AIRBUS
ANNUAL REPORT – OVERVIEW 2018

Passion forprogress

Every day, we use our passion for progress
to address today and tomorrow’s challenges.
From developing new and more efficient products,
to how we can harness the power of data todeliver insight-based solutions, through topioneering disruptive innovations that will
help shape the future of aerospace.

Who we are

Airbus is an international pioneer in the aerospaceindustry. We are a leader in designing, manufacturing
and delivering aerospace products, services andsolutions to customers on a global scale.
We aim for a better-connected, safer and more
prosperous world.

Introduction to our reporting
Overview

02
04
06
08
10
12
14

20
22
24
26

32

Information Document

07
23
71
93
115
159

Financial Statements

05
13
91
97
119

Where applicable, 2017 figures have been restated to reflect the
adoption of the IFRS 15 accounting standard and new segment reporting
as of 1 January 2018. The new segment reporting reflects the merger of
Headquarters into Airbus. Where applicable, ‘Airbus’ refers to commercial
aircraft and the integrated functions while ‘the Company’ refers to Airbus
SE together with its subsidiaries.
Order backlog and order intake are now measured under IFRS 15. The unit
backlog reflects the contractual view. The backlog value now reflects theassessment of recoverability and net transaction price on airframeand engine. The 2017 backlog has not been restated.
Due to rounding, numbers presented may not add up precisely to the totals
provided and percentages may not precisely reflect the absolute figures.

Highlights
Airbus at a glance
Chairman’s message
Board of Directors
Chief Executive Officer interview
Executive Committee and Top Management
Strategy in action
14
Production ramp-up
16
Harnessing the power of data
18
Continuous innovation
Our people
Responsibility and Sustainability
Chief Financial Officer interview
Operational review
26
Airbus28
Airbus Helicopters
30
Airbus Defence and Space
Share information

Risk Factors
Information on the Company’s Activities
Management’s Discussion and Analysis ofFinancial Condition and Results of Operations
General Description of the Company
and its Share Capital
Corporate GovernanceEntity Responsible for the Information Document

Airbus SE – IFRS Consolidated Financial
Statements
Notes to the IFRS Consolidated Financial
Statements
Airbus SE – IFRS Company Financial
Statements
Notes to the IFRS Company Financial
Statements
Other Supplementary Information Including
the Independent Auditor’s Report

Finding what you need online
Our Quick Read has a concise summary of our annual
report, highlighting strategy, performance as well as key
highlights of the year. It also includes video content.
https://annualreport.airbus.com/

Airbus / Annual Report 20181

Overview / Highlights

In 2018, our passion forprogress helped us to achieve
several key milestones
It was a year of solid performance, with the Company’s guidanceachieved or exceeded for all key performance indicators.

Financial

Non-Financial

Revenues (€ billion)

Direct & Indirect air emissions (tonnes CO2)(2017: 59.0*)(2017: 1,013,101)

63.7 8%965,633

EBIT reported (€ billion)

Total energy consumption (MWh)(2017: 2.7*)(2017: 4,098,475)

5.0 89%Earnings per share (€)

3,962,484
Number of training hours (over)

3.94 29%

1,300,000

Free cash flow before M&A and customer financing(€ billion)

Ethics and Compliance (digital training sessions)(2017: 3.05*)

2.9 0%(2017: 2.9)

(October 2017 to September 2018)

204,667(2017: 84,273)

Health and Safety training hours (to 30,800 employees)

Dividend per share (€)**

1.65 10%(2017: 1.50)

137,000(October 2017 to September 2018)
Patents held worldwide (circa)

Self-financed R&D investment (€ billion)

3.2 15%(2017: 2.8)

* Restated for IFRS 15** To be proposed to the 2019 AGM

2

Airbus / Annual Report 2018

37,000A220 Family
In July, we integrated the A220 into the
Airbus aircraft family. These single-aisle
aircraft operate in the 100-150 seat market
segment that is expected to represent atleast 7,000 aircraft over the next 20 years.
Between 1 July and 31 December, we
received 135 net orders for the A220.

European Service Module
In November, we delivered the first European
Service Module (ESM) for NASA’s Orionspacecraft. The ESM is a key element ofOrion, the next-generation spacecraft thatwill ultimately transport astronauts beyond
low Earth orbit. We are the prime contractor
for development and manufacturing of thefirst ESM.

Operational
Deliveries in 2018

800
356
17

Commercial aircraft (2017: 718)

Helicopters (2017: 409)

A400M aircraft (2017: 19)

A400M programme
In February 2018, we signed a Declarationof Intent with the Launch Customer Nations
for our A400M. Subsequent to this, we
succeeded in re-baselining the programmewith the government customers subject
to their domestic approval processes.

H160
During the year, we progressed further withthe flight testing programme and industrial
maturity of our latest H160 helicopter
model and received the initial orders.
The first serial version took to the skies.

Future Combat Air System
In April 2018, we signed a landmark
agreement with Dassault Aviation to
jointly develop and produce Europe’s
Future Combat Air System (FCAS), whichis slated to complement and eventuallyreplace current generation Eurofighter
and Rafale aircraft. FCAS defines a systemof systems that combines fighter jets,
drones and other defence systems.

Airbus / Annual Report 20183

Overview / Airbus at a glance

We are a global leader
in aeronautics, space,and related services
Airbus SE

Airbus

Revenues (€ million)

Offers the most comprehensive range ofpassenger airliners.

63,707 8%(2017: 59,022*)

800
Number of commercial aircraft deliveries(In 2018)

External revenue split
Airbus74%
Airbus Helicopters
9%
Airbus Defence
and Space
17%*Restated for IFRS 15

Our global network

133,671
180

Employees

Locations

EBIT Adjusted (€ million)

4,808(2017: 2,383*)
For more information
See page 26

Airbus – Value Drivers– World passenger air traffic is set to grow at 4.4% peryear between 2018 & 2037, supporting strong aircraft
demand**– Around 37,400 new aircraft deliveries expected
between 2018 and 2037**– Market leading products: A220, A320neo, A330neo,
A350 XWB– Continuous innovation: In 2018, entry-into-service of
A321LR, A330neo, A350-900 ULR and A350-1000– Backlog: new industry record supporting ramp-up plans– A320 Family production rate increase to 60 aircraft
a month by mid-2019 and rate 63 targeted in 2021...and a network of 12,000 direct suppliers
Order book in value by region
Asia Pacifc
30%
Europe28%
North America
19%
Middle East
8%
Latin America
6%
Other
9%

€ 460 billion

The A321LR was certified and entered service in 2018
* Restated for IFRS 15** Source: Airbus Global Market Forecast

4

Airbus / Annual Report 2018

Airbus Helicopters

Airbus Defence and Space

A global leader in the civil and military rotorcraft market.

Europe’s number one defence and space enterprise.

