencies other than the euro and to other market
risks such as interest rate risk, commodity price and equity
price risk.
In order to manage and mitigate those risks, the Company
enters into derivative contracts. The Company applies cash
ﬂow hedge accounting to its derivative contracts whenever the
relevant IFRS criteria can be met. Hedge accounting ensuresthat derivative gains or losses are recognised in proﬁt or loss
(mainly as part of the revenue) in the same period that thehedged items or transactions affect proﬁt or loss.
The major portion of the Company’s derivative contracts is
accounted for under the cash ﬂow hedge model. The fair value
hedge model is used only for certain interest rate derivatives.
Derivative contracts which do not qualify for hedge accounting
are accounted for at fair value through proﬁ t and loss; any
related gains or losses being recognised in ﬁnancial result.
The Company’s hedging strategies and hedge accounting
policies are described in more detail in “— Note 35: Information
about Financial Instruments”.

Key Estimates and Judgements

The preparation of the Company’s Consolidated Financial
Statements requires the use of estimates and assumptions.
In preparing these financial statements, management
exercises its best judgement based upon its experience andthe circumstances prevailing at that time. The estimates andassumptions are based on available information and conditions

16

date. Monetary assets and liabilities denominated in foreign
currencies at the end of the reporting period are remeasured
into the functional currency at the exchange rate in effect atthat date. Except when deferred in equity as qualifying cash
ﬂ ow hedges (see “— Note 35: Information about Financial
Instruments”), these foreign exchange remeasurement gains
and losses are recognised, in line with the underlying item:in profit before finance costs and income taxes if thesubstance of the transaction is commercial (including sales
ﬁnancing transactions); andin ﬁnance costs for ﬁnancial transactions.

Airbus / Financial Statements 2018at the end of the ﬁnancial period presented and are reviewed
on an ongoing basis. Key estimates and judgements thathave a signiﬁcant inﬂuence on the amounts recognised in the
Company’s Consolidated Financial Statements are mentioned
below:

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.1 Basis of Preparation

Revenue recognition for per formance obligationstransferred over time — The PoC method is used torecognise revenue for performance obligations transferredover time. This method places considerable importance on
accurate estimates at completion as well as on the extent ofprogress towards completion. For the determination of the
progress of the performance obligations, signiﬁcant estimates
include total contract costs, remaining costs to completion,
total contract revenue, contract risks and other judgements.
The management of the operating Divisions continuallyreview all estimates involved in such performance obligations
and adjusts them as necessary (see “— Note 20: Contract
Assets, Contract Liabilities and Trade Receivables, and Trade
Liabilities”).
Provisions — The evaluation of provisions, such as onerous
contracts, warranty costs, restructuring measures and legal
proceedings are based on best available estimates. Onerous
contracts are identiﬁ ed by monitoring the progress of thecontract and the underlying programme performance. The
associated estimates of the relevant contract costs, requiresigniﬁ cant judgement related to performance achievements
including estimates involving warranty costs. Depending on
the size and nature of the Company’s contracts and related
programmes, the extent of assumptions, judgements andestimates in these monitoring processes differs. In particular,
the introduction of commercial or military aircraft programmes(e.g. A400M) or major derivative aircraft programmes involves
an increased level of estimates and judgements associatedwith the expected development, production and certiﬁ cation
schedules and expected cost components.
The Company makes estimates and provides across the
programmes, for costs related to identiﬁed in service technicalissues for which solutions have been deﬁ ned, and for which
the associated costs can be reliably estimated taking into
consideration the latest facts and circumstances. The
Company is contractually liable for the repair or replacementof the defective parts but not for any other damages whether
direct, indirect, incidental or consequential (including loss ofrevenue, proﬁt or use). However, in view of overall commercial
relationships, contract adjustments may occur, and must be
considered on a case by case basis.
Estimates and judgements are subject to change basedon new information as contracts and related programmes
progress. Furthermore, the complex design and manufacturing
processes of the Company’s industry require challenging
integration and coordination along the supply chain including
an ongoing assessment of suppliers’ assertions which
may additionally impact the outcome of these monitoringprocesses (see “— Note 10: Revenue and Gross Margin” and“— Note 22: Provisions, Contingent Assets and Contingent
Liabilities”).
Employee beneﬁ ts — The Company accounts for pension
and other post-retirement benefits in accordance withactuarial valuations. These valuations rely on statistical andother factors in order to anticipate future events. The actuarial
assumptions may differ materially from actual developments

due to changing market and economic conditions andtherefore result in a signiﬁ cant change in post-retirement
employee beneﬁ t obligations and the related future expense(see “— Note 29: Post-Employment Beneﬁ ts”).
Legal contingencies — Airbus companies are parties
to litigations related to a number of matters as describedin “— Note 36: Litigation and Claims”. The outcome ofthese matters may have a material effect on the financial
position, results of operations or cash flows of the Company.
Management regularly analyses current information about
these matters and provides provisions for probable cash
outflows, including the estimate of legal expenses to resolve
the matters. Internal and external lawyers are used forthese assessments. In making the decision regarding theneed for provisions, management considers the degree ofprobability of an unfavourable outcome and the ability tomake a sufficiently reliable estimate of the amount of loss.
The filing of a suit or formal assertion of a claim against
the Airbus companies or the disclosure of any such suit orassertion, does not automatically indicate that a provision
may be appropriate.
Income taxes — The Company operates and earns income
in numerous countries and is subject to changing tax laws
in multiple jurisdictions within these countries. Signiﬁ cantjudgements are necessary in determining the worldwide
income tax liabilities. Although management believes that it
has made reasonable estimates about the ﬁ nal outcome oftax uncertainties, no assurance can be given that the ﬁ nal
tax outcome of these matters will be consistent with what
is reﬂ ected in the historical income tax provisions. At eachend of the reporting period, the Company assesses whether
the realisation of future tax beneﬁ ts is probable to recognisedeferred tax assets. This assessment requires the exercise ofjudgement on the part of management with respect to, among
other things, beneﬁts that could be realised from available tax
strategies and future taxable income, as well as other positive
and negative factors. The recorded amount of total deferred
tax assets could be reduced, through valuation allowances
recognition, if estimates of projected future taxable income
and beneﬁ ts from available tax strategies are lowered, or ifchanges in current tax regulations are enacted that impose
restrictions on the timing or extent of the Company’s ability toutilise future tax beneﬁ ts. The basis for the recoverability testof deferred tax assets is the same as the Company’s latest
operative planning also taking into account certain qualitative
aspects regarding the nature of the temporary differences.
Qualitative factors include but are not limited to an entity’s
history of planning accuracy, performance records, businessmodel, backlog, existence of long-term contracts as well as
the nature of temporary differences (see “— Note 15: IncomeTax”).

2

Other subjects that involve assumptions and estimates arefurther described in the respective notes (see “— Note 6:
Acquisitions and Disposals”, “— Note 17: Intangible Assets”
and “— Note 20: Contract Assets, Contract Liabilities andTrade Receivables, and Trade Liabilities”).

Airbus / Financial Statements 201817

Notes to the IFRS Consolidated Financial Statements /2.1 Basis of Preparation

4.

Change in Accounting Policies and Disclosures

The accounting policies applied by the Company for preparing its 2018 year-end Consolidated Financial Statements are thesame as applied for the previous year, except for the ﬁrst application of the new standards described below. Amendments,
improvements to and interpretations of standards effective from 1 January 2018 have no material impact on the Consolidated
Financial Statements.

New, Revised or Amended IFRS Standards and Interpretations Applied from 1 January 2018
IFRS 15 “Revenue from Contracts with Customers”
In May 2014, the IASB issued IFRS 15 which establishes asingle comprehensive framework for determining when torecognise revenue and how much revenue to recognise.
IFRS 15 replaced the former revenue recognition standards
IAS 18 “Revenue” and IAS 11 “Construction C ontracts” andrelated interpretations. The core principle of IFRS 15 is thatan entity recognises revenue to depict the transfer of controlof the promised goods or services (performance obligations)in an amount that reﬂ ects the consideration to which that
entity is entitled.

- Under IFRS 15, measurement of the revenue takes into-

The Company adopted the new standard on 1 January 2018,using the full retrospective transition method. Accordingly, theCompany restated the comparative 2017 results included in the2018 IFRS Consolidated Financial Statements. The opening
equity was restated as of 1 January 2017.
The Company has elected the practical expedients forcompleted contracts and contract modiﬁcations. As a result,
the Company has not restated completed contracts whichbegan and ended within 2017 or which were completed at the
beginning of 1 January 2017. The Company used transaction
prices at the date contracts were completed rather thanestimating variable consideration amounts in the comparative
reporting periods. The Company has reﬂected the aggregate
effect of all of the modiﬁcations that occur before 1 January
2017 in identifying the performance obligations, determining
and allocating the transaction price.
The application of those practical expedients allows anefficient implementation of the standard especially oncomplex transactions (e.g. contractual amendments on
military contracts) and a provision of relevant information
under IFRS 15.
The Company has used the practical expedient applicable tothe disclosure on the amount of the transaction price allocatedto the remaining performance obligations (i.e. backlog) andan explanation of when it expects to recognise the amount asrevenue without any comparative information.
The Company revised its accounting policies relative to revenue
recognition, to implement IFRS 15 as described in “— Note 2:
Signiﬁcant Accounting Policies”. The most signiﬁcant changes
result from the following:
S everal performance obligations are identiﬁ ed instead ofrecognising a single contract margin under IAS 11 (e.g.
A400M, NH90 contracts). In some cases, the over time
method (PoC method) revenue recognition criteria are
not fulﬁ lled under IFRS 15. In particular, for A350 launch
contracts, A400M series production and certain NH90
contracts, revenue and production costs relative to the
manufacture of aircraft are recognised at a point in time(e.g. upon delivery of the aircraft to the customer).

-

18

Airbus / Financial Statements 2018account variable consideration constraints in order to achieve
high likelihood that a signiﬁcant reversal of the recognised
revenue will not occur in the future. The constraint inassessing revenue at completion for some contracts (A400M)
generates a decrease in recognised revenue.
For the application of the over time method (PoC method),the Company measures its progress towards complete
satisfaction of performance obligations based on inputs(i.e. cost incurred) rather than on outputs (i.e. milestones
achieved). For the Company’s current long-term construction
contracts, progresses were usually measured based on
milestones achieved (e.g. Tiger programme, satellites, orbital
infrastructures). Under IFRS 15, the Company measuresprogress of work performed using a cost-to-cost approach,whenever control of the work performed transfers to thecustomer over time.

IFRS 15 also impacts the presentation of the revenue fromthe sales of engines. Under IAS 18, the Company recognised
revenue based on the amount of its contracts with its
customers, unless it had conﬁrmation of the amount of theprice concession. In contrast, IFRS 15 requires the Company
to estimate the amount of price concession in all cases and totreat the price concession as a reduction of revenue and costof sales. Under IFRS 15, revenue and cost of sales decreaseby the amount of the estimated concession granted by theCompany’s engine supplier to their customers.
In addition to these changes, IFRS 15 introduced a new class ofassets and liabilities “contract assets” and “contract liabilities”:
A contract asset represents the Company’s right toconsideration in exchange for goods or services that theCompany has transferred to a customer when that right isconditioned by something other than the passage of time(e.g. revenue recognised from the application of the PoC
method before the Company has a right to invoice. Prior to
the implementation of IFRS 15, unbilled revenue was reported
within “trade receivables”).
A contract liability represents the Company’s obligation
to transfer goods or services to a customer for which thecustomer has paid a consideration (e.g. contract liabilities
mainly include the customer advance payments received
which were reported prior to the implementation of IFRS 15
within “other liabilities”).

--

For any individual contract, either a contract asset or a contract
liability is presented on a net basis.
The distinction between non-current and current presentation
remains unchanged.

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.1 Basis of Preparation

The following tables summarise the impacts on the comparative information resulting from the change in revenue recognition
principles:
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2017:(In € million)

AssetsNon-current assets
Intangible assets
Property, plant and equipment
Investment property
Investments accounted for under the equity method
Other investments and other long-term financial assets
Non-current contract assets
Non-current other financial assets
Non-current other assets
Deferred tax assets
Non-current securities
Total non-current assets
Current assets
Inventories
Trade receivables
Current portion of other long-term financial assets
Current contract assets
Current other financial assets
Current other assets
Current tax assets
Current securities
Cash and cash equivalents
Total current assets
Assets and disposal group of assets classified as held for sale

Total assets

As previously reported

IFRS 15

As restated

11,62916,610
3
1,678
4,204
0
2,980
2,295
3,598
10,94453,941

0
0
0
(61)
0
1
0
(1,320)
964
0
(416)

11,62916,610
3
1,617
4,204
1
2,980
975
4,562
10,94453,52531,464
8,358
529
0
1,979
2,907
914
1,627
12,016
59,794202(1,727)(2,871)
0
496
0
30
0
0
0
(4,072)
029,737
5,487
529
496
1,979
2,937
914
1,627
12,01655,722
202

113,937(4,488)109,449

Equity and liabilities
Equity attributable to equity owners of the parent
Capital stockReserves
Accumulated other comprehensive income
Treasury shares
Total equity attributable to equity owners of the parent
Non-controlling interests

775
9,833
2,742
(2)
13,3483

0(2,608)00(2,608)
(1)

775
7,225
2,742
(2)
10,7402

Total equity

13,351(2,609)10,742

10,153
8,984
0
6,948
17,190981
199
44,455(374)
016,013(244)(16,892)
21(157)(1,633)

9,779
8,984
16,013
6,704
298
1,002
42
42,8226,575
2,212
13,44402,185
29,193
1,481
935
56,025
106

(303)
0
(38)
25,943(135)(25,284)
0
(429)
(246)
0

6,272
2,212
13,40625,943
2,050
3,909
1,481
506
55,779106

Total liabilities

100,586(1,879)98,707

Total equity and liabilities

113,937(4,488)109,449

Liabilities
Non-current liabilities
Non-current provisions
Long-term financing liabilities
Non-current contract liabilities
Non-current other financial liabilities
Non-current other liabilities
Deferred tax liabilities
Non-current deferred income
Total non-current liabilities
Current liabilities
Current provisions
Short-term financing liabilities
Trade liabilities
Current contract liabilities
Current other financial liabilities
Current other liabilities
Current tax liabilities
Current deferred income
Total current liabilities
Disposal group of liabilities classified as held for sale2(1) Including reclassification between contract assets, current and non-current contract liabilities compared to previously reported in the 2018 interim financial statements.

Airbus / Financial Statements 201819

Notes to the IFRS Consolidated Financial Statements /2.1 Basis of Preparation

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 1 JANUARY 2017:(In € million)

IFRS 15

As restated

AssetsNon-current assets
Intangible assets
Property, plant and equipment
Investment property
Investments accounted for under the equity method
Other investments and other long-term financial assets
Non-current contract assets
Non-current other financial assets
Non-current other assets
Deferred tax assets
Non-current securities
Total non-current assets
Current assets
Inventories
Trade receivables
Current portion of other long-term financial assets
Current contract assets
Current other financial assets
Current other assets
Current tax assets
Current securities
Cash and cash equivalents
Total current assets
Assets and disposal group of assets classified as held for sale

12,06816,913
5
1,608
3,655
0
976
2,358
7,557
9,897
55,037

0
0
0
(39)
0
0
0
(1,157)
523
0
(673)

12,06816,913
5
1,569
3,655
0
976
1,201
8,080
9,897
54,36429,688
8,101
522
0
1,257
2,576
1,110
1,551
10,14354,9481,148(1,581)(1,718)
0
469
0
37
0
0
0
(2,793)
028,107
6,383
522
469
1,257
2,613
1,110
1,551
10,14352,155
1,148

Total assets

111,133(3,466)

107,667

Equity and liabilities
Equity attributable to equity owners of the parent
Capital stockReserves
Accumulated other comprehensive income
Treasury shares
Total equity attributable to equity owners of the parent
Non-controlling interests

773
7,732
(4,845)
(3)
3,657
(5)

0
(2,096)00(2,096)
0

773
5,636
(4,845)
(3)
1,561
(5)

Total equity

3,652(2,096)

1,556

10,8268,791
013,313
16,2791,292
288
50,789(648)
014,642(348)(15,969)
(188)
(155)
(2,666)

10,178
8,791
14,642
12,965
310
1,104
133
48,123

6,143
1,687
12,532
0
5,761
27,535
1,126
917
55,701
991

(202)
0
389
25,655(117)(24,114)
0
(315)
1,296
0

5,941
1,687
12,92125,655
5,644
3,421
1,126
602
56,997991

Total liabilities

107,481(1,370)106,111

Total equity and liabilities

111,133(3,466)

107,667

Liabilities
Non-current liabilities
Non-current provisions
Long-term financing liabilities
Non-current contract liabilities
Non-current other financial liabilities
Non-current other liabilities
Deferred tax liabilities
Non-current deferred income
Total non-current liabilities
Current liabilities
Current provisions
Short-term financing liabilities
Trade liabilities
Current contract liabilities
Current other financial liabilities
Current other liabilities
Current tax liabilities
Current deferred income
Total current liabilities
Disposal group of liabilities classified as held for sale20

As previously reported

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.1 Basis of Preparation

CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2017:
As previously reported

IFRS 15

As restatedRevenue

66,767(7,745)59,022

Cost of sales(59,160)

7,011(52,149)

Gross margin

7,607

(734)

6,873

(In € million)

(872)

0

(872)

Administrative expenses

Selling expenses(1,567)0(1,567)

Research and development expenses(2,807)0(2,807)

Other income

981

0

981

Other expenses

(336)

0

(336)

Share of profit from investments accounted for under the equity method

333

(22)

311

Other income from investments

82

0

82

3,421

(756)

2,665

Interest income

189

0

189

Interest expense

(517)

0

(517)

Other financial result

1,477

12

1,489

Profit before financial result and income taxes

Total financial result

1,149

12

1,161

Income taxes(1,693)231(1,462)

Profit for the period

2,877

(513)

2,364

2,873

(512)

2,361

4

(1)

3

Attributable to:Equity owners of the parent (Net income)Non-controlling interests

Earnings per share

€

€

€

Basic

3.71

(0.66)

3.05

Diluted3.70(0.66)

3.04

IFRS 9 “Financial Instruments”
IFRS 9, published in July 2014, replaces the existingguidance in IAS 39 “Financial instruments: recognition andmeasurement”. IFRS 9 includes revised guidance on theclassification and measurement of financial instruments,
including a new expected credit loss model for calculating
impairment on ﬁnancial assets, and the new general hedge
accounting requirements. It also carries forward the guidanceon recognition and derecognition of ﬁnancial instruments fromIAS 39.
The Company adopted the new standard on 1 January 2018and has elected to apply the limited exemption in IFRS 9
relating to transition for classiﬁcation and measurement andimpairment, and accordingly has not restated comparative
periods in the year of initial application. As a consequence, any
adjustments to carrying amounts of ﬁnancial assets or liabilities
are recognised at the beginning of the reporting period, withthe difference recognised in opening equity.
Classification and Measurement
From 1 January 2018, the Company classiﬁ es its ﬁ nancial
assets according to IFRS 9 using the following measurement
categories:
those to be measured at amortised cost; andthose to be measured subsequently at fair value (either
through OCI or through proﬁt and loss).

-

The classiﬁcation depends on the Company’s business model
for managing the ﬁnancial assets and the contractual termsof the cash ﬂows.

2

Financial assets at amortised cost — This categorycomprises assets that are held for collection of contractual
cash ﬂows where those cash ﬂows represent solely payments
of principal and interest. It includes trade receivables.
Financial assets at fair value through OCI — This categorycomprises:(i) Equity investments that are not held for trading. With the
exception of dividends received, the associated gains andlosses (including any related foreign exchange component)
are recognised in OCI. Unlike the treatment of “available-forsale” equity investments under IAS 39, amounts presented
in OCI are not subsequently transferred to profit and loss
on derecognition of the equity investment nor in the eventof an impairment. The Company has remeasured non-listed
equity investments for which no quoted market prices areavailable at fair value and determined the fair values of theseequity investments using valuation methods such as net
asset values or a comparable company valuation multiples
technique.

Airbus / Financial Statements 201821

Notes to the IFRS Consolidated Financial Statements /2.1 Basis of Preparation(ii) Debt instruments where contractual cash flows are solely
payments of principal and interest, and that are held both forsales and collecting contractual cash flows. These instruments
include the bond securities portfolio and are measured in amanner similar to the “available-for- sale” debt instruments under
IAS 39.
Financial assets at fair value through proﬁt and loss — This
category comprises all other ﬁnancial assets (e.g. derivative
instruments) that are to be measured at fair value (including
equity investments for which the Company did not elect topresent changes in fair value in OCI).
The impact of IFRS 9 on the classiﬁcation and measurementof ﬁnancial assets is set out in the “measurement categories ofﬁnancial instruments” table.
Impairment
From January 2018, the Company assesses on a forward-looking
basis the expected credit losses associated with its debt
instruments carried at amortised cost and fair value throughOCI. The Company applies the low credit risk exemption allowing
the Company to assume that there is no signiﬁcant increasein credit risk since initial recognition of a ﬁnancial instrument,
if the instrument is determined to have low credit risk at thereporting date. Similarly, the Company has determined thatits trade receivables and contract assets generally have low
credit risk. The Company has applied the simpliﬁed approachpermitted by IFRS 9 of measuring expected credit losses oftrade receivables and contract assets on a life-time basis frominitial recognition.
Hedge Accounting

If such a shift in hedged deliveries occurs, hedge ineffectivenesswill arise to the extent the maturities of the hedging instrument
and the expected timing of the hedged cash ﬂows are no longer
perfectly aligned. In order to minimise such ineffectiveness theCompany will close the timing gap by rolling over hedges to
new maturities, using foreign exchange swap contracts. The
hedge results will move along with the hedged deliveries.
In addition, the Company will designate the risk of changes
in the spot element as the hedged risk in order to eliminate
the ineffectiveness resulting from changes in forward points
between different maturities. The forward element will be
accounted for as a cost of hedging similar to the time valueof options.
According to the prospective application requirement of IFRS 9,
the fair values of the legacy portfolio in place at inception of the
new strategy continue to be assigned to the previous ﬁrst ﬂow
hedge regime and remain in the hedge reserve in OCI, to berecognised in proﬁt and loss only at maturity of the originallyhedged cash ﬂ ows (unless those cash ﬂ ows are no longer
expected to occur).

Hedging instruments in place as at 31 December 2017 qualify
as hedges under IFRS 9. The Company’s risk management
strategies and hedge documentation are aligned with therequirement of the new standard and hedge accounting
continues to apply.

As a result of prospective application, the hedging instruments
designated under the new strategy will have a non-zero fairvalue at hedge inception, which may create some small
ineffectiveness.

With the adoption of IFRS 9, the Company accounts for changes
in the time value of its foreign currency options as a cost ofhedging through OCI and recognises them as a separate
component of equity. The cumulative cost-of-hedging will bereclassiﬁed to proﬁt or loss when the hedged transaction affects
proﬁt or loss.

Another source of ineffectiveness will be the counterparty
credit risk inherent in the hedge portfolio. As such, credit risk
is absent from the hedged cash ﬂows. However, since netting
arrangements are in place with all the hedge counterparties
and the Company has a policy of trading with investment grade
counterparties only, the credit risk arising from its hedging
instruments, and associated changes in credit risk, havehistorically been negligible and are expected to remain so.

Applying the cost-of-hedging guidance to foreign currency
options retrospectively results in an increase of the 2018 opening
balance of AOCI by € +172 million on a net of tax basis and acorresponding decrease of the opening balance of retained
earnings. As a result, retrospective application does not change
the total equity as of 1 January 2018 that would otherwise havebeen reported.
New Hedge Strategy
As of 30 June 2018, the Company adopted a new hedge strategy
to hedge its net exposure (US dollar revenue less US dollar cost)
resulting from commercial aircraft deliveries of speciﬁc aircraft
types. The strategy more closely aligns hedge accounting withrisk management activities.

22

Under the new strategy the foreign exchange derivatives
used as hedging instruments are designated as a hedge ofa portion of the cash ﬂows received for each of a number ofdeliveries of a speciﬁc aircraft type that are expected to occur
in a given month. In contrast to the ﬁrst ﬂow approach that waspreviously used (which is described in “— Note 35.1: Financial
Risk Management”), the new strategy assigns the hedging
instruments to a speciﬁed number of monthly deliveries of a
speciﬁc aircraft type and hence will allow the hedge result tomove along with the hedged deliveries in the event of a shift
in deliveries.

Airbus / Financial Statements 2018

The hedging strategies otherwise used by the group are
essentially the same as those used before transition to IFRS 9
and are described in detail in “— Note 35.1: Financial Risk
Management”. In some cases, the currency basis spread was
excluded from the hedge on transition to IFRS 9 in order toimprove hedge effectiveness. Changes in the currency basis
spread will be accounted for as a cost of hedging similar to thetime value of options. This change in the hedge designation
had no impact on OCI or equity as of 1 January 2018, nor will
it affect future proﬁt and loss when the hedges mature (unlessexceptional circumstances apply).

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.1 Basis of Preparation

IFRS 9 Total Equity Impacts
The total impact on the Company’s equity due to IFRS 9 as at 1 January 2018 is as follows:
1 January 2018

(In € million)

Opening equity - IAS 39

10,742

Increase in expected loss allowance for trade receivables and contract assets(7)

Increase in expected loss allowance for other financial assets(4)

Deferred tax effects

3

Adjustments to equity from adoption of IFRS 9(8)Opening equity - IFRS 9

10,734

The following table shows the measurement categories of ﬁnancial instruments:

Measurement categories
according to IAS 39

Carrying amountaccordingto IAS 39 at
31 December 2017

Equity investments

Available-for-sale

2,441

Customer financing

Loans and receivables

771(In € million)

Carrying amountaccording
Measurement categories
to IFRS 9 ataccording to IFRS 9 1 January 2018

AssetsOther investments and otherlong-term financial assets
Fair value through OCI

1,088

Fair value through profit and loss

1,353

Fair value through profit and loss

771

Other loans

Loans and receivables

1,521

Amortised cost

1,521

Trade receivables (1)Loans and receivables

5,487

Amortised cost

5,487

Contract assets (1)Loans and receivables

497

Amortised cost

497

Fair value through profit and loss

3,564

Fair value through profit and loss

3,564

Other financial assets
Derivative instruments (2)Non-derivative instruments
Securities

Cash and cash equivalents

Loans and receivables

1,395

Amortised cost

1,395

Available-for-sale

12,571

Fair value through OCI

12,571

Fair value through profit and loss

6,256

Fair value through profit and loss

6,256

Fair value through OCI

900

Available-for-sale

2,085

Loans and receivables

3,675

Total (1)Fair value through profit and loss

1,185

Amortised cost

3,675

40,263

2

40,263Liabilities
Financing liabilities
Bonds and commercial
papersAmortised cost

(7,063)

Amortised cost

(7,063)Liabilities to financial
institutions and others

Amortised cost

(3,792)

Amortised cost

(3,792)Finance lease liabilities

Other

(342)

Other

(342)

Derivative instruments (2)Fair value through profit and loss

(2,271)

Fair value through profit and loss

(2,271)

European Governments’refundable advances

Amortised cost

(5,901)

Amortised cost

(5,901)Others (1)Amortised cost

(582)

Amortised cost(582)

(13,406)

Amortised cost

Other financial liabilities

Trade liabilities(1)

Amortised cost

Total (1)(33,357)(13,406)(33,357)(1) Previous year figures are restated due to the application of IFRS 15.
(2) Most derivative instruments are designated as hedging instruments in cash flow hedges.

Airbus / Financial Statements 201823

Notes to the IFRS Consolidated Financial Statements /2.1 Basis of Preparation

New, Revised or Amended IFRS Standards and Interpretations Issued but not yet Applied
A number of new or revised standards, amendments and improvements to standards as well as interpretations are not yet effective
for the year ended 31 December 2018 and have not been applied in preparing these Consolidated Financial Statements andearly adoption is not planned:
IASB effective date for annual reporting
periods beginning on or afterStandards and amendments

Endorsement status

IFRS 16 “Leases”

1 January 2019

Endorsed

IFRIC 23 “Uncertainty over Income Tax Treatments”

1 January 2019

Endorsed

Amendments to IAS 19: Plan amendment, curtailment or settlement

1 January 2019

Not yet endorsed

Amendments to IAS 28: Long-term interests in associates and joint ventures

1 January 2019

Endorsed

Annual improvements to IFRS standards 2015-2017

1 January 2019

Not yet endorsed

Amendments to IFRS 3: Definition of a business

1 January 2020

Not yet endorsed

Amendments to IAS 1 and IAS 8: Definition of material

1 January 2020

Not yet endorsed

IFRS 16 “Leases”
In May 2016, the IASB published the new standard IFRS 16,
which replaces the existing guidance on leases, including
IAS 17 “Leases”, IFRIC 4 “Determining Whether an Arrangement
Contains a Lease”, SIC-15 “Operating Leases—Incentives”, and
SIC-27 “Evaluating the Substance of Transactions Involving theLegal Form of a Lease”. IFRS 16 introduces a uniform lessee
accounting model. Applying that model, a lessee is required torecognise a right-of-use asset representing the lessee’s rightto use the underlying asset and a ﬁnancial liability representing
the lessee’s obligation to make future lease payments.
There are exemptions for short-term leases and leases of lowvalue assets. Lessor accounting remains comparable to thatprovided by the existing leases standard: lessors continue toclassify their leases as operating leases or ﬁnance leases. The
standard shall be applied for the ﬁrst time in the ﬁrst reporting
period of a ﬁscal year that begins on or after 1 January 2019.
The transition to the new lease accounting from the existing
rules will be accomplished using the modiﬁed retrospective
method according to IFRS 16, therefore, the cumulative effectof adopting IFRS 16 will be recognised as an adjustment to the
opening balance of retained earnings at 1 January 2019, withno restatement of comparative information.
The Company intends to use the following practical expedientsprovided by the standard at transition date:
The previous determination pursuant to IAS 17 and IFRIC 4
of whether a contract is a lease will be maintained for existing
contracts, in accordance with IFRS 16.
O n initial application of IFRS 16 to operating leases, theright-of-use to the leased asset will generally be measured
at the amount of the lease liability, using the discount rate at
the date of initial application. Where accrued lease liabilities
existed, the right-of-use asset will be adjusted by the amountof the accrued lease liability under IFRS 16. Under IFRS 16,--

the measurement of the right-of-use at initial application will
not include initial direct costs. In some cases, the value ofright-of-use assets may differ from the value of the liabilities
due to offsetting against existing provisions or as a result ofvaluation allowances.
Not to apply the new recognition requirements to short-termleases and to leases of low value assets as soon as the newstandard is effective.

The Company’s operating leases mainly relate to real estate
assets, company cars and equipment. The Company has ﬁnalised
the implementation of a software to be used both to manage theCompany’s leases and to generate IFRS 16 calculations. So far,the most signiﬁcant potential impact identiﬁed by the Company
relates to its operating leases of real estate assets (such as land,
warehouses, storage facilities and ofﬁces).
The ﬁnal impact of IFRS 16 on the Company’s Consolidated
Financial Statements in the period of initial application will depend
on future economic conditions, including incremental borrowing
rates to be applied for the computation of the lease liability present
value as of 1 January 2019, the composition of the lease portfolio
at that date and the estimation of the lease terms, as extension
and early termination options offered by lease agreements willneed to be included in the calculation of the liability if their exercise
or non-exercise is considered reasonably certain.
The analysis conducted as part of the Company wide project on
initial application resulted in the probable recognition of leaseliabilities totalling from € 1.2 billion to € 1.5 billion (1 January2019) as a result of the transition. Net cash will decrease
accordingly due to the increase in lease liabilities. The impact
of applying IFRS 16 on proﬁt before ﬁnance costs and income
taxes and proﬁ t for the period will not be signiﬁ cant. Thechange in presentation of operating lease expenses will resultin a corresponding improvement in cash ﬂows from operating
activities and a decline in cash ﬂows from ﬁnancing activities.

IFRIC 23 “Uncertainty over Income Tax Treatments”
On May 2017, the IASB issued IFRIC 23 “Uncertainty over Income
Tax Treatments”. The interpretation clariﬁes the recognition andmeasurement requirements when there is uncertainty overincome tax treatments. In assessing the uncertainty, an entity
shall consider whether it is probable that a taxation authority
will accept the uncertain tax treatment. IFRIC 23 is effective forannual reporting periods beginning on or after 1 January 2019,
while earlier application is permitted.

24

Airbus / Financial Statements 2018

The Company is currently assessing the impacts of adopting
the interpretation on the Company’s Consolidated Financial
Statements which might trigger some reclassiﬁ cation fromprovisions to tax liabilities.

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.2 Airbus Structure

2.2 Airbus Structure
5.

Scope of Consolidation

Consolid ation — The Company’s Consolidated Financial
Statements include the financial statements of Airbus SE
and all material subsidiaries controlled by the Company. The
Company’s subsidiaries prepare their ﬁnancial statements at thesame reporting date as the Company’s Consolidated Financial
Statements (see Appendix “Simpliﬁed Airbus Structure” chart).
Subsidiaries are entities controlled by the Company including
so-called structured entities, which are created to accomplish
a narrow and well-deﬁned objective (see “— Note 25: Sales
Financing Transactions”). They are fully consolidated from thedate control commences to the date control ceases.
The assessment of control of a structured entity is performed inthree steps. In a ﬁrst step, the Company identiﬁes the relevant
activities of the structured entities (which may include managing
lease receivables, managing the sale or re-lease at the end of

the lease and managing the sale or re-lease on default) and in asecond step, the Company assesses which activity is expected
to have the most signiﬁcant impact on the structured entities’
return. Finally, the Company determines which party or parties
control this activity.
The Company’s interests in equity-accounted investees
comprise investments in associates and joint ventures. Suchinvestments are accounted for under the equity method andare initially recognised at cost.
The ﬁ nancial statements of the Company’s investments inassociates and joint ventures are generally prepared for thesame reporting period as for the parent company. Adjustments
are made where necessary to bring the accounting policies andaccounting periods in line with those of the Company.

PERIMETER OF CONSOLIDATION
31 December
2018

2017

189

207

in joint ventures45

40

in associates

19

23

253

270

(Number of companies)

Fully consolidated entities
Investments accounted for under the equity method

Total

For more details related to unconsolidated and consolidated structured entities, see “— Note 25: Sales Financing Transactions”.

6.

2

Acquisitions and Disposals

Business combinations are accounted for using the acquisition
method, as at the acquisition date, which is the date on which
control is transferred to the Company.

These evaluations are linked closely to the assumptions madeby management regarding the future performance of the assets
concerned and the discount rate applied.

The determination of the fair value of the acquired assets andthe assumed liabilities which are the basis for the measurementof goodwill requires significant estimates. Land, buildings
and equipment are usually independently appraised while
marketable securities are valued at market prices. If intangible
assets are identiﬁed, depending on the type of intangible asset
and the complexity of determining its fair value, the Company
either consults with an independent external valuation expert
or develops the fair value internally, using appropriate valuation
techniques which are generally based on a forecast of the total
expected future net cash ﬂows.

Loss of control, loss of joint control, loss of signiﬁ cantinﬂ uence — Upon loss of control of a subsidiary, the assets
and liabilities and any components of the Company’s equity
related to the subsidiary are derecognised. Any gain or loss
arising from the loss of control is recognised within otherincome or other expenses in the Consolidated Income
Statement. If the Company retains any interest in the previous
subsidiary, such interest is measured at fair value at the datethe control is lost.

Airbus / Financial Statements 201825

Notes to the IFRS Consolidated Financial Statements /2.2 Airbus Structure

Assets and liabilities of a material subsidiary for which a loss ofcontrol is highly probable are classiﬁed as assets and liabilities
held for sale when the Company has received sufficientevidence that the loss of control will occur in the 12 months after
the classiﬁcation. These assets and liabilities are presented
after elimination of intercompany transactions.
When the loss of signiﬁcant inﬂuence or the loss of joint control
of an investment accounted under for the equity method

6.1

Sale of investment in an associate or joint venture — Anygain or loss arising from the disposal of investment accounted
for under the equity method is recognised within share of proﬁt
from investments.

Acquisitions

On 16 October 2017, Airbus, Bombardier Inc. (“Bombardier”)
and Investissement Québec (“IQ”) signed an agreementthat brings together Airbus’ global reach and scale with
Bombardier’s newest, state-of-the-art jet aircraft family. Under
the agreement, Airbus will provide procurement, sales andmarketing, and customer support expertise to the C Series
Aircraft Limited Partnership (“CSALP”), the entity that
manufactures and sells the C Series. The partnership brings
together two complementary product lines.
On 8 June 2018, having received all required regulatory
approvals, Airbus, Bombardier and IQ closed the C Seriestransaction effective on 1 July 2018.
On 1 July 2018, Airbus has taken the control of C Series
programme and acquired 50.01% Class A ownership units
in CSALP. Bombardier and IQ will own 33.55% and 16.44%,
respectively. Airbus has consolidated CSALP using the full
integration method effective from 1 July 2018. At closing, Airbus
paid US$ 1 per share to assume a net liability. Technology andinventories are the main assets acquired. Airbus has assumed
the liabilities of CSALP which are mainly related to customer
contracts in the backlog, trade payables, advance payments
received and refundable advance liabilities. The functional
currency of CSALP is US dollar.
Bombardier will continue with its current funding plan of
CSALP. Bombardier will fund the cash shortfalls of CSALP,
if required, during the second half of 2018, up to a maximumof US$ 225 million; during 2019, up to a maximum of
US$ 350 million; and up to a maximum aggregate amount of
US$ 350 million over the following two years, in consideration
for non-voting participating Class B common units of CSALP.
Airbus has the choice to reimburse Bombardier’s funding for26

is highly probable and is excepted to occur in the coming
12 months, this associate or joint venture is classiﬁed as an
asset held for sale.