356

17

Number of helicopter deliveries(In 2018)

Number of A400M deliveries(In 2018)

EBIT Adjusted (€ million)

EBIT Adjusted (€ million)

380

935

(2017: 247*)(2017: 815*)

For more information
See page 28

For more information
See page 30

Airbus Helicopters – Value Drivers– Civil & parapublic demand is 40% driven byreplacements and 60% driven by growth**– Military demand mainly driven by budgetary and strategic
considerations and the need to replace ageing fleets*– Leading civil and parapublic market share with around
52% by units in 2018
– Increased military market share to 25% in 2018 thanks
to several major contracts– Services visibility: large in-service fleet of around12,000 helicopters worldwide– New product introduction: First serial H160 performed
first flight in 2018 ahead of certification– Investigating future unmanned vertical take-off andlanding systems and urban air mobility

Airbus Defence and Space – Value Drivers– Global defence and space budget in 2018:highest level since the end of the Cold War**– Activities: Military Aircraft, Space Systems, CIS(Communications, Intelligence & Security) andUAS (Unmanned Aerial Systems)– Comprehensive portfolio with leading position in
European home markets and strong export potential– Clear growth strategy based on strengthening coreproducts and expanding services business with afocus on digitalisation– Growth opportunities driven by increasing defence
spending and dynamic shift of the space market– Favourable political context with new programme
opportunities including FCAS and European MALE

Airbus Helicopters has increased its military market share

Airbus Defence and Space’s BepiColombo spacecraft
was launched on its mission to Mercury* Restated for IFRS 15** Source: Airbus Helicopters* Restated for IFRS 15** Source: Airbus Defence and Space Global Market Forecast

Airbus / Annual Report 20185

Overview / Chairman’s message

Positioned
for growth

Denis Ranque
Chairman of the Board

Board Members conducted anumber of site visits in 2018

Dear shareholders, Dear stakeholders,
The aerospace and defence industry
is preparing for a new era when
digital technology will help transformengineering and manufacturing
operations. At Airbus, the search for a
new generation of enterprising leaders
continued this year to prepare us forthe challenges of the next decade.
Therefore 2018 was an exceptionally busy
year for your Board and the Remuneration,
Nomination and Governance Committee
as we interviewed and selected a newcore management team. As we alreadyannounced, the Board unanimously selected
Guillaume Faury as our new CEO after athorough examination of the potential
candidates. Guillaume is due to assume hispost after the Annual General Meeting on 10
April 2019, subject to shareholders’ approval.
He is joined by Dominik Asam as Chief
Financial Officer, one of the most respected
CFOs in the German DAX 30. In two other6

Airbus / Annual Report 2018

key appointments, we selected Michael
Schöllhorn as Chief Operating Officer forcommercial aircraft, bringing expertise indigitalisation, end-to-end process optimisationand supply chain management, and Philippe
Mhun as Chief Programmes and Services
Officer for commercial aircraft, bringing his
experience in airline operations and aircraft
programmes. Earlier in the year, we appointed
Grazia Vittadini as Chief Technology Officer
and Bruno Even took over from GuillaumeFaury as CEO of Airbus Helicopters.
The Board supported management in therunning of the business. Despite significant
operational challenges, we delivered a record
number of commercial aircraft in 2018 and thiswas reflected in the strong overall financial
performance. Within Airbus Helicopters,
the first serial H160 took to the skies andin Defence we signed an initial agreement
on Europe’s Future Combat Air Systemand concluded negotiations on the A400M
contract amendment with our government
customers, prior to their domestic
approval processes.

“The Board supported managementin the running of the business…We are
well positioned to harvest the rewardsof our new products and services.”

Dividend policy
The dividend policy demonstrates
our strong commitment toshareholders’ returns. We target
sustainable growth in our dividend
within a payout ratio of 30-40%.
Dividend (€ per share)
2016
2017
2018

1.35
1.50
1.65*

* To be proposed to the 2019 AGM

1.65 per share
The year also saw the completion of Airbus’purchase of a majority stake in the former‘C Series’ aircraft programme, which were-launched as the A220. This aircraft is an
important complement to our commercial
product range and will benefit from Airbus’commercial and industrial contribution.
Turning to digitalisation, after thoroughpreparation we are now looking to further
industrialise our digital concepts to make ouroperations increasingly efficient. Already, we
have seen the great potential for digitalisationin our industry with the Skywise data platform.
Our site visits for the Board included the Final
Assembly Line Asia in Tianjin and the Skywise
campus in Toulouse. As Chairman, I also
took the opportunity to engage with someof our institutional shareholders and answer
analysts’ questions on our governanceand hear their views.
Our Ethics and Compliance Committee
was also fully occupied, overseeing thedevelopment of a state-of-the-art complianceprogramme and a zero-tolerance complianceculture across Airbus. It also monitored
closely the investigations in full cooperation
with judiciary authorities. During the year,
the Company also implemented its
Responsibility and Sustainability Charter.
As I indicated last year, Tom Enders, ourcurrent CEO, decided to leave on the expiry of
his mandate in April 2019. Harald Wilhelm, ourcurrent CFO, has since opted to leave aroundthe same time in agreement with the Board.
I would like to thank Tom, Harald and theoutgoing management team for theirnumerous achievements in the developmentof your Company, and also its deeptransformation through the introduction of our
new shareholding and governance structures,and the integration of Airbus Commercial
Aircraft and Airbus Group. During Tom andHarald’s tenure we also saw the introductionof a dividend policy by the Board.

Dividend to be paid on 17 April 2019,subject to shareholder approval

At Board level, we welcomed three new
Directors in the year: Victor Chu, Jean-Pierre
Clamadieu and René Obermann, who arebringing their diverse skills and experience tothe Board. At the 2019 AGM we will propose
the renewal of mandates of three current
Board Members, namely Catherine Guillouard,
Claudia Nemat and Carlos Tavares, who haveall proven their added value and given a strong
contribution over the last three years.
Reflecting the strength of the 2018
achievements, the Board proposes to theAnnual General Meeting a dividend of€ 1.65 per share (2017: € 1.50).
In summary, I believe – and am sure my
Board colleagues will agree – that we are
well positioned to harvest the rewards ofour new products and services. I would liketo thank our employees for their continued‘Passion for progress’ that has made theseaccomplishments possible, and all our
stakeholders for their faith in the Board andmanagement. Our diligent selection of a new
management team has primed Airbus for the
decade ahead. We look forward to Airbus
pioneering an era of technology-driven change.

Denis Ranque
Chairman of the Board

For more information
on governance see ourInformation Document

Airbus / Annual Report 20187

Overview / Board of Directors

Board of Directors
As of 1 January 2019

/ 01 Denis Ranque
Chairman of the Boardof Directors of Airbus SE/ 02 Tom Enders
Chief Executive Officer of Airbus SE

Chairman of the Ethics andCompliance Committee/ 03 Ralph D. Crosby, Jr.

/ 05 Catherine Guillouard/ 06 Jean-Pierre Clamadieu/ 07 Hermann-Josef Lamberti
Chairman of the Audit Committee/ 04 Lord Drayson (Paul)

/ 06

/ 03

/ 05

/ 07
/ 04

8

Airbus / Annual Report 2018

/ 02

For updates please visit
www.airbus.com/company/
corporate-governance/ 08 Amparo Moraleda
Chair of the Remuneration, Nomination
and Governance Committee/ 09 René Obermann

Full biographies of our Board
Members can be found in ourInformation Document/ 10 Claudia Nemat

Audit Committee
Remuneration, Nomination
and Governance Committee
Ethics and Compliance Committee

Changes to the Board in 2019/ 11 Carlos Tavares

Tom Enders

To step down as Executive Board
Member and CEO at 2019 AGM
on 10 April

Guillaume Faury

Proposed CEO to join the Board
as Executive Board Member
on 10 April 2019, subject
to shareholder approval/ 12 Victor Chu

/ 01
/ 09
/ 10
/ 11

/ 08
/ 12

Airbus / Annual Report 20189

Overview / Chief Executive Offcer interview

Reaching
new heights

Interview with Tom Enders
Chief Executive Officer“It was another year of solid
progress…We were able
to deliver a sharp rise inunderlying profitability.”