Airbus / Financial Statements 2018

the nominal amount plus a yearly 2% interest or for an amountequal to the fair value of the shares of CSALP at the purchasedate of Class A ownership units.
Airbus beneﬁts from call rights in respect of all of Bombardier’s
interests in CSALP at fair market value, with the amount forClass B shares subscribed by Bombardier capped at theinvested amount plus accrued interests if any, including acall right exercisable no earlier than 7.5 years following theclosing, except in the event of certain changes in the control of
Bombardier, in which case the right is accelerated. Airbus also
beneﬁts from call rights in respect of all IQ’s interests in CSALP
at fair market value no earlier than 4.5 years following the closing.
Bombardier beneﬁts from a corresponding put right whereby
it could require that Airbus acquire its interest at fair market
value after the expiry of the same period. IQ will also beneﬁt
from tag along rights in connection with a sale by Bombardierof its interests in the partnership.
Airbus used the full goodwill approach to account for thistransaction. Bombardier’s and IQ’s interests in CSALP
are measured at their estimated fair value. The fair value
measurement of the assets acquired and liabilities assumed has
been performed by an independent expert. According to IFRS 3,
the fair values of acquired assets and assumed liabilities havebeen determined excluding Airbus speciﬁc synergies (mainlywith respect to volumes sold and manufacturing costs).
The transaction has been approved by the Board of Directorsof both Airbus and Bombardier, as well as the Cabinet of theGovernment of Québec. The partnership’s head ofﬁce, primary
assembly line and related functions will be based in Mirabel,
Québec (Canada).

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.2 Airbus Structure

The following table summarises the ﬁnal allocation of the purchase price to the acquired assets and the assumed liabilities at theacquisition date:Total(In € million)

Intangible assets

(1)

1,377

Property, plant and equipment

252

Deferred tax assets

86

Inventories (2)660Trade receivables

8

Other financial assets

350

Other assets

93

Cash and cash equivalents

129

Total assets acquired

2,955

Provisions / Acquired customer contracts (3)2,609Deferred tax liabilities

77

Trade liabilities

270

Contract liabilities

685

Other financial liabilities

827

Other liabilities

356

Total liabilities assumed

4,824

Net assets assumed

1,870

Non-controlling interests (at fair value, i.e. including synergies provided by the acquirer)
Consideration transferred (5)Goodwill arising on acquisition

(4)

2,246
(225)

(6)

3,891

(1) Intangible assets: Mainly include the acquired technology for the A220 programme. The fair value of the programme was measured using the “multi-excess earnings method” andis equal to the present value of the after-tax cash flows attributable to future deliveries excluding existing contracts in the backlog which are valued separately. The technology willbe amortised over the expected number of aircraft to be delivered over the programme useful life.
(2) Inventories: The fair value of the inventories has been measured considering net contractual selling prices.
(3) Acquired customer contracts: This represents the present value of the excess of expected fulfilment costs over contractual selling prices for all acquired customer contracts in thebacklog. Estimated fulfilment costs include both direct costs that will be recognised in gross margin and contributory asset charges to reflect the return required on other assets that
contribute to the generation of the forecast cash flows. This liability will be released as a reduction of cost of sales based on the delivered aircraft considered in the measurement of
the liability.
(4) Non-controlling interests: Airbus has recognised a financial liability at fair value for the estimated exercise price of the written put options on non-controlling interests (Bombardier
put option and IQ tag along). According to the accounting policy of the Company, changes in the fair value of the liability are recognised directly in equity.
(5) Consideration transferred: Airbus paid US$ 1 per share (754 shares) to acquire 50.01% of CSALP and received 100,000,000 warrants which are each entitled to one Class B
Bombardier common share at a strike price equal to the US equivalent of Can$ 2.29. The fair value amounted to US$ 263 million as at 1 July 2018. As a result, the considerationtransferred is negative.
(6) Goodwill: The goodwill mostly represents Airbus specific synergies expected from the acquisition, which have been excluded from the fair value measurement of the identifiable net
assets. These synergies mainly relate to higher expected volumes of aircraft sold and lower manufacturing costs. CSALP is part of the cash generating unit (“CGU”) Airbus and will
be tested for impairment on an annual basis. The opening balance sheet after purchase price allocation of CSALP has been audited as at 1 July 2018. In accordance with IFRS 3“Business Combinations”, the opening balance sheet of CSALP might vary during the 12 month allocation period which ends 1 July 2019. Airbus will retrospectively adjust the initialaccounting to reflect new information that would have affected the recognition or the measurement of these amounts as of 1 July 2018.

6.2

2

Disposals

On 7 March 2018, the Company ﬁ nalised the sale of Plant
Holdings, Inc., held by the Airbus DS Communications Inc.
business, to Motorola Solutions after receiving the required
regulatory approvals. Airbus Defence and Space recognised again of € 159 million, reported in other income.
On 1 October 2018, the Company completed the disposal of its
subsidiary Compañía Española de Sistemas Aeronáuticos,
S.A. (“CESA”) to Héroux-Devtek Inc. (“Héroux-Devtek”), for apurchase price of € 114 million.
On 28 February 2017, the Company sold its defence electronics
business, a leading global provider of mission-critical sensors,
integrated systems and services for premium defence andsecurity applications mainly based in Ulm (Germany), to afﬁliates
of KKR & Co. L.P. (the acquirer), a leading global investmentﬁrm. The German defence electronics business was sold for€ 823 million, Airbus Defence and Space recognised a net gainon sale of € 604 million. The closing for the French defence
electronics business will occur after full separation of the businesssold from Airbus other business activities and is expected to takeplace in 2018. The divestment is part of the strategic review of
the Airbus Defence and Space business portfolio. The assets
and liabilities of this company were classiﬁed as a disposalgroup held for sale as of 31 December 2016. With respect toextending security clearance for the Airbus Defence and Spacebusiness, Airbus made a 25.1% reinvestment into Hensoldt

Airbus / Financial Statements 201827

Notes to the IFRS Consolidated Financial Statements /2.2 Airbus Structure

Holding Germany GmbH, a subsidiary of the acquirer which
now holds the transferred business. The reinvestment took theform of an equity investment of € 6 million and a shareholder
loan of € 109 million. In addition, the reinvestment agreement
provides for a combined put/call option mechanism which is
subject to full separation being achieved and will then allow theacquirer to take over Airbus’ equity investment and shareholder
loan at a pre-determined price at any time, and Airbus to sellthem to the acquirer at that price after three years.
On 3 April 2017, Airbus sold its 49% stake in Atlas to Thyssen
Krupp.
The ArianeGroup (formerly Airbus Safran Launchers, “ASL”)
joint venture transaction was ﬁ nalised in 2017 with a ﬁ nal
agreement on Airbus contribution balance sheet leading to€ 52 million additional capital gain on the period. The purchaseprice allocation was completed as of 30 June 2017. The
purchase price was mainly allocated to identiﬁed intangible

6.3

assets for a € 395 million value, a € 16 million depreciation
expense net of tax was recognised in 2017 (2016: € 7 million
based on preliminary allocation). The remaining goodwill is partof the value of the investment accounted for under the equity
method in ArianeGroup (see “— Note 7: Investments Accounted
for under the Equity Method”).
On 17 October 2017, Airbus and StandardAero Aviation
Holdings, Inc signed a sale purchase agreement for Vector
Aerospace Holding SAS (“Vector”) which was closed on
3 November 2017. Vector is a global aerospace maintenance,
repair and overhaul company, providing quality support for
turbine engines, components, and fixed and rotary-wing
aircraft. It generated revenues of € 638 million in 2016
and employs approximately 2,200 people in 22 locations.
Airbus Helicopters received € 542 million and recognised anon- material gain which is reflected in other income.

Assets and Disposal Groups Classiﬁed as Held for Sale

As of 31 December 2018, the Company accounted for assets and disposal groups of assets classified as held for sale in theamount of € 334 million (2017: € 202 million). Disposal group of liabilities classified a s held for sale as of 31 December 2018
amount to € 432 million (2017: € 106 million). In 2018 and 2017, it is related to Alestis Areospace S.L and to non-core businesses
entities within Airbus Defence and Space, respectively.
The assets and disposal group of assets and liabilities classiﬁed as held for sale consist of:
31 December(In € million)

2018

2017

Non-current assets

232

100

Inventories

21

16

Trade receivables

63

74

Other assets

2

7Cash and cash equivalents

Assets and disposal groups of assets classified as held for sale
Provisions
Non-current financing liabilities

16

5

334

202

3

19

201

0

Trade liabilities

42

16

Other liabilities

186

71

Disposal groups of liabilities classified as held for sale

432

106

6.4

Cash Flows from Disposals including Assets and Disposal Groups Classiﬁed as Held for Sale

The following table provides details on cash ﬂows from disposals (resulting in assets and liabilities disposed) of subsidiaries, joint
ventures and businesses:(In € million)

Total selling price received by cash and cash equivalents
Cash and cash equivalents included in the disposed subsidiaries

Total

The aggregate cash ﬂows from disposals of subsidiaries andassets and disposals groups classiﬁed as held for sale in 2018
result mainly from the sale of Plant Holdings, Inc. and CESA.

28

Airbus / Financial Statements 2018

2018

2017

325

1,298

(5)

(28)

320

1,270

In 2017, they result mainly from the sale of the defence electronics
business, the sale of Vector and the completion of ArianeGroup.

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.2 Airbus Structure

7.

Investments Accounted for under the Equity Method
31 December(In € million)

Investments in joint ventures(1)

Investments in associates

Total

(1)

2018

2017

1,484

1,424

209

193

1,693

1,617

(1) Previous year figures are restated due to the application of IFRS 15.

Investments accounted for under the equity method increased by € +76 million to € 1,693 million (2017 (restated): € 1,617 million)
and mainly include the equity investments in ArianeGroup, MBDA and ATR GIE.

7.1

Investments in Joint Ventures

The joint ventures in which the Company holds an interest are structured in separate incorporated companies. Under joint
arrangement agreements, unanimous consent is required from all parties to the agreement for all relevant activities. The Company
and its partners have rights to the net assets of these entities through the terms of the contractual agreements.
The Company’s interest in its joint ventures, accounted for under the equity method, is stated in aggregate in the following table:(In € million)

2018

2017

Carrying amount of the investment at 1 January (1)

1,424

1,398

Share of results from continuing operations (1)

291

274

Share of other comprehensive income

(15)

53

Dividends received during the year

(182)

(255)

Others (2)Carrying amount of the investment at 31 December (1)

(34)

(46)

1,484

1,424

(1) Previous year figures are restated due to the application of IFRS 15.
(2) In 2018, it includes the impact of the disposal of Aquitaine. In 2017, it includes the impact of the finalisation of the ArianeGroup joint venture transaction, see “— Note 6: Acquisitions
and Disposals”.

The Company’s individually material joint ventures are
ArianeGroup, Paris (France), MBDA S.A.S., Paris (France),
and ATR GIE, Blagnac (France), as parent companies of theirrespective groups. These joint venture companies are notpublicly listed.
ArianeGroup is a 50% joint venture between the Company
and Safran. ArianeGroup is the head company in a group
comprising several subsidiaries and affiliates, all leading
companies in their ﬁelds, such as: APP, Arianespace, Cilas,
Eurockot, Eurocryospace, Europropulsion, Nuclétudes,
Pyroalliance, Regulus, Sodern and Starsem. ArianeGroupinherits a rich portfolio of products and services, enabling it
to deliver innovative and competitive solutions to numerous
customers around the world.

The Company holds a 37.5% stake in MBDA at 31 December
2018 and 2017, which is a joint venture between the Company,
BAE Systems and Leonardo (formerly Finmeccanica). MBDA
offers missile systems capabilities that cover the whole rangeof solutions for air dominance, ground-based air defence
and maritime superiority, as well as advanced technologicalsolutions for battleﬁeld engagement.

2

ATR GIE manufactures advanced turboprop aircraft. It is a 50%
joint venture between Leonardo (formerly Finmeccanica) groupcompany and the Company. Both Leonardo and the Company
provide airframes which are assembled by ATR GIE in France.
The members of ATR GIE are legally entitled exclusively to the
beneﬁts and are liable for the commitments of the Company.
ATR GIE is obliged to transfer its cash to each member of thejoint venture.

Airbus / Financial Statements 201829

Notes to the IFRS Consolidated Financial Statements /2.2 Airbus Structure

The following table summarises ﬁnancial information for ArianeGroup, MBDA and ATR GIE based on their Consolidated Financial
Statements prepared in accordance with IFRS:
ArianeGroupMBDA

ATR GIE(In € million)

2018

2017

2018

2017

2018

2017

Revenue (1)

3,587

3,221

3,164

2,982

1,498

1,600

Depreciation and amortisation

(42)

(128)

(112)

(107)

(95)

(19)

Interest income

5

2

9

9

0

0

Interest expense (1)

(3)

(9)

(6)

(6)

0

0

Income tax expense (1)

(83)

(58)

(99)

(92)

(3)

(7)

Profit from continuing operations (1)

251

228

239

201

193

265

Other comprehensive income

(14)

38

5

145

0

0

Total comprehensive income (100%) (1)

237

266

244

346

193

265

Non-current assets (1)

5,748

5,578

2,437

2,385

172

159

Current assets (1)

6,626

5,360

7,654

6,728

674

743

507

807

2,658

2,818

3

8

688

495

1,046

1,145

87

131

thereof cash and cash equivalents
Non-current liabilities
thereof non-current financial liabilities(excluding trade and other payables and provisions)
Current liabilities (1)thereof current financial liabilities(excluding trade and other payables and provisions)

137

31

9

0

0

0

7,514

6,448

8,462

7,537

460

426

28

36

6

55

0

0

Total equity (100%) (1)

4,172

3,995

583

431

299

345

Equity attributable to the equity owners of the parent (1)

4,157

3,988

583

431

299

345

15

7

0

0

0

0

Non-controlling interests(1) Previous year figures are restated due to the application of IFRS 15.

ArianeGroupMBDA

ATR GIE(In € million)

2018

2017

2018

2017

2018

2017

The Company’s interest in equity on investee (1)

2,078

1,994

218

162

150

173

244

244

282

282

0

0

(1,519)(1,520)

0

0

0

0

The Company DS PPA (including 2016 A6 catch-up)

(37)

(17)

0

0

0

0

Contingent liability release adjustment

(25)

(15)

0

0

0

0

Fair value adjustments and modifications for differencesin accounting policies (1)0Goodwill
PPA adjustments, net of tax

(21)

10

(11)

(12)

0

Dividend adjustment

0

0

(26)

(35)

0

0

Elimination of downstream inventory

2

2

0

0

(4)

(4)

722

698

463

397

146

169

Carrying amount of the investment at 31 December (1)(1) Previous year figures are restated due to the application of IFRS 15.

The development of these investments is as follows: (1)ArianeGroupMBDA

ATR GIE

2018

2017

2018

2017

2018

2017

Carrying amount of the investment at 1 January

698

694

397

320

169

224

Share of results from continuing operations

88

68

91

76

98

133

Share of other comprehensive income

(8)

13

(1)

54

4

(14)

Dividends received during the year

(26)

(25)

(26)

(53)

(125)

(174)

(In € million)

Changes in consolidation

0

0

0

0

0

0

Others

(30)

(52)

2

0

0

0

Carrying amount of the investment at 31 December

722

698

463

397

146

169

(1) Previous year figures are restated due to the application of IFRS 15.

The Company’s share of contingent liabilities as of 31 December 2018 relating to MBDA is € 420 million (2017: € 308 million).

30

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.2 Airbus Structure

7.2

Investments in Associates

The Company’s interests in associates, accounted for under the equity method, are stated in aggregate in the following table:
2018

2017

Carrying amount of the investment at 1 January

193

171

Share of results from continuing operations

39

37

Share of other comprehensive income

11

(7)

Dividends received during the year

(36)

(8)

1

0

(In € million)

Changes in consolidation
OthersCarrying amount of the investment at 31 December

1

0

209

193

The cumulative unrecognised comprehensive loss for these associates amounts to € -30 million and € -47 million as of 31 December
2018 and 2017, respectively (thereof € 17 million for the period).

8.

Related Party Transactions(In € million)

Sales of
Purchases ofgoods andgoods andservices andservices andother income other expenses

Receivables
due at31 December

Loans granted /Payables Other receivables
Loans received /due atdue at Other liabilities due
31 December
31 December
at 31 December

2018
Total transactions
with associates

13

222

3

39

95

20

Total transactions
with joint ventures

2,197

209

1,200

1,175

0

1,121

Total transactions
with associates

7

234

5

39

92

14

Total transactions
with joint ventures

2,615

425

989

463

1

1,076

2017 (1)2(1) Previous year figures are restated due to the application of IFRS 15.

Transactions with unconsolidated subsidiaries are immaterial to
the Company’s Consolidated Financial Statements.
As of 31 December 2018, the Company granted guarantees of€ 129 million to Air Tanker Group in the UK (2017: € 152 million).

For information regarding the funding of the Company’s pension
plans, which are considered as related parties, see “— Note 29:
Post-Employment Beneﬁts”.
The information relative to compensation and beneﬁts granted
to Members of the Executive Committee and Board of Directors
are disclosed in “— Note 31: Remuneration”.

Airbus / Financial Statements 201831

Notes to the IFRS Consolidated Financial Statements /2.3 Segment Information

2.3 Segment Information
The Company operates in three reportable segments which reﬂect the internal organisational and management structure according
to the nature of the products and services provided.

- Airbus (formerly Airbus Commercial Aircraf t and - Airbus Defence and Space — Military Aircraft design,
Headquarters) — Development, manufacturing, marketingand sale of commercial jet aircraft of more than 100 seats;
aircraft conversion and related services; development,
manufacturing, marketing and sale of regional turboprop
aircraft and aircraft components. It also includes the holding
function of the Company and its bank activities.

development, delivery, and support of military aircraft
such as combat, mission, transport and tanker aircraft as
well as Unmanned Aerial systems and their associatedservices. Space Systems design, development, delivery, andsupport of full range of civil and defence space systems fortelecommunications, earth observations, navigation, scienceand orbital systems. Communication, Intelligence & Security
provision of services around data processing from platforms,
secure communication and cyber security. In addition, themain joint ventures design, develop, deliver, and support
missile systems as well as space launcher systems.

- Airbus Helicopters — Development, manufacturing,marketing and sale of civil and military helicopters; provisionof helicopter related services.

9.

Segment Information

The following table presents information with respect to the Company’s business segments. As a rule, inter-segment transfers
are carried out on an arm’s length basis. Inter-segment sales predominantly take place between Airbus and Airbus Defence
and Space and between Airbus Helicopters and Airbus. Other activities not allocable to the reportable segments, together withconsolidation effects, are disclosed in the column “Transversal/Eliminations”.
The Company uses EBIT as a key indicator of its economic performance.
Business segment information for the year ended 31 December 2018 is as follows:
AirbusDefenceand Space

Transversal /Eliminations

Consolidated
Airbus(In € million)

AirbusAirbusHelicopters

Total revenue

47,9705,934

11,063064,967

Internal revenue

(771)

(411)

(78)

0

(1,260)47,1995,523

10,985063,70744,175

2,917

3,080

0

50,172

23

362

4,579

0

4,964

Revenue
thereof:sales of goods at a point in timesales of goods over time

3,001

2,244

3,326

0

8,571

4,295

366

676

(289)

5,048

depreciation and amortisation

1,794

167

457

26

2,444

research and development expenses(2,214)

(315)

(328)

(360)

(3,217)

114

10

206

0

330

(2,843)(569)(1,652)8(5,056)

services, including sales of spare parts
Profit before finance result and income taxes (EBIT)
thereof:share of profit from investments accounted
for under the equity method
additions to other provisions(1)

Interest result(232)

Other financial result(531)

Income taxes(1,274)

Profit for the period

3,011(1) See “— Note 22: Provisions, Contingent Assets and Contingent Liabilities”.

32

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.3 Segment Information

Business segment information for the year ended 31 December 2017 is as follows: (1)AirbusDefence andSpace(In € million)

AirbusAirbusHelicopters

Total revenue

43,486

6,335

10,596

060,417

Internal revenue

(819)

(476)

(100)

0

(1,395)42,667

5,859

10,496

0

59,022

39,955

2,898

2,015

0

44,868

0

332

5,624

0

5,956

2,712

2,629

2,857

0

8,198

2,257

247

462

(301)

2,665

Revenue

Transversal /Eliminations

Consolidated
Airbusthereof:sales of goods at a point in timesales of goods over time
services, including sales of spare parts
Profit before finance result and income taxes (EBIT)
thereof:depreciation and amortisation(1,661)

(209)

(429)

1

(2,298)research and development expenses(1,842)

(306)

(322)

(337)

(2,807)

share of profit from investments accounted
for under the equity method

144

5

161

1

311

additions to other provisions

(895)

(619)

(2,399)(11)(3,924)

Interest result(328)

Other financial result

1,489

Income taxes(1,462)

Profit for the period

2,364(1) Previous year figures are restated due to the application of IFRS 15. The divisional figures are restated due to the new segment structure.

Segment capital expenditures

31 December(In € million)

20182017 (2)

Airbus

1,618

1,885

Airbus Helicopters

149

192

Airbus Defence and Space

518

481

0

0

2,285

2,558

Transversal / Eliminations

Total capital expenditures(1)(1) Excluding expenditure for leased assets.
(2) The divisional figures are restated due to the new segment structure.

Segment assets

2

31 December(In € million)

20182017 (1)

Airbus66,61260,143

Airbus Helicopters

8,885

9,666

Airbus Defence and Space

19,056

17,763

Transversal / Eliminations(8,182)(8,388)

Total segment assets

86,371

79,184

UnallocatedDeferred and current tax assets

6,286

5,476

Securities

12,794

12,571

Cash and cash equivalents

9,413

12,016

Assets classified as held for sale

Total assets

334

202

115,198

109,449(1) Previous year figures are restated due to the application of IFRS 15. The divisional figures are restated due to the new segment structure.

Revenue by geographical areas is disclosed in “— Note 10: Revenue and Gross Margin”. Property, plant and equipment bygeographical areas is disclosed in “— Note 18: Property, Plant and Equipment”.

Airbus / Financial Statements 201833

Notes to the IFRS Consolidated Financial Statements /2.4 Airbus Performance

Segment order backlog

31 December 2018
(In € million)(In %)

Airbus411,65990

Airbus Helicopters

14,943

3

Airbus Defence and Space

35,316

8

Transversal / Eliminations

Total

As of 31 December 2018, the total backlog represents theaggregate amount of the transaction price allocated to theunsatisﬁed and partially unsatisﬁed performance obligations
to the Company’s customers. Backlog commitments are relative
to the Company’s enforceable contracts with its customers
where it is probable that the consideration will be collected.
The value of the backlog is measured in accordance with therevenue recognition standard (IFRS 15) implemented from

(2,393)(1)

459,525100

1 January 2018. As a result, contractual rebates, enginesconcessions, and variable considerations are taken into
consideration for measurement. Contracts stipulated in acurrency different than the presentation currency are translated
to euro using the spot rate as of 31 December 2018. Adjustments
to the value of the backlog could result from changes in thetransaction price. The backlog will mainly be released into
revenue over a period of seven years.

2.4 Airbus Performance
10. Revenue and Gross Margin
Revenue increased by € +4,685 million to € 63,707 million (2017 (restated): € 59,022 million). The increase relates mainly to Airbus(€ +4,484 million), mostly driven by higher deliveries of 800 aircraft (in 2017: 718 aircraft), and to Airbus Defence and Space(€ +467 million), principally reﬂecting an increase in Military Aircraft. This was partly reduced due to the perimeter change at Airbus
Helicopters (€ -401 million).
Revenue by geographical areas based on the location of the customer is as follows:(In € million)

20182017 (1)Asia-Pacific

23,29721,319Europe17,78015,767

North America

11,144

10,836

Middle East

6,379

7,211

Latin America

1,437

894

Other countries

3,670

2,995

63,70759,022

Total(1) Previous year figures are restated due to the application of IFRS 15.

The gross margin increased by € +1,914 million to € 8,787 million
compared to € 6,873 million in 2017 (restated), mainly driven byhigher deliveries, improved performance and favourable foreignexchange impact at Airbus, partly offset by impairments andprovisions recognised on the A380 programme. It also reﬂects
a positive impact from lower charges at Airbus Defence andSpace on the A400M programme. The gross margin rateincreased from 11.6% (restated) to 13.8%.

34

Airbus / Financial Statements 2018

In 2018, Airbus has delivered 93 A350 XWB aircraft. New orderintakes, cancellations, delivery postponements and othercontractual agreements to the end of December 2018 havebeen reﬂected in the ﬁnancial statements.
The industrial ramp-up is progressing and associated risks
continue to be closely monitored in line with the schedule,
aircraft performance and overall cost envelope, as per customer
commitments. Despite the progress made, challenges remain
with recurring cost convergence as the ramp-up continues.

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.4 Airbus Performance

In 2018, the Company’s largest A380 operator has reviewed
its aircraft ﬂeet strategy going forward and has concluded it isforced to restructure and reduce its A380 order by 39 aircraft.
The Company entered into discussions with the customer
in late 2018 which ﬁnally resulted in the signature of a headof agreement on 11 February 2019. Without this customer’s
A380 order, the Company has no substantial order backlog
and no basis to sustain A380 production, despite all sales andmarketing efforts in recent years. As a consequence of thisdecision, deliveries of the A380 will cease in 2021.

step towards reaching a contractually binding agreement also
mitigating the commercial exposure while satisfying customer
needs with regard to capabilities and availability of the aircraft.
A detailed review of the programme concluded in the fourth
quarter of 2017 including an estimate of the ﬁnancial impactsof the above mentioned adaptations on schedule, capabilities
and retroﬁt resulted in an update of the loss making contract
provision of € 1,299 million for the year 2017 (restated equivalentloss following the implementation of IFRS 15 was € 992 million
for the year 2017).

At year-end 2018, in view of the above, the Company has
reassessed accordingly the expected market assumptions andthe recoverability and depreciation method of speciﬁc assets
allocated to the A380 programme. As a result, the Company
has impaired speciﬁc A380 assets in the amount of € 167 million,
recognised an onerous contract provision for an amount of€ 1,257 million and updated the measurement of refundable
advances including interest accretion for a total amount of€ 1,426 million. As a consequence, the recognition of theonerous contract provision as well as other speciﬁc provisions
and the remeasurement of the liabilities have negatively affected
the consolidated income statement before taxes by a net€ 463 million in EBIT and positively impacted the other ﬁnancial
result by € 177 million.

In 2018, the Company has been working together with OCCAR
and concluded the negotiations on a contract amendment. The
customer Nations are now set to endorse the agreement to allow
pursuing the domestic approval processes with the objective
to sign the contract amendment in the ﬁ rst half-year 2019.
In the fourth quarter 2018 an update of the contract estimate atcompletion has triggered a net additional charge of € 436 million.
This reﬂects the outcome of the negotiations, updated estimateson the export scenario during the launch contract phase of
the A400M programme as well as applicable escalation andsome cost increases. Risks remain on development of technicalcapabilities and the associated costs, on securing sufﬁcient
export orders in time, on aircraft operational reliability inparticular with regards to engines, and on cost reductions as
per the revised baseline.

17 A400M aircraft were delivered in 2018. In total, 74 aircraft
have been delivered as of 31 December 2018. The Company
continued with development activities toward achieving therevised capability roadmap with the achievement of an importantdevelopment milestone according to schedule. Retroﬁt activities
are progressing in line with the customer agreed plan.
In 2017, the Company entered into discussions with OCCAR
and the customer Nations that resulted in the signature of a
Declaration of Intent (“DOI”) on 7 February 2018 agreeing on a
global re-baselining of the contract, including a revised aircraft
delivery schedule, an updated technical capability roadmap anda revised retroﬁt schedule. The DOI represents an important

11.

The A400M contractual SOC 1, SOC 1.5, SOC 2, SOC 2.5
and SOC 3 development milestones remain to be achieved.
SOC 1 fell due end October 2013, SOC 1.5 fell due end
December 2014, SOC 2 end of December 2015 and SOC 2.5
end of October 2017.
The associated termination rights became exercisable by
OCCAR on 1 November 2014, 1 January 2016, and 1 January
2017, respectively. Management judges that it is highly unlikelythat any of these termination rights will be exercised as with theupcoming contract amendment these termination rights will becompletely reviewed.

Research and Development Expenses

2

Research and development expenses increased by € +410 million to € 3,217 million compared to € 2,807 million in 2017, primarily
reﬂecting R&D activities on the A320 programme. In addition, an amount of € 91 million of development costs has been capitalised,
mainly related to Airbus Helicopters programmes.

Airbus / Financial Statements 201835

Notes to the IFRS Consolidated Financial Statements /2.4 Airbus Performance

12. Share of Proﬁt from Investments Accounted for under the Equity
Method and Other Income from Investments(In € million)

Share of profit from investments in joint ventures(1)

Share of profit from investments in associates

Share of profit from investments accounted for under the equity method
Other income from investments

(1)

2018

2017

291

274

39

37

330

311

109

82

(1) Previous year figures are restated due to the application of IFRS 15.

Share of profit from investments under the equity method and other income from investments increased by € +46 million
to € 439 million compared to € 393 million in 2017 (restated).

13. Other Income and Other Expenses
Other income increased by € +675 million to € 1,656 million
compared to € 981 million in 2017. This increase is mainly related
to the release of liabilities on the A380 programme and the gain of€ 159 million following the disposal of Plant Holdings, Inc. In 2017,it mainly included the capital gain of € 604 million from the sale ofthe defence electronics business at Airbus Defence and Space.
For more details, see “— Note 6: Acquisitions and Disposals”).

Other expenses decreased by € -154 million to € -182 million
compared to € -336 million in 2017, which included the arbitralaward relating to the Republic of China (Taiwan). For moredetails, see “— Note 36: Litigation and Claims”.

14. Total Financial Result
Interest income derived from the Company’s asset management and lending activities is recognised as interest accrues, using
the effective interest rate method.
(In € million)

2018

2017

Interests on European Governments’ refundable advances

(181)

(270)

Others(51)(58)

Total interest result (1)

(232)

(328)

Change in fair value measurement of financial instruments

(340)

392

Foreign exchange translations on monetary items

(238)

219

Unwinding of discounted provisions(2)

OthersTotal other financial result (2)
Total

(2 )

(44)

(49)

91

927

(531)

1,489

(763)

1,161

(1) In 2018, the total interest income amounts to € 208 million (2017: € 189 million) for financial assets which are not measured at fair value through profit or loss. For financial liabilities
which are not measured at fair value through profit or loss € -440 million (2017: € -517 million) are recognised as total interest expenses. Both amounts are calculated by using theeffective interest method.
(2) Previous year figures are restated due to the application of IFRS 15.

Total financial result deteriorated by € -1,924 million to€ -763 million compared to € 1,161 million in 2017 (restated). Thisis due to a negative impact from foreign exchange valuation ofmonetary items and the revaluation of ﬁnancial instruments, partly

36

Airbus / Financial Statements 2018

compensated by the net effect of the change of treatment ofcertain ﬁnancial instruments under IFRS 9. In addition, in 2017 it
included the impact of the decrease in the European Governments’refundable advances primarily related to the A380 programme.

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.4 Airbus Performance

15. Income Tax
The expense for income taxes is comprised of the following:(In € million)

2018

2017

Current tax expense

(477)

(912)

Deferred tax expense(1)

Total (1)

(797)

(550)

(1,274)(1,462)(1) Previous year figures are restated due to the application of IFRS 15.

Main income tax rates and main changes impacting the Company:(Rate in %)

2018

2019

>2019

Netherlands

25.00

25.00

25.00

France (1)

34.43

32.02

25.83

Germany

30.00

30.00

30.00

Spain

25.00

25.00

25.00

19.00

19.00

17.00

UK

(2)

(1) A tax law has been enacted in 2017 changing the rate for income taxes from 34.43% to 32.02% for 2019, to 28.92% for 2020, to 27.37% for 2021 and to 25.83% from 2022.
(2) 20% until 31 March 2017, 19% from 1 April 2017 until 31 March 2020 and 17% from 1 April 2020.

The following table shows a reconciliation from the theoretical income tax (expense) using the Dutch corporate tax rate to thereported income tax (expense):2018(In € million)

2017 (1)Profit before income taxes

4,285

3,826

Corporate income tax rate

25.0%

25.0%

Expected (expense) for income taxes(1,071)(957)

Effects from tax rate differentials / Change of tax rate

(41)

(233)

Capital gains and losses on disposals / mergers

40

148

Income from investment and associates

76

197

Tax credit

64

53

Change in valuation allowances (2)

(299)

(355)

Tax contingencies

(110)

(318)

Other non-deductible expenses and tax-free income

Reported tax (expense)

67

3(1,274)(1,462)

2(1) Previous year figures are restated due to the application of IFRS 15.
(2) Reassessments of the recoverability of deferred tax assets based on future taxable profits.

The income tax expense of € -1,274 million (2017 (restated):€ -1,462 million) corresponds to an effective tax rate of 29.7%(2017 (restated): 38.2%).
In 2018, the effective tax rate was mainly impacted by nonrealised tax losses in the period leading to additional deferred
tax asset impairment. This was partially offset by the tax-freesale of Plant Holdings Inc. (see “— Note 6: Acquisitions andDisposals”). Without these impacts, the effective tax rate would
be approximately 26%.

In 2017, th e effective tax rate was mainly impacted by nonrealised tax losses in the period leading to additional deferred
tax asset impairment. It also included an additional income
tax charge related to the French corporate tax surcharge andthe reduction in deferred tax asset due to the income tax
rate decrease in the US, both enacted end of 2017. This waspartially compensated by the disposal of the defence electronics
business, which is taxed at a reduced rate. Without these
impacts, the effective tax rate would be approximately 26%.

Airbus / Financial Statements 201837

Notes to the IFRS Consolidated Financial Statements /2.4 Airbus Performance

As the Company controls the timing of the reversal of temporary
differences associated with its subsidiaries (usually referred to as“outside basis differences”) arising from yet undistributed proﬁts
and changes in foreign exchange rates, it does not recognisea deferred tax liability. For temporary differences arising frominvestments in associates the Company recognises deferred
tax liabilities. The rate used reﬂects the assumptions that thesedifferences will be recovered from dividend distribution unlessa management resolution for the divestment of the investment
exists at the closing date. For joint ventures, the Company

assesses its ability to control the distribution of dividends basedon existing shareholder agreements and recognises deferred
tax liabilities accordingly.
As of 31 December 2018, the aggregate amount of temporary
differences associated with investments in subsidiaries,
branches and associates and interests in joint arrangements,
for which deferred tax liabilities have not been recognised,amounts to € 132 million.

Deferred taxes on net operating losses (“NOLs”), trade tax loss carry forwards and tax credit carry forwards:(In € million)

Germany

Spain

UK

Other
countries

31 December
2018

31 December
2017

596

1,989

127

2,103

1,492

6,307

4,269

0

2,020

0

0

0

2,020

1,051

FranceNOL
Trade tax loss carry forwards

0

0

319

11

2

332

547

Tax effectTax credit carry forwards

154

601

351

369

393

1,868

1,617

Valuation allowances

(113)

(415)

(74)

(49)

(364)

(1,015)

(733)

41

186

277

320

29

853

884

Deferred tax assets on NOL s
and tax credit carry forwards

NOLs, capital losses and trade tax loss carry forwards are indeﬁnitely usable under certain restrictions in France, Germany, theUK and Spain. They are usable for 20 years in Canada. In Spain, R&D tax credit carry forwards still expire after 18 years. The
ﬁrst tranche of tax credit carry forwards (€ 1 million) will expire in 2020. No deferred tax has been recognised for this tranche.
Roll forward of deferred taxes:(In € million)

20182017 (1)Net deferred tax assets at 1 January

3,560

6,930

Deferred tax expense in income statement

(797)

(550)

Deferred tax recognised directly in AOCI

754

(2,881)

Deferred tax on remeasurement of the net defined benefit pension plans

(28)

(26)

Others

27

87

3,516

3,560

2018

2017

Net deferred tax assets at 31 December(1) Previous year figures are restated due to the application of IFRS 15.

Details of deferred taxes recognised cumulatively in equity are as follows:(In € million)

38

Financial assets at fair value through OCI (previously available-for-sale investments)

(75)

(124)

Cash flow hedges

(446)

(238)

Deferred tax on remeasurement of the net defined benefit pension plans

1,694

1,652

Total

1,173

1,290

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.4 Airbus Performance

Deferred income taxes as of 31 December 2018 are related to the following assets and liabilities:
1 January 2018 (1)Other movements

Movement throughincome statement

31 December 2018

R&D
tax
credits

Deferredtax benefit(expense)

Deferredtax
assetsDeferredtax
liabilities

Deferredtax
assetsDeferredtax
liabilities

OCI /IAS 19Intangible assets

70

(586)

0

0

0

201

147

(462)

Property, plant and equipment

681(1,257)

0

1

0

177

613

(1,011)(In € million)

Investments and other long-term
financial assets

Others

(2)

559

(167)

0

9

0

1,001

1,416

(14)

Inventories

1,376(1,871)

0

0

0

1,898

1,416

(13)

Receivables and other assets

3,553(3,286)

590

(61)

0

(1,831)646(1,681)

0

(2)

0

0

0

14

12

0

Provisions for retirement plans

1,480

0

(156)

27

0

(713)

695

(57)

Other provisions

3,508(1,239)

0

0

0

(335)

1,890

44

Liabilities

2,504(2,211)

123

(4)

0

(1,214)887(1,689)Prepaid expenses

(94)

(67)

0

0

0

98

0

(63)

NOLs and tax credit carry forwards

1,617

0

0

86

(41)

206

1,868

0

Deferred tax assets (liabilities)
before offsetting

15,254(10,686)

557

58

(41)

(498)

9,590

(4,946)

Deferred income

Valuation allowances on deferred
tax assets(1,008)

0

169

11

0

(299)

(1,127)0

Set-off(9,684)

9,684

0

0

0

0

(3,628)3,628

Net deferred tax assets(liabilities)

4,562(1,002)

726

69

(41)

(797)

4,835

(1,318)(1) Previous year figures are restated due to the application of IFRS 15.
(2) “Others” mainly comprises changes in the consolidation scope and foreign exchange rate effects.