Q. How would you sum up 2018?
It was another year of solid progress, and agreat effort by Team Airbus. This meant wedelivered on our commitments. We achieved asignificant step up in aircraft deliveries despitesome pretty strong headwinds, particularly on
the engine side. Additionally, we completed
the acquisition of a majority stake in the A220
programme ahead of schedule and in Defence
significantly de-risked the A400M. Add tothat our continued focus on digitalisationand innovation plus the appointment of a newgeneration of leaders, then it was quite a year!
Q. What were your operational andcommercial highlights?
Even with the A220, delivering 800 aircraft
was no mean achievement – particularly as
the engine issues meant we had to hand overabout 300 in the last quarter! In the end,
A320neo Family deliveries more than doubled
compared to 2017 and the overall A320
programme is on track for the targeted
monthly production rate of 60 by mid-2019.

10

Airbus / Annual Report 2018

The next goal is rate 63 in 2021. Our A350
XWB programme also ramped up, delivering
93 aircraft and reaching the targeted monthly
rate of 10 in the fourth quarter. Unfortunately,
due to Emirates’ decision to reduce its orderand the lack of airline demand overall we had
to make the painful decision to wind down
production of the A380, with last deliveries in
2021. Overall, we achieved a book-to-bill ofclose to 1 in commercial aircraft, showing theunderlying health of the market with a backlog
of about 7,600 aircraft, including the A220.
Helicopters had a good year on the sales
side with a book-to-bill above 1 for the firsttime in many years. That’s encouraging,
given demand for helicopters globally is still
weak, particularly from civil and parapubliccustomers. However, we captured anincreasing share of the military market withsome good contract wins for the NH90 and
the Lakota Light Utility Helicopter. And, we
notched up the first orders for the newgeneration H160 ahead of its planned
certification in 2019.

Defence and Space had a book-to-bill slightly
below 1 but has some good short- andlong-term prospects, particularly in military
aircraft. We succeeded in re-baselining the
A400M programme with our government
customers and their domestic approval
processes should conclude in 2019. Last year,
we also signed an important initial agreementwith our industrial partner to develop a Future
Combat Air System. I am also particularly
proud of the agreement we inked with
Lockheed Martin to offer aerial refuelling for
US defence customers. I am convinced the
US Air Force should not have any otherambition than to fly and operate the bestequipment out there. And in the field oftanker aircraft that’s our A330 MRTT, clearly.
In Space, we saw the first launch contract
for Ariane 6 and early in 2019 the firstsatellites for the pioneering OneWeb
constellation were launched.
This performance meant we were able todeliver a sharp rise in underlying profitability,
or EBIT Adjusted, and our reported numbers
were also up sharply even when taking theA380 and A400M charges into account.
Q. How would you sum up your time as
Airbus CEO?
It’s been a tremendous privilege. We’ve beenon quite a journey on each of the three ‘I’focus areas – Integration, Internationalisation
and Innovation.
Starting in 2012, we worked with the Board
to inject new dynamism into the Company,
moving swiftly to normalise the governanceand ownership structure. Building on this new
foundation, we integrated the whole group
under the strong single Airbus brand. We
expanded our footprint outside of Europe
significantly and, for example, are now

For more information about ourStrategy in action see:
Production ramp-up,
on pages 14-15
Harnessing the power of data,on pages 16-17
Continuous innovation,
on pages 18-19

establishing a new production line for theA220 in Mobile, Alabama. When it comesto digitalisation and innovation, we have
prepared for the future challenges andopportunities. Our Skywise platform has
rapidly established itself in the industry andbeen adopted by over 50 airlines. By year-end,
this should increase to some 100 airlines!
We see continuous innovation in all ouraircraft, like the fuel-efficient A330-800 thattook to the skies in 2018, the H160 helicopter,and the compact OneWeb satellites that are
being mass-produced in an industry first.
We’re also determined to be leaders in the
future of transport! That’s why we’re pioneers
in urban air mobility with the electric powered
Vahana and CityAirbus demonstrators. I am
also particularly proud of the achievementsof the Airbus Foundation, which for 10 years
has used our resources to support people
affected by natural disasters and to inspireyoung people to pursue careers in aerospace.
And in compliance, we have enhanced ourcontrols and practices to position ourselves
for the future.
Q. To what extent have shareholders
shared your success story?
Since becoming CEO, we’ve been strongly
committed to improving returns forshareholders and this is set to continue.
Compared to 2012, the dividend has morethan doubled from € 0.60 a share to the
proposed 2018 payment of € 1.65. The
numbers speak for themselves!
Q. What is the outlook for Airbus under
your successor?
I have huge confidence in Guillaume Faury
and his outstanding team. Guillaume steered
Helicopters through the industry’s worse
downturn in decades and had a successful
2018 at commercial aircraft. He’s passionate
about improving the environmental
performance of our products and using digitaltechnology to improve our competitiveness.
I am handing over to a team with energy andvision which will lead Airbus into the 2020s.

Tom Enders
Chief Executive Officer

A message from
Guillaume Faury*It’s a great honour to have beenasked by the Board to take overas CEO and lead this fantastic
company into its next chapter. I lookforward to building on Tom’s andTeam Airbus’ many achievements
these past years. I know thattogether with the passionate Airbus
employees around the world we
can accomplish more great thingsin the coming years.

Looking ahead to 2019
As the 2018 results showed, Airbus
is a company that delivers on its
commitments and we intend to doso again in 2019. I look forward tocontinuing at full speed with all thepotential that the Company has.
Operationally, we will remain
focused on programme execution,
on continuous improvements,
on competitiveness and we’ll do thisby continuing to drive performance,
investing in our industrial system
and into digital technologies. In fact,
digitalisation is key to improving theway we design, manufacture andservice our aircraft and support
our customers.
It’s going to be an interesting year
ahead and we are committed todelivering our earnings and cash
flow growth potential.

Guillaume Faury* Proposed Chief Executive Officer from
10 April 2019 (pictured above left)

Airbus / Annual Report 201811

Overview / Executive Committee and Top Management

Executive Committee
and Top Management
As of 1 January 2019

Tom Enders1*
Chief Executive Officer, Airbus

Guillaume Faury2*
President Airbus Commercial Aircraft

Harald Wilhelm3*
Chief Financial Officer, Airbus

Bruno Even4*
Chief Executive Officer,
Airbus Helicopters

Dirk Hoke*
Chief Executive Officer,
Airbus Defence and SpaceJohn Harrison*
General Counsel, Airbus

Christian Scherer5
Chief Commercial Officer, Airbus

Thierry Baril*
Chief Human Resources Officer, Airbus* Member of the Executive Committee

3. Dominik Asam is due to succeed Harald Wilhelm as
CFO in April 2019

1. Tom Enders is due to step down as CEO following the2019 AGM
2. Guillaume Faury has been selected to succeed Tom
Enders as CEO subject to his appointment as Executive
Board Member by the 2019 AGM

12Airbus / Annual Report 2018

4. Bruno Even appointed CEO of Airbus Helicopters in
April 2018
5. Christian Scherer appointed Airbus Chief Commercial
Officer in September 2018

Philippe Mhun6*
Chief Programmes and Services Officer,
Airbus Commercial AircraftKlaus Richter*
Chief Procurement Officer, Airbus

C. Jeffrey Knittel
Chairman and Chief Executive Officer,
Airbus Americas

George Xu
Chief Executive Officer, Airbus China

Marc Fontaine
Digital Transformation Officer, Airbus

Patrick de Castelbajac
Head of Strategy and International, Airbus* Member of the Executive Committee
6. Philippe Mhun appointed Chief Programmes & Services
Officer for Airbus Commercial Aircraft in January 2019

Grazia Vittadini7*
Chief Technology Officer, Airbus

Rainer Ohler
Head of Communications, Airbus

For updates please visit
www.airbus.com/company/
corporate-governance7. Grazia Vittadini appointed Chief Technology Officer in
May 2018

Airbus / Annual Report 201813

Overview / Strategy in action

Production ramp-up
Ramping-up A320 Family aircraft production and transitioning to the NEO version was a key priority for 2018.
A350 production also increased, reaching the targeted monthly rate of 10 aircraft. We have invested in new
facilities, technologies and transport capacity to support the ramp-up.

A320 Family

New facilities
We are committed to reaching a combinedmonthly A320 Family production rate of 60
aircraft by mid-2019 through our final assemblylines in Toulouse, Hamburg, Mobile and Tianjin.
A key enabler for this during 2018 was the
opening of a fourth A320 Family production
line in Hamburg. The new line makes use ofdigital technologies and a more flexible industrial
set up to build aircraft more efficiently.
The new Hamburg line features:– User-optimised delivery of materials,
closer to employees– Digital production control systems– Automated 7-axis robots forcircumferential joints– Dynamic measurement assemblywith laser trackers

Results

626+

A320 Family deliveries(CEO and NEO)

Compared
to 2017

14

12%

Airbus / Annual Report 2018

BelugaXL

Investing to deliver
To address greater transport capacity
requirements related to the ramp-up
of single-aisle and A350 XWB aircraft
production, we have invested in a new
fleet of larger BelugaXL aircraft, basedon the A330-200 freighter.

Flight testing underway
Following its first flight in July 2018, theBelugaXL will undergo some 600 hours of flighttesting ahead of its planned entry-into-service
during 2019. The aircraft, which is 63.1 metreslong and has a fuselage diameter of 8.8 metres,
provides us with an additional 30% of extra
transport capacity compared to the current
BelugaST aircraft. It can transport two A350
XWB wings while the existing BelugaST can
only carry one. The aircraft will operate to
11 destinations and features newly-developed
elements including a lowered cockpit, cargo
bay structure, and rear and tail section.

Results

30% 227tonnes
Additionaltransport capacity

Max. take-off weight versus
155 tonnes for BelugaST

Airbus / Annual Report 201815

Overview / Strategy in action

SkywiseGaining traction
We made significant progress in rolling out the
Skywise digital platform to support the operationsof airlines around the world, creating value in
new ways for them and also for Airbus. Morethan 50 airlines representing over 4,000 aircraft
had signed up by year-end – with customers
including Delta Air Lines, which signed amulti-year contract to continue using the platform
and related predictive maintenance services.
The service has also now been extended into
the supply chain, enabling improvements inreliability, quality and performance.

Skywise now has more than:

50

4,000

Airlines signed up

Commercial aircraft
represented

Harnessing the power of data
A key part of our digitalisation strategy is to unlock the full potential of data in our industry.
During 2018 we focused on industrialising and deploying our most promising digital concepts,
including the Skywise data platform.
16

Airbus / Annual Report 2018

SmartForce launched

Wider offering
Building on the success of Skywise, wehave now introduced advanced data analytics
to the defence market through the launch of
SmartForce by Airbus Defence and Space andAirbus Helicopters. This system offers a suiteof services to enable military operators to exploit
data gathered by their aircraft to enhance
operational safety, boost mission availability
and reduce maintenance support costs. Moreefficient maintenance is possible by using thewealth of data generated by new generation
helicopters and aircraft such as the NH90,
A400M and A330 MRTT.

Airbus / Annual Report 201817

Overview / Strategy in action

Continuous innovation
We continuously innovate to ensure that our products are at the forefront of aerospace technology.
Our commercial aircraft are designed with our customers in mind, helping them to operate their fleets
more efficiently and serve new markets while providing their passengers with the best inflight experience.

A330neo

Improving effciency
With fuel representing one of the largest single
components of an aircraft operator’s costs,
we have continuously focused on making our
products more efficient. During 2018, deliveriesof the new generation wide-bodied A330-900
commenced, while the smaller A330-800
variant made its first flight. These A330neo
models offer a reduction in fuel consumption
per seat of 25% compared with older
generation aircraft of a similar size.
This is mainly achieved through:– New generation Rolls-Royce engines– Greater span, new 3D optimised wings– Sharklet wing-tip devices optimised
for aerodynamic performance

Results

25% +1,300nm
Fuel saving versus
previous generation

18

Airbus / Annual Report 2018

More range for A330 -800
versus earlier A330 -200

New variants

Pushing the limits
Greater fuel efficiency and technologicaldevelopments are helping Airbus’ customers to
tap new markets and gain a competitive edge.

A321LR and A350-900 ULR
Airbus delivered the first A321LR, the world’s
most flexible and capable large single-aisle
aircraft. The aircraft gives operators the flexibility
to fly long-range operations of up to 4,000
nautical miles and tap new long-haulmarkets that weren’t previously accessible withsingle-aisle aircraft. Meanwhile, the A350-900
Ultra Long Range also went into service. It’s
capable of flying further in commercial service
than any other aircraft with a range of up to
9,700 nautical miles or over 20 hours non-stop.

Results: A350-900 ULR

9,700 20hours
Nautical miles. Further
in commercial service
than any other aircraft.

or more non-stop.

Airbus / Annual Report 201819

Overview / Our people

Preparing for
future challenges
The Company continues developing its workforce to pioneer the aerospaceindustry’s transition to a digital future. Employees should possess therequired skills and adaptability to master fast and complex change.

As it prepares to lead aerospace’s
digital revolution, the Company islooking to improve ways of working
and offer a highly rewarding employee
experience – especially the rightworking environment, services andwell-being. This is true for both current
employees and those who will joinin the coming years.
Always learning
Human Resources is committed to helping
employees to learn and adapt to new skills
and functions throughout their careers.
To that end, 2018 saw the launch of morethan 40,000 plans for developing individual
employees. While managers coach their teammembers, employees take responsibility for
their own action plans. New skills include
those linked to digitalisation initiatives thatare being prioritised Company-wide.

The Company’s approach to improving theworking environment is inclusive, recognising
the diversity of its workforce. More than 250
teams acted together to improve their working
environments through the myWorking
Environment Survey. Between them,
employees come from more than 130
countries and speak over 20 languages.
Empowering individuals
As Airbus seeks to change its culture,staff are increasingly willing to speak up.
Individuals are more willing to offer opinions
through surveys, suggesting they feel
more empowered. Employees requested
feedback almost 80,000 times in 2018.
This shows that employees recognise theindividual contributions that they can make,which is a valuable change in culture.