Deferred income taxes as of 31 December 2017 are related to the following assets and liabilities: (1)1 January 2017

Other movements

Movement throughincome statement

31 December 2017

R&D
tax
credits

Deferredtax benefit(expense)

Deferredtax
assetsDeferredtax
liabilities

Deferredtax
assetsDeferredtax
liabilities

OCI /IAS 19Intangible assets

70

(610)

0

15

0

9

70

(586)

Property, plant and equipment

741(1,384)

0

(48)

0

115

681

(1,257)(In € million)

Investments and other long-term
financial assets

Others

(2)

204

(303)

0

39

0

452

559

(167)

Inventories

1,431(1,222)

0

45

0

(749)

1,376

(1,871)

Receivables and other assets

2,695(1,011)

(918)

52

0

(551)

3,553

(3,286)(2)

Prepaid expenses

1

0

0

0

0

(3)

0

Provisions for retirement plans

1,420

0

(34)

32

0

62

1,480

0

Other provisions

3,720(1,492)

0

9

0

32

3,508

(1,239)Liabilities

4,564(2,676)(2,159)

(3)

0

567

2,504

(2,211)

Deferred income

19

(102)

0

(77)

0

(1)

(94)

(67)

NOLs and tax credit carry forwards

1,706

0

0

0

39

(128)

1,617

0

Deferred tax assets (liabilities)
before offsetting

16,571(8,800)(3,111)

64

39

(195)

15,254(10,686)

Valuation allowances on deferred
tax assets

(795)

0

204

(62)

0

(355)

(1,008)0Set-off(7,696)

7,696

0

0

0

0

(9,684)

9,684

Net deferred tax assets(liabilities)

8,080(1,104)(2,907)

2

39

(550)

4,562

(1,002)

2(1) Previous year figures are restated due to the application of IFRS 15.
(2) “Others” mainly comprises changes in the consolidation scope and foreign exchange rate effects.

Airbus / Financial Statements 201839

Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities

16. Earnings per ShareProfit for the period attributable to equity owners of the parent (Net income) (1)Weighted average number of ordinary shares

Basic earnings per share

2018

2017

€ 3,054 million€ 2,361 million

775,167,941

773,772,702€ 3.94€ 3.05(1)(1) Previous year figures are restated due to the application of IFRS 15.

Diluted earnings per share – The Company’s categories ofdilutive potential ordinary shares are share-settled Performance
Units relating to Long-Term Incentive Plans (“LTIP”) and theconvertible bond issued on 1 July 2015. During 2018, theaverage price of the Company’s shares exceeded the exercise
price of the share-settled Performance Units and therefore
752,107 shares (2017: 505,536 shares) were considered in thecalculation of diluted earnings per share. The dilutive effect of
the convertible bond was also considered in the calculation ofdiluted earnings per share in 2018, by adding back € 7 millionof interest expense to the proﬁt for the period attributable toequity owners of the parent (2017: € 7 million) and by including
5,022,990 of dilutive potential ordinary shares.

2018

2017

Profit for the period attributable to equity owners of the parent (Net income),
adjusted for diluted calculation (1)€ 3,061 million€ 2,368 million

Weighted average number of ordinary shares (diluted) (2)780,943,038

779,301,228€ 3.92€ 3.04

Diluted earnings per share(1)(1) Previous year figures are restated due to the application of IFRS 15.
(2) Dilution assumes conversion of all potential ordinary shares.

2.5 Operational Assets and Liabilities
17.

Intangible Assets

Intangible assets comprise (i) goodwill (see “— Note 5: Scope of Consolidation”), (ii) capitalised development costs (see “— Note 2:
Signiﬁcant Accounting Policies”) and (iii) other intangible assets, e.g. internally developed software and acquired intangible assets.
Intangible assets with ﬁnite useful lives are generally amortised on a straight-line basis over their respective estimated useful lives(3 to 10 years) to their estimated residual values.
31 December 2018 and 2017 comprise the following:
31 December 2018
(In € million)GrossamountAmortisation /Impairment

Net book
value

Gross
amountGoodwill

14,077(1,038)13,03910,180(1,040)9,141

Capitalised development costs

3,070(1,488)

1,582

3,104

(1,340)

1,763

Other intangible assets

Total

40

31 December 2017

Airbus / Financial Statements 2018

Amortisation /Impairment

Net book
value

4,572

(2,467)

2,105

3,135

(2,409)725

21,719(4,993)

16,726

16,418(4,789)

11,629

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities

NET BOOK VALUE(In € million)

Balance at
Changes in
Balance at
1 January Exchange
consolidation
Amortisation / 31 December(1)(1)
2018 differences Additions
scope Reclassification Disposals
Impairment
2018

Goodwill

9,141

12

0

3,894

(4)

(3)

0

13,039

Capitalised
development
costs

1,763

(2)

91

0

(12)

0

(259)

1,582

Other
intangible
assets

Total

725

34

233

1,377

(59)

(7)

(199)

2,105

11,629

44

324

5,271

(75)

(10)

(458)

16,726(1) Includes intangible assets from entities disposed and reclassified to assets and disposal groups classified as held for sale (see “— Note 6: Acquisitions and Disposals”).

(In € million)

Balance at
Changes in
1 January Exchange
consolidation
Amortisation /2017 differences Additions
scope Reclassification (1) Disposals (1)Impairment

Balance at
31 December
2017

Goodwill

9,425

(72)

0

0

(208)

(4)

0

9,141

Capitalised
development
costs

1,707

(8)

219

0

34

(5)

(185)

1,763

Other
intangible
assets

Total

936

(27)

189

0

(164)

(2)

(207)

725

12,068

(107)

409

0

(338)

(11)

(392)

11,629(1) Includes intangible assets from entities disposed and reclassified to assets and disposal groups classified as held for sale (see “— Note 6: Acquisitions and Disposals”).

Intangible assets increased by € +5,097 million to € 16,726 million (2017: € 11,629 million). Intangible assets mainly relate to
goodwill of € 13,039 million (2017: € 9,141 million). The increase is primarily due to the acquisition of CSALP (see “— Note 6:
Acquisitions and Disposals”).

Capitalised Development Costs
The Company has capitalised development costs in the amount of € 1,582 million as of 31 December 2018 (€ 1,76 3 million as of
31 December 2017), mainly for the A350 XWB programme (€ 678 million).

2

Impairment Tests
Each year the Company assesses whether there is an indicationthat a non-ﬁnancial asset or a Cash Generating Unit (“CGU”) to
which the asset belongs may be impaired. In addition, intangible
assets with an indeﬁnite useful life, intangible assets not yet
available for use and goodwill are tested for impairment annually,irrespective of whether there is any indication for impairment.
An impairment loss is recognised in the amount by which theasset’s carrying amount exceeds its recoverable amount. For
the purpose of impairment testing, any goodwill is allocatedto the CGU or group of CGUs in a way that reﬂects the way
goodwill is monitored for internal management purposes.
The discounted cash ﬂow method is used to determine therecoverable amount of a CGU or the group of CGUs to which
goodwill is allocated. The discounted cash flow method
is particularly sensitive to the selected discount rates andestimates of future cash ﬂows by management. Discount rates
are based on the weighted average cost of capital (“WACC”)

for the groups of cash generating units. The discount rates arecalculated based on a risk-free rate of interest and a market
risk premium. In addition, the discount rates reﬂect the current
market assessment of the risks speciﬁc to each group of CGUs
by taking into account speciﬁ c peer group information onbeta factors, leverage and cost of debt. Consequently, slightchanges to these elements can materially affect the resulting
valuation and therefore the amount of a potential impairment
charge.
These estimates are influenced by several assumptions
including growth assumptions of CGUs, availability andcomposition of future defence and institutional budgets,foreign exchange ﬂuctuations or implications arising from thevolatility of capital markets. Cash ﬂow projections take into
account past experience and represent management’s best
estimate of future developments.

Airbus / Financial Statements 201841

Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities

As of 31 December 2018 and 2017, goodwill was allocated to CGUs or group of CGUs and is summarised in the following schedule:
AirbusHelicopters(In € million)

AirbusGoodwill as of 31 December 2018

10,759128

Goodwill as of 31 December 2017 (1)

6,852

129

AirbusDefenceand Space

Transversal /Eliminations

Consolidated
Airbus2,152

0

13,039

2,160

0

9,141

(1) Previous year figures are restated due to the application of IFRS 15. The divisional figures are restated due to the new segment structure.

The goodwill mainly relates to the creation of the Company in 2000 and the Airbus Combination in 2001.
The annual impairment tests performed in 2018 led to no impairment charge.
General Assumptions Applied in the Planning Process
The basis for determining the recoverable amount is the value in
use of the CGUs. Generally, cash ﬂow projections used for theCompany’s impairment testing are based on operative planning.
The operative planning, used for the impairment test, is based on
the following key assumptions which are relevant for all CGUs:
increase of expected future labour expenses of 2.0% (2017:2.0%);
future interest rates projected per geographical market, for
the European Monetary Union, the UK and the US;
future exchange rate of 1.25 US$/€ (2017: 1.25 US$/€) toconvert in euro the portion of future US dollar which is
not hedged (see “— Note 35: Information about Financial
Instruments”).

-- Due to the signiﬁcant hedge portfolio, the carrying value-

Airbus Helicopters- The planning takes into account the evolution of programmes-

General economic data derived from external macroeconomic
and ﬁnancial studies have been used to derive the general key
assumptions.
In addition to these general planning assumptions, the following
additional CGU specific assumptions, which represent
management’s current best assessment as of the date ofthese Consolidated Financial Statements, have been applied
in individual CGUs.
Airbusand planned cash ﬂows of the CGU Airbus are materiallyinﬂuenced.
Cash ﬂows are discounted using a euro weighted pre-tax
WACC of 10.6% (2017: 9.6%).

-

based upon the current backlog and an assessment of orderintake for platforms and services.
In the absence of long-term ﬁnancial reference, expected cash
ﬂows generated beyond the planning horizon are consideredthrough a terminal value.
Long-term commercial assumptions in respect of market
share, deliveries and market value are based on the helicopter
market forecast considering the decrease over recent years
in the civil and parapublic market partially driven by decreaseof investment in oil and gas, needs of helicopter ﬂeet renewal
and growth markers and the increase of Airbus Helicoptersmarket share in this environment. Current market evolutions
are considered through sensitivities.
Cash ﬂows are discounted using a euro weighted pre-tax
WACC of 10.4% (2017: 9.7%).

Airbus Defence and Space

Overall the defence and space markets are expected to grow
- The planning takes into account the current production rate - at a steady rate during the period of the operative planningassumptions and provides an assessment of expected future
horizon.
deliveries on that basis.
Business growth is underpinned by growing defence- In the absence of long-term ﬁnancial reference, expected cash-

42

ﬂows generated beyond the planning horizon are consideredthrough a terminal value.
Long-term commercial assumptions in respect of market
share, deliveries and market value are based on General
Market Forecast updated in 2018. The development of market
share per segment considers enlargement of the competitionas per current best assessment. Current market evolutions
are considered through sensitivities.

Airbus / Financial Statements 2018-

opportunities boosted after ﬁ nalisation of the successful
portfolio re-shaping programme. Underlying performanceis improved by focusing on project delivery, cost control andefﬁciency.
In the absence of long-term ﬁnancial reference, expected cash
ﬂows generated beyond the planning horizon are consideredthrough a terminal value.
Cash ﬂows are discounted using a euro weighted pre-tax
WACC of 9.1% (2017: 8.3%).

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities

18. Property, Plant and Equipment
Property, plant and equipment is valued at acquisition or manufacturing costs less accumulated depreciation and impairment
losses. Items of property, plant and equipment are generally depreciated on a straight-line basis. The following useful lives are
assumed:Buildings

10 to 50 years

Site improvements

6 to 30 years

Technical equipment and machinery

2 to 20 years

Jigs and tools(1)

5 years

Other equipment, factory and office equipment

2 to 10 years(1) If more appropriate, jigs and tools are depreciated using the number of production or similar units expected to be obtained from the tools (sum-of-the-units method).

Property, plant and equipment as of 31 December 2018 and 2017 comprises the following:
31 December 201831 December 2017GrossamountDepreciation /Impairment

Net book
value (2)GrossamountDepreciation /Impairment

Net book
value (2)Land, leasehold improvements
and buildings, including buildings
on land owned by others

9,873(4,692)

5,181

9,543

(4,452)

5,091

Technical equipment and machinery

8,022

21,004(12,938)

8,066(In € million)

21,994(13,972)

Other equipment, factory and officeequipment (1)3,714(2,812)

902

3,693

(2,754)939

Construction in progress

2,668

0

2,668

2,514

0

2,514

38,249(21,476)

16,77336,754(20,144)

16,610Total(1) Includes the net book value of aircraft under operating lease (see “— Note 25: Sales Financing Transactions”).
(2) Buildings, technical equipment and other equipment accounted for in fixed assets under finance lease agreements for net amounts to € 345 million (2017: € 359 million).

NET BOOK VALUE(In € million)

Balance atBalance at
Changes in
Depreciation/ 31 December
1 January Exchange
consolidation Reclassi(1)(1)
Impairment
2018 differences Additions
2018
scope fication Disposals

Land, leasehold
improvements andbuildings, including
buildings on land
owned by others

5,091

9

84

172

166

(40)

(301)

5,181

Technical equipment
and machinery

8,066

70

391

69

888

(50)

(1,412)

8,022

939

10

147

0

50

(15)

(229)

902

Other equipment,
factory and officeequipment
Constructionin progress

Total

2,514

(7)

1,381

11

(1,223)

(8)

0

2,668

16,610

82

2,003

252

(119)

(113)

(1,942)

16,7732(1) Includes property, plant and equipment from entities disposed and reclassified to assets and disposal groups classified as held for sale (see “— Note 6: Acquisitions and Disposals”).

Airbus / Financial Statements 201843

Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities(In € million)

Balance at
Changes in
1 January Exchange
consolidation ReclassiDepreciation/2017 differences Additions
scope fication (1) Disposals (1)Impairment

Balance at
31 December
2017

Land, leasehold
improvements andbuildings, including
buildings on land
owned by others

5,192

(58)

123

(1)

167

(41)

(291)

5,091

Technical equipment
and machinery

8,255

(128)

429

7

900

(17)

(1,380)

8,066

994

(29)

335

3

79

(220)

(223)

939

Other equipment,
factory and officeequipment
Constructionin progress

Total

2,472

(22)

1,452

0

(1,384)

(4)

0

2,514

16,913

(237)

2,339

9

(238)

(282)

(1,894)

16,610(1) Includes property, plant and equipment from entities disposed and reclassified to assets and disposal groups classified as held for sale (see “— Note 6: Acquisitions and Disposals”).

Property, plant and equipment increased by € +163 million to € 16,773 million (2017: € 16,610 million), mainly at Airbus Defence
and Space (€ +150 million).
For details on assets related to lease arrangements on sales ﬁnancing, see “— Note 25: Sales Financing Transactions”.
PROPERTY, PLANT AND EQUIPMENT BY GEOGRAPHICAL AREAS
31 December(In € million)

2018

2017

France

7,630

7,222

Germany

4,281

4,649

UK

2,141

2,193

Spain

1,500

1,613

Other countries

1,176

881

16,72816,558Total(1) Property, plant and equipment by geographical areas excludes leased assets of € 45 million (2017: € 52 million).

Off-Balance Sheet Commitments
Commitments related to property, plant and equipment
comprise contractual commitments for future capital
expenditures and contractual commitments for purchases of“Land, leasehold improvements and buildings including buildings
on land owned by others” (€ 256 million as of 31 December 2018,2017: € 257 million).

Future nominal operating lease payments (for the Company as
a lessee) for rental and lease agreements not relating to aircraft
sales ﬁnancing amount to € 1,494 million as of 31 December
2018 (2017: € 1,025 million), and relate mainly to procurement
operations (e.g. facility leases).

Maturities as of 31 December 2018 and 2017 are as follows:
31 December
2018

2017

Not later than 1 year

261

202

Later than 1 year and not later than 5 years

696

516

Later than 5 years

537

307

1,494

1,025

(In € million)

Total

44

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities

19. Other Investments and Other Long-Term Financial Assets
31 December(In € million)

2018

2017

Other investments

2,267

2,441

Other long-term financial assets

1,544

1,763

Total non-current other investments and other long-term financial assets

3,811

4,204

489

529

4,300

4,733

Current portion of other long-term financial assets

Total

Other investments mainly comprise the Company’s
participations. The signiﬁcant participations at 31 December
2018 include the remaining investment in Dassault Aviation( 9.89%, 2 017: 9.93%) amounting to € 999 million (2017€ 1,071 million).

Other long-term financial assets and the current portionof other long-term financial assets include other loans in
the amount of € 1,523 million as of 31 December 2018 (2017:€ 1,521 million), and the sales ﬁnancing activities in the formof ﬁnance lease receivables and loans from aircraft ﬁnancing.

20. Contract Assets, Contract Liabilities and Trade Receivables,
and Trade Liabilities
Contract assets represent the Company’s right to considerationin exchange for goods or services that the Company has
transferred to a customer when that right is conditioned bysomething other than the passage of time (e.g. revenue
recognised from the application of the PoC method before theCompany has a right to invoice).
Contract liabilities represent the Company’s obligation to transfer
goods or services to a customer for which the Company hasreceived consideration, or for which an amount of considerationis due from the customer (e.g. advance payments received).
Net contract assets and contract liabilities are determinedfor each contract separately. For serial contracts, contract
liabilities are presented in current contract liabilities, if revenues
are expected within the next twelve months or material expenses
for the manufacturing process have already occurred. For
long-term production contracts (e.g. governmental contracts
such as A400M, Tiger, NH90), contract liabilities are classiﬁed as

current when the relating inventories or receivables are expected
to be recognised within the normal operating cycle of the longterm contract.
Trade receivables arise when the Company provides goods
or services directly to a customer with no intention of trading
the receivable. Trade receivables include claims arising fromrevenue recognition that are not yet settled by the debtor aswell as receivables relating to construction contracts. Trade
receivables are initially recognised at their transaction prices
and are subsequently measured at amortised cost less any
allowances for impairment. Gains and losses are recognisedin the Consolidated Income Statement when the receivables
are derecognised, impaired or amortised.

2

Impairment and allowances of trade receivables andcontract assets are measured at an amount equal to thelife-time expected loss as described in “— Note 4: Change in
Accounting Policies and Disclosures”.

Contract Assets, Contract Liabilities and Trade Receivables
Signiﬁcant changes in contract assets and contract liabilities during the period are as follows:
2018
Contract assets

Contract liabilities-(23,464)

Increase due to cash received, excluding amounts recognised as revenue-

23,472

Transfers from contract assets recognised at the beginning of the period(2,740)-

Increase as a result of changes in the measure of progress

3,074

-

(In € million)

Revenue recognised that was included in the contract liability balance at 1 January

As of 31 December 2018, trade receivables amounting to € 583 million (2017: € 964 million) will mature after more than one year.

Airbus / Financial Statements 201845

Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities

In the year of implementation, the Company does not disclosesigniﬁcant changes in the contract assets and the contract
liabilities for the prior year. The high costs linked to its creation

would have not justiﬁed the result in terms of additional useful
information to be provided.

The respective movement in the allowance for doubtful accounts in respect of trade receivables and contract assets during theperiod was as follows:(In € million)

20182017 (1)Allowance balance at 1 January

(252)

(245)

Foreign currency translation adjustment(5)

2

Utilisations / disposals and business combinations

28

37

Additions

Allowance balance at 31 December (2)

(40)

(46)

(269)

(252)

(1) Previous year figures are restated due to the application of IFRS 15.
(2) Thereof, € 2 million relates to contracts assets (2017: € 3 million).

Trade Liabilities
Trade liabilities of € 16,237 million (2017 (restated): € 13,406 million) increased by € +2,831 million, mainly in Airbus.
As of 31 December 2018, trade liabilities amounting to € 29 million (2017: € 24 million) will mature after more than one year.

21. Inventories
31 December 2017 (1)31 December 2018
GrossamountWritedown

Net book
value

Gross
amountWritedown

Net bookvalue

Raw materials and manufacturing supplies

3,827

(554)

3,273

3,231

(484)

2,747

Work in progress

23,119(1,476)

21,643

22,176(1,911)

20,265

Finished goods and parts for resale

3,949

(555)

3,394

3,487

(612)

2,875

(In € million)

Advance payments to suppliers

Total

3,631

(50)

3,581

3,916

(66)

3,850

34,526(2,635)31,89132,810(3,073)29,737(1) Previous year figures are restated due to the application of IFRS 15.

Inventories of € 31,891 million (2017 (restated): € 29,737 million)
increased by € +2,154 million. This is driven by Airbus(€ +2,128 million) reﬂ ecting an increase in work in progress
associated with the A320 programme ramp-up, including theimpact of late engine deliveries.
Write-downs for inventories are recorded when it becomesprobable that total estimated contract costs will exceed total
contract revenue. In 2018, write-downs of inventories in the46

Airbus / Financial Statements 2018

amount of € -883 million (2017 (restated): € -1,108 million) arerecognised in cost of sales, whereas reversal of write-downs
amounts to € 264 million (2017 (restated): € 10 2 million). At
31 December 2018, € 20,626 million of work in progress and€ 3,130 million of ﬁnished goods and parts for resale were carriedat net realisable value.
Inventories recognised as an expense during the period amountto € 44,437 million (2017 (restated): € 39,828 million).

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities

22. Provisions, Contingent Assets and Contingent Liabilities
Provisions — The determination of provisions, e.g. for onerous
contracts, warranty costs, restructuring measures and legal
proceedings is based on best available estimates.
In general, in the aerospace sector, the contractual and technicalparameters considered for provision calculations are complex.

Hence uncertainty exists with regard to the timing and amountsof expenses to be taken into account.
The majority of other provisions are generally expected to resultin cash outﬂows during the next 1 to 12 years.

31 December(In € million)

Provisions for pensions(2)

Other provisions (1)

Total

(1)

thereof non-current portion (1)thereof current portion

(1)

2018

2017

7,072

8,361

11,816

7,690

18,88816,051

11,571

9,779

7,317

6,272

(1) Previous year figures are restated due to the application of IFRS 15.
(2) See “— Note 29: Post-Employment Benefits”.

Provisions for pensions decreased mainly due to contributions made into the various pension vehicles.
Other provisions are presented net of programme losses against inventories (see “— Note 21: Inventories”) and increased
due to the inclusion of liabilities related to acquired customer contracts linked to the acquisition of CSALP (see “— Note 6:
Acquisitions and Disposals”) and due to the A380 net charge recorded in 2018 (see “— Note 10: Revenue and Gross Margin”).
Movements in other provisions during the year were as follows:(In € million)

Balance at
1 January Exchange
2018 differences

Increase
Reclassification/
from
Change inpassageconsolidatedof time Additions
group

Balance at
31 December
Used Released
2018

Onerous contracts (1)

1,828

51

0

2,374

2,617

(1,328)

(53)

5,489

Outstanding costs (1)

1,606

1

0

468

(81)

(577)

(93)

1,324

Aircraft financing risks (1) (2)

1

0

0

2

8

0

(5)

6

Obligation from services
and maintenanceagreements

492

0

8

67

194

(82)

(28)

651

Warranties (1)

267

0

1

108

22

(57)

(14)

327

Personnel-related
provisions (3)

1,019

0

3

427

37

(452)

(114)

920

Litigation and claims

288

0

0

116

244

(45)

(16)

587

Asset retirement

158

0

(6)

2

0

0

(1)

153

Other risks and charges (1)

2,031

(2)

0

1,492

(603)

(317)

(242)

2,359

Total (1)

7,690

50

6

5,056

2,438

(2,858)(566)

11,8162(1) Previous year figures are restated due to the application of IFRS 15.
(2) See “— Note 25: Sales Financing Transactions”.
(3) See “— Note 28: Personnel-Related Provisions”.

Provisions for onerous contracts in 2018 mainly include the provisions related to the A380 and A400M programmes(see “— Note 10: Revenue and Gross Margin” and “— Note 21: Inventories”). Reclassiﬁcation / Change in consolidated groupmainly relates to the liabilities associated to the CSALP acquisition (see “— Note 6: Acquisitions and Disposals”).
The majority of the addition to provisions for outstanding costs relates to Airbus Helicopters (€ 307 million) as well as to Airbus
Defence and Space (€ 110 million).
Provisions for litigations and claims include the arbitral award relating to the Republic of China (Taiwan). For more details,
see “— Note 36: Litigation and Claims”.

Airbus / Financial Statements 201847

Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities

Personnel-related provisions include restructuring provisions and other personnel charges. For more details, see “— Note 28:
Personnel-Related Provisions”.
An H225 Super Puma helicopter was involved in an accident on 29 April 2016. Management is cooperating fully with the authorities
and have agreed a retroﬁt plan for the implementation of corrective measures. An estimate of the related net future costs has
been prepared and is included in other provisions.
Contingent assets and contingent liabilities — The Company
is exposed to technical and commercial contingent obligations
due to the nature of its businesses. To mitigate this exposure,
the Company has subscribed a Global Aviation Insurance
Programme (“GAP”). Information required under IAS 37“Provisions, Contingent Assets and Contingent Liabilities” isnot disclosed if the Company concludes that disclosure canbe expected to prejudice seriously its position in a dispute withother parties.

For other contingent liabilities, see “— Note 36: Litigation and
Claims” and “— Note 10: Revenue and Gross Margin” (mainly
A400M programme).
Other commitments include contractual guarantees
and performance bonds to certain customers as well as
commitments for future capital expenditures and amounts
which may be payable to commercial intermediaries if future
sales materialise.

23. Other Financial Assets and Other Financial Liabilities
Other Financial Assets
31 December
2018

2017

1,031

2,901

77

79

Total non-current other financial assets

1,108

2,980

Receivables from related companies

1,082

992

(In € million)

Positive fair values of derivative financial instruments(1)

Others

(1)

286

663

443

324

Total current other financial assets

1,811

1,979

Total

2,919

4,959

Positive fair values of derivative financial instruments
Others(1) See “— Note 35: Information about Financial Instruments”.

Other Financial Liabilities
31 December(In € million)

2018

2017

Liabilities for derivative financial instruments (2)

1,132

1,127

European Governments’ refundable advances

4,233

5,537

Others (1) (2)

2,644

40

8,009

6,704

1,623

1,144

344

364

175

199

Total non-current other financial liabilities(1)

Liabilities for derivative financial instruments (2)European Governments’ refundable advances(3)

Liabilities to related companies (1)

320

343

Total current other financial liabilities (1)Others

2,462

2,050

Total (1)

10,471

8,754

2,125

2,041

thereof other financial liabilities due within 1 year (1)(1) Previous year figures are restated due to the application of IFRS 15.
(2) See “— Note 35: Information about Financial Instruments”.
(3) Refundable advances from European Governments are provided to the Company to finance research and development activities for certain projects on a risk-sharing basis, i.e.
they are repaid to the European Governments subject to the success of the project.

48

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities

The total net fair value of derivative financial instruments
deteriorated by € -2,731 million to € -1,438 million (2017:€ 1,293 million) as a result of the strengthening of the US dollar
versus the euro associated with the mark to market valuationof the hedge portfolio.

The European Governments’ refundable advances decreasedby € -1,324 million to € 4,577 million (2017: € 5,901 mil lion),primarily related to the update on the A380 programme(see “— Note 10: Revenue and Gross Margin”).

24. Other Assets and Other Liabilities
Other Assets
31 December(In € million)

Cost to fulfil a contract(1)

Prepaid expenses (1)
(1)

2018

2017

777

868

33

15

78

92

888

975

Value added tax claims

3,255

1,892

Cost to fulfil a contract (1)

464

522

OthersTotal non-current other assets (1)Prepaid expenses(1)

Others (1)Total current other assets (1)

Total

(1)

121

146

406

377

4,246

2,937

5,134

3,912

(1) Previous year figures are restated due to the application of IFRS 15.

Other Liabilities
31 December(In € million)

Others (1)Total non-current other liabilities(1)

Tax liabilities (excluding income tax)

2018

2017

460

298

460

298

2,706

1,397

Others

2,582

2,512

Total current other liabilities (1)

5,288

3,909

Total (1)

5,748

4,207

5,288

3,909

thereof other liabilities due within 1 year (1)2(1) Previous year figures are restated due to the application of IFRS 15.

Airbus / Financial Statements 201849

Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities

25. Sales Financing Transactions
Sales financing — With a view to facilitating aircraft sales for
Airbus and Airbus Helicopters, the Company may enter intoeither on-balance sheet or off-balance sheet sales financing
transactions.
On-balance sheet transactions where the Company islessor are classified as operating leases, finance leases andloans, inventories and to a minor extent, equity investments:(i) Operating leases – Aircraft leased out under operating leases
are included in property, plant and equipment at cost lessaccumulated depreciation (see “— Note 18: Property, Plant
and Equipment”). Rental income from operating leases isrecorded as revenue on a straight-line basis over the term of
the lease.
(ii) Finance leases and loans – When, pursuant to a financing
transaction, substantially all the risks and rewards of ownershipof the financed aircraft reside with a third party, the transaction
is characterised as either a finance lease or a loan. In such
instances, revenue from the sale of the aircraft are recorded
upon delivery, while financial interest is recorded over time
as financial income. The outstanding balance of principal isrecorded on the statement of financial position (on-balance
sheet) in long-term financial assets, net of any accumulated
impairments.
(iii) Inventories – Second hand aircraft acquired as part of acommercial buyback transaction, returned to Airbus after
a payment default or at the end of a lease agreement areclassified as inventories held for resale if there is no subsequent
lease agreement in force (see “— Note 21: Inventories”).
Off-balance sheet commitments — Financing commitments
are provided to the customer either as backstop commitments
before delivery, asset value guarantees at delivery, operating
head-lease commitments or counter guarantees:(i) Backstop commitments are guarantees by Airbus, madewhen a customer-order is placed, to provide financing to
the customer in the event that the customer fails to securesufficient funding when payment becomes due under the order.
Such commitments are not considered to be part of Gross
Customer Financing Exposure as (i) the financing is not inplace, (ii) commitments may be transferred in full or part tothird parties prior to delivery, (iii) past experience suggests it
is unlikely that all such proposed financings actually will be
implemented and, (iv) Airbus retains the asset until the aircraft
is delivered and does not incur an unusual risk in relation
thereto. In order to mitigate customer credit risks for Airbus,
such commitments typically contain financial conditions whichguaranteed parties must satisfy in order to benefit therefrom.
(ii) Asset value guarantees are guarantees whereby Airbus
guarantees a portion of the value of an aircraft at a specificdate after its delivery. Airbus considers the financial risks
associated with such guarantees to be acceptable, because(i) the guarantee only covers a tranche of the estimated future
value of the aircraft, and its level is considered prudent incomparison to the estimated future value of each aircraft, and(ii) the exercise dates of outstanding asset value guarantees
are distributed through 2030.

50

Airbus / Financial Statements 2018

As of 31 December 2018, the nominal value of asset value
guarantees considered as variable considerations under
IFRS 15 provided to beneﬁciaries amounts to € 639 million(2017: € 722 million), excluding € 27 million (2017: € 30 million)
w here the risk is considered to be remote. The present
value of the risk inherent in asset value guarantees where asettlement is being considered probable is fully provided forand included in the total of contract liabilities for an amountof € 511 million (2017 restated: € 582 million) (see “— Note 20:
Contract Assets, Contract Liabilities and Trade Receivables,
and Trade Liabilities”).
(iii) Operating head-lease commitments – Airbus has entered into
head-lease sub-lease transactions in which it acts as a lessee
under an operating head-lease and lessor under the sub-lease.
Airbus’ customer financing exposure to operating head-leasecommitments is determined as the present value of the futurehead-lease payments. There was no net exposure for suchleases as of 31 December 2018 and 2017.
Exposure — In terms of risk mana gement, the Company
manages its gross exposure arising from its sales financing
activities (“Gross Customer Financing Exposure”) separately
for (i) customer’s credit risk and (ii) asset value risk.
Gross Customer Financing Exposure is the sum of (i) thebook value of operating leases before impairment, (ii) the
outstanding principal amount of finance leases or loans
due before impairment, (iii) the guaranteed amounts underfinancial guarantees and the net present value of head-leasecommitments, (iv) the book value of second hand aircraft for
resale before impairment, and (v) the outstanding value of
any other investment in sales financing structured entities
before impairment. This Gross Customer Financing Exposure
may differ from the value of related assets on the Company’s
Statement of Financial Position and related off-balance
sheet contingent commitments, mainly because (i) assets
are recorded in compliance with IFRS, but may relate totransactions that are financed on a limited recourse basisand (ii) the carrying amount of the assets on the Consolidated
Statement of Financial Position may have been adjusted for
impairment losses.
Gross Customer Financing Exposure amounts to US$ 1.0 billion(€ 0.9 billion) (2017: US$ 1.7 billion (€ 1.4 billion)).
Net exposure is the difference between Gross Customer
Financing Exposure and the collateral value. Collateral value
is assessed using a dynamic model based on the net present
value of expected future receivables, expected proceedsfrom resale and potential cost of default. This valuation
model yields results that are typically lower than residual
value estimates by independent sources in order to allow forwhat management believes is its conservative assessment ofmarket conditions and for repossession and transformation
costs. The net exposure is provided for by way of impairment
losses and other provisions.
Impairment losses and provisions — For the purpose ofmeasuring an impairment loss, each transaction is tested
individually. Impairment losses relating to aircraft underoperating lease and second hand aircraft for resale (included
in inventory) are recognised for any excess of the aircraft’s

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities

carrying amount over the higher of the aircraft’s value in use
and its fair value less cost to sell. Finance leases and loans aremeasured at fair value, based on the present value of estimatedfuture cash ﬂows (including cash ﬂows expected to be derived
from a sale of the aircraft). Under its provisioning policy forsales ﬁ nancing risk, Airbus records provisions as liabilities
for estimated risk relating to off-balance sheet commitments.
Security — Sales ﬁnancing transactions, including those that are
structured through structured entities, are generally collateralisedby the underlying aircraft. Additionally, the Company beneﬁts
from protective covenants and from security packages tailoredaccording to the perceived risk and the legal environment.
The Company endeavours to limit its sales ﬁnancing exposureby sharing its risk with third parties usually involving the creationof a structured entity. Apart from investor interest protection,interposing a structured entity offers advantages such as

ﬂ exibility, bankruptcy remoteness, liability containment andfacilitating sell-downs of the aircraft ﬁnanced. An aircraft ﬁnancing
structured entity is typically funded on a non-recourse basis
by a senior lender and one or more providers of subordinatedﬁnancing. When the Company acts as a lender to such structured
entities, it may take the role of the senior lender or the providerof subordinated loan. The Company consolidates an aircraftﬁ nancing structured entity if it is exposed to the structured
entity’s variable returns and has the ability to direct the relevant
remarketing activities. Otherwise, it recognises only its loan tothe structured entity under other long-term ﬁnancial assets. At
31 December 2018 the carrying amount of its loans from aircraft
ﬁnancing amounts to € 502 million (2017: € 695 million). This
amount also represents the Company’s maximum exposure
to loss from its interest in unconsolidated aircraft ﬁ nancing
structured entities.

On-Balance Sheet Operating and Finance Leases
The future minimum operating lease payments (undiscounted) due from customers to be included in revenue, and the future
minimum lease payments (undiscounted) from investments in finance leases to be received in settlement of the outstanding
receivable at 31 December 2018 are as follows:(In € million)

Aircraft underoperating lease

Finance leasereceivables (1)Not later than 1 year

26

7

Later than 1 year and not later than 5 years

58

2

Later than 5 years

20

31 December 2018869(1) Includes € 1 million of unearned finance income.

Off-Balance Sheet Commitments
Operating head-lease commitments comprise operating lease payments due by Airbus as lessee under head-lease transactions.
As of 31 December 2018 and 2017, the scheduled payments owed under sales ﬁnancing head-leases are as follows:
31 December
2018

2017

Not later than 1 year

19

28

Later than 1 year and not later than 5 years

2

16(In € million)

Later than 5 years

00

Total aircraft lease commitments (1)2144thereof commitments where the transaction has been sold to third parties

(21)

(44)

Total aircraft lease commitments where the Company bears the risk
(not discounted)

0

0

2

(1) Backed by sublease income from customers with an amount of € 27 million in 2018 (2017: € 40 million).

Airbus / Financial Statements 201851

Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities

Financing Liabilities
Financing liabilities from sales financing transactions are mainly based on variable interest rates (see “— Note 34.3: Financing
Liabilities”) and entered into on a non-recourse basis (i.e. in a default event, the creditor would only have recourse to the aircraft
collateral).
31 December
2018

2017

Loans

22

29

Liabilities to financial institutions

0

0

Total sales financing liabilities

22

29(In € million)

Customer Financing Cash Flows
Direct customer ﬁnancing cash ﬂows amount to € 79 million in 2018 (2017: € -100 million).

Customer Financing Exposure
The on-balance sheet assets relating to sales ﬁnancing, the off-balance sheet commitments and the related ﬁnancing exposure(not including asset value guarantees) as of 31 December 2018 and 2017 are as follows:
31 December 201831 December 2017

AirbusAirbusHelicopters

Total

AirbusAirbusHelicopters

Total

Operating leases (1)

110

32

142

107

34

141

Finance leases and loans

637

67

704

839

97

936

Inventories

22

0

22

149

0

149

(In € million)

Other investments
On-balance sheet customer financing

6

0

6

25

0

25

775

99

874

1,120

131

1,251

28

10

38

144

4

148

Gross Customer Financing Exposure

803

109

912

1,264

135

1,399

Collateral values

(562)

(35)

(597)

(953)

(64)

(1,017)

Net exposure

241

74

315

311

71

382

Off-balance sheet customer financing

Operating leases

(74)

(23)

(97)

(68)

(21)

(89)

Finance leases and loans

(144)

(51)

(195)

(115)

(50)

(166)

On-balance sheet commitments - inventories

(17)

0

(17)

(119)

0

(119)

Off-balance sheet commitments - provisions (2)

(6)

0

(6)

(8)

0

(8)

(241)

(74)

(315)

(311)

(71)

(382)

Asset impairments, fair value
adjustments and provisions(1) For 2018 and 2017, depreciation amounts to € 10 million and € 11 million respectively and related accumulated depreciation is € 55 million and € 53 million respectively.
(2) See “— Note 22: Provisions, Contingent Assets and Contingent Liabilities”.

52

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.6 Employees Costs and Beneﬁts

2.6 Employees Costs and Beneﬁts
26. Number of Employees

AirbusAirbusHelicopters

AirbusDefenceand Space

Consolidated
Airbus31 December 201880,924

19,74533,002

133,671

31 December 2017 (1)77,163

20,10832,171

129,442(1) Previous year figures are restated due to the new segment structure.

27.

Personnel Expenses(In € million)

2018

2017

Wages, salaries and social contributions

12,566

12,629Net periodic pension cost (1)

Total

581

511

13,147

13,140(1) See “— Note 29.1: Provisions for Retirement Plans”.

28. Personnel-Related Provisions
Several German companies provide life-time working account models, being employee beneﬁt plans with a promised return on
contributions or notional contributions that qualify as other long-term employee benefits under IAS 19. The employees’ periodical
contributions into their life-time working accounts result in corresponding personnel expenses in that period, recognised in otherpersonnel charges.

(In € million)

Restructuring measures /pre-retirement part-time
work
Other personnel charges

Total

Balance at
1 January Exchange
2018 differences

346

0Increase
Reclassification/
from
Change inpassageconsolidatedof time Additions
group

0

83

14

Balance at
31 December
Used Released
2018

(132)

(68)

243

673

0

3

344

23

(320)

(46)

677

1,019

0

3

427

37

(452)

(114)

920

A restructuring provision associated with the re-organisation of
the Company of € 160 million was recorded at year-end 2016,
following the communication of the plan to the employees and theEuropean Works Council in November 2016. The French social
plan was agreed between the Company and the works council
in June 2017. The German social plan was agreed between the2Company and the works councils in September 2017, and thereconciliation of interests was ﬁnalised on 21 February 2018.
In Airbus Helicopters, the restructuring plan launched in 2016
was signed by the three representative trade unions andvalidated by the Work Administration Agency (DIRECCTE) in
March 2017.

Airbus / Financial Statements 201853

Notes to the IFRS Consolidated Financial Statements /2.6 Employees Costs and Beneﬁts

29. Post-Employment Beneﬁts
31 December(In € million)

2018

Provisions for retirement plans

6,474

7,127

Provisions for deferred compensation

598

1,234

7,072

8,361

Retirement plans and similar obligations

2017

29.1 Provisions for Retirement Plans
When the Company employees retire, they receive indemnities
as stipulated in retirement agreements, in accordance withregulations and practices of the countries in which it operates.
France — The French pension system is operated on a “payas you go” basis. Besides the basic pension from the Frenchsocial security system, each employee is entitled to receive acomplementary pension from deﬁned contribution schemes
Association pour le régime de retraite complémentaire dessalariés (“ARRCO”) and Association générale des institutions deretraite des cadres (“AGIRC”). Moreover, French law stipulates
that employees are paid retirement indemnities in the form oflump sums on the basis of the length of service, which areconsidered as deﬁned obligations.
Germany — The Company has a pension plan (P3) for executive
and non-executive employees in place. Under this plan, theemployer provides contributions for the services rendered by
the employees, which are dependent on their salaries in therespective service period. These contributions are converted
into components which become part of the accrued pension
liability at the end of the year. Total beneﬁts are calculated asa career average over the entire period of service. Certain
employees that are not covered by this plan receive retirement
indemnities based on salary earned in the last year or on
an average of the last three years of employment. For some
executive employees, beneﬁts are dependent on the ﬁnal salaryof the respective individual at the date of retirement and the time
period served as an executive.
In 2018, Airbus introduced the new Airbus Pensions Plan (“APP”)
with security-linked beneﬁts in Germany, which all new entrants
after 1 January 2018 will join. Accordingly, the existing pension
plan has been closed for new entrants. As of 1 January 2019deferred compensation which is ﬁnanced by the employees isoffered exclusively in APP for all employees.
Parts of the pension obligation in Germany are funded byassets invested in speciﬁc funding vehicles. Besides a relief
fund (“Unterstützungskasse”), the Company has implemented
a Contractual Trust Arrangement. The Contractual Trust
Arrangement structure is that of a bilateral trust arrangement.
Assets that are transferred to the relief fund and the Contractual
Trust Arrangement qualify as plan assets under IAS 19.
UK — The Company UK Pension Scheme (“the Scheme”) was
implemented by Airbus Defence and Space Ltd., Stevenage(UK) as the principal employer. This plan comprises all eligible
employees of Airbus Defence and Space Ltd. as well as
all personnel, who were recruited by one of the Company
subsidiaries located in the UK and participating in the scheme.

54

Airbus / Financial Statements 2018

The major part of the obligation is funded by scheme assets
due to contributions of the participating companies. The
Scheme is a registered pension scheme under the FinanceAct 2004. The trustee’s only formal funding objective is thestatutory funding objective under the Pensions Act part 6
2004, which is to have sufﬁcient and appropriate assets tocover the Scheme’s obligations. Since 1 November 2013, thisplan is generally closed for joiners, who participate in a separate
deﬁned contribution plan.
Moreover, the Company participates in the UK in several funded
trustee-administered pension plans for both executive and nonexecutive employees with BAE Systems being the principal
employer. The Company’s most signiﬁcant investments in termsof employees participating in these BAE Systems UK pension
plans is Airbus Operations Ltd. Participating Airbus Operations
Ltd. employees have continued to remain members in the BAE
Systems UK pension plans due to the UK pension agreement
between the Company and BAE Systems and a change in the
UK pensions legislation enacted in April 2006.
For the most significant of these BAE Systems Pension
Schemes, the Main Scheme, BAE Systems, the Company andthe scheme Trustees agreed on a sectionalisation, which was
implemented on 1 April 2016. Although BAE Systems remains
the only principal employer of the Scheme, the Company has
obtained powers in relation to its section which are the sameas if it were the principal employer.
Based on the funding situation of the respective pension
schemes, the pension plan trustees determine the contribution
rates to be paid by the participating employers to adequately
fund the schemes. The different UK pension plans in which theCompany investments participate are currently underfunded.
Airbus Operations Ltd. (for its section of the Main Scheme)
and BAE Systems (for the other schemes) have agreed withthe trustees various measures designed to make good theunderfunding. These include (i) regular contribution payments
for active employees well above such which would prevail for
funded plans and (ii) extra employers’ contributions.
In the event that an employer who participates in the BAE
Systems pension schemes fails or cannot be compelled to
fulﬁl its obligations as a participating employer, the remaining
participating employers are obliged to collectively take on
its obligations. The Company considers the likelihood of thisevent as remote. However, for the Main Scheme the Company
considers that its obligation is in principle limited to that related
to its section.

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.6 Employees Costs and Beneﬁts

Risks
The Deﬁned Beneﬁt Obligation (“DBO”) exposes the Company
to actuarial risks, including the following ones:
Market price risk — The return on plan assets is assumed tobe the discount rate derived from AA-rated corporate bonds.
If the actual return rate of plan assets is lower than the applied
discount rate, the net DBO increases accordingly. Moreover, themarket values of the plan assets are subject to volatility, which
also impacts the net liability.
Interest rate risk — The level of the DBO is signiﬁ cantly
impacted by the applied discount rate. The low interest rates,
particular in the euro-denominated market environment, leadto a relatively high net pension liability. If the decline in returnsof corporate bonds continues, the DBO will further increasein future periods, which can only be offset partially by the

positive development of market values of those corporate bonds
included in plan assets. Generally, the pension obligation issensitive to movements in the interest rate leading to volatile
results in the valuation.
Inﬂ ation risk — The pension liabilities can be sensitive to
movements in the inﬂation rate, whereby a higher inﬂation rate
could lead to an increasing liability. Since some pension plans
are directly related to salaries, increases in compensations
could result in increasing pension obligations. For the deferredcompensation plan P3, which is ﬁnanced by the employees aﬁxed interest rate has been agreed.
Longevity risk — The pension liabilities are sensitive to the life
expectancy of its members. Rising life expectancies lead to anincrease in the valuation of the pension liability.

The weighted average assumptions used in calculating the actuarial values of the most signiﬁcant retirement plans as of 31 December
2018 are as follows:
Pension plans inGermany(Rate in %)2018

France2017

2018

Participation in
BAE Systems
Pension Scheme
in the UK

UK
2017

2018

2017

Canada

2018

2017

2018

Discount rate

1.7

1.7

1.7

1.7

2.8

2.5

2.7

2.5

3.9

Rate of compensation increase

2.8

2.8

2.5

2.5

2.6

2.6

2.6

2.6

3.0

Rate of pension increase

1.6

1.5

1.7

1.7

3.0

3.0

2.9

2.9

2.0

Inflation rate

1.6

1.5

1.7

1.7

3.1

3.1

3.1

3.1

2.0

For Germany and France, the Company derives the discountrate used to determine the DBO from yields on high quality
corporate bonds with an AA rating. The determination of the
discount rate is based on the iBoxx€ Corporates AA bonddata and uses the granularity of single bond data in order toreceive more market information from the given bond index. The
discount rate for the estimated duration of the respective pension
plan is then extrapolated along the yield curve. In the UK, it isdetermined with reference to the full yield curve of AA-rated
sterling-denominated corporate bonds of varying maturities.
The salary increase rates are based on long-term expectationsof the respective employers, derived from the assumed inﬂation
rate and adjusted by promotional or productivity scales.

Inﬂation rate for German plans corresponds to the expected
increase in cost of living. In the UK, the inﬂation assumptions
are derived by reference to the difference between the yields
on index-linked and ﬁxed-interest long-term government bonds.
For the calculation of the German pension obligation, the newly
introduced “2018 G” mortality tables (generation tables) as
developed by Professor Dr. Klaus Heubeck are applied. For
the UK schemes, the Self-Administered Pensions S2 mortality
tables based on year of birth (as published by the Instituteof Actuaries) is used in conjunction with the results of aninvestigation into the actual mortality experience of scheme
members. In France, i nstitute for French statistics (“INSEE”)
tables are applied.

2

Rates for pension payment increases are derived from therespective inﬂation rate for the plan.

Airbus / Financial Statements 201855

Notes to the IFRS Consolidated Financial Statements /2.6 Employees Costs and Beneﬁts

The development of the DBO is set out below:
DBO(In € million)

Balance at 1 January 2017

Plan assets

Pensionplans
of theCompany

Participation in
BAE Systems
PensionSchemein the UK

11,104

3,808

Total

Pensionplans
of theCompany

Participation in
BAE Systems
PensionSchemein the UK

Total

Total
provisions

14,912(4,531)(2,632)(7,163)

7,749

Service cost

348

81

429

0

0

0

429

Interest cost and income

195

97

292

(92)

(67)

(159)

133

Past service cost

(51)

0

(51)

0

0

0

(51)

from changes indemographic assumptions

308

(160)

148

0

0

0

148

from changes infinancial assumptions

(51)

48

(3)

0

0

0

(3)

from changes inexperience adjustments

(9)

(83)

(92)

0

0

0

(92)

from plan assets

Remeasurements: Actuarial(gains) and losses arising

0

0

0

(210)

(169)

(379)

(379)

Changes in consolidation,transfers and others

(136)

4

(132)

50

0

50

(82)

Benefits paid

(368)

(92)

(460)

137

92

229

(231)

Contributions by employer
and other plan participants

0

0

0

(300)

(152)

(452)

(452)

Foreign currency translation
adjustments

(41)

(132)

(173)

35

96

131

(42)

11,2993,571

14,870(4,911)(2,832)(7,743)

7,127

Service cost

381

84

464

0

0

0

464

Interest cost and income

202

85

287

(97)

(68)

(165)

123

0

0

0

0

0

0

0

from changes indemographic assumptions

112

(24)

88

0

0

0

88

from changes infinancial assumptions

(35)

(152)

(187)

0

0

0

(187)

from changes inexperience adjustments

117

48

165

0

0

0

165

0

0

0

398

105

502

502

Balance at 31 December 2017

Past service costRemeasurements: Actuarial(gains) and losses arisingfrom plan assets
Changes in consolidation,transfers and others

247

0

247

(209)

0

(209)

38

Benefits paid

(380)

(115)

(495)

148

115

262

(233)

3

5

8

(1,281)(335)(1,616)(1,608)Contributions by employer
and other plan participantsForeign currency translation
adjustments

Balance at 31 December 201856

Airbus / Financial Statements 2018

(14)

(27)

(40)

11

25

36

(5)

11,932

3,475

15,407(5,941)(2,990)(8,933)

6,474

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.6 Employees Costs and Beneﬁts

The funding of the plans is as follows:
31 December
2018

2017

(In € million)

DBO

Plan assets

DBO

Unfunded pension plans

2,157

0

1,563

0

Funded pension plans (partial)

13,250(8,933)

13,307(7,743)

Total

15,407(8,933)

14,870(7,743)

In 2018, contributions in the amount of € 1,278 million (2017:€ 300 million) are made into the pension plans of the Company,
mainly relating to the Contractual Trust Arrangement of€ 1,159 million (2017: € 187 million), the Company UK schemefor € 104 million (2017: € 77 million).

Plan assets

Contributions of approximately € 500 million are expected tobe made in 2019.
The weighted average duration of the DBO for retirement plansand deferred compensation is 16 years at 31 December 2018(31 December 2017: 17 years).

The split of the DBO for retirement plans and deferred compensation between active, deferred and pensioner members for themost signiﬁcant plans is as follows:
ActiveDeferredPensioner

Germany

49%

6%

45%

France

99%

0%

1%

UK

65%

14%

21%

Participation in BAE System Pension Scheme (Main Scheme)

58%

16%

26%

Canada

95%

1%

4%

The following table shows how the present value of the DBO of retirement plans and deferred compensation would have been
inﬂuenced by changes in the actuarial assumptions as set out for 31 December 2018:
Change in actuarial assumptions

Impact on DBO
Change at 31 December

Present value of the obligation
Discount rate
Rate of compensation increase
Rate of pension increase
Life expectancy

Sensitivities are calculated based on the same method (present
value of the DBO calculated with the projected unit method)
as applied when calculating the post-employment benefit
obligations. The sensitivity analyses are based on a change of
one assumption while holding all other assumptions constant.

2018

2017

17,037

16,232

Increase by 0.5%-point(1,204)(1,228)Decrease by 0.5%-point

1,338

1,359

Increase by 0.25%-point

136

111

Decrease by 0.25%-point

(130)

(196)

Increase by 0.25%-point

316

283

Decrease by 0.25%-point

(302)

(356)

Increase by 1 year

428

369

2

This is unlikely to occur in practice and changes of more than
one assumption may be correlated leading to different impacts
on the DBO than disclosed above. If the assumptions change
at a different level, the effect on the DBO is not necessarily ina linear relation.

Airbus / Financial Statements 201857

Notes to the IFRS Consolidated Financial Statements /2.6 Employees Costs and Beneﬁts

The fair value of the plan assets for retirement plans and deferred compensation can be allocated to the following classes:
2018(In € million)

2017

QuotedpricesUnquoted
prices

Total

QuotedpricesUnquoted
prices

Total

1,061

0

1,061

1,157

3

1,160

Equity securities
EuropeRest of the world

361

0

361

511

48

559

Emerging markets

359

0

359

281

0

281

1,355

0

1,355

1,188

0

1,188

Corporates

1,570

71

1,642

1,250

591

1,841

Governments

1,451

0

1,451

1,310

74

1,384

491

0

491

16

280

296

Global
Bonds

Pooled investments vehicles
Commodities

0

98

98

115

0

115

Hedge funds

0

269

269

332

196

528

Derivatives

0

207

207

0

(54)

(54)

Property

0

494

494

92

284

376

1,103

96

1,199

43

0

43

0

976

976

216

(40)

176

7,751

2,211

9,962

6,511

1,382

7,893

Cash and money market funds
OthersBalance at 31 December

The majority of funded plans apply broadly an asset-liability
matching framework. The strategic asset allocation of theplans takes into account the characteristics of the underlying
obligations. Investments are widely diversiﬁed, such that the
failure of any single investment would not have a material impact
on the overall level of assets. A large portion of assets in 2018consists of ﬁxed income instruments, equities, although theCompany also invests in property, commodities and hedge
funds. The Company reassesses the characteristics of thepension obligations from time to time or as required by theapplicable regulation or governance framework. This typicallytriggers a subsequent review of the strategic asset allocation.

The amount recorded as provision for retirement plans can be allocated to the signiﬁcant countries as follows:
Pension plans of the Company

Germany

FranceUK

CanadaParticipation in
BAE Systems
PensionSchemein the UK

DBO

8,660

1,756

1,205

311

3,475

15,407(In € million)

Total

Plan assets

4,646

23

1,083

189

2,992

8,933

Recognised at
31 December 2018

4,014

1,733

122

122

483

6,474

DBO

8,464

1,640

1,195

0

3,571

14,870Plan assets

3,861

17

1,033

0

2,832

7,743

Recognised at
31 December 2017

4,603

1,623

162

0

739

7,127

Employer’s contribution to state and private pension plans, mainly in Germany and France, are to be considered as deﬁned
contribution plans. Contributions in 2018 amounted to € 991 million (2017: € 677 million).

58

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.6 Employees Costs and Beneﬁts

29.2 Provisions for Deferred Compensation
This amount represents obligations that arise if employees elect to convert part of their remuneration or bonus into an equivalentcommitment for deferred compensation which is treated as a deﬁned beneﬁt post-employment plan. The development for the
DBO and plan assets is as follows:
2018

2017

(In € million)

DBO

Plan assets

Total

DBO

Plan assets

Total

Balance at 1 January

1,362

(150)

1,212

1,018

(128)

890

Service cost

118

0

118

135

0

135

Interest cost

23

0

23

17

0

17

Interest income

0

(6)

(6)

0

(3)

(3)

from changes in demographic
assumptions

(2)

0

(2)

174

0

174

from changes in financial assumptions

8

0

8

5

0

5

from changes in experience adjustments

33

0

33

34

0

34

from plan assets

0

44

44

0

(3)

(3)

Changes in consolidation,transfers and others

(20)

1

(19)

(13)

(1)

(14)

Benefits paid

(11)

0

(11)

(8)

0

(8)

119

(921)

(802)

0

(15)

(15)

1,630

(1,032)

598

1,362

(150)

1,212

Remeasurement: Actuarial (gains)and losses arising

Contributions

Balance at 31 December

RECOGNISED AS
31 December(In € million)

2018

2017

Provisions

598

1,234

0

22

598

1,212

Non-current and current other assets

Total

In 2018, new trust arrangements have been establishedbetween the trust and the participating companies and stipulate
a minimum funding requirement for the portion of the obligation,
which is not protected by the pension guarantee association or

Pensions-Sicherungs Verein in case of an insolvency of Airbus
companies concerned. Some portions of the obligation must
be covered with securities in the same amount, while otherportions must be covered by 115%.

Airbus / Financial Statements 2018

259

Notes to the IFRS Consolidated Financial Statements /2.6 Employees Costs and Beneﬁts

30. Share-Based Payment
Share-based compensation — Until 2015, the Company
operated a Performance and Restricted Unit Plan or LTIP
which qualiﬁes as a cash-settled share-based payment planunder IFRS 2. The grant of so-called “units” will not physically besettled in shares (except with regard to the Company Executive
Committee Members). For details of the conversion of some
Performance Units granted to Executive Committee Members
into equity-settled plans see “— Note 31.1: Remuneration Executive Committee”.
Since 2016, the Company operates a Performance Units andPerformance Share Plan, which is granted in units as wellas in shares.
For plans settled in cash, provisions for associated services
received are measured at fair value by multiplying the numberof units expected to vest with the fair value of one LTIP unit at
the end of each reporting period, taking into account the extent
to which the employees have rendered service to date. The fairvalue of each LTIP unit is determined using a forward pricing
model. Changes of the fair value are recognised as personnel

expenses of the period, leading to a remeasurement of theprovision.
Since 2018, the Company operates also exceptional grantsof Performance Units and Performance Shares under an
Equity Pool. Such exceptional grants are validated by speciﬁc
resolutions from the Board of Directors. Objective of thesegrants is to mirror the Performance Units and Performance
Share Plan in term of vesting conditions and vesting dates.
Accounting principles and methodology are the ones appliedfor LTIP as described above.
Besides the equity-settled parts from LTIP 2016 onwards, theEmployee Share Ownership Plan (“ESOP”) is an additional
equity-settled share-based payment plan. Under this plan, theCompany offers its employees Airbus SE shares at fair value
matched with a number of free shares based on a determining
ratio. The fair value of shares provided is reﬂected as personnel
expenses in the Company’s Consolidated Income Statementwith a corresponding increase in equity.

30.1 LTIP
In the years 2013 to 2015, the Board of Directors of the Company
approved the granting of LTIP Performance and Restricted
Units. Since 2016, it has approved a LTIP Performance Units
and Performance Share Plan.
The Company hedges the share price risk inherent in the
cash-settled LTIP units by entering into equity swaps where
the reference price is based on the Airbus SE share price. To theextent that cash-settled LTIP units are hedged, compensation

expense recognised for these units will effectively reﬂect thereference price ﬁxed under the equity swaps. In order to avoid
any dilution of its current shareholders out of equity-settled
LTIP units, the Company performs share buybacks to meetits obligations to its employees, following the decisions of theBoard of Directors and approval of the AGM.
In 2018, compensation expense for LTIPs including the effect of
the equity swaps amounted to € 69 million (2017: € 88 million).

The fair value of units and shares granted per vesting date is as follows (LTIP plan 2018):
Expected vesting date(In € per unit / share granted)

Fair value of Performance Units and Shares

May 2022 - Performance Shares

85.01

May 2022 - Performance Units

84.09

May 2023 - Performance Units

83.28

As of 31 December 2018, provisions of € 140 million (2017: € 183 million) relating to LTIP have been recognised.
The life-time of the Performance and Restricted Units as well as Performance Shares is contractually ﬁxed (see the description of
the respective tranche in the following table). For the units, the measurement is next to other market data, mainly affected by theshare price as of the end of the reporting period (€ 83.96 as of 31 December 2018) and the life-time of the units.

60

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.6 Employees Costs and Beneﬁts

The principal characteristics of the LTIPs as at 31 December 2018 are summarised below:

Grant date (1)LTIP 2013 (5)LTIP 2014 (6)LTIP 2015 (7)LTIP 2016

LTIP 2017

LTIP 201817 December
2013

13 November
2014

29 October
2015

25 October
2016

30 October
2017

30 October
2018

Performance and Restricted Unit Plan
Units

Performance Plan

Performance Restricted Performance Restricted Performance Restricted

Units

SharesUnits

SharesUnits

SharesNumber of units
granted (2)1,245,052 359,060 1,114,962 291,420

926,398 240,972

615,792

621,198

421,638

425,702278,376

281,181

Number of units
outstanding (3)656,406 231,396

592,391

594,561

411,841

415,905

278,376

281,181

Total numberof eligible
beneficiaries
Vesting
conditions

0

0

1,709

424,260

134,198

1,621

1,564

1,671

1,601

1,626

The Performance and Restricted Units and Performance Shares will vest if the participant is still employed by a company of the Company
at the respective vesting dates. Performance Units and Shares will vest upon achievement of mid-term business performance.
Vesting schedule is made up of two payments (four payments until LTIP 2013) over two years.

Share priceper unit limited
at vesting
dates to (4)€ 92.34€ 94.90€ 112.62

Vesting dates

25% each:in May 2017
in November 2017
in May 2018
in November 2018

50% in June 2018
50% expected
in June 201950% each
expected:in June 2019
in July 2020

Number ofvested units

855,686 333,415 399,540 138,527

2,606€ 105.34

0-€ 147.62-€ 213.88-

50% each
50% each
50% each
expected:
100%
expected:
100%
expected:
100%
in May 2020 expected in May 2021 expected in May 2022 expectedin May 2021 in May 2020 in May 2022 in May 2021 in May 2023 in May 2022
0

0

0

0

0

0

(1) Date, when the vesting conditions were determined.
(2) Based on 100% target performance achievement. A minimum of 50% of Performance Units will vest; 100% in case of on-target performance achievement; up to a maximum of
150% in case of overachievement of performance criteria. In case of absolute negative results (cumulative EBIT of the Company) during the performance period, the Board of
Directors can decide to review the vesting of the Performance Units including the 50% portion which is not subject to performance conditions (additional vesting condition).
(3) Including shares granted through the Equity Pool, if applicable.
(4) Corresponds to 200% of the respective reference share price. Overall, the pay-out for Performance Units is limited to a total amount of 250% of the units originally granted,
each valued with the respective reference share price of € 46.17 (for LTIP 2013), € 47.45 (for LTIP 2014), € 56.31 (for LTIP 2015), € 52.67 (for LTIP 2016), € 73.81 (for LTIP 2017)and € 106.94 (for LTIP 2018).
(5) Based on performance achievement of 75% for Performance Units under LTIP 2013.
(6) Based on performance achievement of 80% for Performance Units under LTIP 2014.
(7) Based on performance achievement of 75% for Performance Units under LTIP 2015.

30.2 ESOPIn 2018 and 2017, the Board of Directors approved a new ESOP
scheme. Eligible employees were able to purchase a ﬁ xed
number of previously unissued shares at fair market value (2018:
5, 15, 30, 50 or 100 shares; 2017: 5, 20, 30, 50 or 100 shares).
The Company matched each ﬁxed number of shares with anumber of the Airbus SE free shares based on a determinedratio (2018: 4, 7, 10, 13 and 25 free shares, respectively; 2017:
4, 8, 10, 13 and 25 free shares, respectively). During a custodyperiod of at least one year or, provided the purchase took placein the context of a mutual fund (regular savings plan), of ﬁve
years, employees are restricted from selling the shares, but havethe right to receive all dividends paid. Employees who directly
purchased the Airbus SE shares have, in addition, the ability

2

to vote at the annual shareholder meetings. The subscription
price was equal to the closing price at the Paris stock exchange
on 14 February 2018 (2017: 21 February 2017) and amounted
to € 84.17 (2017: € 67.24). Investing through the mutual fund
led to a price which corresponds to the average price at theParis stock exchange during the 20 trading days immediately
preceding 14 February 2018 (2017: 21 February 2017), resulting
in a price of € 88.65 (2017: € 64.44). Airbus SE issued and sold
446,059 ordinary shares (2017: 411,710) with a nominal value of€ 1.00 each. Compensation expense (excluding social security
contributions) of € 38 million (2017: € 28 million) was recognisedin connection with ESOP.

Airbus / Financial Statements 201861

Notes to the IFRS Consolidated Financial Statements /2.6 Employees Costs and Beneﬁts

31. Remuneration
31.1 Remuneration – Executive Committee
The Company’s key management personnel consists of Members of the Executive Committee and Non-Executive Board Members.
The Chief Executive Ofﬁcer (“CEO”), who chairs the Executive Committee, is the sole Executive Board Member. The annual
remuneration and related compensation costs of the key management personnel as expensed in the respective year can besummarised as follows:(In € million)

2018

2017

18.7

25.4

Executive Committee, including Executive Board Member
Salaries and other short-term benefits (including bonuses)
Post-employment benefit costs

4.7

6.9

Share-based remuneration (“LTIP award”, including associated hedge result)

5.3

8.8

Termination benefits

8.6

10.9

Other benefits

0.5

0.6

Social charges

8.7

7.1

Non-E xecutive Board Members
Short-term benefits (including social charges)

Total expense recognised

2.0

2.1

48.5

61.8

For additional information regarding the remuneration of Executive Committee Members (including the CEO), please also refer tothe “Report of the Board of Directors –4.4: Remuneration Report”.
Salaries and Other Short-Term Benefits (Including Bonuses)
The amount of bonuses is based on estimated performance achievement as at the balance sheet date and difference between
previous year estimation and actual pay-out in the current year. Outstanding short-term beneﬁts (bonuses) at year-end 2018 for
Executive Committee Members based on estimated performance achievement at year-end was € 9.3 million (2017: € 12.5 million).
Post-Employment and Other Long-Term Benefits
The post-employment and other long-term beneﬁts of the Executive Committee, including the CEO, amounted to € 61.6 million at
31 December 2018 (2017: € 78.6 million). The disclosed post-employment and other long-term beneﬁts reﬂect the total outstandingbalance for all Executive Committee Members in charge at the end of the respective balance sheet date.
Share-Based Remuneration (“LTIP Award”)
The share-based payment expenses result from not yet forfeited units granted to the Executive Committee Members under theCompany’s LTIP which are remeasured to fair value as far as they are cash-settled.
In 2018, the Members of the Executive Committee were granted 18,554 Performance Units (2017: 53,108) and 21,359 Performance
Shares (2017: 57,172) for LTIP 2018, the respective fair value of these Performance Units and Shares at the respective grant dates
was € 3.8 million (2017: € 8.8 million). Fair value of outstanding LTIP balances at the end of 2018 for all Executive Committee Members
was € 9.4 million (2017: € 17.4 million). The total number of outstanding Performance and Restricted Units amounted to 189,260 at
31 December 2018 (2017: 384,867), granted to the current Members of the Executive Committee.
Until and including the plan 2015, based on the intention of the Board of Directors to increase the long-term commitment of
Executive Committee Members to the success of the Company, the Board has authorised the Executive Committee Members
to opt for partial conversion of the otherwise cash-settled LTIPs into share-settled plans at each grant date of any new LTIP,
requiring a minimum conversion rate into equity settlement of 25% of total granted Performance Units. At the conversion date,each Executive Committee Member individually determined the split of equity and cash settlement for the formerly granted LTIP.
After overall performance assessment of each of the plans, the vesting dates as determined at the initial grant date apply to all
cash-settled Performance Units. However, units converted into equity settlement only vest at the last of the vesting dates of therespective plan.

62

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.6 Employees Costs and Beneﬁts

Performance Units granted to Executive Committee Members until 31 December 2015 are summarised below:
LTIP 2013

LTIP 2014

LTIP 2015

Total number of units granted

152,250

159,448

189,476

Number of cash-settled units

103,725

117,816

143,217

Number of equity-settled units
Date of conversion

48,525

41,632

46,25928 February 2014

28 February 201528 February 2016

€ 53.39€ 55.33€ 59.78

Share price at date of conversion

Termination Benefits
In the case of contract termination, the Executive Committee
Members are entitled to an indemnity equal to 1.5 times the
Total Target Remuneration (deﬁned as Base Salary and target
Annual Variable Remuneration) with respect to applicable local
legal requirements, if any. This will not apply if the Executive
Committee mandate is terminated for cause, in case of
dismissal, if the Executive Committee Member resigns or has
reached retirement age.
The Executive Committee Members’ contract includes a
non-compete clause which applies for a minimum of one year
and can be extended at the Company’s initiative for a further
year. The Board of Directors has the discretion to waive or
invoke the extension of the non-compete clause when legallyor contractually possible. The compensation for each yearthat the non-compete clause applies is equal to 50% of thelast Total Annual Remuneration (deﬁned as Base Salary andAnnual Variable Remuneration most recently paid) with respect
to applicable local legal requirements, if any.

Past LTIP awards may be maintained in full or prorated, insuch cases as in case of retirement or if a mandate is notrenewed by the Company without cause, prorata being basedon the presence in the Company during performance periods.
The vesting of past LTIP awards follows the plans’ rules andregulations and is not accelerated in any case. LTIP awards areforfeited for Executives who leave the Company on their own
initiative, but this is subject to review by the Board of Directors.
The termination beneﬁts include assumptions about all effective,
known or planned terminations to date.
Other Benefits
Other beneﬁ ts include expenses for Executive Committee
Members’ company cars and accident insurance. There were no
outstanding liabilities at 31 December 2018 or 2017, respectively.

31.2 Remuneration – CEO
The total remuneration of the CEO and Executive Member of the Board of Directors, related to the reporting periods 2018 and2017, can be summarised as follows:
2018

2017

1,500,000

1,500,000

Annual variable pay

2,167,500

1,912,500

Post-employment benefit costs

1,136,706

1,175,057

Share-based remuneration (“LTIP award”) (1)1,203,767

1,551,666(In €)

Base salary

Termination benefits

302,256

2,900,000

Other benefits

61,144

63,250Social charges

12,20512,012

2(1) Expense related to share-based payment plans as recognised in the annual period (service period) including the result from the hedge of cash-settled share-based payment(see “— Note 30: Share-Based Payment”). The pay-out from vested cash-settled LTIP in 2018 was € 1,364,541 (2017: € 1,372,048).

Annual Variable Pay
The annual variable pay is based on estimated performance achievement as at the balance sheet date and difference between
the previous year’s estimation and actual pay-out in the current year.
Post-Employment Benefit Costs
Post-employment beneﬁt costs relate to the aggregated amount of current service and interest costs as well as interest costs on
employee’s contribution to the deﬁned beneﬁt plan.
For the CEO, the pension DBO including deferred compensation amounted to € 26,303,930 as of 31 December 2018 (2017:€ 21,176,042). The change in valuation is due to changes in actuarial assumptions (e.g. mortality table, expected pension increase,retirement age). There has been no change in the pension promise for the CEO in 2018.
For the ﬁscal year 2018, the current service and interest costs related to the CEO’s pension promise represented an expense of€ 1,136,706 (2017: € 1,175,057). This amount has been accrued in the Consolidated Financial Statements.

Airbus / Financial Statements 201863

Notes to the IFRS Consolidated Financial Statements /2.6 Employees Costs and Beneﬁts

Share-Based Remuneration
In 2018, due to the announcement of his departure, the CEO has not been granted with Performance Units nor Performance Shares.
The table below gives an overview of the interests of the CEO, under the various LTIPs of the Company:
Granted Date
Performance Units and Shares
Revaluation

LTIP 2013

LTIP 2014

LTIP 2015

LTIP 2016

LTIP 2017

30,30029,50024,862

28,48020,324

75%

80%

75%

100%

100%

22,72423,60018,64828,48020,324in cash11,364

8,850

0

0

0

in shares

11,3600000in cash0

8,850

13,986

14,24010,162in shares

0

5,900

4,662

14,24010,162

Performance Units and Shares revalued
Vested in 2018

Outstanding 2018

Vesting scheduleCash-settled units
Equity-settled units

For vesting dates, see “— Note 30.1: LTIP”
November 2018

June 2019

July 2020

May 2020

May 2021

Vesting of all Performance Units and Performance Shares granted to the CEO is subject to performance conditions.
The fair value of outstanding LTIP balances at the end of 2018 for the CEO was € 2,257,848 (2017: € 2,732,125).
Termination Benefits
Termination beneﬁts include non-compete indemnity estimated according to art. 74 et seq. of the German Commercial Code(“BGB”) based on 2018 data.
For more details, see “— Note 31.1: Remuneration - Executive Committee”, section “Termination Beneﬁts”.
Other Benefits
The CEO is entitled to accident insurance coverage and a company car. In 2018, the total amount expensed was € 61,144(2017: € 63,250). The Company has not provided any loans to / advances to / guarantees on behalf of the CEO.

64

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.6 Employees Costs and Beneﬁts

31.3 Remuneration – Board of Directors
The remuneration of the Non-Executive Members of the Board of Directors was as follows:
2018
Fixum (1)(In €)

2017

Attendancefees (2)

Total

Fixum (1)Attendancefees (2)Total

Non-Executive Board Members
Denis Ranque

210,000

75,000285,000

204,293

80,000284,293

Victor Chu (5)72,37650,000122,376

0

0

0

(6)

72,37650,000122,37600

0100,000

75,000175,000

94,42080,000174,420

Lord Drayson (3)114,475

55,000169,475

72,10060,000132,100

Catherine Guillouard

120,000

75,000

195,000

120,000

70,000190,000

Jean-Pierre Clamadieu
Ralph D. Crosby Jr.

Hermann-Josef Lamberti

130,000

65,000

195,000

135,707

70,000205,707

María Amparo Moraleda Martínez

127,238

65,000192,238

120,000

80,000200,000

Claudia Nemat

100,000

75,000175,000

100,000

70,000170,000

René Obermann(5)Carlos Tavares

72,37655,000127,37600080,00050,000130,000

80,00065,000145,000

27,90010,00037,900100,000

60,000160,000

Former Non-Executive Board Members
Hans-Peter Keitel (4)Lakshmi N. Mittal

0

0

0

28,176

10,00038,176Sir John Parker (4)36,27010,00046,270135,707

65,000200,707

Jean-Claude Trichet (4)Total

27,90010,00037,900100,000

80,000180,000

1,290,910

720,000

2,010,910

1,290,403

790,000

2,080,403(1) The fixum includes a base fee for a Board membership and a Committee fee membership within the Audit Committee, the Remuneration, Nomination and Governance Committee(“RNGC”) and/or the Ethics & Compliance Commitee (“E&C”). The fixum for the year 2018 was paid 50% in January 2018 and 50% in July 2018. The fixum for the year 2017 was paid
50% in January 2017 and 50% in July 2017.
(2) The attendance fees related to the first semester 2018 were paid in July 2018, those related to the second semester 2018 were paid in January 2019. The attendance fees related
to the first semester 2017 were paid in July 2017, those related to the second semester 2017 were paid in January 2018.
(3) Member of the E&C Committee as of 11 April 2018.
(4) Not a Member of the Company Board of Directors as of 11 April 2018.
(5) Member of the Company Board of Directors and the AC as of 11 April 2018.
(6) Member of the Company Board of Directors and the RNGC as of 11 April 2018.

Airbus / Financial Statements 20182

65

Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

2.7 Capital Structure and Financial Instruments
32. Total Equity
32.1 Equity Attributable to Equity Owners of the Parent
The Company’s shares are exclusively ordinary shares with a par value of € 1.00. The following table shows the development of
the number of shares issued and fully paid:(In number of shares)

2018

2017

Issued at 1 January774,556,062

772,912,869

1,811,819

1,643,193

776,367,881

774,556,062(636,924)(129,525)

775,730,957

774,426,537

Issued for ESOP

Issued at 31 December
Treasury shares

Outstanding at 31 December

Holders of ordinary shares are entitled to dividends and to one
vote per share at general meetings of the Company.
Equity attributable to equity owners of the parent (including
purchased treasury shares) amounts to € 9,724 million (2017(restated): € 10,740 million) representing a decrease of€ -1,016 million. This is due to a decrease in other comprehensive
income of € -2,982 million, principally related to the mark tomarket revaluation of the hedge portfolio of € -2,249 million, achange in actuarial gains and losses income of € -569 million anda dividend payment of € -1,161 million (€ 1.50 per share), partly
compensated by a net income for the period of € 3,054 million.
Capital stock comprises the nominal amount of shares
outstanding. The addition to capital stock represents thecontribution for exercised options by employees of € 1,811,819( 2017: € 1,643,193) in compli ance with the implemented
ESOPs.
Share premium mainly results from contributions in kind in
the course of the creation of the Company, cash contributions
from the Company’s initial public offering, capital increases
and reductions due to the issuance and cancellation of shares.
Retained earnings include mainly the proﬁt for the period and thechanges in other comprehensive income from remeasurementsof the deﬁned beneﬁt pension plans net of tax which amounts
to € -569 million in 2018 (2017: € 151 million), and cash dividend
payments to Airbus SE shareholders.
On 11 April 2018, the Shareholders’ General Meeting decided
to distribute a gross amount of € 1.50 per share, which was
paid on 18 April 2018. For the ﬁscal year 2018, the Company’s
Board of Directors proposes a cash distribution payment of€ 1.65 per share.