Making jobs mobile
Encouraging mobility is one of the ways
to offer a rewarding career. In 2018, morethan 12,500 employees moved to jobs
in different countries or different businesssegments. Nearly 700 moved from thefactory floor to management roles, bringing
critical technical expertise with them.
A better working environment
Better teamwork, as well as employee
empowerment and accountability, gives abetter working environment, as well as leading
to stronger results. In 2018, Human Resources
supported more than 600 teams looking for
more productive and engaging ways ofworking. They were encouraged to talk toother teams and exchange ideas, while
experimenting with new methods of working.
Many employees took advantage of the
Leadership University’s facilities for teamcoaching, peer coaching, feedback andsharing of best practices.

Training employees to ensure they have the necessary skills for tomorrow’s challenges is a priority

20

Airbus / Annual Report 2018

Partnering with universities for
future skills
With technology evolving rapidly, theCompany continues to attract the brightest
minds from the most innovative universities.
With that in mind, three new universities weresigned up to the Airbus Global University
Partner Programme at the Zhuhai airshow.
The University of Sydney, Australia, Centrale
Supelec, France and Massachusetts Instituteof Technology, USA, joined the other 22
university partners. Airbus works with theuniversities to develop a strong pipelineof students with the skills it needs.

Chilean university wins diversity award
By offering science, technology, engineeringand mathematics (STEM) outreacheducation to indigenous minorities andyoung people in rural areas, a Chilean
university has given them valuable potential
career paths. The SaviaLab diversity
initiative from Pontificia Universidad Católica
de Chile was selected as the winner of the2018 Airbus GEDC Diversity Award forinnovative use of technology to increase
diversity in engineering education.

Awards for Excellence
The annual employee Awards for
Excellence held its prize giving ceremonyin March 2018. For the first time, project
teams were recognised for their new ways
of working together with the Special Pulse
Recognition prize. The winner of both the
Employee Choice and Top Awards wasan end-to-end prototype designed todemonstrate the value of big data forin-service aircraft. This project also
played a role in promoting Airbus’
Skywise data platform.

Soaring interest in digitalaerospace competition
More than 2,000 students registered topresent their ideas for digital innovations injust the first three months of Airbus’ sixth Fly
Your Ideas competition. Students submitted
ideas that could change the future ofaerospace. They were invited to address
challenges in six areas: electrification, dataservices, cyber security, Internet of Things,
artificial intelligence and mixed reality. Up tosix finalist teams will be selected in 2019,
competing to share a prize and the chance
to develop their idea.

Airbus / Annual Report 201821

Overview / Responsibility and Sustainability

Prioritising Responsibility
and Sustainability
Through introducing a Responsibility and Sustainability (R&S) Charter, the Company
placed responsible business conduct at the heart of its strategy. Targets andkey performance indicators are being developed to track its progress.

Marking a significant milestone
in the Company’s engagement in
R&S, a Charter was created which
serves as a testament to Airbus SE’scommitment to promoting responsible
business conduct in pursuit of creating
a better connected, safer and more
prosperous world.
The Charter has nine underlying
commitments, which are set against eightinternationally-recognised United Nations
Sustainable Development Goals. Key
performance indicators are being developed
to measure each commitment, allowing for
progress to be monitored from within andoutside the Company.
The Charter, which was signed by the
Executive Management Team, was circulated
Company-wide via a ‘team talk’. It is also
being integrated into training modules, boththrough an e-learning and two Leadership
University modules.
Illustrating the growing importance of
responsible business practices, the Company’s
2018 ‘key priorities’ have a greater focus on
R&S than ever before, and include:– Continuing to improve the eco-efficiency
of products and services– Reducing the Company’s industrial
environmental footprint– Making health and safety everyone’s priority– Prioritising diversity– Ensuring Ethics and Compliance standards
and principles are respected

Concentrating on ninecommitments
The Charter comprises ninecommitments, outlining where theCompany pursues R&S goals in
the areas of:

1. Product safety
2. Anti-corruption
and bribery
3. Labour relations

Keeping up with standards
Airbus SE published its second Modern
Slavery Statement, in line with UK regulation,and committed to several voluntary UN andinternational standards, including The
Women’s Empowerment Principles, UN
Standards of Conduct for Business for LGBTI
and the Global Deal French Initiative. During
2018, Airbus in the UK published its first
Gender Pay Gap Report as well as its firstpayment practices and performance data.
For further information please visit
www.airbus.com/company/responsibilitysustainability.html

4. Environment
5. Respect for human rights
6. Diversity
7. Health and safety
8. Supply chain
9. Community impact
While the KPIs were not in place in 2018, thefollowing broad advances were madethroughout the year:– More than a fifth of female employees (23%)
were promoted to Level 4 management
and above– A new health and safety system was
deployed– A ‘Sustainable Manufacturing 2030’
vision was introduced– First aircraft with sustainable fuel weredelivered from Mobile, Alabama– A pilot phase for R&S performance
ratings of suppliers was launched

The Airbus Foundation celebrated its 10th
anniversary in 2018 and continued to deliver
relief cargo together with its partners

22

Airbus / Annual Report 2018

Sustainable fuel-powered
A320s delivered
Airbus’ A320 Family production facility in
Mobile, USA, delivered the first aircraft
partially powered by sustainable jet fuelto JetBlue. Since May 2016, Airbus hasoffered customers receiving aircraft from
Toulouse, France, the option of taking
delivery of aircraft using a blend ofsustainable jet fuel. Airbus is working
towards offering this option to morecustomers receiving aircraft from Mobile,with the larger vision of supporting industrial
production of sustainable fuel for aviation in
the Southeastern USA.

Making manufacturing sustainableAirbus believes it has a crucial role to playin promoting sustainable manufacturing
practices. It has set ambitious but
measurable goals to lessen its
environmental impact in commercial aircraft
manufacturing by 2030: respect the Paris
Agreement’s goal to restrict the global
temperature rise to well below 2°C above
pre-industrial levels, despite Airbus’commercial aircraft production ramp-up,
by reducing CO2 emissions intensity by
60%; reduce water use by 50%; maintaincompliance with air emissions regulations
despite the production ramp-up; anddeploy environmental requirements
when evaluating and selecting suppliers.

Inspiring the next generationof innovators
The Airbus Foundation’s Discovery Space
leverages the natural curiosity of young
people to set their sights on the sky.
Launched in May 2018, this inventive digitalplatform is a space where young people
from around the world can understandscience through aerospace. In just over six
months, the content created with Airbus
engineers for Discovery Space was viewed
more than 50,000 times. Discovery Space’s
first design competition, in partnership with
Autodesk, focused on a space launcher
and received over 900 entries from students
in 35 countries. 2018 also marked theAirbus Foundation’s 10th anniversary.

Eyeing deforestation through satellites
To help food companies monitor
deforestation in their supply chains, Airbus,
along with non-profit organisation The Forest
Trust, and Netherlands-based SarVision,developed Starling, which deploys satellite
data and radar images. In 2019, Airbus
released a new version of its OneAtlaslarge-scale image-processing platformthat allows access to the Starling service.

Airbus / Annual Report 201823

Overview / Chief Financial Offcer interview

Continuous
improvement

Harald Wilhelm
Chief Financial Officer“The financial performanceof Airbus has positively
reflected our overall
strategic direction andability to consistently
deliver on commitments.”

24

Airbus / Annual Report 2018

Q. How would you assess the 2018
financial performance?
We can be pleased overall given theoperational challenges we faced. Importantly,
we achieved or exceeded all the KPIs in the2018 guidance provided to the markets.
Deliveries reached the targeted 800
commercial aircraft, with the support of the
newly integrated A220 programme. If you lookat the underlying profitability, or EBIT Adjusted,
and the free cash flow before M&A andcustomer financing, I’m happy to say we
exceeded our targets there. Of course
this was the result of some hard workby Airbus employees!