66

Airbus / Financial Statements 2018

Treasury shares represent the amount paid or payable for own
shares held in treasury. During 2018, the number of treasury
stock held by the Company increased to 636,924 compared to129,525 as of 31 December 2017. No shares were sold back to
the market nor cancelled (2017: 0 shares).
On 11 April 2018, the Annual Ge neral Meeting (“AGM”) of
the Company authorised the Board of Directors, for a period
expiring at the AGM to be held in 2019, to issue shares and to
grant rights to subscribe for shares in the Company’s sharecapital for the purpose of:
ESOPs and share-related LTIPs, provided that such powers
shall be limited to an aggregate of 0.14% of the Company’s
authorised share capital (see “— Note 30: Share-Based
Payment”);
funding the Company and its subsidiaries, provided thatsuch powers shall be limited to an aggregate of 0.3% of
the Company’s authorised share capital (see “— Note 34.3:
Financing Liabilities”).

-

For each operation, such powers shall not extend to issuingshares or granting rights to subscribe for shares if there is nopreferential subscription right and for an aggregate issue pricein excess of € 500 million per share issuance.
Also on 11 April 2018, the AGM authorised the Board of
Directors for an 18-month period to repurchase up to 10% of
the Company’s issued share capital at a price per share notless than the nominal value and not more than the higher ofthe price of the last independent trade and the highest current
independent bid on the trading venues of the regulated marketof the country in which the purchase is carried out.
Furthermore, the AGM authorised both the Board of Directors
and the CEO, with powers of substitution, to establish the exact
number of the relevant shares to be cancelled.

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

32.2 Non-Controlling Interests
Non-controlling interests (“NCI”) from non-wholly owned subsidiaries decreased to € -5 million as of 31 December 2018 (2017(restated): € 2 million). These NCI do not have a material interest in the Company’s activities and cash ﬂows.
Subsidiaries with NCI that are material to their stand-alone ﬁnancial information are:Alestis Areospace S.L.
Principal place of business

Ownership interest held by NCIPFW Areospace GmbHLa Rinconada (Spain)

Speyer (Germany)

2018

2017

2018

2017

38.09%

38.09%

25.10%

25.10%

(20)

(18)

(7)

(8)

4

(2)

2

4

NCI (in € million)
Profit (loss) allocated to NCI (in € million)

33. Capital Management
The Company seeks to maintain a strong ﬁnancial proﬁle to safeguard its going concern, ﬁnancial ﬂexibility as well as shareholders’,
credit investors’ and other stakeholders’ conﬁdence in the Company. Consequently, operating liquidity is of great importance.
As part of its capital management, it is one of the Company’s objectives to maintain a strong credit rating by institutional rating
agencies. This enables the Company to contain its cost of capital which positively impacts its stakeholder value (entity value).
Next to other non-ﬁnancial parameters, the credit rating is based on factors such as cash ﬂow ratios, proﬁtability and liquidity
ratios. The Company monitors these ratios to keep them in a range compatible with a strong rating.
Rating Agency

Long-term rating

Outlook

Short-term ratingStandard and Poor’s

A+

StableA-1+

Moody’s Investors Services

A2

StableP-1

Fitch Rating (unsolicited)A-

StableF-2

The Company’s stand-alone ratings reﬂect the strong backlog
providing revenue visibility and the Company’s leading market
position, the Company’s strong liquidity and improving credit
metrics as well as management’s focus on programmes
execution, proﬁtability and cash generation improvement. The
rating is constrained by the Company’s exposure to structural
currency risk.
In accordance with the Company’s conservative ﬁnancial policy,
a strong rating is key to maintain a wide array of funding sources
at attractive conditions, to have broad access to long-term
hedging and to strengthen the Company’s position as a solid
counterparty for its customers and suppliers.
Among other indicators, the Company uses a Value BasedManagement approach in order to guide the Company towards
sustainable value creation by generating ﬁnancial returns above
the cost of capital.
The key elements of the Value Based Management concept are:deﬁnition of ﬁnancial returns;- thedeﬁnition of the Company’s capital base; and- the- the measurement of value creation derived from the two
above.

The Company uses Return on Capital Employed (“RoCE”) to
measure the value created by ﬁnancial returns relative to its
capital base. RoCE, as deﬁned by the Company, uses EBIT
for the numerator and Average Capital Employed for thedenominator. The Average Capital Employed for the Company
is deﬁned as the average of the annual opening and closing
positions of Fixed Assets plus Net Operating Working Capitalplus Operating Cash less Other Provisions.
Financial value is created if proﬁts relative to the Company’s
Capital Employed exceed the Company’s cost of capital. Valuecan be measured by comparing RoCE to the WACC. A threeyear plan for a value creation ambition is constructed annually,
and is composed of (i) RoCE, (ii) EBIT, and (iii) Free Cash Flow,which is deﬁned as Cash provided by operating activities andCash used for investing activities less Change of securities,
Contribution to plan assets for pensions, realised Treasury
swaps and bank activities.

2

The Company also monitors the level of dividends paid to its
shareholders.
The Company generally satisﬁes its obligations arising from
ESOPs by issuing new shares. In order to avoid any dilution of its
current shareholders out of LTIPs, the Company performs sharebuybacks to meet its obligations to its employees, following thedecisions of the Board of Directors and approval of the AGM.
Apart from this purpose, the Company generally does not tradewith treasury shares.
The Company complies with the capital requirements underapplicable law and its Articles of Association.

Airbus / Financial Statements 201867

Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

34. Net Cash
The net cash position provides ﬁnancial ﬂexibility to fund the Company’s operations, to react to business needs and risk proﬁleand to return capital to the shareholders.
31 December(In € million)

2018

2017

Cash and cash equivalents

9,413

12,016

Current securities

2,132

1,627

Non-current securities

10,662

10,944Gross cash position

22,207

24,587

Short-term financing liabilities(1,463)(2,212)Long-term financing liabilities(7,463)(8,984)

Total

13,281

13,391

The net cash position on 31 December 2018 amounted to€ 13,281 million (2017: € 13,391 million), with a gross cash
position of € 22,207 million (2017: € 24,587 million).
Derivative instruments recognised on the Company’s Statementof Financial Position consist of (i) instruments that are enteredinto as hedges of the Company’s operating activities or interest
result, and (ii) embedded foreign currency derivatives that arise

from separating the foreign currency component from certain
operating contracts. Cash ﬂows resulting from the settlementof these derivatives are therefore recorded as part of cash ﬂow
from operations. Similarly, ﬁnancial assets and liabilities arisingfrom customer ﬁnancing activities and refundable advancesfrom European Governments are considered part of operating
activities and related cash ﬂows are hence recognised as cash
ﬂows from operating activities.

34.1 Cash and Cash Equivalents
Cash and cash equivalents are composed of the following elements:
31 December(In € million)

2018

2017

Bank account and petty cash

1,862

3,672

Short-term securities (at fair value through profit and loss)

6,576

6,256

984

2,085

6

8

9,428

12,021

Short-term securities (at fair value through OCI) (1)OthersTotal cash and cash equivalents
Recognised in disposal groups classified as held for sale

Recognised in cash and cash equivalents

15

5

9,413

12,016(1) IFRS 9 new classification category (prior year-end: available-for-sale).

Only securities with a maturity of three months or less from the date of the acquisition, that are readily convertible to known
amounts of cash and which are subject to an insigniﬁcant risk of changes in value, are recognised in cash equivalents.

34.2 Securities
The majority of the Company’s securities consists of debt
securities and are classiﬁed at fair value through OCI (2017:
available-for-sale ﬁnancial assets) (see “— Note 35.2: Carrying
Amounts and Fair Values of Financial Instruments”).
The Company’s securities portfolio amounts to € 12,794 millionand € 12,571 million as of 31 December 2018 and 2017,
respectively. The security portfolio contains a non-current
portion classiﬁ ed at fair value through OCI of € 10,662 million(2017: € 10,944 m illion available-for-sale securities), and acurrent portion of € 2,132 million (2017: € 1,627 million).
Included in the securities portfolio as of 31 December 2018and 2017, respectively, are corporate and government bonds

68

Airbus / Financial Statements 2018

bearing either ﬁxed rate coupons (€ 12,152 million nominal value;
2017: € 12,023 million) or ﬂoating rate coupons (€ 504 million
nominal value; 2017: € 376 million), foreign currency funds ofhedge funds (€ 0 million nominal value; 2017: € 5 million) andforeign currency funds of ﬁxed income funds (€ 10 million fairvalue; 2017: € 11 million).
When the Company enters into securities lending or otherﬁnancing activities that involve the pledging of securities as
collateral, the securities pledged continue to be recognised on
the balance sheet. As of 31 December 2018, securities for an
amount of € 63 million were pledged as collateral for borrowings
from banks (2017: € 67 million).

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

34.3 Financing Liabilities
Financing liabilities comprise obligations towards ﬁnancial
institutions, issued corporate bonds, deposits made bycustomers of Airbus Bank, borrowings received from joint
ventures and other parties as well as ﬁnance lease liabilities.
Financing liabilities are recorded initially at the fair value ofthe proceeds received, net of transaction costs incurred.
Subsequently, ﬁnancing liabilities are measured at amortisedcost, using the effective interest rate method with any difference
between proceeds (net of transaction costs) and redemption
amount being recognised in total ﬁnance income (cost) over theperiod of the ﬁnancing liability.

Financing liabilities to ﬁnancial institutions may include liabilities
from securities lending transactions. In securities lendingtransactions, the Company receives cash from its counterparty
and transfers the securities subject to the lending transaction
as collateral. The counterparty typically has the right to sell or
repledge the securities pledged. The amount of cash received
is recognised as a ﬁnancing liability. The securities pledged are
not derecognised, but remain on the Company’s Statement of
Financial Position.

Not exceeding
1 yearOver 1 year
up to 5 years

More than
5 years

Total

Bonds and commercial papers

0

2,386

4,273

6,659

Liabilities to financial institutions

86

150

117

353

Loans

70

203

26

299

Finance lease liabilities

23

146

161

330

(In € million)

Others (1)

1,284

1

0

1,285

31 December 2018

1,463

2,886

4,577

8,926

Bonds and commercial papers

512

1,524

5,027

7,063

Liabilities to financial institutions

290

1,397

325

2,012

Loans

144

200

185

529

Finance lease liabilities

17

139

186

342

Others (1)

1,249

1

0

1,250

31 December 2017

2,212

3,261

5,723

11,196(1) Included in “others” are financing liabilities to joint ventures.

Long-term financing liabilities, mainly comprising bonds andliabilities to ﬁnancial institutions, decreased by € -1,521 million
to € 7,463 million (2017: € 8,984 million), as a result of early
settlement of liabilities to ﬁnancial institutions with the European
Investment Bank (“EIB”).
Short-term financing liabilities decreased by € -749 million
to € 1,463 million (2017: € 2,212 million). The decrease in shortterm ﬁnancing liabilities is mainly related to the settlement of aEuro Medium Term Note (“EMTN”) bond in September 2018.
The Company has issued several euro-denominated bonds
under its EMTN programme and three stand-alone US dollardenominated bonds on the US institutional market under Rule
144A. It has also issued a euro-denominated convertible bondand euro-denominated exchangeable bonds into Dassault
Aviation shares. Furthermore, the Company has long-term US
dollar-denominated loans outstanding with the Development
Bank of Japan (“DBJ”).

The Company can issue commercial paper under the so-called“billet de trésorerie” programme at ﬂ oating or ﬁ xed interest
rates corresponding to the individual maturities ranging from1 day to 12 months. The programme has been set up in 2003
with a maximum volume of € 2 billion, increased in 2013 toa maximum volume of € 3 billion. As of 31 December 2018,
there were no outstanding amounts under this programme. The
Company established in April 2015 a US$ 2 billion commercial
paper programme which has been increased to US$ 3 billion in
April 2016. The commercial paper issuance activity was limitedin the course of the year 2018.

2

Financing liabilities include outstanding debt of € 25 million(2017: € 46 million) relating to a loan Air bus received fromAir 2 US in 1999 by way of a reinvestment note amounting to
US$ 800 million, bearing a ﬁ xed interest rate of 9.88%, andother liabilities related to sales ﬁnancing (see “— Note 25: Sales
Financing Transactions”).

Airbus / Financial Statements 201869

Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

The terms and repayment schedules of these bonds and loans are as follows:
Carrying amount(In € million)

Principal
amount31 December(In million)

2018

Maturity
date

Additional features

€ 500

0

512

Sep 2003

5.50%

5.58%

Sep 2018

Interest rate swapped into
3M Euribor +1.72%

US$ 1,000

848

818

Apr 2013

2.70%

2.73%

Apr 2023

Interest rate swapped into
3M Libor +0.68%

EMTN 10 years€ 1,000

1,038

1,031

Apr 2014

2.375%

2.394%

Apr 2024

Interest rate swapped into
3M Euribor +1.40%

EMTN 15 years

€ 500

523

517

Oct 2014

2.125%

2.194%

Oct 2029

Interest rate swapped into
3M Euribor +0.84%

EMTN 15 years
US$ Bond 10 years

Convertible bond
7 years

€ 500

477

470

Jul 2015

0.00%

1.386%

Jul 2022

Convertible into Airbus SE
shares at € 99.54 per shareissued at 102%EMTN 10 years

€ 600

594

584

May 2016

0.875%

0.951%

May 2026

Interest rate swapped into
3M Euribor

EMTN 15 years

€ 900

865

851

May 2016

1.375%

1.49%

May 2031

Interest rate swapped
into 3M Euribor

Exchangeable bonds
5 years€ 1,078

1,061

1,054

Jun 2016

0.00%

0.333%Jun 2021

Exchangeable into Dassault
Aviation shares issued
at 103.75%

US$ Bond 10 years

US$ 750632

615

Apr 2017

3.15%

3.16%

Apr 2027

Interest rate swapped into
3M Libor +0.87%

US$ Bond 30 years

US$ 750621

611

Apr 2017

3.95%

4.02%

Apr 2047

Interest rate swapped into
3M Libor +1.61%

6,659

7,063

Jan 2011

3M
US-Libor+1.15%Jan 2021

Interest rate swapped into
4.76% fixed

Aug 2011

3M
US-Libor+0.85%

Aug 2021

Interest rate swapped into
3.2% fixed

Feb 2020

Bonds

DBJ 10 years

EIB 10 years

US$ 300

US$ 721

87

0

250

343

EIB 7 years

US$ 4060339

Feb 2013

3M
US-Libor+0.93%

EIB 10 years

US$ 6270516

Dec 2014

2.52%

Dec 2015

6M
US-Libor+0.559%EIB 10 years

70

2017

Coupon Effective
Issuance or interest interest
date
rate
rate

US$ 320

0

267

Others266

297

Liabilities tofinancial institutions

353

2,012

Airbus / Financial Statements 2018

2.52%

Dec 2024

Dec 2025

Interest rate swapped into
3M Libor +0.61%

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

Reconciliation of liabilities arising from ﬁnancing liabilities:
Non-cash movements
Foreignexchange
Changesin scope movements

Balance at
1 January
2018

Cash flows

Bonds and commercial papers

7,063

(468)

Liabilities to financial institutions

2,012(1,664)

0

529

(225)

146

(In € million)

Loans
Finance lease liabilities

0

Others64(1)

Balance at
31 December
2018

0

6,659

5

0

353

(149)

(2)

299

342

(7)

0

(5)

0

330

Others

1,250

56

2

(23)

0

1,285

Total

11,196(2,308)

148

(108)

(2)

8,926

(1) Included in “other assets and liabilities and others” in the Statements of Cash Flows.

The aggregate amounts of ﬁnancing liabilities maturing during the next ﬁve years and thereafter as of 31 December 2018 and2017 are as follows:
31 December(In € million)

2018

2017

1 year

1,463

2,212

2 years

211

249

3 years

1,212

621

4 years

537

1,719

5 years

926

672

Thereafter

4,577

5,723

Total

8,926

11,19635. Information about Financial Instruments2

35.1 Financial Risk Management
By the nature of its activities, the Company is exposed to avariety of ﬁnancial risks: (i) market risks, in particular foreignexchange risk, but also interest rate risk, equity price risk andcommodity price risk, (ii) liquidity risk and (iii) credit risk. The
Company’s overall ﬁnancial risk management activities focus on
mitigating unpredictable ﬁnancial market risks and their potential
adverse effects on the C ompany’s operational and ﬁnancial
performance.
The ﬁnancial risk management of the Company is generally
carried out by the Treasury department of the Company underpolicies approved by the Board of Directors or by the Chief
Financial Ofﬁcer. The identiﬁcation, evaluation and hedging of the
ﬁnancial risks is in the joint responsibility of several establishedspeciﬁc committees such as the Foreign Exchange Committee
and the Asset Liability Management Committee, including theCompany business segments.
The Company uses ﬁnancial derivatives solely for risk mitigating
purposes (“hedging”) and applies hedge accounting for asigniﬁcant portion of its hedging portfolio.

Market Risk
Foreign exchange risk — Foreign exchange risk arises
when future commercial transactions or ﬁrm commitments,
recognised monetary assets and liabilities and net investments
in foreign operations are denominated in a currency that is not
the entity’s functional currency.
The Company manages a long-term hedge portfolio withmaturities of several years covering its net exposure to US
dollar sales, mainly from the commercial activities of Airbus.
This hedge portfolio covers a large portion of the Company’s
ﬁrm commitments and highly probable forecasted transactions.
Most of the Company’s revenue is denominated in US dollars,
while a major portion of its costs is incurred in euro and to alesser extent in other foreign currencies. Consequently, to theextent that the Company does not use ﬁnancial instruments
to hedge its exposure resulting from this currency mismatch,
its proﬁts will be affected by changes in the €/US$ exchange
rate. As the Company intends to generate proﬁts primarily fromits operations rather than through speculation on exchange

Airbus / Financial Statements 201871

Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

rate movements, it uses hedging strategies to manage andminimise the impact of exchange rate ﬂuctuations on these
proﬁts.
With respect to its commercial aircraft products, until 30 June2018 the Company typically hedged ﬁrmly committed sales in
US dollar using a “ﬁrst ﬂow approach”. Under that approach,the foreign currency derivatives the Company entered into were
designated as a hedge of the ﬁrst US dollar inﬂows received
from the customer at aircraft delivery in a given month. The
strategy implied that only a portion of the expected monthly
customer payments made at aircraft delivery were hedged.
For this reason, a reduction of monthly cash inﬂows as a resultof postponements or order cancellations had no impact on
the effectiveness of the hedge as long as the actual gross US
dollar cash inﬂows received at aircraft delivery in a particularmonth exceeded the portion designated as being hedged inthat month. However, if the monthly US dollar cash inﬂ ows
received at aircraft delivery were expected to be, or proved
to be, less than the notional amount of the hedges maturingin that month, the excess portion of the hedge notional would
disqualify for hedge accounting and the related fair valuechanges or settlement gains or losses would be recognised
in ﬁnancial result.
As of 30 June 2018, the Company adopted a new hedge
strategy to hedge its net exposure (US dollar revenue less
US dollar cost) resulting from commercial aircraft deliveries of
speciﬁc aircraft types. The strategy more closely aligns hedge
accounting with risk management activities, and is describedin “— Note 4: Change in Accounting Policies and Disclosures”.
Under the new strategy the foreign exchange derivatives
used as hedging instruments are designated as a hedge ofa portion of the cash flows received for each of a numberof deliveries of a specific aircraft type that are expected tooccur in a given month, and hence will allow the hedge result
to move along with the hedged deliveries in the event of ashift in deliveries.
The Company also hedges its expected foreign currency
exposure arising from US dollar or pound sterling cash outﬂows
in the commercial aircraft business on a ﬁrst outﬂow basis,though to a much lesser extent than US dollar cash inﬂows.
In military aircraft and non-aircraft businesses, the Company
hedges inﬂ ows and outﬂ ows in foreign currencies from ﬁ rmly
committed or highly probable forecast sales and purchase
contracts. Here, foreign currency derivatives are typicallycontracted in lower volumes; they may be accounted for using
a ﬁ rst ﬂ ow approach or are designated as hedges of speciﬁ cagreed milestone payments. The amount of the expected
ﬂ ows to be hedged can cover up to 100% of the equivalentof the net US dollar exposure at inception. The coverage ratio
considers the variability in the range of potential outcomestaking into account macroeconomic movements affecting
spot rates and interest rates as well as the robustness of thecommercial cycle.
In situations where the payment dates for hedged firmly
committed cash ﬂows are not ﬁ xed and subject to potentiallysigniﬁcant delays, the Company may use rollover strategies,
usually involving foreign exchange swaps.

72

Airbus / Financial Statements 2018

For all foreign currency hedges of future cash ﬂ ows which
qualify for hedge accounting under IFRS 9, the Company uses
the cash ﬂ ow hedge model, which requires (i) recognising
the effective portion of the fair value changes of the hedging
derivatives in equity (within OCI) and (ii) recognising the effectof the hedge in proﬁ t or loss when the hedged cash ﬂ ows
affect proﬁt or loss.
In addition, the Company hedges currency risk arising fromﬁnancial assets or liabilities denominated in currencies otherthan the euro, including foreign currency receivable andpayable accounts, as well as foreign currency denominatedfunding transactions or securities. The Company applies hedge
accounting if a mismatch in terms of proﬁt or loss recognitionof the hedging instrument and hedged item would otherwise
occur. Frequently, however, the currency-induced gains orlosses of the hedging instrument and the hedged item matchin terms of proﬁt or loss recognition (“natural hedge”), so nohedge accounting is required. Sometimes such gains or losses
may end up in different sections of the income statement (suchas operating proﬁt for the hedged item and ﬁnancial result for
the hedging instrument). If so, the Company may choose topresent the gains or losses of both the hedging instrument
and the hedged item in the same income statement line item
if certain formal requirements are met.
As hedging instruments, the Company primarily uses foreign
currency forwards, foreign currency options and to a minor
extent non-derivative ﬁnancial instruments. A hedge ratio of
1:1 is applied by the Company.
The Company also has foreign currency derivative instruments
which are embedded in cer tain purchase contracts
denominated in a currency other than the functional currencyof any substantial party to the contract, principally in US
dollar and pound sterling. If such embedded derivatives are
required to be accounted for separately from the host purchase
contract, related gains or losses are generally recognised inother ﬁnancial result. However, if the embedded derivatives
qualify for hedge accounting, the Company might choose to
designate them as a hedging instrument in a hedge of foreign
currency risk, in which case they are accounted for under the
cash ﬂow hedge model as described above.
Interest rate risk — The Company uses an asset-liability
management approach with the objective to limit its interest
rate risk. It undertakes to match the risk proﬁle of its interestbearing assets with those of its interest-bearing liabilities. The
remaining net interest rate exposure is managed through several
types of interest rate derivatives, such as interest rate swaps
and interest rate futures contracts, in order to minimise risks
and ﬁnancial impacts.
The vast majority of related interest rate hedges qualify forhedge accounting, and most of them are accounted for under
the fair value hedge model. As a result, both the fair valuechanges of these derivatives and the portion of the hedged
items’ fair value change that is attributable to the hedged
interest rate risk are recognised in proﬁt and loss, where they
offset to the extent the hedge is effective.
A few interest rate swaps that have been entered into asa hedge of certain of the Company variable rate debt (see“— Note 34.3: Financing Liabilities”) are accounted for under the

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

cash ﬂow hedge model. Related fair value gains are recognisedin OCI and reclassiﬁed to proﬁt or loss when the hedged interest
payments affect proﬁt or loss.
The Company invests in ﬁnancial instruments such as overnight
deposits, certiﬁcates of deposits, commercial papers, othermoney market instruments and short-term as well as mediumterm bonds. For its ﬁnancial instruments portfolio, the Company
has an Asset Liability Management Committee in place thatmeets regularly and aims to limit the interest rate risk on a fairvalue basis through a value-at-risk approach, from which resultsa hedge ratio that is however not actively steered.
Commodity price risk — The Company is exposed to risk
relating to ﬂuctuations in the prices of commodities used in the
supply chain. It manages these risks in the procurement process
and to a certain extent uses derivative instruments in order tomitigate the risks associated with the purchase of raw materials.
To the extent that the gains or losses of the derivative and thoseof the hedged item or transaction do not match in terms of proﬁt
or loss, the Company applies cash ﬂow hedge accounting to
the derivative instruments, with a hedge ratio of 1:1.
Equity price risk — The Company is to a small extent invested
in equity securities mainly for operational reasons. Its exposure
to equity price risk is hence limited. Furthermore, it is exposed
under its LTIP to the risk of the Company share price increases.
The Company limits these risks through the use of equity
derivatives that qualify for hedge accounting and have been
designated as hedging instruments in cash ﬂow hedges, witha hedge ratio of 1:1.
Sensitivities of market risks — The approach used to measure
and control market risk exposure of the Company’s ﬁnancial
instrument portfolio is, amongst other key indicators, the valueat-risk model (“VaR”). The VaR of a portfolio is the estimatedpotential loss that will not be exceeded over a speciﬁed periodof time (holding period) from an adverse market movement witha speciﬁed conﬁdence level. The VaR used by the Company
is based upon a 95% conﬁdence level and assumes a ﬁ veday holding period. The VaR model used is mainly based on

the so-called “Monte-Carlo-Simulation” method. The model
generates a wide range of potential future scenarios for market
price movements by deriving the relevant statistical behaviourof markets for the portfolio of market data from the previous
two years and observed interdependencies between different
markets and prices.
The Company’s VaR computation includes the Company’s
ﬁnancial debt, short-term and long-term investments, foreign
currency forwards, swaps and options, commodity contracts,ﬁnance lease receivables and liabilities, foreign currency tradeliabilities and receivables and contract assets.
Although VaR is an important tool for measuring market risk,
the assumptions on which the model is based give rise to some
limitations, including the following:
a ﬁve-day holding period assumes that it is possible to hedge
or dispose of positions within that period. This is considered
to be a realistic assumption in almost all cases but may not be
the case in situations in which there is severe market illiquidity
for a prolonged period.
a 95% conﬁdence level does not reﬂect losses that may occur
beyond this level. Even within the model used there is a 5%
statistical probability that losses could exceed the calculated
VaR.
the use of historical data as a basis for estimating the statisticalbehaviour of the relevant markets and ﬁ nally determining
the possible range of future outcomes out of this statisticalbehaviour may not always cover all possible scenarios,
especially those of an exceptional nature.

-

The Company uses VaR amongst other key ﬁgures in order todetermine the riskiness of its ﬁnancial instrument portfolio andin order to optimise the risk-return ratio of its ﬁnancial asset
portfolio. Further, its investment policy deﬁnes a VaR limit for the
total portfolio of cash, cash equivalents and securities. The total
VaR as well as the different risk-factor speciﬁc VaR ﬁgures ofthis portfolio are measured and serve amongst other measures
as a basis for the decisions of the Company’s Asset Liability
Management Committee.

Airbus / Financial Statements 2018

273

Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

A summary of the VaR position of the Company ﬁnancial instruments portfolio at 31 December 2018 and 2017 is as follows:

Total VaR

Equityprice VaR

Currency
VaR

Commodity
price VaR

Interest
rate VaR

Foreign exchange hedges for forecast transactions
or firm commitments

711

0

716

0

88

Financing liabilities, financial assets (including cash,
cash equivalents, securities and related hedges)

82

28

70

0

34

Finance lease receivables and liabilities, foreign currency
trade payables and receivables

21

0

20

0

19

Commodity contracts

3

0

0

3

0

(In € million)

31 December 2018

8

8

1

0

0

Diversification effectEquity swaps

(182)

(6)

(147)

0

(48)

All financial instruments

644

31

659

3

93

Foreign exchange hedges for forecast transactions
or firm commitments

872

0

913

0

89

Financing liabilities, financial assets (including cash,
cash equivalents, securities and related hedges) (1)

63

17

56

0

20

Finance lease receivables and liabilities, foreign currency
trade payables and receivables (1)

40

0

23

0

34

Commodity contracts

2

0

0

2

0

Equity swaps

2

2

0

0

0

(162)

(3)

(133)

0

(56)

817

17

859

2

87

31 December 2017

Diversification effect(1)

All financial instruments (1)(1) Previous year figures are restated due to the application of IFRS 15.

The decrease of the total VaR as of 31 December 2018 is mainly attributable to a strong decrease of market volatilities, in particularforeign exchange volatility €/US$, in combination with a decrease in net foreign exchange portfolio, compared to year-end 2017.
The Company uses its derivative instruments entirely for hedging purposes. As a result, the respective market risks of these
hedging instruments are – depending on the hedges’ actual effectiveness – offset by corresponding opposite market risks of
the underlying forecast transactions, assets or liabilities. Under IFRS 7, the underlying forecast transactions do not qualify as
ﬁnancial instruments and are therefore not included in the tables shown above. Accordingly, the VaR of the foreign exchange
hedging portfolio in the amount of € 711 million (2017: € 872 million) cannot be considered as a risk indicator for the Company
in the economic sense.
Liquidity Risk
The Company’s policy is to maintain sufficient cash andcash equivalents at any time to meet its present and futurecommitments as they fall due. It manages its liquidity by holding
adequate volumes of liquid assets and maintains a committed
credit facility (€ 3.0 billion as of 31 December 2018 and 2017) inaddition to the cash inﬂow generated by its operating business.
The Company continues to keep within its asset portfolio thefocus on low counterparty risk. In addition, it maintains a setof other funding sources, and accordingly may issue bonds,
notes and commercial papers or enter into security lending

74

Airbus / Financial Statements 2018agreements. Adverse changes in the capital markets could
increase its funding costs and limit its ﬁnancial ﬂexibility.
Further, the management of the vast majority of the Company’s
liquidity exposure is centralised by a daily cash concentration
process. This process enables it to manage its liquidity surplus
as well as its liquidity requirements according to the actual
needs of its subsidiaries. In addition, management monitors
the Company’s liquidity reserve as well as the expected cash
ﬂows from its operations.

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

The contractual maturities of the Company’s ﬁnancial liabilities, based on undiscounted cash ﬂows and including interest payments,
if applicable, are as follows:(In € million)

Carrying
amountContractual
cash flows< 1 year

1 year 2 years

2 years 3 years

3 years 4 years

4 years 5 years>5 years(28,302)(29,843)(20,541)(429)(1,452)(726)(1,075)(5,620)31 December 2018
Non-derivative financial liabilities
Derivative financial liabilities

Total(2,755)(4,479)(1,806)(1,075)

(868)

(492)

(157)

(81)

(31,057)(34,322)(22,347)(1,504)(2,320)(1,218)(1,232)(5,701)(25,185)(27,030)(16,280)

(428)

(812)

(1,896)(829)(6,785)31 December 2017
Non-derivative financial liabilities (1)Derivative financial liabilities

Total (1)(2,271)(3,063)(1,167)

(835)

(184)

(3)

(2)

(872)

(27,456)(30,093)(17,447)(1,263)(996)(1,899)(831)(7,657)(1) Previous year figures are restated due to the application of IFRS 15.

Non-derivative ﬁnancial liabilities included in the table above comprise ﬁnancing liabilities and ﬁnance lease liabilities as presented
in the tables of “— Note 35.2: Carrying Amounts and Fair Values of Financial Instruments”. Due to their speciﬁc nature, namely
their risk-sharing features and uncertainty about the repayment dates, the European Governments’ refundable advances, whichamount to € -4,577 million at 31 December 2018 (€ -5,901 million at 31 December 2017) are not included.
Credit Risk
The Company is exposed to credit risk to the extent of nonperformance by either its customers (e.g. airlines) or its
counterparts with regard to ﬁnancial instruments or issuers ofﬁnancial instruments for gross cash investments. However, it
has policies in place to avoid concentrations of credit risk andto ensure that credit risk is limited.
As far as central treasury activities are concerned, credit risk
resulting from ﬁnancial instruments is managed by the Company.
In order to ensure sufﬁcient diversiﬁcation, a credit limit system
is used.
The Company monitors the performance of the individual
ﬁnancial instruments and the impact of market developments on
their performance and takes appropriate action on foreseeable
adverse development based on pre-deﬁned procedures andescalation levels.
Sales of products and services are made to customers after
having conducted appropriate internal credit risk assessment.
In order to support sales, primarily at Airbus and ATR, theCompany may agree to participate in customer ﬁnancing, ona case-by-case basis either directly or through guarantees
provided to third parties. In determining the amount and termsof the ﬁnancing transaction, the Company takes into accountthe airline’s credit rating and economic factors reﬂecting therelevant ﬁnancial market conditions, together with appropriate
assumptions as to the anticipated future value of the ﬁnanced
asset.
The booked amount of ﬁnancial assets represents the maximum
credit exposure. The credit quality of ﬁnancial assets can beassessed by reference to external credit rating (if available) orinternal assessment of customers’ creditworthiness e.g. airlines
by way of internal risk pricing methods.
For further information relating to gross credit risk and impairment
see “— Note 35.7: Impairment Losses”

35.2 Carrying Amounts and Fair Valuesof Financial Instruments
Financial instruments — The Company’s ﬁnancial assets mainly
consist of cash, short to medium-term deposits and securities.
Its ﬁnancial liabilities include trade liabilities, obligations towards
ﬁnancial institutions, issued bonds and refundable advancesfrom European Governments. All purchases and sales ofﬁnancial assets are recognised on the settlement date according
to market conventions.
From January 2018, the Company classiﬁes its ﬁnancial assets
in one of the following categories: (i) at fair value through OCI,(ii) at fair value through proﬁt and loss and (iii) at amortised cost.
Classiﬁcation depends on the Company’s business model for
managing the ﬁnancial assets and the contractual terms of the
cash ﬂows, as described in “— Note 4: Change in Accounting
Policies and Disclosures”.

2

Until 31 December 2017, the Company classiﬁed its ﬁnancial
assets in the following three categories: (i) at fair value throughproﬁ t and loss, (ii) loans and receivables and (iii) availablefor-sale ﬁ nancial assets. Classiﬁ cation was determined bymanagement at initial recognition and depended on the purposeof acquisition.
Available-for-sale ﬁnancial assets — Financial assets classiﬁed
as available-for-sale were accounted for at fair value. Changes
in their fair value other than impairment losses and foreignexchange gains and losses on monetary items were recognised
directly within AOCI. Upon disposal of such ﬁnancial assets,
the cumulative gain or loss previously recognised in equity
was recorded as part of other income (other expenses) frominvestments in the Consolidated Income Statement for theperiod. Interest earned on the investment were presented asinterest income in the Consolidated Income Statement using theeffective interest method. Dividends earned on investment wererecognised as other income (other expenses) from investmentsin the Consolidated Income Statement when the right to thepayment had been established.

Airbus / Financial Statements 201875

Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

Financial assets at fair value through proﬁt or loss — Within
the Company, only derivatives not designated as hedges are
categorised as held for trading. Furthermore, the Company
designates certain ﬁ nancial assets (such as investments inaccumulated money market funds) at fair value through proﬁt
or loss at initial recognition if they are part of a group of ﬁnancial

assets that is managed and its performance is evaluated on a fairvalue basis, in accordance with a documented risk management
or investment strategy.
The Company assigns its ﬁnancial instruments into classes
based on their balance sheet category.

The following table presents the carrying amounts and fair values of ﬁnancial instruments by class and by IFRS 9 measurement
category as of 31 December 2018:
Financial assets
and liabilities atamortised cost

Fair value
through profit
or loss

Fair value
through OCI

Equity investments (1)

1,202

1,065

Customer financing

510

0(In € million)

Financial
instruments
total

Fair
value

Book
value

Fair
value

0

0

2,267

2,267

0

0

510

510

Amortised
cost

AssetsOther investments and otherlong-term financial assets

Other loans

0

0

1,523

1,523

1,523

1,523

Trade receivables

0

0

6,078

6,078

6,078

6,078

Contract assets

0

0

854

854

854

854

1,317

0

0

0

1,317

1,317

0

0

1,602

1,602

1,602

1,602

0

12,7940

012,794

12,794

Other financial assets
Derivative instruments
Non-derivative instruments
Securities
Cash and cash equivalents

6,576

984

1,853

1,853

9,413

9,413

Total

9,605

14,843

11,91011,91036,35836,358

Bonds and commercial papers

00(6,659)(6,781)(6,659)(6,781)

Liabilities to financial
institutions and others

00(1,937)(1,941)(1,937)(1,941)

0

0

(330)

(330)

(330)

(330)

Liabilities
Financing liabilities

Finance lease liabilities(2)

Other financial liabilities
Derivative instruments(2,755)000(2,755)(2,755)

European Governments’refundable advances (3)00(4,577)(4,577)(4,577)(4,577)

Others0(2,300)

(839)

(839)

(3,139)(3,139)Trade liabilities

00(16,237)(16,237)(16,237)(16,237)(2,755)(2,300)(30,579)(30,705)(35,634)(35,760)

Total(1) Other than those accounted for under the equity method.
(2) Finance lease liabilities are accounted for in accordance with IAS 17 in a manner that is similar, though not identical in all respects, to amortised-cost accounting under IFRS 9.
(3) The European Governments’ refundable advances of € -4,577 million are measured at amortised cost. Fair values cannot be reliably measured because their risk sharing natureand the uncertainty of the repayment dates give rise to a broad range of reasonable fair value estimates and make it impossible to reasonably assess the probabilities of the various
estimates within the range. This may change and reliable fair value measures become available as the related programmes approach the end of production.

76

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

The following table presents the carrying amounts and fair values of ﬁnancial instruments by class and by IAS 39 measurement
category as of 31 December 2017:
Fair value
Loans and receivables
for hedge Available- and financial liabilities
relationsfor-sale
at amortised cost

Fair value throughprofit or loss
Held fortrading

Designated

Fair
value

Equity investments (2) (3)

0

0

0

2,441

0

0

Customer financing (4)

0

0

0

0

695

704

Other loans

0

0

0

0

1,521

1,521

Trade receivables (1)

0

0

0

0

5,487

Contract assets (1)

0

0

0

0

497

(In € million)

Fair Amortised
value
cost

Other

Fair
value

Financial
instruments
total
Book
value

Fair
value

0

2,441

2,441

76

771

780

0

1,521

1,521

5,487

0

5,487

5,487

497

0

497

497

3,564

AssetsOther investments and otherlong-term financial assets

Other financial assets (6)Derivative instruments (7)

66

0

3,498

0

0

0

0

3,564

Non-derivative instruments

0

0

0

0

1,395

1,395

0

1,395

1,395

0

0

0

12,57100

012,571

12,571

Securities
Cash and cash equivalents

0

6,256

0

2,085

3,675

3,675

0

12,016

12,016

66

6,256

3,498

17,097

13,27013,27976

40,26340,272

Bonds and commercial
papers0000(7,063)(7,363)0(7,063)(7,363)Liabilities to financial
institutions and others

0

0

0

0

(3,791)(3,838)0(3,791)(3,838)Finance lease liabilities (5)

0

0

0

0

0

0

(342)

(342)

(342)

Derivative instruments (8)

(239)

0

(2,032)

0

0

0

0

(2,271)(2,271)

European Governments’refundable advances (6)

0

0

0

0

(5,901)(5,901)0(5,901)(5,901)

0

0

0

0

(582)

(582)

0

(582)

(582)

(13,406)(13,406)

Total (1)Liabilities
Financing liabilities

Other financial liabilities

Others(1)

Trade liabilities (1)Total (1)

0

0

0

0

(13,406)(13,406)

0

(239)

0

(2,032)0(30,743)(31,090)(342)

2(33,356) (33,703)(1) Previous year figures are restated due to the application of IFRS 15.
(2) Other than those accounted for under the equity method.
(3) For some equity investments for which market price quotes are not available, fair value estimates are based on valuation techniques. The range of such valuations is significant
and the related probabilities cannot be reasonably assessed.
(4) This includes finance lease receivables, which are not assigned to an IAS 39 measurement category, but reported as “other”.
(5) Finance lease liabilities are accounted for in accordance with IAS 17 in a manner that is similar, though not identical in all respects, to amortised-cost accounting under IAS 39.
They are therefore assigned to the category “amortised cost”.
(6) The European Governments’ refundable advances of € -5,901 million are measured at amortised cost. Fair values cannot be reliably measured because their risk sharing natureand the uncertainty of the repayment dates give rise to a broad range of reasonable fair value estimates and make it impossible to reasonably assess the probabilities of the various
estimates within the range. This may change and reliable fair value measures become available as the related programmes approach the end of production.
(7) This includes credit value adjustments of € -36 million, of which € -36 million is recognised in OCI.
(8) This includes debit value adjustments of € 18 million, of which € 18 million is recognised in OCI.

Fair Value Hierarchy
Fair value of financial instruments — The fair value ofquoted investments is based on current market prices. If
the market for financial assets is not active, or in the caseof unlisted financial instruments, the Company determines
fair values by using generally accepted valuation techniqueson the basis of market information available at the end of

the reporting period. Derivative instruments are generally
managed on the basis of the Company’s net exposure to
the credit risk of each particular counterparty and fair value
information is provided to the Company’s key management
personnel on that basis. For these derivative instruments,
the fair value is measured based on the price that would be

Airbus / Financial Statements 201877

Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

received to sell a net long position, or transfer a net shortposition, for a particular credit risk exposure as further
described below.

-

Depending on the extent the inputs used to measure fair values
rely on observable market data, fair value measurements may
be hierarchised according to the following levels of input:
Level 1: quoted prices (unadjusted) in active markets for
identical assets and liabilities;
Level 2: inputs other than quoted prices that are observablefor the asset or liability – fair values measured based on
Level 2 input typically rely on observable market data such

The fair values disclosed for ﬁnancial instruments accounted forat amortised cost reﬂect Level 2 input. Otherwise, fair values
are determined mostly based on Level 1 and Level 2 input andto a lesser extent on Level 3 input.

-

as interest rates, foreign exchange rates, credit spreads orvolatilities;
Level 3: inputs for the asset or liability that are not based on
observable market data – fair values measured based on Level 3
input rely to a signiﬁcant extent on estimates derived from theCompany’s own data and may require the use of assumptions
that are inherently judgemental and involve various limitations.

The following table presents the carrying amounts of the ﬁnancial instruments held for the three levels of the fair value hierarchy
as of 31 December 2018 and 2017, respectively:
2018
Level 1

2017

Level 2

Level 3

Total

Level 1

1,778

0

489

2,267

1,963

0

0

1,963

0

1,152

165

1,317

0

3,564

0

3,564

Securities

10,7212,073

012,794

10,9951,576

012,571

Cash equivalents

6,576

984

0

7,560

6,256

2,085

0

8,341

19,075

4,209

654

23,93819,2147,225

026,439Derivative instruments

0(2,729)(26)(2,755)0(2,214)(3)(2,217)

Other financial liabilities

00(2,300)(2,300)

0

0

0

0

0

(2,729)(2,326)(5,055)0(2,214)(3)(2,217)(In € million)

Level 2

Level 3

Total

Financial assets measured at fair value
Equity instruments
Derivative instruments

Total
Financial liabilities measured at fair value

Total

The development of ﬁnancial instruments of Level 3 is as follows:
Financial assets(In € million)

78

Financial liabilities

Commodity
swap
agreements Derivatives Participations Total

Written put Commodity
options on
swap
Earn-out
NCI interests agreements agreements

Total

Balance at 1 January 2017

0

0

0

0

(28)

(11)

(10)

(49)

Profit or loss

0

0

0

0

0

(9)

0

(9)

Other comprehensive income

0

0

0

0

0

0

0

0

Settlements

0

0

0

0

0

17

0

17

Release

0

0

0

0

28

0

10

38

Balance at 31 December 2017,
IAS 39

0

0

0

0

0

(3)

0

(3)

IFRS 9 implementation

0

0

478

478

0

0

0

0

Balance at 1 January 2018,
IFRS 9

0

0

478

478

0

(3)

0

(3)

Business combination

0

198

0

198

(2,247)00(2,247)

Profit or loss

0

25

0

25

0

(67)

0

(67)

Other comprehensive income

0

0

23

23

0

0

0

0

Settlements

0

(58)

(12)

(70)

0

44

0

44

Others

0

0

0

0

(53)

0

0

(53)

Balance at 31 December 2018

0

165

489

654

(2,300)(26)

0(2,326)

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

The ﬁnancial liabilities measured at fair value that are classiﬁed
as Level 3 consist mainly of the written put options on noncontrolling interests resulting from the acquisition of CSALP(see “— Note 6: Acquisitions and Disposals”).
The Company has remeasured certain unlisted equity
investments as described in “— Note 4: Change in Accounting
Policies and Disclosures”. The fair value of some of these equity
investments have been determined using valuation methods
such as the net asset value technique.

For short-term commodity contracts, the notional amounts,
being the unobservable input, are set with reference to monthly
commodity volumes that management expects to purchase
based on planning forecasts. The fair values are otherwise
determined using observable market data including quoted
interest rates and pricing information obtained from recognised
vendors of market data.

Financial Assets Designated at Fair Value through Profit or Loss
The following types of ﬁnancial assets held at 31 December 2018 and 2017, respectively, are designated at fair value throughproﬁt or loss:
Nominal amount at
initial recognition at
31 December 2018

Fair value at
31 December
2018

Nominal amount at
initial recognition at
31 December 2017

Fair value at
31 December
2017

5,415

5,416

6,256

6,256

Foreign currency funds of hedge funds

0

0

5

0

Foreign currency funds of fixed income funds

9

9

11

11

5,424

5,425

6,272

6,267

(In € million)

Designated at fair value through profit
or loss at recognition:
Money market funds (accumulating)Total

The Company manages these assets and measures their performance on a fair value basis.
In addition, the Company invests in non-accumulating money market funds, which pay interest on a monthly basis. The fair valueof those funds corresponds to their nominal amount at initial recognition date amounting to € 1,159 million (2017: € 1,186 million).
Fair Value Measurement Method
The Company uses the following methods to measure fairvalues:Equity instruments — The fair values of listed equity instruments
reﬂect quoted market prices. For non-listed equity investments
for which quoted market prices are not available, the Company
determines the fair values using valuation methods such as net
asset values or a comparable valuation technique.
Customer ﬁnancing assets and other loans — The carrying
amounts reﬂected in the annual accounts are used as a proxyfor fair value.
Contract assets, trade receivables and other receivables —The carrying amounts reﬂected in the annual accounts are used
as reasonable estimates of fair value because of the relatively
short period between the receivables’ origination and theirmaturity.
Securities — The fair values of securities reﬂect their quoted
market price at the end of the reporting period.
Cash and cash equivalents — include cash in hand, cash inbanks, checks, ﬁxed deposits as well as commercial papers
and money market funds. The carrying amounts reﬂected in theannual accounts are used as reasonable estimates of fair value
because of the relatively short period between the originationof the instrument and its maturity or due date. The fair valueof commercial papers is determined based on Level 2 input
by discounting future cash ﬂ ows using appropriate interest
rates. The fair values of money market funds are determinedby reference to their quoted market price.

Derivatives — The fair values of derivative instruments reﬂect
quoted market prices, where available, but in most cases are
determined using recognised valuation techniques such as
option-pricing models and discounted cash ﬂow models. The
valuation is based on observable market data such as currency
rates, currency forward rates, interest rates and yield curves,commodity forward prices as well as price and rate volatilities
obtained from recognised vendors of market data. Furthermore,to the extent that these instruments are subject to master netting
arrangements and similar agreements and managed on thebasis of net credit exposure, their fair values reﬂect credit anddebit value adjustments based on the net long or net shortposition that the Company has with each counterparty. Except
for certain short-term commodity contracts discussed in theLevel 3 section above, derivative fair values are measured basedon Level 2 input.

2

Financing liabilities — The fair values disclosed for ﬁnancing
liabilities, other than those of issued bonds and commercial
papers, are determined based on Level 2 input by discounting
scheduled or expected cash ﬂows using appropriate market
interest rates. The fair values disclosed for the issued EMTN
and US dollar bonds reﬂect public price quotations that qualify
as Level 1 input. For issued commercial papers, the carrying
amounts reﬂected in the annual accounts are used as reasonableestimates of fair value because of the relatively short period
between the origination of these instruments and their maturity.
Trade liabilities and current other ﬁnancial liabilities — For
the same reason as trade receivables, carrying amounts areused as reasonable fair value approximations for trade liabilities
and current other ﬁnancial liabilities.

Airbus / Financial Statements 201879

Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

The following interest rate curves are used in the determination of the fair value in respect of the derivative ﬁnancial instruments
as of 31 December 2018 and 2017:31 December
2018

2017

2018

€

(Rate in %)

2017

2018

US$

2017
£

6 months(0.30)(0.32)

2.95

1.91

1.05

0.87

1 year

(0.19)(0.22)

3.10

2.18

1.29

0.90

5 years

0.14

0.25

2.60

2.24

1.31

1.03

10 years

0.76

0.81

2.73

2.39

1.44

1.27

35.3 Potential Effect of Set-Off Rights on Recognised Financial Assets and Liabilities
The Company reports all its ﬁnancial assets and ﬁnancial liabilities on a gross basis. With each derivative counterparty there are
master netting agreements in place providing for the immediate close-out of all outstanding derivative transactions and paymentof the net termination amount in the event a party to the agreement defaults or another deﬁned termination event occurs.
Furthermore, securities lending transactions are accounted for as collateralised borrowings. As a result, the securities pledged
as collateral continue to be recognised on the balance sheet and the amount of cash received at the outset of the transaction isseparately recognised as a ﬁnancial liability. The following tables set out, on a counterparty speciﬁc basis, the potential effect ofmaster netting agreements and collateralised borrowings on the Company’s ﬁnancial position, separately for ﬁnancial assets andﬁnancial liabilities that were subject to such agreements as of 31 December 2018 and 2017, respectively:
Related amounts not
set off in statementof financial positions

Grossamounts
recognisedGrossamounts
recognised
set off inthe financial
statements

Net amounts
presented in
the financial
statements

Financial
instruments

Cashcollateral
received

Net amountFinancial asset

1,186

0

1,186

(872)

0

314

Financial liabilities

2,726

0

2,726

(872)

0

1,854

Financial asset

3,564

0

3,564

(2,068)44

1,540

Financial liabilities

2,271

0

2,271

(2,068)0203(In € million)

31 December 201831 December 201735.4 Notional Amounts of Derivative Financial Instruments
The contract or notional amounts of derivative ﬁnancial instruments shown below do not necessarily represent amounts exchangedby the parties and, thus, are not necessarily a measure for the exposure of the Company through its use of derivatives.
The notional amounts of foreign exchange derivative financial instruments are as follows, speciﬁed by year of expected maturity:
Remaining period
1 year

2 years

3 years

4 years

5 years>5 years

Total

Net forward sales contracts

20,843

18,496

13,540

6,173

1,098

71

60,221

Foreign exchange options

1,642

4,048

1,467

0

0

0

7,157

0

2,473

0

0

0

0

2,473

18,568

16,596

14,007

8,304

2,356

241

60,072

0

3,160

3,865

1,401

0

0

8,426

(610)

0

0

0

0

0

(610)

(In € million)

31 December 2018

Foreign exchange swap contracts
31 December 2017
Net forward sales contracts
Foreign exchange options
Foreign exchange swap contracts

80

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

The following table sets out the notional amount of foreign exchange hedges in place as of 31 December 2018 relating to thecommercial activities of Airbus, and the average euro converted rates applicable to corresponding EBIT.
(In US$ million)

2019

2020

2021

2022

2023+

Total

Total hedges

27,544

26,824

18,631

7,585

1,339

81,923

€/US$

1.23

1.23

1.24

1.27

1.30

1.24

£/US$

1.45

1.37

1.36

1.35

1.37

1.40

Forward rates

In 2018 new hedge contracts of US$ 19.0 billion (2017: US$ 12.4 billion) were added at an average rate of 1.25 US$/€ (2017: 1.22
US$/€).
As of 31 December 2018, the total hedge portfolio with maturities up to 2024 amounts to US$ 81.9 billion (2017: US$ 88.7 billion)
and covers a major portion of the foreign exchange exposure expected over the period of the operative planning. The averageUS$/€ hedge rate of the US$/€ hedge portfolio until 2024 amounts to 1.24 US$/€ (2017: 1.23 US$/€) and for the US$/£ hedge
portfolio until 2023 amounts to 1.40 US$/£ (2017: 1.43 US$/£).
The notional amounts of interest rate contracts are as follows:
Remaining period
1 year

2 years

3 years

4 years

5 years

6 years

Interest rate contracts

939

7

172

4

1,048

1,000

600

1,200

4,970

Interest rate future contracts

215

0

0

0

0

0

0

0

215

1,101

950

7

675

4

1,001

1,523

2,000

7,261

0

0

0

0

0

0

0

0

0

(In € million)

7 years >7 years

Total

31 December 201831 December 2017
Interest rate contracts
Interest rate future contracts

Please also refer to “— Note 34.3: Financing Liabilities”.
The notional amounts of commodity contracts are as follows:
Remaining period
1 year

2 years

3 years

4 years>4 years

Total

31 December 2018

36

19

14

10

3

81

31 December 2017

53

21

13

8

2

97

Total

(In € million)

2

The notional amounts of equity swaps are as follows:
Remaining period(In € million)

1 year

2 years

3 years

4 years>4 years

31 December 2018

49

37

27

9

0

123

31 December 2017

52

49

19

0

0

120

Airbus / Financial Statements 201881

Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

35.5 Derivative Financial Instruments and Hedge Accounting Disclosure
The following table presents the reconciliation of AOCI, net of tax, resulting from cash ﬂow hedge accounting as of 31 December
2018 under IFRS 9:
Hedging reserve(In € million)

Balance at 1 January 2018

(1)

(776)

Changes in fair values

3,832

Foreign exchange contracts

3,825

Others7

Amount reclassified to profit or loss (matured hedges)(800)

Foreign exchange contracts(799)

Others

(1)

Amount classified to profit or loss (inefficiency)(4)Foreign exchange contracts(4)

Others0

Tax impact(779)

Balance at 31 December 2018

1,473

(1) Restated from IFRS 9, including the time value of options.

The following table presents the reconciliation of AOCI, net of tax, resulting from cash ﬂow hedge accounting as of 31 December
2017 under IAS 39:(In € million)

Equity attributable to equity
owners of the parent

NCI

Total

(7,153)(41)(7,194)

Balance at 1 January 2017
Unrealised gains and losses from valuations, gross

8,143

2

8,145

Transferred to profit or loss for the period, gross

2,447

44

2,491

Changes in fair values of hedging instruments recorded in AOCI, gross

10,59046

10,636

Changes in fair values of hedging instruments recorded in AOCI, tax(2,843)(11)(2,854)

Share of change in fair values of hedging instruments from investments
accounted for under the equity method, net

10

0

10

Changes in fair values of hedging instruments recorded in AOCI, net

7,757

35

7,792

Balance at 31 December 2017

604

(6)

598

The following table presents the amounts relating to items designated as hedging instruments and hedge ineffectivenessfor cash-ﬂow hedges as of 31 December 2018 under IFRS 9:
Carrying values

OCI
Other changes
in value of thehedge reserve (1)Hedge
inefficiency
recordedin financial
resultAmounts
reclassified
from hedge
reserve to
profit and loss

Asset

Liability

Changes in valuesof the hedging
instrument

Net forward sales contracts

868(2,410)

2,749

807

(4)

(791)

Foreign exchange options

21

(28)

9

252

0

0

Embedded Derivatives

0

(16)

6

0

0

(9)

Interest rate risk

0

(3)

(5)

0

0

0

Commodity swap risk

10

(17)

4

0

0

(1)

Equity swap risk

19

(4)

9

0

0

0

918

(2,478)

2,771

1,059

(4)

(801)

(In € million)

Foreign currency risk

Total(1) Including the time value of the options and the forward element accounted for as a cost of hedging similar to the time value of options as described in “— Note 4: Change in
Accounting Policies and Disclosures”.

82

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

The following table presents the amounts relating to items designated as hedging instruments as of 31 December 2017 under IAS 39:
2017(In € million)

Foreign currency contracts - cash flow hedges

AssetsLiabilities

3,386(1,888)Foreign currency contracts - not designated in a hedge relationship1(5)Interest rate contracts - cash flow hedges

0

(11)

Interest rate contracts - fair value hedges

69

(84)

Interest rate contracts - not designated in a hedge relationship

31

(35)

Commodity contracts - cash flow hedges

5(9)Commodity contracts - not designated in a hedge relationship2(3)

Equity swaps - cash flow hedges

38

0

Embedded bonds conversion option - not designated in a hedge relationship

0

(196)

Embedded foreign currency derivatives - cash flow hedges

0

(39)

Embedded foreign currency derivatives - not designated in a hedge relationship

32

(1)

3,564

(2,271)

Total

35.6 Net Gains or Net Losses
The Company’s net gains or net losses recognised in proﬁt or loss in 2018 and 2017, respectively, are as follows:(In € million)

2018

2017

Financial assets or financial liabilities at fair value through profit or loss
Held for trading

(104)

603

Designated on initial recognition

(254)

(214)

Financial assets at amortised cost

(30)

0

0

(21)

Loans and receivables (1) (2)Financial assets at fair value through OCI (previously available-for-sale)Financial liabilities measured at amortised cost

2

(268)

1,360

1,303

2

(1) Previous year figures are restated due to the application of IFRS 15.
(2) Includes impairment losses for 2017 (IAS 39).

Net gains of € 329 million (2017: net gains of € 398 million) are recognised directly in equity relating to ﬁnancial assets at fair value.
Interest income from ﬁnancial assets or ﬁnancial liabilities through proﬁt or loss is included in net gains or losses.

35.7 Impairment Losses
Loss a llowances — For its portfolio of debt instruments
including bonds, term deposits and commercial papers,
the Company measures loss allowances at an amount that
represents credit losses resulting from default events that are
possible within the next 12 months, unless the credit risk ona ﬁnancial instrument has increased signiﬁcantly since initialrecognition. In the event of such signiﬁcant increase in credit
risk the Company measures loss allowances for that ﬁnancial
instrument at an amount equal to its life-time excepted losses,
i.e. at an amount equal to the excepted credit losses that result
from all possible default events over the excepted life of thatﬁnancial instrument.

Investment grade instruments — The Company considers
a signiﬁcant increase in credit risk to have occurred, if there isa downgrade by four notches such that the instrument moves
into a high yield bucket as a direct result of the downgrade. With
respect to instruments that were high yield at initial recognition,
a downgrade by four notches is considered as a signiﬁcant
increase in credit risk.

Airbus / Financial Statements 201883

Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments(In € million)

Stage 112-month ECLStage 2
Life-time ECLStage 3Credit impaired ECL

Total

3.36

0

0

3.36

At 1 January 2018
Change in financial assets

0.07

0.75

0

0.82

Change in risk parameters

0.06

0.38

0

0.44

At 31 December 2018

3.49

1.13

0

4.62

The following table breaks down the gross carrying amount of loans and receivables according to IFRS 9, separately showing
those that are impaired, renegotiated or past due:
Renegotiated/
Not not past
past due/not
Past duedue impaired Impaired ≤3 months(In € million)

Past due
Past due
Past due>3 and>6 and>9 andPast due Impairment≤6 months ≤9 months ≤12 months >12 months
chargeTotal

31 December 2018
Tradereceivables

4,647

179

Contract
assets

856

0

0

0

0

0

0

0

0

856

Others

2,410

2

191

81

43

37

62

503

(204)

3,125

Total (1)

7,913

181

420

398

343

135

146

903

(379)

10,060

229

317

300

98

84

400

(175)

6,079

(1) Customer financing loans and finance leases are valued at fair value through profit and loss under IFRS 9. Hence, no impairment applies.

The following table breaks down the gross carrying amount of loans and receivables according to IAS 39, separately showing
those that are impaired, renegotiated or past due:
Not Renegotiated/
past not past due/due
not impaired Impaired(In € million)

Past due≤3 months

Past due>3 and≤6 months

Past due>6 and≤9 months

Past due>9 and≤12 months

Past due>12 months

Total

31 December 2017
CustomerfinancingTradereceivables (1)Contract
assets (1)

93

0

767

3

3

3

63

3

935

4,190

226

151

430

163

144

64

369

5,738

497

0

0

0

0

0

0

0

497

Others

2,214

0

254

65

145

31

180

228

3,117

Total (1)

6,994

226

1,172

498

311

178

307

600

10,287(1) Previous year figures are restated due to the application of IFRS 15.

The management believes that the unimpaired amounts that are past due are still collectible in full, based on historic payment
behaviour and analysis of customer credit risk, including underlying customers’ credit ratings if they are available.
The following impairment losses on ﬁnancial assets are recognised in proﬁt or loss in 2018 and 2017, respectively:(In € million)

2018

2017

0

(64)

Other investments and other long-term financial assets
Equity instruments (1)Customer financing
Other loans
Trade receivables(2)

Contract assets (2)

Total

(2 )

(1) Customer financing and equity instruments are now measured at fair value.
(2) Previous year figures are restated due to the application of IFRS 15.

84

Airbus / Financial Statements 2018

0

(10)

(32)

(4)

(40)

(43)

0

(3)

(72)

(124)

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.8 Other Notes

2.8 Other Notes
36. Litigation and Claims
Litigation and claims — Various legal actions, governmental
investigations, proceedings and other claims are pending or
may be instituted or asserted in the future against the Company.
Litigation is subject to many uncertainties, and the outcomeof individual matters is not predictable with certainty. The
Company believes that it has made adequate provisions tocover current or contemplated litigation risks. It is reasonably
possible that the ﬁ nal resolution of some of these matters
may require the Company to make expenditures, in excess ofestablished reserves, over an extended period of time and ina range of amounts that cannot be reasonably estimated. The
term “reasonably possible” is used herein to mean that the
chance of a future transaction or event occurring is more thanremote but less than likely.
The Company is involved from time to time in various legal andarbitration proceedings in the ordinary course of its business,the most signiﬁcant of which are described below. Other thanas described below, the Company is not aware of any material
governmental, legal or arbitration proceedings (including any
such proceedings which are pending or threatened), during
a period covering at least the previous twelve months which
may have, or have had in the recent past signiﬁcant effects on
Airbus SE’s or the Company’s ﬁnancial position or proﬁtability.
If the Company concludes that the disclosures relative tocontingent liabilities can be expected to prejudice seriously its
position in a dispute with other parties, the Company limits its
disclosures to the nature of the dispute.

WTO
Although the Company is not a party, the Company is supporting
the European Commission in litigation before the WTO. Following
its unilateral withdrawal from the 1992 EU-US Agreement
on Trade in Large Civil Aircraft, the US lodged a request on
6 October 2004 to initiate proceedings before the WTO. On
the same day, the EU launched a parallel WTO case against
the US in relation to its subsidies to Boeing. On 19 December
2014, the European Union requested WTO consultations on theextension until the end of 2040 of subsidies originally grantedby the State of Washington to Boeing and other US aerospaceﬁrms until 2024.
On 1 June 2011, the WTO adopted the Appellate Body’s ﬁnal
report in the case brought by the US assessing funding toAirbus from European Governments. On 1 December 2011, theEU informed the WTO that it had taken appropriate steps tobring its measures fully into conformity with its WTO obligations,and to comply with the WTO’s recommendations and rulings.
Because the US did not agree, the matter was referred to the
WTO for further review pursuant to WTO rules. A decision
was published in May 2018 in which the WTO clariﬁed that the
EU and the Company have achieved compliance in respectof the majority of the subsidies at issue but considered thatsome remaining obligations required minor adjustments, whichhave since been addressed by the EU. Because the US did
not agree on the EU compliance efforts, the US requested
the resumption of Article 22.6 arbitration proceedings toquantify the amount of countermeasures against the EU. In
September 2018, the US requested an annual amount ofcountermeasures of US$ 11.2 billion. The Company considers
the US’ request unjustiﬁed given the measures taken to comply
with the Appellate Body decision of May 2018. The Company
has worked with the European Commission and the Member
State governments to fully implement the WTO ﬁndings in theAppellate Body’s decision and asserts that the new measurestaken render the sanctions request moot.
On 23 March 2012, the WTO adopted the Appellate Body’s ﬁnal
report in the case brought by the EU assessing funding to Boeing
from the US. On 23 September 2012, the US informed the WTO
that it had taken appropriate steps to bring its measures fully
into conformity with its WTO obligations, and to comply with
the WTO’s recommendations and rulings. Because the EU did
not agree, the matter is now under WTO review pursuant to
WTO rules.
Exact timing of further steps in the WTO litigation process issubject to further rulings and to negotiations between the US
and the EU. Unless a settlement, which is currently not underdiscussion, is reached between the parties, the litigation is
expected to continue for several years.

GPT
In August 2012, the UK Serious Fraud Ofﬁce (“SFO”) announced
that it had opened a formal criminal investigation in relation to
GPT Special Project Management Ltd (“GPT”), a subsidiary
operating in Saudi Arabia that the Company acquired in2007. The investigation relates to issues initially raised by awhistleblower concerning contractual arrangements originating
prior to GPT’s acquisition and continuing thereafter. The
Company has engaged with the SFO throughout and continues
to actively cooperate with the investigation.

2

Euroﬁghter Austria
In February 2017, the Austrian Federal Ministry of Defence raised
criminal allegations against Airbus Defence and Space GmbHand Euroﬁghter Jagdﬂugzeug GmbH for wilful deception andfraud in the context of the sale of the Euroﬁghter aircraft toAustria and respective damage claims. After the Austrian Federal
Ministry of Defence raised its criminal allegations, the Austrian
public prosecutor opened an investigation against Airbus
Defence and Space GmbH, Euroﬁghter Jagdﬂugzeug GmbHand former and current employees of the two entities. The
Company has ﬁled several submissions to the Vienna Public
Prosecutor in response to the allegations of deception in the
procurement of Euroﬁghter combat aircraft made by the Austrian
Defence Minister. The Company is cooperating fully with theauthorities.

Airbus / Financial Statements 201885

Notes to the IFRS Consolidated Financial Statements /2.8 Other Notes

Investigation by the UK SFO and France’s PNF
and Related Commercial Litigation
In the context of review and enhancement of its internal
compliance improvement programme, the Company discovered
misstatements and omissions relating to information provided
in respect of third party consultants in certain applications
for export credit financing for the Company’s customers.
In early 2016, the Company informed the UK, German andFrench Export Credit Agencies (“ECAs”) of the irregularities it
had discovered. The Company made a similar disclosure to
the UK Serious Fraud Ofﬁce (“SFO”). In August 2016, the SFO
informed the Company that it had opened an investigation into
allegations of fraud, bribery and corruption in the civil aviation
business of Airbus relating to irregularities concerning third
party consultants (business partners). In March 2017, France’s
Parquet National Financier (“PNF”) informed the Company thatit had also opened a preliminary investigation into the same
subject and that the two authorities would act in coordination
going forward. The Company is cooperating fully with both
authorities including in respect of potential issues across theCompany’s business. As part of the Company’s engagementwith the US authorities, the latter have requested information
relating to conduct forming part of the SFO/PNF investigationthat could fall within US jurisdiction. The Company is cooperatingwith the US authorities in close coordination with the SFO andPNF. The investigations and any penalties potentially levied as aresult could have negative consequences for the Company. The
potential imposition of any monetary penalty (and the amountthereof) or other sanction including tax liability arising fromthe investigations will depend on the ultimate factual and legalﬁndings of the investigation, and could have a material impact
on the ﬁnancial statements, business and operations of theCompany. However, at this stage it is too early to determine
the likelihood or extent of any such possible consequence.
Investigations of this nature could also result in (i) civil claims
or claims by shareholders against the Company (ii) adverse
consequences on the Company’s ability to obtain or continue
ﬁnancing for current or future projects (iii) limitations on theeligibility of group companies for certain public sector contracts
and/or (iv) damage to the Company’s business or reputation via
negative publicity adversely affecting the Company’s prospects
in the commercial market place.
In light of these investigations, the Company enhanced certainof its policies, procedures and practices, including ethics andcompliance and export control. The Company has revised
and implemented improved procedures, including those withrespect to its engagement of consultants and other third
parties, in particular in respect of sales support activities. The
Company believes that these enhancements to its controls
and practices will best position it for the future, particularly
in light of advancements in regulatory standards. Several
consultants and other third parties have initiated commercial
litigation and arbitration against the Company seeking relief. The
enhancement of its controls and practices has led to additionalcommercial litigation and arbitration against the Company andmay lead to other civil law or criminal law consequences in
the future, which could have a material impact on the ﬁnancial
statements, however at this stage it is too early to determine
the likelihood or extent of any liability.

86

Airbus / Financial Statements 2018

ECA Financing
The Company and the ECAs reached agreement on a process
under which it is able to resume making applications for
ECA-backed ﬁnancing for its customers across the Company
on a case-by-case basis for a limited number of transactions.

Other Investigations
The Company is cooperating fully with the authorities in a
judicial investigation in France related to Kazakhstan. In thisspirit, the Company asked to be interviewed by the investigating
magistrates and has been granted the status of “assisted
witness” in the investigation.
The Company is cooperating with French judicial authorities
pursuant to a request for mutual legal assistance made by thegovernment of Tunisia in connection with historical aircraft sales.
Following a review of its US regulatory compliance procedures,
the Company discovered and subsequently informed relevant
US authorities of its ﬁndings concerning certain inaccuracies
in ﬁlings made with the US Department of State pursuant toPart 130 of the US International Trafﬁc in Arms Regulations(“ITAR”) (a US export control regulation). The Company iscooperating with the US authorities. The Company is unable
to reasonably estimate the time it may take to resolve thematter or the amount or range of potential loss, penalty or othergovernment action, if any, that may be incurred in connection
with this matter.

Other Disputes
In May 2013, the Company was notified of a commercial
dispute following the decision taken by the Company tocease a partnership for sales support activities in some local
markets abroad. The Company believes it has solid grounds
to legally object to the alleged breach of a commercial
agreement. However, the consequences of this dispute andthe outcome of the proceedings cannot be fully assessed at
this stage. The arbitration will not be completed until 2020 at
the earliest.
In the course of another commercial dispute, the Company
received a statement of claim by the Republic of China (Taiwan)
alleging liability for refunding part of the purchase price of alarge contract for the supply of missiles by subsidiary Matra
Défense S.A.S., which the customer claims it was not obliged
to pay. An arbitral award was rendered on 12 January 2018with a principal amount of € 104 million plus interest and costs
against Matra Défense S.A.S. Post-award proceedings are
currently underway.

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2.8 Other Notes

37.

Auditor Fees

With reference to Section 2:382a (1) and (2) of the Netherlands Civil Code, the following fees for the ﬁnancial year 2018 have been
charged by EY to the Company, its subsidiaries and other consolidated entities:(In € thousand)

2018

2017

Audit of the financial statements

12,098

9,238

244

810

Other audit engagements
Tax services
Other non-audit services

Total

766

690

1,245

5,416

14,353

16,154

Other audit ﬁrms have audit fees related to audit process, certiﬁcation and examination of individual and consolidated accountsof € 6 million in 2018 (2017: € 5 million).

38. Events after the Reporting Date
The Company and its largest A380 operator signed a head of agreement on 11 February 2019 (see “— Note 10: Revenue and
Gross Margin”).
These Consolidated Financial Statements have been authorised for issuance by the Board of Directors on 13 February 2019.

2

Airbus / Financial Statements 2018

87

88

Airbus / Financial Statements 2018

ArianeGroup50%*

Airbus Defence
and Space Holding
France SAS(France)

Computadoras,Redese Ingenieria, S.A.
(Spain)Airbus Defence
and Space, S.A.
(Spain)Subsidiaries held with no indication of ownership percentage are 100% owned.
* Indirectly
Legal forms are indicated for information purposes and are not always part of the legal name.

MBDA Group

Ariane Group

Airbus Helicopters

MBDA(France)

37.5%*

Airbus Defence
and Space SAS(France)

Airbus DS Holding
SAS(France)99.99%

4.04%

95.96%

Elbe
FlugzeugwerkeGmbH(Germany)

45%

Airbus Defence 11.98%
and Space GmbH
(Germany)

88.02%*

Airbus Defence and Space

Airbus Defence
and Space
Litmited(UK)

Airbus Operations
GmbH(Germany)

Airbus Operations
Limited(UK)

ATR GIE(France)

Stelia Aerospace(France)

AirbusOperations, S.L.
(Spain)50.01%*

Airbus SAS(France)

Airbus Operations
SAS(France)

4.22%*

95.78%C Series Aircraft
LimitedPartnership(Canada)(The Netherlands)

AIRBUS SE

50%*

Airbus Group
Inc.
(USA)

Airbus Americas
Inc.
(USA)

Premium Aerotec
GmbH(Germany)

4.96%*

Airbus Helicopters
España, S.A.
(Spain)Airbus Helicopters
UK Limited(UK)

Airbus Helicopters
DeutschlandGmbH(Germany)

Airbus Helicopters(France)98.04%

Notes to the IFRS Consolidated Financial Statements /2.9 Appendix “Simpliﬁed Airbus Structure”

2.9 Appendix “Simpliﬁed Airbus Structure”

FINANCIAL STATEMENTS 2018
Notes to the IFRS Consolidated Financial Statements /2

Airbus / Financial Statements 201889

Chapter

3

90

Airbus / Financial Statements 2018

3

Airbus SE
IFRS Company
Financial Statements
IFRS Company Income Statement
for the years ended 31 December 2018 and 2017

92

IFRS Company Statement of Comprehensive Income
for the years ended 31 December 2018 and 2017
92
IFRS Company Statement of Financial Position
at 31 December 2018 and 201793

IFRS Company Statement of Cash Flowsfor the years ended 31 December 2018 and 201794

IFRS Company Statement of Changes in Equity
for the years ended 31 December 2018 and 201795

Airbus / Financial Statements 201891

Airbus SE – IFRS Company Financial Statements /IFRS Company Income Statement
for the years ended 31 December 2018 and 2017
(In € million)

Note

2018

2017

Operating income

393

656

Operating expenses

(270)

(841)

Income from investments

46

614

Loss on disposal of investments

7

(369)

0

Total operating result

4

(200)

428

Interest income

233

211

Interest expense

(195)

(159)

Other financial result

(33)

(1)

Total financial result

5

5

51

(195)

479

(32)

3

(227)

483

(In € million)

2018

2017

Profit (loss) for the period

(227)

483

Net change in fair value of financial assets (1)

(430)

101

Net change in fair value of cash flow hedges

15Profit (loss) before income taxes
Tax income (expense)

6

Profit (loss) for the period

IFRS Company Statement of Comprehensive Income
for the years ended 31 December 2018 and 2017

Other comprehensive income
Items that will be reclassified to profit or loss:

Other comprehensive income, net of tax

(429)

106

Total comprehensive income for the period

(656)

589

(1) IFRS 9 new classification category (prior-year: change in fair value of available-for-sale financial assets).