Q. What drove the big increase inunderlying profit?
Firstly, as a reminder, we adopted the IFRS 15
accounting standard in 2018 which means wehave restated the relevant figures for 2017.
In particular, the year-end backlog value of€ 460 billion is now measured under IFRS 15
and reflects an assessment of recoverability
and net transaction price for airframe andengines. The significant reduction compared
to 2017 – which has not been restated – ismainly due to the use of net prices versus
catalogue prices.
Revenues rose 8% to € 64 billion, reflecting
the record aircraft deliveries. EBIT Adjusted
increased by a healthy 83% to € 5.8 billion,
which significantly exceeded the guidance foraround € 5 billion. Importantly, the return onsales increased to 9.2% and reached 10%
in commercial aircraft alone.

What was behind this? Well, firstly there was
the strong operational performance andprogramme execution across the business.
The main driver was from commercial aircraft,where we benefitted from the much higherdeliveries of A320neos and the pricing
premium they carry compared to the previous
version. The A350 also contributed verystrongly, given the pricing improvement
and efforts on recurring cost reduction.
Improved currency hedging rates also helped.
Underlying profit at Helicopters rose thanks to
its solid programme execution, a favourable
mix and higher Super Puma deliveries.
Defence and Space also contributed
positively, again due to solid
programme execution.
Q. What drove the reported profitability
and free cash flow?
Reported EBIT came in at roughly € 5.0 billion,
including net negative Adjustments totalling€ -786 million. So, even once we hadabsorbed these Adjustments we were still
within the profit guidance set on an underlying
basis! The main elements here were a € -463
million charge which largely covers the costs
related to the A380 delivery and production
ramp-down and a net additional charge of€ -436 million connected to the A400M
programme. The latter mainly reflected
the outcome of negotiations and updated
estimates on A400M exports, escalation andsome other cost increases. All included, wewere able to deliver reported earnings per
share of € 3.94, which was up 29% over 2017.

Q. What are your main achievements
since becoming CFO in 2012?
Looking back over those years, the financial
performance of Airbus has positively reflected
our overall strategic direction and ability toconsistently deliver on commitments. Thishas been especially important following thegovernance and shareholding changes in2013 that saw the institutional shareholdingbase expand significantly.
We have roughly doubled the underlying
profitability and free cash flow and consistently
increased shareholder returns. We’ve invested
close to € 50 billion since 2012 into thebusiness if you consider R&D and capital
expenditure as well as the ramp-up ofprogrammes. And despite this we generated
roughly € 15 billion in free cash flow over thesame period! Out of that we returned about€ 9 billion via dividends and limited sharebuybacks to shareholders, before theproposed 2018 dividend payment.

EBIT Adjusted (€ billion)

5.8 83%
2017
2018

3.2*
5.8

Earnings per share1 (€)

3.94 29%
2017
2018

3.05*
3.94

1. FY 2018 Average number of shares:
775,167,941 compared to 773,772,702
in FY 2017
* 2017 figures restated for IFRS 15

Q. Do you have a message foryour successor?
I wish Dominik Asam all the best and am
sure he’ll find the world of aerospace just as
fascinating as I’ve found it all these years. Just
looking at his track record in the technology
sector, the financial side of Airbus will be incapable hands.

Harald Wilhelm
Chief Financial Officer

Free cash flow before M&A and customer
financing was largely stable at € 2.9 billion,
reflecting the record deliveries and our strong
focus on working capital and capex. That
performance came despite the cash dilution
from the A220 and the burden from the
A400M programme. This gives you anidea about the cash generation potential
in the business.
Ultimately, the Board was able to propose
a double-digit percentage increase in
the dividend to € 1.65 per share. This
corresponds to a payout ratio of 42%, in linewith our commitment to sustainable dividend
growth. And showing our growth trajectory,
for 2019 we target an increase in EBIT
Adjusted of approximately 15% compared
to 2018 and free cash flow before M&A andcustomer financing of about € 4 billion.

For more detailed financial
information please refer toour Information Document
and Financial Statements

Airbus / Annual Report 201825

Overview / Airbus

AirbusAirbus delivered 800 commercial aircraft in 2018, meeting its target and setting
a new company record. Deliveries of A320neo Family and A350 XWB aircraft
accelerated, while the A220 joined the Airbus line-up.
aircraft. A320 Family production is on track
to reach the targeted monthly rate of 60 by
mid-2019. To support the ramp-up, a fourth
A320 production line was opened in Hamburg
while the larger BelugaXL transport aircraft
made its first flight.

Deliveries (units)

800(2017: 718)

Guillaume Faury**
President Airbus Commercial Aircraft

Net orders (units)

747(2017: 1,109)

As overall production continued toramp-up, deliveries increased for the
16th year in a row despite operational
challenges. Ninety-three customers
received a total of 800 aircraft,compared to 718 deliveries in 2017.
The A220 programme was successfully
integrated into Airbus as of 1 July 2018.

Order backlog (units)

7,577(2017: 7,265)

External revenues by activity
Platforms
94%

Showing the underlying health of thecommercial aircraft market, the book-to-billratio by units was close to 1 with 747 netorders booked (2017: 1,109). Including 480
A220s, the order backlog reached an industry
record of 7,577 aircraft at year-end. However,
due to the lack of airline demand productionof the A380 is being wound down.

Services
6%

Revenues increased by 10% to € 48.0 billion(2017 restated: € 43.5 billion), mainly reflecting
the higher aircraft deliveries. EBIT Adjusted
rose 102% to € 4.8 billion (2017 restated:€ 2.4 billion) also reflecting the recorddeliveries. The strong profit improvementcompared to 2017 was driven by progresson the learning curve and pricing for theA350 as well as the A320neo ramp-up andpricing premium. Currency hedging rates
also contributed favourably. Reported
EBIT included the charge related to theA380 programme.

Deliveries by programme (units)
A320
78%
A350
12%
A330
6%
A220
3%
A380
2%

Key financial figures(€ million)

2018

2017

ChangeOrder Intake (net)41,519N/A

N/A

Order Book

411,659

N/A

N/A

Revenues

47,97043,486*+10%+20%

R&D Expenses

2,214

1,842

EBIT Adjusted

4,808

2,383* +102%* Restated for IFRS 15** Appointed in February 2018 and proposed as future
Airbus CEO

26

Airbus / Annual Report 2018

Ramp-up and transition continues
The single-aisle production ramp-up andtransition to the NEO version continued,
with annual A320neo Family deliveries
outnumbering A320ceo deliveries for the firsttime. A320neo Family deliveries more thandoubled to 386 aircraft, up from 181 in 2017.
This was despite initial engine shortages
which meant deliveries were back-loaded tothe second half of the year. The first A321LR
was delivered, offering operators the capability
to fly long-range routes with a single-aisle

Deliveries also included the first three
A330-900s while the flight test campaign forthe smaller A330-800 commenced. The A350
XWB programme delivered 93 aircraft, 15 morethan the previous year (2017: 78). Deliveries ofthe longer fuselage A350-1000 commenced,
with 14 handed over during the year.
The A350-900 Ultra Long Range variant also
went into service. Hitting the monthly A350
production target of 10 aircraft in the fourth
quarter was an important industrial milestone.
Welcoming the A220 aircraft
The A220, formerly known as the ‘C Series’,
joined Airbus’ line-up of aircraft in July. Its
A220-100 and A220-300 variants
complement the A320 Family. In January
2019, construction began on a new A220
assembly line in Mobile, USA, adding to theexisting Mirabel, Canada, production line.