92

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Airbus SE – IFRS Company Financial Statements /IFRS Company Statement of Financial Position
at 31 December 2018 and 2017
Note

2018

2017

Investments in subsidiaries and associates

7

16,797

16,576Long-term financial assets

8

1,468

3,040

Non-current other financial assets

8

1,882

3,898

1

5

Deferred tax assets

6

12

22

Non-current securities

12(In € million)

AssetsNon-current assets

Non-current other assets

10,473

10,812

30,63334,353165

31

Current assets
Trade receivables
Current other financial assets

8

2,152

1,938

Current accounts Airbus companies

8

8,013

9,581

85

124

Current securities

12

2,073

1,576

Cash and cash equivalents

12

Current other assets

Total assets

7,886

11,03820,37424,28851,00758,641Equity and liabilities
Stockholders’ equity

11

Issued and paid up capital

777

775

Share premium

2,941

2,826

Retained earnings

6,636

6,903

31

459

Legal reserves
Treasury shares

(51)

(2)

Result of the year

(227)

483

10,106

11,444Non-current liabilities
Long-term financing liabilities

12

6,746

8,106

Non-current financial liabilities

8

2,015

4,055

8,761

12,161

3

Current liabilities
Short-term financing liabilities

12

0

660

Current accounts Airbus companies

830,17532,127

Current financial liabilities

8

1,906

1,730

Current other liabilities

Total equity and liabilities

58

519

32,13935,03651,00758,641

Airbus / Financial Statements 201893

Airbus SE – IFRS Company Financial Statements /IFRS Company Statement of Cash Flowsfor the years ended 31 December 2018 and 2017
2018

2017

(227)

483

Interest income

(233)

(211)

Interest expense

195

159

Interest received

260

209

Interest paid

(139)

(209)

0

0

(In € million)

Note

Profit for the period (Net income)
Adjustments to reconcile profit for the period to cash provided by operating activities:

Income tax received
Depreciation and amortisation

00Valuation adjustments

39

(345)

Tax (income) expense

44

(18)

Change in income tax assets, income tax liabilities and provisions for income tax

(12)

12

Dividends received

(45)

0

1

(31)

Change in current and non-current provisions
Change in other operating assets and liabilities:

(553)

525

Trade receivables

(134)

106

Trade liabilities

(425)

406

6

13

(670)

575

(270)

(260)

(532)

(327)

Other assets and liabilities

Cash provided by (used for) operating activities
Investments:
Acquisitions of subsidiaries, joint ventures, businesses and non-controlling interests

7

Payments for long-term financial assets
Proceeds from disposals of associates, joint ventures, other investments
and other long-term financial assets
Repayments of other long-term financial assets
Dividends received
Payments for investments in securities

0
164

45

0

(1,874)(3,742)

Proceeds from disposals of securities

1,845

2,400

Cash provided by (used for) investing activities

1,149(1,765)Draw-down in financing liabilities

0

1,399

Repayment of financing liabilities(2,180)(88)

Change in current accounts Airbus companies

(326)

3,118

Cash distribution to Airbus SE shareholders(1,161)(1,043)

117

83

Changes in capital
Share buyback

Cash (used for) provided by financing activities
Effect of foreign exchange rate changes on cash and cash equivalents

(49)

1

(3,599)

3,470

(32)

0

Net (decrease) increase in cash and cash equivalents(3,152)

2,280

Cash and cash equivalents at beginning of period

11,038

8,758

7,886

11,038Cash and cash equivalents at end of period

94

0
1,935

Airbus / Financial Statements 2018

12

FINANCIAL STATEMENTS 2018
Airbus SE – IFRS Company Financial Statements /IFRS Company Statement of Changes in Equity
for the years ended 31 December 2018 and 2017
Legal reserves (1)(In € million)

Balance at 1 January 2017
Profit for the period

Capital
stock

Share
premium

Retainedearnings

Financialassets atfair value (2)Cash flow
hedgesTreasurysharesTotalequity

773

2,745

7,914

359

(6)

(3)

11,782

0

0

483

0

0

0

483

Other comprehensive income

0

0

0

101

5

0

106

Total comprehensive income for the period

0

0

483

101

5

0

589

Capital increase

2

81

0

0

0

0

83

Share-based payments (IFRS 2)

0

0

32

0

0

0

32

Cash distribution to Airbus SE shareholders

00(1,043)00

0(1,043)

Change in treasury shares

0

0

0

0

0

1

1

775

2,826

7,386

460

(1)

(2)

11,444

0

0

367

(370)

0

0

(3)

775

2,826

7,753

90

(1)

(2)

11,441

Profit for the period

0

0

(227)

0

0

0

(227)

Other comprehensive income

0

0

0

(59)

1

0

(58)

Balance at 31 December 2017
Restatements (3)Balance at 1 January 2018

Total comprehensive income for the period

0

0

(227)

(59)

1

0

(285)

Capital increase

2

115

0

0

0

0

117

Share-based payments (IFRS 2)

0

0

43

0

0

0

43

Cash distribution to Airbus SE shareholders

00(1,161)000(1,161)

Change in treasury shares

0

0

0

0

0

(49)

(49)

Cancellation of treasury shares

0

0

0

0

0

0

0

777

2,941

6,408

31

0

(51)

10,106

Balance at 31 December 2018

(1) The distribution of legal reserves is restricted by Dutch law.
(2) IFRS 9 new classification category (prior-year: available-for-sale financial assets).
(3) Opening balance figures are restated due to the application of IFRS 9.

3

Airbus / Financial Statements 201895

Chapter

4

96

Airbus / Financial Statements 2018

4

Notes to the
IFRS Company
Financial Statements
4.1

Basis of Presentation

99

4.2

Company Performance

102

4.3

Operational Assets and Liabilities

104

4.4

Employees

107

4.5

Capital Structure and Financial Instruments

107

Airbus / Financial Statements 201897

Notes to the IFRS Company Financial Statements /Contents

4.1
1.
2.
3.

Basis of Presentation
The Company
Signiﬁcant Accounting Policies
Related Party Transactions

99
99
99
101

9.

Commitments and Contingencies

107

4.4
10.

Employees
Number of Employees

107
107

4.2
4.
5.
6.

Company Performance
Total Operating Result
Total Financial Result
Income Tax

102
102
102
103

4.5

4.3
7.

Operational Assets and Liabilities
Investments in Subsidiaries, Associates
and Participations
Financial Assets and Liabilities

104

Capital Structure
and Financial Instruments
Total Equity
Cash, Securities and Financing Liabilities
Information about Financial Instruments
Audit Fees
Events after the Reporting Date

107
107
109
111
117
117

8.

98

Airbus / Financial Statements 2018

104
106

11.
12.
13.
14.
15.

FINANCIAL STATEMENTS 2018
Notes to the IFRS Company Financial Statements /4.1 Basis of Presentation
1.

The Company

The Company’s principal activity is acting as a holding andmanagement company for the subsidiaries of Airbus SE,
the “Company”, a listed company in the form of a European
Company (Societas Europaea), legally seated in Amsterdam(current registered ofﬁce at Mendelweg 30, 2333 CS Leiden,
The Netherlands) and registered at the Chamber of Commercein The Hague under number 24288945. The Company has its

2.

listings at the European Stock Exchanges in Paris, Frankfurt
am Main, Madrid, Barcelona, Valencia and Bilbao. The
IFRS Financial Statements were authorised for issue by theCompany’s Board of Directors on 13 February 2019. They areprepared and reported in euro (“€”) and all values are rounded
to the nearest million appropriately.

Signiﬁcant Accounting Policies

Basis of preparation — The Company’s Financial Statements
are prepared in accordance with International Financial
Reporting Standards (“IFRS”), issued by the International
Accounting Standards Board (“IASB”) as endorsed by theEuropean Union (“EU”) and with Part 9 of Book 2 of the Dutch
Civil Code.
In the Company Financial Statements of Airbus SE, unlessotherwise disclosed, the same accounting principles have been
applied as set out in the Notes to the Consolidated Financial
Statements, except for the valuation of the investments aspresented under investments in subsidiaries and associates in
the Company Financial Statements. These policies have been
consistently applied to all years presented.
In the Company Financial Statements, the investments in
subsidiaries and associates are recorded at acquisition cost.
In the Company Statement of Income, dividend received frominvestments is recorded as dividend income.
Due to this application, the Company equity and net result
are not equal to the consolidated equity and net result. A
reconciliation of the total shareholders’ equity and proﬁt for theperiod is presented in Note 11 “Total Equity” to the Company
Financial Statements.
The Company Financial Statements have been prepared on ahistorical cost basis, except the equity instruments, securities
and derivative instruments measured at fair value.

Regarding the application of new, revised or amended IFRS
standards issued and applying from 1 January 2018 and issued
but not yet applied please refer to Note 4 “Change in Accounting
Policies and Disclosure” of the Company’s Consolidated
Financial Statements. The implementation of IFRS 15 has had
no impact on the Financial Statements of the Company, andconsequently, the comparative ﬁgures are not restated. The
implementation of IFRS 9 has resulted in a decrease in the
opening equity 2018 of € -3 million due to expected credit loss
impairment on ﬁnancial assets.
In addition, no material changes is expected in the Company
Financial Statements of Airbus SE from the implementation of
the new standards not yet applied. Further information about
Share-Based Payments and Employee Stock Ownership
Plans (ESOP) is presented in Note 30 and information about
Remuneration is presented in Note 31 of the Consolidated
Financial Statements.
The information with regard to Capital Management is disclosed
in Note 33, further information about Litigation and Claims refers
to Note 36 and Events after the Reporting Date are disclosed in
Note 38 of the Company’s Consolidated Financial Statements.
Unless reference is made to the accounting policies describedin the Consolidated Financial Statements, the main accounting
policies applied in the preparation of these Company Financial
Statements are described in each accounting area. These
accounting policies have been consistently applied to all
ﬁnancial years presented, unless otherwise stated.

Airbus / Financial Statements 2018

499

Notes to the IFRS Company Financial Statements /The following table shows the measurement categories of ﬁnancial instruments:(In € million)

Measurement
Carrying amount
categories
according to IAS 39
according to IAS 39 at 31 December 2017

Measurement
Carrying amount
categories according to IFRS 9
according to IFRS 9
at 1 January 2018

AssetsOther investments and other long-term
financial assets
Fair value through OCI

0Available-for-sale

1,193

Fair value through profit
and loss

1,193

Other loans

Loans and receivables

3,234

Amortised cost

3,234

Trade receivables

Loans and receivables

31

Amortised cost

31

Fair value throughprofit and loss

5,640

Fair value through profit
and loss

5,640

Loans and receivables

9,581

Amortised cost

9,581

Available-for-sale

Equity investments

Other financial assets
Derivative instruments
Current account Airbus companies
Securities

Cash and cash equivalents

12,388Fair value through OCI

12,388Fair value throughprofit and loss

6,256

Fair value through profit
and loss

6,256

Fair value through OCI

900

Available-for-sale

2,085

Fair value through profit
and loss

1,185

Loans and receivables

2,697

Amortised cost

2,697

Total

43,105

43,105

Liabilities
Financing liabilities
Bonds and commercial papers

Amortised cost

2,751

Amortised cost

2,751

Liabilities to financial institutions
and others

Amortised cost

1,715

Amortised cost

1,715Internal loans payable

Amortised cost

4,300

Amortised cost

4,300

Fair value throughprofit and loss

5,784

Fair value through profit
and loss

5,784

32,127

Amortised cost

Other financial liabilities
Derivative instruments
Current accounts Airbus companies

Amortised cost

Total

46,67732,127

46,677

Use of Estimates and Judgements
The preparation of the Company Financial Statements inconformity with EU-IFRS requires the use of estimates andassumptions. In preparing those ﬁ nancial statements, themanagement exercises its best judgement based upon its
experience and the circumstances prevailing at that time. The
estimates and assumptions are based on available informationand conditions at the end of the ﬁnancial period presented andare reviewed on an ongoing basis. Actual results could differ
from these estimates.

100

Airbus / Financial Statements 2018

Key accounting estimates and judgements affecting theassessment and measurement of impairment are includedin Note 7 “Investments in Subsidiaries, Associates andParticipations” of the Company Financial Statements.
The details regarding the use of estimates and judgements aredescribed in Note 3 “Use of Estimates and Judgements” of theConsolidated Financial Statements.

FINANCIAL STATEMENTS 2018
Notes to the IFRS Company Financial Statements /3.

Related Party Transactions

Key Management PersonnelIntercompany Transactions

The details regarding the compensation of key management
personnel are described in Note 8 “Related Party Transactions”
of the Consolidated Financial Statements.

A comprehensive exchange of internal services between thesubsidiaries of a multinational corporation like Airbus SE iscommon practice. In its responsibility as holding company tomanage its subsidiaries and to assist the business activities
conducted by Airbus companies and its subsidiaries, Airbus SE
applies transfer prices for its business activities in conformity withmarket levels and in accordance with national and internationaltax requirements (arm’s length principle).

The following table discloses the related party intercompany transactions in 2018 and 2017:
Transactions
with subsidiaries
2018

Transactions
with associates
2018

Transactions
with subsidiaries
2017

Transactions
with associates
2017

Rendering of services, dividend income
and interest income

501

61

772

28

Purchases of services, investment charge
and interest expenses

(256)

(3)

(728)

(2)

Intercompany receivables due
as of 31 December

9,791

95

12,72987

Intercompany payables due
as of 31 December(33,056)(965)(35,422)(1,005)Hedge relationships receivable
as of 31 December

3,793

0

5,640

0

Hedge relationships payable
as of 31 December

3,921

0

5,784

0

(In € million)

For further information about granted guarantees to subsidiaries please refer to Note 9 “Commitments and Contingencies” of theCompany Financial Statements.

4

Airbus / Financial Statements 2018101

Notes to the IFRS Company Financial Statements /4.2 Company Performance4.

Total Operating Result
2018

2017

Operating income

393

656

Corporate services rendered to Airbus companies

393

656

(In € million)

Operating expenses

(270)

(841)

Service fees charged by Airbus companies

(119)

(698)

Administrative expenses

(151)

(143)

Income from investments

46

614

Dividends received from Airbus companies

46

13

Impairment reversal

0601

Expense from investments

(369)

0

Loss on disposal of investments

(369)

0

Total operating result

(200)

428

5.

Total Financial Result
2018

2017

(1)

40

52

Interest income from securities (2)

111

92

(In € million)

Interest result

Interest income

122

119

Interest expense

(195)

(159)

Other financial result

(33)

(1)

Option liability exchangeable bond

33

(19)

Change in fair value measurement of financial assets (3)

(44)

0

Equity instruments

749Interest rate hedging

4

(16)

Financing income (expense)

(7)

(8)

Foreign exchange translations

(26)

(6)

5

51

Total financial result(1) In 2018, the total interest income amounts to € 233 million (2017: € 211 million) for financial assets which are not measured at fair value through profit or loss. For financial liabilities
which are not measured at fair value through profit or loss € -195 million (2017: € -159 million) are recognised as total interest expenses.
(2) IFRS 9 new classification category (prior-year: interest income from available-for-sale financial securities).
(3) New IFR9 classification (prior-year: financial asset at fair-value).

The Company is acting as a ﬁnancial market agent on behalf of its subsidiaries, therefore the fair value changes of derivatives
are reported on a net basis.

102

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Notes to the IFRS Company Financial Statements /6.

Income Tax

The Company is tax registered in the Netherlands. The Company
is heading a ﬁscal unity, which also includes Airbus Finance B.V.,
Airbus DS Holdings B.V. and Airbus Defence and Space
Netherlands B.V. and therefore the Company is severally andjointly liable for income tax liabilities of the ﬁ scal unity as awhole.
Income taxes — The tax expense for the year comprises
deferred tax. Tax is recognised in the Income Statement, except
to the extent that it relates to items recognised directly in Other
Comprehensive Income.

The amount of income tax included in the Income Statement isdetermined in accordance with the rules established by the tax
authorities in the Netherlands, based on which income taxes
are payable or recoverable.
Deferred tax assets and/or liabilities, arising from temporary
differences between the carrying amounts of assets andliabilities and the tax base of assets and liabilities, are calculatedusing the substantively enacted tax rates expected to apply
when they are realised or settled. Deferred tax assets arerecognised if it is probable that they will be realised.

The expense for income taxes is comprised of the following:(In € million)

2018

2017

0

0

Deferred tax income (expense)

Current tax expense

(32)

3

Total

(32)

3

The following table shows reconciliation from the theoretical income tax expense using the Dutch corporate tax rate to the reportedtax (expense) income:(In € million)

2018

2017

Profit before income taxes

(195)

479

Corporate income tax rate

25%

25%

Expected expense for income taxes

42

(120)

Non-taxable income from investments

(80)

153

Option liability exchangeable bond

7

(5)

Income from other companies within the fiscal unity

(1)

(3)

Impairment

12

(12)

Other

(13)

(10)

Reported tax income (expense)

(32)

3

The ﬁrst tranche of tax loss carry forwards (€ 22 million) will expire by the end of 2026.
Deferred income taxes as of 31 December 2018 are related to the following assets and liabilities:

1 January 2018

Other
movements

Movement
throughincomestatement

31 December 2018
Deferredtax
assetsDeferredtax
liabilities

Deferredtax
assetsDeferredtax
liabilities

OCI

OthersDeferredtax benefit(expense)

Securities

0

(31)

22

0

0

0

(9)

Financial instruments

0

(9)

0

0

8

0

(1)

Net operating loss and tax loss
carry forwards

62

0

0

0

(41)

21

0

Deferred tax assets (liabilities)
before offsetting

62

(40)

22

0

(32)

21

(9)

Set-off

(40)

40

0

0

0

(9)

9

Net deferred tax assets (liabilities)

22

0

22

0

0

12

0

(In € million)

Airbus / Financial Statements 2018

4103

Notes to the IFRS Company Financial Statements /Deferred income taxes as of 31 December 2017 are related to the following assets and liabilities:

Other
movements

1 January 2017
Deferredtax
assetsDeferredtax
liabilities

OCI

Securities

0

(43)

12

Financial instruments

0

(1)

(2)

Net operating loss and tax loss
carry forwards(In € million)

Movement
throughincomestatement

31 December 2017

Deferredtax benefit(expense)

Deferredtax
assetsDeferredtax
liabilities

0

0

0

(31)

0

(6)

0

(9)

62

0

Others

53

0

0

0

10

Deferred tax assets (liabilities)
before offsetting

53

(44)

10

0

3

62

(40)

Set-off

(44)

44

0

0

0

(40)

40

9

0

10

0

3

22

0

Net deferred tax assets (liabilities)

Details of deferred taxes recognised cumulatively in equity are as follows:(In € million)

Financial instrument at fair value through OCI (1)Cash flow hedges

Total

2018

2017

(9)

(31)

0

0

(9)

(31)

(1) IFRS 9 new classification category (prior-year: available-for-sale investments).

4.3 Operational Assets and Liabilities
7.

Investments in Subsidiaries, Associates and Participations(In € million)

Balance at 1 January 2017

Associates

Participations

Total

14,43521

1,089

15,545Additions

261

0

0

261

Release Impairment

601

0

0

601

Share-based payments (IFRS 2)

32

0

0

32

Fair value changes through OCI

0

0

137

137

Other adjustments

33

0

(33)

0

Balance at 31 December 201715,362

21

1,193

16,576

Fair value changes through OCI

0

0

(368)

(368)

Fair value changes through Profit or Loss

0

0

368

368

15,362

21

1,193

16,576

200

0

22

222

Release Impairment

0

0

0

0

Share-based payments (IFRS 2)

43

0

0

43

Balance at 1 January 2018
Additions

Fair value changes through Profit or Loss

Balance at 31 December 2018

104

Subsidiaries

Airbus / Financial Statements 2018

0

0

(44)

(44)

15,60521

1,171

16,797

FINANCIAL STATEMENTS 2018
Notes to the IFRS Company Financial Statements /Investments in Subsidiaries, AssociatedCompanies and Participations
Investments in subsidiaries and associated companies are statedat cost, less impairment. Dividend income from the Company’s
subsidiaries and associated companies is recognised when theright to receive payment is established.
In 2018, the participations are stated at fair value with changes
in fair value recognised in Proﬁt and Loss.
For the purpose of impairment testing all consolidated
subsidiaries are allocated to Cash Generating Units (“CGU”) ina way they are monitored for internal management purposes.
At each balance sheet date, the Company reviews whether
there is an indication that a CGU to which its investments in
subsidiaries and associated companies belong to are impaired.
An indication for impairment of the investments in subsidiaries
and associated companies may include, respectively,
management’s downward adjustment of the strategic plan ora signiﬁcant decrease in the share price of a publicly listedcompany. Further indications for impairment of its investments
may include other areas where observable data indicates that
there is a measurable decrease in the estimated future cash
ﬂows. These determinations require signiﬁcant judgement. In
making this judgement, management evaluates, among otherfactors, the ﬁnancial performance of and business outlook for
its investments, including factors such as industry and sector
performance, changes in technology and operational andﬁnancing cash ﬂow.
If any indication for impairment exists, the recoverable amountof the investments is estimated in order to determine the extent,
if any, of the impairment loss. An investment is impaired if therecoverable amount is lower than the carrying value. The
recoverable amount is deﬁned as the higher of an investment’s
fair value less costs to sell and its value in use.
The determination of the investment’s value in use is basedon calculations using pre-tax cash ﬂow projections based on
ﬁnancial budgets approved by management covering a ﬁve-year
period. Cash ﬂows beyond the ﬁve-year period are extrapolatedusing estimated growth rates. The discounted cash ﬂow method
is used to determine the recoverable amount of a CGU to which
its investments in subsidiaries and associated companies
belongs to. The discounted cash ﬂow method is particularly
sensitive to the selected discount rates and estimates of future
cash ﬂows by management. Key assumptions used to determine
the recoverable value of the CGU are the expected future labour
expenses, future interest rates, future exchange rates to convert
in euro the portion of future US dollar and pound sterling which
are not hedged and the estimated growth rate of terminal values.
If the recoverable amount of an investment is estimated to be lessthan its carrying amount, the carrying amount of the investment
is reduced to its recoverable amount. Any impairment loss isrecognised immediately in the Income Statement.

Impairment losses recognised in prior periods shall be reversed
only if there has been a change in the estimates or external market
information used to determine the investment’s recoverable
amount since the last impairment loss was recognised.
The recoverable amount shall not exceed the carrying amountthat would have been determined had no impairment loss beenrecognised in prior years.
The annual impairment test performed in 2018 led to no
impairment charge.

Change of Investments in Subsidiaries
On 6 February 2018, Airbus SE internally acquired 49.10% of
the shares in Aero Ré SA for a total amount of € 9 million. On
17 December 2018, Airbus SE made a capital contribution of€ 25 million into Aero Ré SA.
On 26 July 2018, Airbus SE made a further capital contributionof € 200 million into Airbus Bank GmbH.
On 26 September 2018, Airbus DS Holdings B.V. has been
merged into Airbus SE with retroactive reﬂect on 1 January 2018.
The impact of this merge in the Financial Statements of Airbus SE
is a loss of € 369 million mainly due to the irrecoverability of IC
loan and current accounts. Airbus SE is the new stakeholder of
Airbus Defence and Space Netherland B.V. and Airbus Defence
and Space Limited, and increase is stake in Airbus SAS and
Airbus Defence and Space GmbH: impact of the merge in theInvestments € -69 million.
On 4 December 2018, Airbus SE contributed its 100% subsidiary
Airbus Helicopters Holding SAS to its subsidiary Airbus SAS fora total amount of € 991 million. In return for this contribution,
Airbus SE received additional shares in Airbus SAS for anequivalent amount.
During the year 2018, Airbus SE made further capital
contributions into Airbus Group Ventures Fund for a total amountof € 35 million (2017: € 20 million).
On 27 January 2017, Airbus SE made a further capital
contribution of € 100 million into Airbus Group Bank GmbH.
On 16 November 2017, Airbus SE contributed its 100% subsidiary
Airbus Group Inc to its subsidiary Airbus SAS for a total amountof € 605 million. In return for this contribution, Airbus SE received
additional shares in Airbus SAS for an equivalent amount. The
valuation of Airbus Group Inc made for the contribution show avalue of the company above the book value, allowing Airbus SE
to release the impairment made in 2014 for € 601 million.
On 19 December 2017, Airbus SE internally acquired 2.43%of the shares in Airbus DS Holdings B.V. for a total amount of€ 140.3 million.
During the year 2017, Airbus SE made further capital
contributions into Airbus Group Ventures Fund for a total amountof € 20 million (2016: € 14 million).

Airbus / Financial Statements 2018

4105

Notes to the IFRS Company Financial Statements /INFORMATION ON PRINCIPAL INVESTMENTS OF THE COMPANY
2018

2017
Company

Head office

Aero Ré S.A.

Bertrange (Luxembourg)

50.10

Airbus Defence and Space GmbH

Taufkirchen (Germany)

0.00

Airbus Defence and Space Limited

Stevenage (UK)100.000.00

Airbus Defence and Space Netherlands B.V.

Leiden (Netherlands)

100.00100.00Airbus Defence and Space S.A.

Madrid (Spain)

0.00

100.00Airbus DS Holdings B.V.

Leiden (Netherlands)

100.00100.00Airbus Bank GmbH

Munich (Germany)
Leiden (Netherlands)(in %)(1)

100.00

50.90

74.29
100.00100.00100.00Airbus Finance B.V.

100.00100.00Airbus Group Ltd.

London (UK)100.00100.00Airbus Group Proj B.V.

Leiden (Netherlands)

99.00

99.00

Airbus Group Ventures Fund I, L.P.

Mountain View, CA (USA)0.00

100.00Airbus Helicopters Holding S.A.S.

Marignane (France)

95.78

90.26

Airbus S.A.S.

Toulouse (France)

100.00100.00DADC Luft- und Raumfahrt Beteiligungs GmbH

Taufkirchen (Germany)

9.89

9.93

Dassault Aviation S.A.

Paris (France)

100.00100.00Premium Aerotec GmbH

Augsburg (Germany)(1) Percentages represent share held directly by Airbus SE.

8.

Financial Assets and Liabilities

Financial assets and liabilities at 31 December 2018 and 2017 consist of the following:(In € million)

2018

2017

Long-term financial assets

1,468

3,040

Long-term loans Airbus companies (1)

1,468

3,040

0

0

Long-term loans external
Non-current other financial assets

1,882

3,898

Positive fair values of derivative financial instruments

1,882

3,898

Current other financial assets

2,152

1,938

Positive fair values of derivative financial instruments

1,912

1,744

Current portion long-term loans Airbus companies

240

194

(22,162)(22,546)

8,013

9,581

Liabilities to subsidiaries(30,175)(32,127)

Non-current financial liabilities(2,015)(4,055)Current accounts Airbus companies(1)

Receivables from subsidiaries

Negative fair values of derivative financial instruments(2,015)(4,055)Current financial liabilities(1,906)(1,730)

Negative fair values of derivative financial instruments(1,906)(1,730)(1) The receivables from and liabilities to subsidiaries include mainly transactions in connection with the cash pooling in Airbus SE. Terms and conditions are in agreement with theprevailing market environment.

106

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Notes to the IFRS Company Financial Statements /9.

Commitments and Contingencies

Off-Balance Sheet Commitments
Airbus SE issued guarantees on behalf of Airbus companies
in the amount of € 5,898 million (2017: € 7,227 million). The
commitments of these companies to third parties mainly relate
to their operating business as described in Note 18 “Property,
Plant and Equipment”, Note 25 “Sales Financing Transactions”
and Note 35 “Information about Financial Instruments” of theConsolidated Financial Statements. The expected credit loss
is considered to be non signiﬁcant.

On 8 December 2015, Airbus SE entered into a partnershipagreement to establish a corporate venture capital fund, dubbed
Airbus Group Ventures, as well as a technology and business
innovation center in Silicon Valley with a total commitment
amount of US$ 150 million. On 25 November 2015, a ﬁ rst
investment of US$ 5 million has been made into this fund. During
the year 2018, Airbus SE made further capital contributions into
Airbus Group Ventures Fund for a total amount of US$ 42 million.

4.4 Employees
10. Number of Employees
The average number of the persons employed by the Company in 2018 was 2 (2017: 2). The employees are situated in the
Netherlands.

4.5 Capital Structure and Financial Instruments
11.

Total Equity

Airbus SE’s shares are ordinary shares with a par value of € 1.00. The following table shows the development of the number ofshares outstanding:(In number of shares)

Issued as at 1 January
Issued for ESOP
Issued as at 31 December
Treasury shares as at 31 December

2018

2017

774,556,062

772,912,869

1,811,819

1,643,193

776,367,881

774,556,062(636,924)(129,525)

Outstanding as at 31 December

775,730,957

774,426,537

Authorised shares

3,000,000,000

3,000,000,000

4Holders of ordinary shares are entitled to dividends and are entitled to one vote per share at general meetings of the Company.

Airbus / Financial Statements 2018107

Notes to the IFRS Company Financial Statements /Capital stock comprises the nominal amount of shares
outstanding. The addition to capital stock represents thecontribution for exercised options in compliance with theimplemented stock option plans and by employees of € 1,811,819(2017: € 1,643,193) under the Employee Stock Ownership Plans(“ESOP”).
Share premium mainly results from contributions in kind in thecourse of the creation of Airbus, cash contributions from theInitial Public Offering, capital increases and reductions due tothe issuance and cancellation of shares.
Retained earnings include mainly the proﬁt of the period andcash dividend payments to Airbus SE shareholders.
On 11 April 2018, the Shareholders’ General Meeting decided
to distribute a gross amount of € 1.50 per share, which was
paid on 18 April 2018. For the ﬁscal year 2018, the Company’s
Board of Directors proposed a cash distribution payment of€ 1.65 per share.
Legal reserves includes:- change from ﬁnancial assets at fair value (see Note 13.2
“Carrying Amounts and Fair Values of Financial Instruments”);- change in fair value of derivatives designated as cash ﬂow

hedges (see Note 13.2 “Carrying Amounts and Fair Valuesof Financial Instruments”).

According to Dutch law, the OCI is considered to be a Legal
Reserve and therefore distribution is restricted.
Treasury shares represent the amount paid or payable for own
shares held in treasury. During 2018, the number of treasury
stock held by the Company increase to 636,924 compared to129,525 as of 31 December 2017. No shares were sold back to
the market nor cancelled in 2018 (2017: 0 shares).

Authorisations Granted by the Shareholders’
General Meeting of Airbus SE Held on
11 April 2018
On 11 April 2018, the Annual General Meeting (“AGM”) of
the Company authorised the Board of Directors, for a period
expiring at the AGM to be held in 2019, to issue shares and to
grant rights to subscribe for shares in the Company’s sharecapital for the purpose of:
ESOPs and share-related LTIPs, provided that such powers
shall be limited to an aggregate of 0.3% of the Company’s
authorised share capital (see “— Note 30: Share-Based
Payment”);
funding the Company and its subsidiaries, provided thatsuch powers shall be limited to an aggregate of 0.3% of
the Company’s authorised share capital (see “— Note 34.3:
Financing Liabilities”).

-

For each operation, such powers shall not extend to issuingshares or granting rights to subscribe for shares if there is nopreferential subscription right and for an aggregate issue pricein excess of € 500 million per share issuance.
Also on 11 April 2018, the AGM authorised the Board of
Directors for an 18 months period to repurchase up to 10% of
the Company’s issued share capital at a price per share notless than the nominal value and not more than the higher ofthe price of the last independent trade and the highest current
independent bid on the trading venues of the regulated marketof the country in which the purchase is carried out.
Furthermore, the AGM authorised both the Board of Directors
and the CEO, with powers of substitution, to establish the exact
number of the relevant shares to be cancelled.

Reconciliation Consolidated to Company Equity and Net Income
The difference between the total shareholders’ equity according to the Consolidated Financial Statements and Company’s Financial
Statements as at 31 December 2018 and 2017 is as follows:(In € million)

20182017 (1)Consolidated equity

9,724

13,348

OCI - Restatement of investments from Consolidated
to Company Financial Statements(103)(2,283)Retained Earnings - Restatement of investments from Consolidated
to Company Financial Statements

(486)

(436)

Retained Earnings - Valuation investments at historical cost

2,071

1,487

Retained Earnings - Impairment of financial assets(1,099)(672)

Company’s equity

10,106

11,444(1) 2017 not restated of IFRS 15 impacts.

The difference between the net income according to the Consolidated Financial Statements and Company’s Financial Statements
for the year ended 31 December 2018 and 2017 is as follows:(In € million)

2018

2017

Consolidated net income

3,054

2,873

Income from investments according to Consolidated Financial Statements(3,007)(3,014)

46

614

Income from investments according to Company Financial Statements
Loss on / Impairment of financial assets
Other valuation differences

Company’s net income (Profit or loss for the period)

108

Airbus / Financial Statements 2018

(369)

0

49

10

(227)

483

FINANCIAL STATEMENTS 2018
Notes to the IFRS Company Financial Statements /12. Cash, Securities and Financing Liabilities
12.1 Cash and Cash Equivalents
Cash and cash equivalents are composed of the following elements:
31 December(In € million)

Bank accounts
Short-term securities (at fair value through profit or loss)
Short-term securities (at fair value through OCI) (1)Total cash and cash equivalents

2018

2017

326

2,697

6,576

6,256

984

2,085

7,886

11,038(1) IFRS 9 new classification (prior-year: Short-term securities – available-for-sale).

Only securities with a maturity of three months or less from the date of the acquisition, that are readily convertible to known
amounts of cash and which are subject to an insigniﬁcant risk of changes in value are recognised in cash equivalents.

12.2 Securities
31 December(In € million)

2018

2017

Current securities at fair value through OCI

2,073

1,576

Non-current securities at fair value through OCI

10,135

10,812338

012,546

12,388Non-current securities at fair value through profit or loss

Total securities

Included in the securities portfolio as of 31 December 2018and 2017, respectively, are corporate and government bonds
bearing either ﬁxed rate coupons (€ 12,067 million nominal value;comparably in 2017: € 12,062 million) or ﬂoating rate coupons(€ 479 million nominal value; comparably in 2017: € 321 million)
and foreign currency funds of hedge funds (€ 0 million nominal
value; 2017: € 5 million).

4

Airbus / Financial Statements 2018109

Notes to the IFRS Company Financial Statements /12.3 Financing Liabilities
Current and non-current classiﬁcation – A ﬁnancial asset or liability is classiﬁed as current if it is settled within 12 months after
the reporting date, and as non-current otherwise.
Financing liabilities comprise obligations towards ﬁnancial institutions, issued corporate bonds, and payables due to related parties.
The Company has received several euro-denominated loans and one US dollar-denominated loan from Airbus Finance B.V.
(“AFBV”). It has also issued a convertible bond in euro and euro-denominated exchangeable bonds into Dassault Aviation sharesand 2 stand-alone US dollar-denominated bonds on the US institutional market under Rule 144A. Furthermore, the Company
had long-term US dollar-denominated loans outstanding with the European Investment Bank (“EIB”) and has long-term US dollardenominated loans outstanding with the Development Bank of Japan (“DBJ”). The terms and repayment schedules of thesebonds and loans are as follows:
Carrying amountPrincipal
amount31 December
2017

Coupon orinterest rate

Effective
interest
rate(in million)

2018

Maturity

Additional features

Loans from Airbus Finance B.V.
AGFBV 15 years (EMTN)

€ 500

€0

€ 500

3M Euribor+1.85%

at variable
rate

Sept. 2018

AGFBV 10 years (EMTN)€ 1,000€ 1,038€ 1,031

2.40%

2.45%

Apr. 2024

Interest rate swapped
into 3M Euribor +1.40%

AGFBV 15 years (EMTN)

€ 500

€ 523

€ 517

2.15%

2.24%

Oct. 2029

Interest rate swapped
into 3M Euribor +0.84%

AGFBV 10 years (EMTN)

€ 600

€ 594

€ 584

0.91%

0.95%

May 2026

Interest rate swapped
into 3M Euribor

AGFBV 15 years (EMTN)

€ 900

€ 866

€ 851

1.41%

1.49%

May 2031

Interest rate swapped
into 3M Euribor

US$ 1,000

€ 848

€ 818

2.72%

2.80%

Apr. 2023

Interest rate swapped
into 3M US-Libor +0.68%

AGFBV US$ Loan 10 years

Loans from financial institutions
DBJ 10 years

US$ 300

€ 87

€ 250

3M US-Libor+1.15%

4.84%

Jan. 2021

Interest rate swapped
into 4.76% fixed

EIB 10 years

US$ 721€0€ 343

3M US-Libor+0.85%

3.20%

Aug. 2021

Interest rate swapped
into 3.2% fixed

EIB 7 years

US$ 406€0€ 339

3M US-Libor+0.93%

at variablerate

Feb. 2020

EIB 10 years

US$ 627

€0

€ 516

2.52%

2.52%

Dec. 2024

EIB 10 years

US$ 320€0€ 267

6M US-Libor+0.56%

at variablerate

Dec. 2025

Share buyback commitment€0€0

Others

€0

€0

€ 477

€ 470

0.00%

1.39%

July 2022

Convertible into Airbus SE
shares at € 99.54 per share

Interest rate swapped
into 3M Euribor +0.61%

Bond
Convertible bond 7 years€ 500

Exchangeable bond 5 years€ 1,078€ 1,061€ 1,054

0.00%

0.33%

June 2021

Exchangeable into Dassault
Aviation SA shares at€ 1,306.25 per share

US$ Bond 10 years

US$ 750

€ 632

€ 615

3.15%

3.16%

Apr 2027

Interest rate swapped
into 3M Libor +0.87%

US$ Bond 30 years

US$ 750

€ 621

€ 611

3.95%

4.02%

Apr 2047

Interest rate swapped
into 3M Libor +1.61%€ 6,746€ 8,765€ 6,746€ 8,106

€0

€ 660

Total
thereof non-current
financing liabilities
thereof current financing
liabilities

110

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Notes to the IFRS Company Financial Statements /Long-term financing liabilities, mainly comprising bonds andliabilities to ﬁnancial institutions, decreased by € 1,360 million
to € 6,746 million (2017: € 8,106 million). The decrease in longterm ﬁnancing liabilities is mainly related to the repayment by
anticipation of the EIB loan for a total amount of US$ 1.6 billion
in May and June 2018 and the repayment by anticipation of
US$ 200 million of the DBJ loan in April and July 2018.
Short-term financing liabilities decreased by € 660 million
to € 0 million (2017: € 660 million). The decrease in short-term
ﬁ nancing liabilities is mainly related to the repayment of aEuro Medium Term Note (“EMTN”) bond for € 500 million on
September 2018 and the early repayment of the EIB loan for
US$ 192 million in May and June 2018.
The Company can issue commercial paper under the so-called“billet de trésorerie” programme at ﬂ oating or ﬁ xed interest
rates corresponding to the individual maturities ranging from1 day to 12 months. The programme has been set up in 2003
with a maximum volume of € 2 billion, increased in 2013 toa maximum volume of € 3 billion. As of 31 December 2018,
there was no outstanding amount under the programme. The
Company established in April 2015 a US$ 2 billion commercial
paper programme which has been increased to US$ 3 billion in
April 2016. The commercial paper issuance activity was limitedin the course of the year 2018.
In 2017, the increase in long-term financing liabilities ismainly due to the issuance in April 2017 of two bonds under
the company’s EMTN-Programme for a total amount of
US$ 1.5 billion, maturing in 2027 and 2047. Included in the shortterm financing liabilities is the bond under the company’s
EMTN-Programme maturing in September 2018 for an amountof € 500 million as well as the part of the EIB loan maturing in2018 for an amount of US$ 193 million.

Reconciliation of liabilities arising from ﬁnancing liabilities:
Non-cash movements(In € million)

Bonds and commercial papers

Balance at
1 January
2018

Fair value
Foreignthroughexchange
profit or loss movements

Cash flows

2,750

0

(32)

59

OthersBalance at
31 December
2018

14

2,791

Liabilities to financial institutions

1,715

(500)

24

40

3

3,868

Loans from Airbus Finance B.V.