12
1. A320neo Family deliveries increased sharply
2. Flight testing of the A330-800 commenced

Key achievements 2018
– Deliveries increased for the 16th
successive year to 800 aircraft– A220 integrated into Airbus, enhancing
the product portfolio– Order backlog reached 7,577 aircraft,including the A220
– A total of 93 A350s were delivered,including 14 A350-1000s– A350 monthly production rate of 10
aircraft reached in the fourth quarter– The first A330-900s were delivered, with
the A330-800 making its maiden flight

Key priorities 2019
– Plan and deliver reliably on
operational targets– Meet key programme milestones– Achieve sales targets and focus
on strategic sales campaigns– Deliver financial KPIs
– Pursue digital transformation acrossdesign, manufacturing and services

Commercial aircraft deliveries reached
a new record in 2018

Airbus / Annual Report 201827

Overview / Airbus Helicopters

Airbus Helicopters
Airbus Helicopters booked increased orders despite a challenging environment for
the industry. It retained its global leadership in the civil and parapublic sector, while
growing its military market share. Pioneering new programmes passed key milestones.
Deliveries (units)356(2017: 409)

Bruno Even**
Chief Executive Officer,
Airbus Helicopters

Net orders (units)381(2017: 335)

Airbus Helicopters attracted a higher
number of orders, with a book-to-bill ratio
above 1 in terms of both value and units.
Net orders rose 14% to 381 units (2017:335 units) and included 15 orders for the
next-generation H160 and 29 NH90s.
Military sales also included 51 additional
Lakota light utility helicopters for the
US Army and four H225Ms for Thailand.

Order backlog (units)717(2017: 692)

External revenues by activity
Platforms
59%

Anticipating the future of aviation, Helicopters’
pioneering programmes achieved key
milestones. The CityAirbus electric vertical
take-off and landing (eVTOL) rotorcraft passed
the power-on and ground testing stages,
ahead of its maiden flight. Meanwhile,
the VSR700 unmanned aerial systemdemonstrator flew for the first time and theRacer high-speed demonstrator passed
the preliminary design review milestone.

Revenues declined by 6% to € 5.9 billion(2017 restated: € 6.3 billion), including thenegative perimeter impact on revenues fromthe sale of Vector Aerospace in late 2017.
On a comparable perimeter, revenues werestable despite the lower number of deliveries.
EBIT Adjusted rose 54% to € 380 million(2017 restated: € 247 million), reflecting higher
Super Puma Family deliveries, favourable mix
and solid underlying programme execution.

Services
41%

External revenues by sector
Civil
51%

Benefitting from a broad footprint
Airbus Helicopters’ performance in the year
also reflected its broad international footprint.
The first of 100 H135 helicopters under aframework agreement with China weredelivered in Qingdao, where a dedicated
final assembly line will service the domestic
market for civil and parapublic helicopters.
Additionally, the Hong Kong Government
Flying Service took delivery of the first
H175s configured for public services.

Defence49%

Key financial figures
2018

2017

ChangeOrder Intake (net)

6,339

N/A

N/A

Order Book

14,943

N/A

N/A

Revenues

5,934

6,335*-6%

R&D Expenses

315

306

+3%

EBIT Adjusted

380

247*

+54%

(€ million)

Advancing innovation
The first H160 in serial configuration rolled off
the new assembly line in Marignane, France,and conducted its maiden flight. This serial
version joined three prototypes, which havealready accumulated over 1,000 flight hours,in the final steps of the flight test campaign.
Certification for the H160 is due in 2019.

1

2* Restated for IFRS 15** Succeeded Guillaume Faury as Airbus Helicopters
CEO in April 201828

Airbus / Annual Report 2018

1. Military order intake included the H225M
2. Digitalisation is a key priority for Airbus
Helicopters

Key achievements 2018
– Strong order intake, with book-to-bill
above 1 and first H160 orders– Share of the military helicopter
market increases– Pioneering programmes such as
CityAirbus passed key milestones– First serial H160 takes to the skies
ahead of certification

Key priorities 2019
– Deliver on our commitments andachieve key programme milestones– Strengthen our focus on Quality anddeliver our Aviation Safety commitment– Deliver financial KPIs andboost competitiveness– Achieve key milestones for demonstratorsand prepare technological bricks for
future platforms– Roll out digital road-map for customers,
operations and employees

Airbus Helicopters delivereda total of 356 rotorcraft

Airbus / Annual Report 201829

Overview / Airbus Defence and Space

Airbus Defence and Space
Airbus Defence and Space secured important contract wins, with positive mid- tolong-term market perspectives. New initiatives were launched, including the next
generation combat aircraft, while progress was made on the A400M.
A400M deliveries (units)

17(2017: 19)

Dirk Hoke
Chief Executive Officer,
Airbus Defence and SpaceNet order intake (€ billion)

8.4(2017: N/A)

Airbus Defence and Space recorded abook-to-bill of around 0.8 with net orderintake of € 8.4 billion, supported by key
contract wins. These included
Eurofighter for Qatar, four A330 MRTT
tankers, Heron TP drones for Germany
as well as two new generation
telecommunication satellites.

Order backlog (€ billion)

35.3(2017: N/A)

External revenues by activity
Platforms
70%

Revenues increased by 4% to € 11.0 billion(2017 restated: € 10.6 billion), supported by
the Space Systems and Military Aircraft
activities. EBIT Adjusted increased by 15% to€ 935 million (2017 restated: € 815 million),
mainly reflecting solid programme execution.
On a reported basis, EBIT was supported by
the net capital gain from the disposal of the
Airbus DS Communications, Inc. businessearly in the year.

Services
30%

External revenues by business line
Military
Aircraft
52%
Space
Systems27%
CIS* & Others
21%* Communications, Intelligence & Security

Key financial figures
2018

2017

ChangeOrder Intake (net)

8,441

N/A

N/A

Order Book

35,316

N/A

N/A

Revenues

11,063

10,596*+4%

R&D Expenses

328

322

+2%

EBIT Adjusted

935

815*

+15%

(€ million)* Restated for IFRS 1530

Airbus / Annual Report 2018

The A400M’s progress
A total of 17 A400M military transport aircraft
were delivered, bringing total programmedeliveries to 74 aircraft as of 31 December
2018. The Company continued with
development activities towards achieving therevised capability roadmap. Retrofit activities
are progressing in line with the customer
agreed plan. Following the Declaration ofIntent signed in February 2018, negotiations
on the contract amendment were concluded
with the government customers prior to theirdomestic approval processes.

Well positioned for future growth
Airbus Defence and Space has been
reshaped in recent years to be morecompetitive, with new initiatives launched in2018 to capture future growth. Significantly,
an initial landmark agreement was signedwith Dassault Aviation for the Future Combat
Air System (FCAS) programme. Elsewhere,
an agreement was signed with Lockheed
Martin to jointly explore opportunities to meetgrowing demand for aerial refuelling for US
defence customers. The first serial production
facility for the solar-powered Zephyr S HAPS(High Altitude Pseudo-Satellite) was opened.
In Space, the first European Service Module
for NASA’s Orion spacecraft was delivered
while the BepiColombo spacecraft was
successfully launched on its mission to
Mercury. OneWeb Satellites inaugurated
its assembly line in Toulouse ahead of thefirst launch of satellites for the OneWeb
constellation in 2019.