4,300

(1,680)

7

46

0

87

Total

8,765

(2,180)

(1)

(144)

18

6,746

13. Information about Financial Instruments
13.1 Financial Risk Management
The Company acts as an intermediary for its subsidiaries when
they wish to enter into derivative contracts to hedge against
foreign exchange risk or other market risks such as interest raterisk, commodity price risk or equity price risk. The Company’s
practice is to set up a derivative contract with a subsidiary andat the same time enter into a back-to-back derivative transaction
with a bank. Contracts with subsidiaries being thus mirrored (ona one-to-one basis) by contracts with banks, the Company’s net
exposure is virtually zero. There are, however, a few derivative
contracts the Company holds in order to hedge its own market
risk exposure.
As the Company’s back-to-back hedge contracts are enteredinto with different counterparties, their fair values are reﬂected
separately in the statement of Financial Position and recognised
as other ﬁnancial assets and ﬁnancial liabilities as disclosed in
Note 8 “Financial assets and liabilities” of the Company Financial
Statements.
In the Statement of Income the results of the back-to-back hedgetransactions, both realised and unrealised, are presented on a
net basis as the Company acts as an agent for its subsidiaries.
The Company’s overall ﬁnancial risk management activities andtheir objectives are described in detail in section 35.1 “Financial
Risk Management” of the Notes to the Consolidated Financial
Statements.

Market Risk
Foreign exchange risk — The Company manages a longterm hedge portfolio with maturities of several years for its
subsidiaries, mainly Airbus, and to a small extent for its joint
ventures or associates. This hedge portfolio covers a large
portion of Airbus’ ﬁ rm commitments and highly probable
forecast transactions. As explained above, owing to theCompany’s back-to-back approach, its own exposure toforeign exchange risk is very limited.
Interest rate risk — The Company uses an asset-liability
management approach with the objective to limit its interest
rate risk. The Company undertakes to match the risk proﬁleof its interest-bearing assets with those of its interest-bearing
liabilities, the remaining net interest rate exposure being
managed through several types of interest rate derivatives.
If the derivative instruments qualify for hedge accounting in
the Company Financial Statements the Company applies
cash ﬂ ow hedge accounting or fair value hedge accounting.
For more information on the risk management and hedging
strategies used by the Company please refer to section 35.1
“Financial Risk Management” of the Notes to the Consolidated
Financial Statements.

4

Equity price risk — The Company is to a small extent invested
in quoted equity securities mainly for strategic reasons. The
Company’s exposure to equity price risk is hence limited.

Airbus / Financial Statements 2018111

Notes to the IFRS Company Financial Statements /Furthermore, Airbus is exposed under its Long-Term Incentive
Plan (LTIP) to the risk of Airbus’ share price movements. In order
to limit these risks for the Company, the Company enters into
equity derivatives that reference the Airbus Group SE shareprice.
Sensitivities of market risks — the approach used to measure
and control market risk exposure within the Company’s
ﬁnancial instrument portfolio is amongst other key indicators
the value-at-risk (“VaR”). For information about VaR andthe approach used by the Company to assess and monitor
sensitivities of market risks please refer to section 35.1 “Financial
Risk Management” of the Notes to the Consolidated Financial
Statements.
The Company is part of the Company risk management
process, which is more fully described in section 35.1 “Financial
Risk Management” of the Notes to the Consolidated Financial
Statements.

A summary of the VaR position of the Company’s ﬁnancial instruments portfolio at 31 December 2018 and 2017 is as follows:
Total VaR

Equity price VaR

Currency VaRInterest rate VaR

Foreign exchange hedges

35

0

35

0

Financing liabilities, financial assets(incl. cash, cash equivalents, securities and related hedges)

52

34

35

24

(In € million)

31 December 2018

Equity swaps

3

3

0

0

Diversification effect

(51)

(2)

(68)

0

All financial instruments

39

35

2

24

Foreign exchange hedges

4

0

4

1

Financing liabilities, financial assets(incl. cash, cash equivalents, securities and related hedges)

30

17

12

24

31 December 2017

Equity swaps

2

2

0

0

Diversification effect

(5)

(3)

(1)

(1)

All financial instruments

31

16

15

24

The increase in the total VaR by € 8 million to € 39 million (2017: € 31 million) is mainly attributable to an increase in equity market
volatility. The increase in Currency VaR for foreign exchange hedges and ﬁnancing liabilities and assets are linked to high year-end
US$ inﬂows and according offsetting derivative transactions at the end of the year so that the net currency VaR decreased by€ 13 million to € 15 million (2017: € 2 million). The derivative instruments entered into with external counterparties are passed on a 1:1
basis to Airbus entities. As a result, the respective market risks of the external derivative instruments are offset by corresponding
opposite market risks of intragroup transactions.
Liquidity Risk
The Company’s policy is to maintain sufﬁcient cash and cash equivalents at any time to meet its own and the Company’s present
and future commitments as they fall due. For information on how the Company monitors and manages liquidity risk, please referto section 35.1 “Financial Risk Management” of the Notes to the Consolidated Financial Statements.
The contractual maturities of the Company ﬁnancial liabilities, based on undiscounted cash ﬂows and including interest payments,
if applicable, are as follows:(In € million)

Carrying Contractual
amount cash flows< 1 year

1 year2 years

2 years3 years

3 years4 years

4 years- More than
5 years
5 years

31 December 2018
Non-derivative financial liabilities(6,746)(7,766)

(48)

(48)

(1212)

(547)

(921)

(4,990)Derivative financial liabilities(3,921)(4,768)(2,085)(1,160)

(856)

(427)

(160)

(80)

(10,667)(12,534)(2,133)(1,208)(2068)(974)(1,081)(5,070)Non-derivative financial liabilities(8,766)(9,948)

(746)

(243)

(616)

(1,592)(672)(6,079)Derivative financial liabilities(5,784)(4,259)(1,651)(1,091)

(370)

(18)

(24)

(1,105)(14,550)(14,207)(2,397)(1,334)(986)(1,610)(696)(7,184)Total
31 December 2017

Total

112

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Notes to the IFRS Company Financial Statements /Credit Risk
The Company is exposed to credit risk to the extent of nonperformance by its counterparts with regard to ﬁnancial instruments
or issuers of ﬁnancial instruments for gross cash investments.
However, it has policies in place to avoid concentrations of credit
risk and to ensure that credit risk is limited.
As far as central treasury activities are concerned, credit risk
resulting from ﬁnancial instruments is managed by the Company.
In order to ensure sufﬁcient diversiﬁcation, a credit limit system
is used.
The Company monitors the performance of the individual
ﬁnancial instruments and the impact of market developments on
their performance and takes appropriate action on foreseeable
adverse development based on pre-deﬁned procedures andescalation levels.
Sales of products and services are made to customers after
having conducted appropriate internal credit risk assessment.
The booked amount of ﬁnancial assets represents the maximum
credit exposure. The credit quality of ﬁnancial assets can beassessed by reference to external credit rating (if available) orinternal assessment of customers’ creditworthiness by way ofinternal risk pricing methods.
In 2018, the total receivables, neither past due nor impaired
amount to € 250 million (2017: € 176 million). On 1 January 2018,
the impact of the application of the expected credit loss on
the securities is € -3 million. In 2018, the total impact is non
signiﬁcant.

13.2 Carrying Amounts and Fair Valuesof Financial Instruments
Financial instruments – The Company’s ﬁnancial assets mainly
consist of cash, short to medium-term deposits and securities.
The Company’s ﬁnancial liabilities include intragroup liabilities,
obligations towards ﬁnancial institutions and issued bonds. The
Company has the same classiﬁcation and accounting policies
as the Company. Please refer to section 35.1 “Financial Risk
Management” of the Notes to the Consolidated Financial
Statements for more information.
From January 2018, the Company classiﬁes its ﬁnancial assets
in one of the following categories: (i) at fair value through OCI,(ii) at fair value through proﬁt and loss and (iii) at amortised cost.
Classiﬁcation depends on the Company’s business model for
managing the ﬁnancial assets and the contractual terms of the
cash ﬂows, as described in “— Note 4: Change in Accounting
Policies and Disclosures”.
Until 31 December 2017, the Company classiﬁed its ﬁnancial
assets in the following three categories: (i) at fair value throughproﬁt and loss, (ii) loans and receivables and (iii) available-for-saleﬁnancial assets. Classiﬁcation was determined by management
at initial recognition and depended on the purpose of acquisition.
The Company assigns its ﬁnancial instruments (excluding its
at-cost investments, which are outside the scope of IAS 39“Financial instruments: recognition and measurement”) intoclasses based on their category in the statement of ﬁnancial
position.

The following table presents the carrying amounts and fair values of ﬁnancial instruments by class and by IFRS 9 measurement
category as of 31 December 2018:(In € million)

Fair value
through
profitor loss

Fair value
through
OCI

Financial assets andliabilities at amortised cost

1,171

0

0

0

1,171

1,171

0

0

1,708

1,739

1,708

1,739

0

0

165

165

165

165

3,794

0

0

0

3,794

3,794

Amortised cost

Financial
instruments total

Fair value Book value

Fair value

AssetsOther investments and long-term financial assets
Equity instruments
Loans
Trade receivables
Other financial assets
Derivative instruments
Current account Airbus companies
Securities
Cash and cash equivalents

Total

0

0

8,013

8,013

8,013

8,013

338

12,2080012,546

12,546

6,576

984

326

326

7,886

7,887

11,87913,192

10,212

10,24335,28335,315

Liabilities

4

Financing liabilities
Issued bonds and commercial papers

0

0

2,813

2,832

2,813

2,832

Liabilities to banks and other financing liabilities

0

0

87

88

87

88

Internal loans payable

0

0

3,846

3,950

3,846

3,950

3,921

0

0

0

3,921

3,921

Other financial liabilities
Derivative instruments
Current accounts Airbus companies

Total

0

0

30,17530,17530,17530,1753,921

036,92237,04540,84240,966

Airbus / Financial Statements 2018113

Notes to the IFRS Company Financial Statements /The following table presents the carrying amounts and fair values of ﬁnancial instruments by class and by IAS 39 measurement
category as of 31 December 2017:(In € million)

Loans andreceivables andfinancial liabilities
at amortised cost

Fair value throughprofit or loss

Fair value
for hedge
relations

Held fortrading Designated

Fair
value

Book
value

Fair Amortised
value
cost

Availablefor-saleFinancial
instruments total

Fair
value

Book
value

Fair
value

AssetsOther investments and long-term
financial assets
Equity instruments

0

0

0

1,193

1,193

0

0

1,193

1,193

Loans

0

0

0

0

0

3,234

3,856

3,234

3,856

Trade receivables

0

0

0

0

0

31

31

31

31

Other financial assets

0

0

0

0

0

0

0

0

0

5,586

0

54

0

0

0

0

5,640

5,640

0

0

0

0

0

9,581

9,581

9,581

9,581

Derivative instruments
Current account Airbus companies
Securities

0

0

0

12,38812,3880012,38812,388Cash and cash equivalents

0

6,256

0

2,085

2,085

2,697

2,697

11,038

11,038

5,586

6,256

54 15,666

15,666

15,543

16,165

43,10543,727

Issued bonds and commercial papers

0

0

0

0

0

2,751

3,083

2,751

3,083

Liabilities to banks and otherfinancing liabilities

0

0

0

0

0

1,715

3,081

1,715

3,081

Internal loans payable

0

0

0

0

0

4,300

4,298

4,300

4,298

5,698

0

86

0

0

0

0

5,785

5,785

Total
Liabilities
Financing liabilities

Other financial liabilities
Derivative instruments
Current accounts Airbus companies

Total

0

0

0

0

0

32,12732,12732,12732,127

5,698

0

86

0

0

40,89342,59046,67948,375

Fair Value Hierarchy
For further details please refer to Note 35.2 “Carrying Amounts and Fair Values of Financial Instruments” in the Consolidated
Financial Statements.
The fair values disclosed for ﬁnancial instruments accounted for at amortised cost reﬂect Level 2 input.
The following table presents the carrying amounts of the ﬁnancial instruments held at fair value across the three levels of the fairvalue hierarchy as of 31 December 2018 and 2017, respectively:
31 December 2018
(In € million)

31 December 2017

Level 1

Level 2

Total

Level 1

Level 2

Total

1,171

0

1,171

1,193

0

1,193

Financial assets measured at fair value
Equity instruments
Derivative instruments

0

3,794

3,794

0

5,641

5,641

Securities

12,546

0

12,546

12,3880

12,388Cash equivalents

6,577

984

7,561

7,441

900

8,341

20,294

4,778

25,072

21,022

6,542

27,564

0

3,921

3,921

0

5,785

5,785

Total
Financial liabilities measured at fair value
Derivative instruments
Other liabilities

Total

114

Airbus / Financial Statements 2018

0

0

0

0

0

0

0

3,921

3,921

0

5,785

5,785

FINANCIAL STATEMENTS 2018
Notes to the IFRS Company Financial Statements /Financial Assets Designated at Fair Value through Profit or Loss
The following types of ﬁnancial assets held at 31 December 2018 and 2017, respectively, are designated at fair value throughproﬁt or loss:(In € million)

Nominal amount at
initial recognition at
31 December 2018

Nominal amount at
initial recognition at
31 December 2017

6,577

7,441

338

0

0

0

6,915

7,441

Designated at fair value through profit or loss at recognition:
Money market funds (accumulating)
Securities
Foreign currency funds of hedge funds

Total

The company manages these assets and measures their performance on a fair value basis.
In addition, the Company invests in non-accumulating money market funds, which pay interest on a monthly basis. The fair valueof those funds corresponds to their nominal amount at initial recognition date amounting to € 0 million (2017: € 1,185 million).

13.3 Potential Effect of Set-Off Rights on Recognised Financial Assets and Liabilities
The Company reports all its ﬁnancial assets and ﬁnancial liabilities on a gross basis. With each derivative counterparty there are
master netting agreements in place providing for the immediate close-out of all outstanding derivative transactions and paymentof the net termination amount in the event a party to the agreement defaults or another deﬁned termination event occurs. The
following tables set out, on a counterparty speciﬁc basis, the potential effect of master netting agreements on the Company’s
ﬁnancial position, separately for ﬁnancial assets and ﬁnancial liabilities that were subject to such agreements as of 31 December
2018 and 2017, respectively:
Related amounts not
set off in the statementof financial positionGrossamounts
recognisedGrossamounts
recognised
set off inthe financial
statements

Net amounts
presented in
the financial
statements

Financial
instruments

Cashcollateral
received

Net amountFinancial assets

3,799

0

3,799

(879)

0

2,920

Financial liabilities

3,829

0

3,829

(879)

0

2,950

Financial assets

2,643

0

2,643

(1,472)44

1,215

Financial liabilities

1,486

0

1,486

(1,472)0

14(In € million)

31 December 201831 December 201713.4 Notional Amounts of Derivative Financial Instruments
The notional amount of interest rate contracts are as follows, speciﬁed by year of expected maturity:
Remaining period(In € million)

1 year

2 years

3 years

4 years

5 years

6 years

7 years>7 years

Total

0

0

0

0

1,048

1,000

600

1,200

3,848

215

0

0

0

0

0

0

0

215

31 December 2018
Interest rate contracts
Interest rate future contracts

4

31 December 2017
Interest rate contracts

0

0

0

343

0

1,001

1,523

2,000

4,867

Interest rate future contracts

0

0

0

0

0

0

0

0

0

Airbus / Financial Statements 2018115

Notes to the IFRS Company Financial Statements /The notional amounts of equity swaps are as follows:
Remaining period
1 year

2 years

3 years

4 years>4 years

Total

31 December 2018

49

37

27

9

0

122

31 December 2017

52

49

19

0

0

121

(In € million)

13.5 Derivative Financial Instruments and Hedge Accounting Disclosure
The following table presents the amounts relating to items designated as hedging instruments as of 31 December 2018 under IFRS 9:
Carrying values(In € million)

Asset

Liability

00Foreign currency risk
Net forward sales contracts

00Interest rate risk

Foreign exchange options

66

95

Commodity swap risk

00Equity swap risk

0

0

66

95

Total

The following table presents the amounts relating to items designated as hedging instruments as of 31 December 2017 under
IAS 39:AssetsLiabilities

0

0

5,504

5,513

0

1

Interest rate contracts - fair value hedges

54

84

Interest rate contracts - not designated in a hedge relationship30

29

Commodity contracts - not designated in a hedge relationship16

16

Equity swaps - not designated in a hedge relationship38

0(In € million)

Foreign currency contracts - cash flow hedges
Foreign currency contracts - not designated in a hedge relationship
Interest rate contracts - cash flow hedges

Option component of Exchangeable Bond

Total

0

141

5,641

5,784

13.6 Net Gains or Net Losses
The Company’s net gains or net losses recognised in proﬁt or loss in 2018 and 2017, respectively are as follows:
2018

2017

Held for trading

(51)

200

Designated on initial recognition

(39)

(214)

Financial assets at amortised cost350(In € million)

Financial assets or financial liabilities at fair value through profit or loss

(1)

0

(226)

Financial assets at fair value through OCI (2)

68

(205)

Loans and receivables

Financial assets at fair value through profit or Loss

(42)

0

Financial liabilities measured at amortised cost

(10)

448

Total

(39)

4

(1) Contain among others impairment losses.
(2) IFRS 9 new classification (prior-year: Available-for-sale financial assets)

116

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Notes to the IFRS Company Financial Statements /14. Audit Fees
Fees related to professional services rendered by the Company’s auditor, Ernst & Young Accountants LLP, for the ﬁscal year 2018
were € 680 thousand (2017: € 685 thousand). These fees relate to audit services only.

15. Events after the Reporting Date
There are no signiﬁcant events after the reporting date.

4

Airbus / Financial Statements 2018

117

Chapter

5

118

Airbus / Financial Statements 2018

5

Other Supplementary
Information Including
the Independent
Auditor’s Report

Airbus / Financial Statements 2018

119

Other Supplementary Information Including the Independent Auditor’s Report /Other Supplementary Information
1.

Appropriation of Result

Articles 30 and 31 of the Articles of Association provide that the Board of Directors shall determine which part of the result shallbe attributed to the reserves. The General Meeting of Shareholders may dispose of a reserve only upon a proposal of the Boardof Directors and to the extent it is permitted by law and the Articles of Association. Dividends may only be paid after adoption of
the annual accounts from which it appears that the shareholders’ equity of the Company is more than the amount of the issued
and paid-in part of the capital increased by the reserves that must be maintained by law.
It will be proposed at the Annual General Meeting of Shareholders that the loss for the period of € 227 million as shown in the
Income Statement for the ﬁnancial year 2018 is to be added to retained earnings and that a payment of a gross amount of € 1.65
per share shall be made to the shareholders out of retained earnings.

2.

Independent Auditor’s Report

To: the shareholders and Board of Directors of Airbus SE

Report on the Audit of the Financial Statements 2018 included in the Annual Report
Our Opinion
We have audited the ﬁnancial statements 2018 of Airbus SE (the Company), based in Amsterdam.
In our opinion the accompanying ﬁnancial statements give a true and fair view of the ﬁnancial position of Airbus SE as at 31 December
2018, and of its result and its cash ﬂows for 2018 in accordance with International Financial Reporting Standards as adopted by
the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code.
The ﬁnancial statements comprise:the consolidated and Company statement of ﬁnancial position as at 31 December 2018;
the following statements for 2018: the consolidated and Company income statement, the consolidated and Company Statementsof Comprehensive Income, changes in equity and cash ﬂows;
the notes comprising a summary of the signiﬁcant accounting policies and other explanatory information.

-

Basis for our Opinion
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities underthose standards are further described in the “Our responsibilities for the audit of the ﬁnancial statements” section of our report.
We are independent of Airbus SE in accordance with the EU Regulation on speciﬁc requirements regarding statutory audit ofpublic-interest entities, the Wet toezicht accountantsorganisaties (Wta, Audit ﬁrms supervision act), the Verordening inzake deonafhankelijkheid van accountants bij assurance-opdrachten (ViO, Code of Ethics for Professional Accountants, a regulation withrespect to independence) and other relevant independence regulations in the Netherlands. Furthermore we have complied with
the Verordening gedrags- en beroepsregels accountants (VGBA, Dutch Code of Ethics).
We believe the audit evidence we have obtained is sufﬁcient and appropriate to provide a basis for our opinion.

120

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Other Supplementary Information Including the Independent Auditor’s Report /Materiality
Materiality
Benchmark applied
Explanation€ 292 million (2017: € 213 million)
5 % of the EBIT Adjusted
We consider EBIT Adjusted as the most appropriate benchmark as it best aligns with the expectationsof those charged with governance at Airbus and users of the Company’s financial statements.

We have also taken into account misstatements and/or possible misstatements that in our opinion are material for the users of
the ﬁnancial statements for qualitative reasons.
We agreed with the Audit Committee of the Board of Directors (“the Audit Committee”) that misstatements in excess of € 10 million
that are identiﬁed during the audit, would be reported to them, as well as smaller misstatements that in our view must be reported
on qualitative grounds.
Scope of the Group Audit
Airbus SE is at the head of a group of entities. The ﬁnancial information of this group is included in the Consolidated Financial
Statements of Airbus SE.
We are responsible for directing, supervising and performing the group audit. In this context, we have determined the nature andextent of the audit procedures to be carried out for the entities, based on their size and/or risk proﬁle.
We scope entities into the group audit where they are of signiﬁcant size, have signiﬁcant risks to the Company associated with themor are considered for other reasons. This resulted in coverage of 88% of total consolidated revenue and 91% of total consolidated
assets. The remaining 12% of revenues, and 9% of total assets result from entities, none of which individually represents morethan 1% of revenues. For those entities, we performed, amongst others, analytical procedures to corroborate our assessmentthat the ﬁnancial statements are free from material misstatements.
We executed an audit plan that includes participation in risk assessment and planning discussions, setting the direction of
the group audit work (including instructions to the divisional and entity auditors), reviewing and discussing the planned audit
approach, obtaining an understanding of the ﬁnancial reporting process and performing procedures on the group consolidation,
participating in the evaluation of key accounting topics, reviewing the ﬁnancial statements and participating in meetings with the
management of the Company and its divisions. In our audit instructions, we also included targeted audit procedures that address
the key programmes (A220, A350, A380, A400M) as well as the risk of non-compliance with laws and regulations. We involved
several EY specialists to assist the audit team, including specialists from our tax, actuarial, treasury and compliance departments.
The audit of the three Airbus divisions is performed jointly by EY network ﬁrms and non-EY audit ﬁrms. Meetings were held withthe divisional auditors and divisional management to discuss the ﬁndings reported to the group audit team. We furthermore
executed ﬁle reviews at EY network teams and non-EY audit ﬁrms.
By performing the procedures mentioned above at group entities, together with additional procedures at group level, we havebeen able to obtain sufﬁcient and appropriate audit evidence about the Company’s ﬁnancial information to provide an opinion
about the Consolidated Financial Statements.
Our Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most signiﬁcance in our audit of the ﬁnancial
statements. We have communicated the key audit matters to the Audit Committee. The key audit matters are not a comprehensive
reﬂection of all matters discussed.
These matters were addressed in the context of our audit of the ﬁnancial statements as a whole and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.

5
Airbus / Financial Statements 2018121

Other Supplementary Information Including the Independent Auditor’s Report /Risk description

Our audit response

Litigation and claims and risk of non-compliance with laws and regulations
A part of the Company’s business is characterised by competition
for individual significant contracts with customers which areoften directly or indirectly associated with governments. The
process associated with these activities is susceptible to the riskof non-compliance with laws and regulations. In addition, theCompany operates in a number of territories where the use ofcommercial intermediaries is normal practice. Certain entities of
the group remain under investigation by various law enforcement
agencies for amongst others alleged irregularities concerning
third party consultants. Breaches of laws and regulations inthese areas can lead to fines, penalties, criminal prosecution,commercial litigation and restrictions on future business.

We evaluated and tested the Company’s policies, procedures
and controls over the selection of intermediaries, contracting
arrangements, ongoing management, payments and responses
to suspected breaches of policy.
We evaluated the tone set by management and the Board of
Directors and the Company’s approach to managing this risk.

Litigation and claims involve amounts that are potentiallysignificant and the estimate of the amount to be provided as
a liability, if any, is inherently subjective. The outcome of thesematters may have a material effect on the Company’s result andits financial position.

We discussed with the Board of Directors, the Audit Committee,
the Ethics and Compliance Committee as well as the Company’s
internal and external legal advisors the areas of potential orsuspected breaches of law, including the ongoing investigations.
To corroborate the results of those enquiries with third parties
we assessed related non-privileged documentation. We haveinquired the management, the Audit Committee, the Ethics
and Compliance Committee and the Board of Directors as towhether the Company is in compliance with laws and regulations
relating to bribery and corruption.

Reference is made to the disclosures on Note 3 “Key estimatesand judgements”, Note 22 “Provisions, contingent assets andcontingent liabilities” and Note 36 “Litigations and claims” of thefinancial statements.

We maintained a high level of vigilance to possible indicationsof significant non-compliance with laws and regulations relating
to bribery and corruption whilst carrying out our other audit
procedures.
We gained additional assurance by comparing management’s
position to the assessment from external parties such as externallawyers in those cases where a high amount of judgement isinvolved.
We have assessed whether the disclosure in Note 36 to thefinancial statements of the Company’s exposure to the financial
effects of potential or suspected breaches of law or regulation
complies with the accounting standards.
We determined that the disclosures in the financial statements
reflect the current status of the investigation by the UK SFO,
France’s PNF and US DOJ as well as the review of business
partner relationships in accordance with accounting standards.

Revenue recognition, including the application of IFRS 15
The Company adopted the new standard on 1 January 2018,using the full retrospective transition method and electing thepractical expedients for completed contracts and contract
modifications.
The allocation of the transaction price to and the identificationof performance obligations in contracts are judgemental andcould have a material effect on the Company’s result and its
financial position. Furthermore, the amount of revenue andprofit recognised in a year for over time contracts is dependent
on the assessment of the stage of completion of performanceobligations as well as estimated total revenues and estimatedtotal cost.
The value of the backlog is disclosed in the notes.
Reference is made to the disclosures on Note 2 “Significant
Accounting Policies”, Note 3 “Key estimates and judgements”,
Note 9 “Segment Information” and Note 10 “Revenue and grossmargin” of the financial statements.

Our audit procedures included, amongst others, assessing theappropriateness of the Company’s accounting policies related
to IFRS 15 Revenue recognition, including the appropriate
timing of revenue recognition method: over time or point intime. In addition we evaluated the design and implementationof internal controls for the sales process and tested individual
sales transactions to assess proper identification of theperformance obligations in the contracts, the completeness andvaluation of the variable considerations constraints included in
the transaction price and the reasonableness of the actual andestimated cost to complete included in the cost-to-cost method
for contracts recognised over time.
Our procedures furthermore included cut-off testing for point intime contracts to assess whether revenue was recognised in thecorrect period.
The audit of the backlog end of 31 December 2018 included
verifying the correct application of IFRS 15 and reconciling thebacklog value presented in the disclosures with the underlying
contract details and other supporting documentation.
We did not identify evidence of material misstatement in therevenue recognised in the year and we determined that theappropriate disclosures were made in the financial statements.

122

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Other Supplementary Information Including the Independent Auditor’s Report /Risk description

Our audit response

Estimations with respect to the contract margin for the accounting of onerous contracts and the assessmentof the contract margin recognised for the significant over time contracts.
Significant estimates are made to assess the contract margin,
based on estimated revenue and costs for the key programmes
including progress of costs (PoC) for over time contracts.
Provisions for onerous contracts such as for the A400M and
A380 are recognised when it becomes probable that the present
value of unavoidable costs of fulfilling the obligations under
the contract exceeds the present value of economic benefits
expected to be received under the contract.
The determination of these contract margins and provisions
for onerous contracts is based on available best estimates andrequires management’s significant judgement and assumptions
associated with the technical development achievement andcertification schedules, production plan (including assumptions
on ramp up), performance guarantees as well as expected
outcome from ongoing negotiations with customers.
Reference is made to the disclosure on Note 2 “Significant
Accounting Policies”, Note 3 “Key estimates and judgements”,
Note 10 “Revenues and gross margin” and Note 22 “Provisions,contingent assets and contingent liabilities” of the financial
statements.

We evaluated the design and implementation of internal controls
for accounting for onerous contracts and assessment of thecontract margin. We also performed substantive procedures
on individually significant programmes, including discussions
with the programme team including the Head of Programme.
Furthermore we evaluated management’s assumptions in thedetermination of amongst others the stage of completion of a
project, estimates to complete for both revenue and costs and any
provisions for onerous contracts. We focused on management’s
assessment of key contract risks and opportunities to determine
whether these are appropriately reflected in the cost to complete
forecasts, paid specific attention to technical and market
developments, including export opportunities, delivery plan andcertification schedules.
We challenged management’s assumptions by discussing
and reviewing correspondence with customers, considered
the accuracy and consistency of similar estimates made inprevious years and corroborated the assumptions with thelatest contractual information. For over time contracts andperformance obligations we performed detailed testing of
cost incurred and audited the correct application of margin atcompletion.
Finally we determined that the appropriate disclosures weremade in the financial statements.

Recoverability of assets related to significant programmes
Capitalised development costs, jigs and tools and inventories
relate mainly to the key programmes, such as the A350, A400M,
A380 and NH90.
Estimates of the future cash flows are necessary to determine
if an impairment of assets has to be recognised. In addition to
the risk of contract cancellations, significant costs or loss ofrevenue may be incurred in connection with remedial actions
required to correct any performance issue detected. Owing to
the inherent uncertainty involved in forecasting future costs andinterpreting contractual and commercial positions in determining
impairments and provisions, this is a key audit area. Updates tothese provisions can have a significant impact on the Company’s
result and financial position.
Reference is made to the disclosures on Note 2 “Significant
Accounting Policies”, Note 21 “Inventories” and Note 22“Provisions, contingent assets and contingent liabilities” of thefinancial statements.

We evaluated the design and implementation of internal controls
for identifying and recording impairments and performed
substantive audit procedures including inquiry of the programme
controller and Head of Programmes and corroboration withother audit evidence.
We evaluated management’s assumptions in the determinationof the forecasted revenue to be realised, cost to be incurred(including any contractual penalties) and the expected grossmargin. Part of our evaluation was the assessment of thehistorical accuracy of the Company’s estimates in previous
periods and included an analysis of contingencies and impact ofknown technical issues on cost forecasts and provisions.
In addition, with respect to the A380, we evaluated management’s
estimate regarding the reimbursement of the programme
specific RLI’s.
Finally we determined that the appropriate disclosures weremade in the financial statements.

Derivative financial instruments (including IFRS 9)
The Company operates in a business environment that is exposed
to currency and interest rate volatility. A significant portion of theCompany’s revenue is dominated in US dollars, while a major partof its costs is incurred in Euro and, to a lesser extent, in Pounds
Sterling. In response to these risks the Company uses financial
instruments (mainly currency forwards) to mitigate the exposure
to changes in market rates. There is a high inherent risk of error
in the Company’s Consolidated Financial Statements, both in
the valuation of the financial instruments and in the presentationand disclosure in the financial statements.

For the audit of the financial instruments we used specialists
who tested the controls around the Company’s central treasury
system, independently calculated the valuation of the treasury
portfolio and tested the application of the hedge accounting
rules and the resulting accounting treatment. In this process wealso assessed the delivery profile used as a basis to the hedge
accounting effectiveness test.

The magnitude of the Company’s hedge portfolio and potentiallysignificant changes in the exchange rate of the US dollar versus
the Euro could have a significant impact on the consolidated
equity of the Company via the “mark to market” valuation of thehedge portfolio.

Based on a sample of derivative financial instruments we
assessed that the valuation of the financial instruments is withina pre-defined tolerable variance threshold and no material
exceptions were noted.

Reference is made to Note 35 “Information about financial
instruments” of the financial statements.

We obtained counterparty confirmation of the outstanding
financial instruments to verify the existence and ownership.

The results of our procedures relating to management’s
accounting for derivative financial instruments (including IFRS 9)
in the 2018 financial statements were satisfactory and wedetermined that the appropriate disclosures were made in thefinancial statements.

Airbus / Financial Statements 2018

5123Other Supplementary Information Including the Independent Auditor’s Report /Risk description

Our audit response

The acquisition of CSALP (judgements related to the PPA)On 1 July 2018, the Company has taken control of the C Series
programme of Bombardier by acquiring 50.01% percent Class A
ownership units in the C Series Aircraft Limited Partnership(CSALP) entity. The entity is consolidated as of 1 July 2018.
Purchase price allocation (“PPA”) has been performed by theCompany and resulted into €3,8 billion goodwill.
Given the significant judgement on key assumptions, such as
future cash flows, expected synergies and discount rates, the
PPA related to the CSALP transaction is considered to be a key
audit matter.
Reference is made to Note 6.1 “Acquisitions” of the financial
statements.

With respect to the accounting for the CSALP investment, wehave, amongst others, read the purchase agreement, examined
the accounting considerations, assessed the valuation of the put
option on minority interests, the identification and valuation of
the assets and liabilities, including any fair value adjustments,
assessed and challenged significant valuation assumptions,such as the discount rates and expected synergies. We haveincluded valuation specialists in our team to assist with the auditof the purchase price allocation.
We also obtained an audit report for CSALP from its EY auditor
for the opening balance at the acquisition date and the results forthe six months ended 31 December 2018. We provided detailed
instructions to this auditor, covering the significant audit areas,
including the relevant risks of material misstatements, and theinformation required to be reported by the auditor. In addition,
we performed site visits to meet local management and theauditor, telephone conferences were held with the auditor anda file review was performed. During the site visits, telephone
conferences and the file review, we challenged and reviewed theapproach and the audit findings and observations reported tous.
We noted the assumptions relating to the PPA of CSALP fellwithin acceptable ranges and we determined that the appropriate
disclosures were made in the financial statements.

Report on other Information included in the Annual Report
In addition to the ﬁnancial statements and our auditor’s report thereon, the annual report contains other information that consists of:Report of the Board of Directors (we refer to www.airbus.com for the board report);- the- other information pursuant to Part 9 of Book 2 of the Dutch Civil Code.
Based on the following procedures performed, we conclude that the other information:is consistent with the ﬁnancial statements and does not contain material misstatements;
contains the information as required by Part 9 of Book 2 of the Dutch Civil Code.

-We have read the other information. Based on our knowledge and understanding obtained through our audit of the ﬁnancial
statements or otherwise, we have considered whether the other information contains material misstatements. By performing
these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard 720. The
scope of the procedures performed is substantially less than the scope of those performed in our audit of the ﬁnancial statements.
The Board is responsible for the preparation of the other information, including the Report of the Board of Directors in accordancewith Part 9 of Book 2 of the Dutch Civil Code and other information as required by Part 9 of Book 2 of the Dutch Civil Code.

Report on Other Legal and Regulatory Requirements
Engagement
We were appointed by the Annual General Meeting of Shareholders as auditor of Airbus SE on 28 April 2016, as of the audit for
the year 2016 and have operated as statutory auditor since that date.
No prohibited Non-Audit Services
We have not provided prohibited non-audit services as referred to in Article 5(1) of the EU Regulation on speciﬁc requirements
regarding statutory audit of public-interest entities.

Description of Responsibilities for the Financial Statements
Responsibilities of the Board of Directors and Audit Committee for the Financial Statements
The Board of Directors is responsible for the preparation and fair presentation of the ﬁnancial statements in accordance with
EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code. Furthermore, the Board of Directors is responsible for such internal
control as management determines is necessary to enable the preparation of the ﬁnancial statements that are free from material
misstatement, whether due to fraud or error.

124

Airbus / Financial Statements 2018

FINANCIAL STATEMENTS 2018
Other Supplementary Information Including the Independent Auditor’s Report /As part of the preparation of the ﬁnancial statements, the Board of Directors is responsible for assessing the company’s ability
to continue as a going concern. Based on the ﬁnancial reporting frameworks mentioned, the Board of Directors should prepare
the ﬁnancial statements using the going concern basis of accounting unless the Board of Directors either intends to liquidate thecompany or to cease operations, or has no realistic alternative but to do so. The Board of Directors should disclose events andcircumstances that may cast signiﬁcant doubt on the Company’s ability to continue as a going concern in the ﬁnancial statements.
The Audit Committee is responsible for overseeing the Company’s ﬁnancial reporting process.
Our Responsibilities for the Audit of the Financial Statements
Our objective is to plan and perform the audit assignment in a manner that allows us to obtain sufﬁcient and appropriate audit
evidence for our opinion.
Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material
errors and fraud during our audit.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to inﬂuence the economic decisions of users taken on the basis of these ﬁnancial statements. The materiality affects
the nature, timing and extent of our audit procedures and the evaluation of the effect of identiﬁed misstatements on our opinion.
We have exercised professional judgement and have maintained professional scepticism throughout the audit, in accordancewith Dutch Standards on Auditing, ethical requirements and independence requirements. Our audit included amongst others:
Identifying and assessing the risks of material misstatement of the ﬁnancial statements, whether due to fraud or error, designingand performing audit procedures responsive to those risks, and obtaining audit evidence that is sufﬁcient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control;
Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management;
Concluding on the appropriateness of management’s use of the going concern basis of accounting, and based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast signiﬁcant doubt on the
Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the ﬁnancial statements or, if such disclosures are inadequate, tomodify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause a company to cease to continue as a going concern;
Evaluating the overall presentation, structure and content of the ﬁnancial statements, including the disclosures;
Evaluating whether the ﬁnancial statements represent the underlying transactions and events in a manner that achieves fairpresentation.

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Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing thegroup audit. In this respect we have determined the nature and extent of the audit procedures to be carried out for group entities.
Decisive were the size and/or the risk proﬁle of the Company’s entities or operations. On this basis, we selected group entities forwhich an audit or review had to be carried out on the complete set of ﬁnancial information or speciﬁc items.
We communicate with the Audit Committee regarding, amongst other matters, the planned scope and timing of the audit andsigniﬁcant audit ﬁndings, including any signiﬁcant ﬁndings in internal control that we identify during our audit. In this respect we also
submit an additional report to the Audit Committee in accordance with Article 11 of the EU Regulation on speciﬁc requirements
regarding statutory audit of public-interest entities. The information included in this additional report is consistent with our audit
opinion in this auditor’s report.
We provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence,and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards.
From the matters communicated with the Audit Committee, we determine the key audit matters: those matters that were of mostsigniﬁcance in the audit of the ﬁnancial statements. We describe these matters in our auditor’s report unless law or regulationprecludes public disclosure about the matter or when, in extremely rare circumstances, not communicating the matter is in the
public interest.

5

Amsterdam, 13 February 2019
Ernst & Young Accountants LLP
signed by A.A. van Eimeren

Airbus / Financial Statements 2018125