1

2
1. Four A330 MRTT tankers were ordered in 2018
2. A serial production facility was opened for
the Zephyr

Key achievements 2018
– Key contract wins: Eurofighter Qatar,
four MRTTs, and new generation
telecommunication satellites– Airbus and Dassault Aviation join forceson FCAS programme– Airbus and Lockheed Martin sign aerial
refuelling Memorandum of Agreement– A400M re-baselining negotiated– First module for Orion spacecraft delivered

Key priorities 2019
– Meet critical development milestones
on quality, on time, on cost
– Secure key European defence
initiatives – European MALE, FCAS
– Develop new businesses and newmarkets including digital services– Deliver financial KPIs
– Accelerate deployment of digitalsolutions with a focus on Digital
Design, Manufacturing and Services

Construction of the European Space Agency’s
ExoMars rover began at Airbus Defence andSpace in Stevenage

Airbus / Annual Report 201831

Overview / Share information

Shareinformation
In 2018, Airbus SE’s share price closed up 1% at € 83.96.
The Company outperformed wider markets and most defence
peers, which declined 13% and 7% respectively in the same period.

Capital structure(As of 31 December 2018)
Free foat*
74%
SOGEPA(French State)
11%
GZBV(German State)
11%
SEPI(Spanish State)
4%* Includes shares held by the Company itself

Financial calendar
Full-Year 2018 results release:
14 February 2019
Annual General Meeting 2019:10 April 2019
First Quarter 2019 results release:
30 April 2019

After opening at € 82.75 in January, Airbus
SE shares climbed by 26% to € 104.56 during
the first half of the year. In early 2018, theshare price increase was mainly driven by theCompany’s strong 2017 delivery performanceand solid Full-Year (FY) 2017 results. Shares
headed lower thereafter following engine
delivery delays but then rebounded following
Q1 2018 results, mainly driven by the FY 2018
guidance confirmation despite the engine
delays. The commercial performance during
the Farnborough International Airshow camein ahead of expectations and helped pushshares up to € 105.98 in July.

Macroeconomic uncertainty and concerns
about shrinking global growth continued toweigh on shares throughout November andDecember. Airbus SE shares were additionallyimpacted in December by news flow aroundongoing compliance investigations.
With an annual increase of 1%, Airbus SE
shares outperformed the Eurostoxx 600(-13%) and the CAC 40 (-11%).

Airbus SE shares reached a then all-time highof € 111.16 in late July after the Half-Year
results confirmed guidance and beat
expectations. The share price remained
broadly stable throughout the summer and in
September began to decline in line with wider
markets as investor sentiment was impacted
by global macroeconomic events.

Half-Year 2019 results release:
31 July 2019
Nine-Month 2019 results release:
30 October 2019
Investor Relations andFinancial Communication

Share price evolution

E-mail: ir@airbus.com

190%

200%

2016

2017

2018

CAC 40 INDEX

Dec-2017
Dec-2018
MSCI World Aerospace & Defence

180%

Website: www.airbus.com

170%
160%
150%
140%
130%
120%
110%
100%
90%
80%
70%
Dec-2015
Airbus32

Airbus / Annual Report 2018

Dec-2016
Eurostoxx 600

Information
Document

2018

Information
Document
Airbus SE is a European public company (Societas Europaea),
with its seat in Amsterdam, The Netherlands, which is listed in
France, Germany and Spain.
As a result of the relabelling to a single Airbus brand, Airbus SE
together with its subsidiaries is referred to as “the Company”
and no longer the Group. The segment formerly known
as “Airbus Commercial Aircraft” is referred to as “Airbus”.
See “— Management’s Discussion and Analysis of Financial
Condition and Results of Operations — 2.1.1.2 Reportable
Business Segments”.
In addition to historical information, this Information Document
includes forward-looking statements. The forward-looking
statements are generally identiﬁed by the use of forward-looking
words, such as “anticipate”, “believe”, “estimate”, “expect”,

02

Airbus / Information Document 2018

“intend”, “plan”, “project”, “predict”, “will”, “should”, “may” orother variations of such terms, or by discussion of strategy.
These statements relate to the Company’s future prospects,
developments and business strategies and are based on
analyses or forecasts of future results and estimates of amounts
not yet determinable. These forward-looking statements
represent the view of the Company only as of the dates
they are made, and the Company disclaims any obligation
to update forward-looking statements, except as may beotherwise required by law. The forward-looking statements inthis Information Document involve known and unknown risks,
uncertainties and other factors that could cause the Company’s
actual future results, performance and achievements to differ
materially from those forecasted or suggested herein. These
include changes in general economic and business conditions,as well as the factors described under “Risk Factors” below.

Risk Factors

1

Information on the Company’s Activities

2

Management’s Discussion and Analysisof Financial Condition and Results of Operations

3

General Description of the Company
and its Share Capital4

Corporate Governance5

Entity Responsible
for the Information Document

Airbus / Information Document 201803

ANNUAL REPORT 2018

Contents

Information Document
2018

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

Risk Factors

07

1.
2.
3.
4.

08
11
18
20

Financial Market Risks
Business-Related Risks
Legal Risks
Environmental, Health and Safety Risks

1

Informationon the Company’s Activities

23

1.1
1.1.1
1.1.2
1.1.3
1.1.4
1.1.5
1.1.6
1.1.7
1.1.8

24
24
28
36
39
45
46
46
48

Presentation of the Company
Overview
Airbus (Commercial Aircraft)
Helicopters
Defence and Space
Investments
Insurance
Legal and Arbitration Proceedings
Non-Financial Information

2

Management’s Discussion
and Analysis of Financial Condition
and Results of Operations

04

Airbus / Information Document 201871

2.1
Operating and Financial Review
2.1.1 Overview
2.1.2 Signiﬁcant Accounting Considerations,
Policies and Estimates
2.1.3 Performance Measures
2.1.4 Results of Operations
2.1.5 Changes in Total Equity(Including Non-Controlling Interests)
2.1.6 Liquidity and Capital Resources
2.1.7 Hedging Activities

72
73

85
86
89

2.2

Statutory Auditor Fees

90

2.3

Information Regarding the Statutory Auditor

90

76
77
81

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FINANCIAL STATEMENTS 2018

1

1

2

3

General Description of the Company
and its Share Capital

4

5

2

3

4

5

4

93

3.1
3.1.1

General Description of the Company
94
Commercial and Corporate Names,
Seat and Registered Ofﬁce
94
3.1.2 Legal Form
94
3.1.3 Governing Laws and Disclosures
94
3.1.4 Date of Incorporation and Duration of the Company 95
3.1.5 Objects of the Company
96
3.1.6 Commercial and Companies Registry96
3.1.7 Inspection of Corporate Documents
96
3.1.8 Financial Year96
3.1.9 Allocation and Distribution of Income
96
3.1.10 General Meetings
97
3.1.11 Disclosure of Holdings
98
3.1.12 Mandatory Disposal
99
3.1.13 Mandatory Offers
100
3.2
3.2.1
3.2.2
3.2.3

3

General Description of the Share Capital
Issued Share Capital
Authorised Share Capital
Modiﬁcation of Share Capitalor Rights Attached to the Shares
3.2.4 Securities Granting Accessto the Company’s Share Capital
3.2.5 Changes in the Issued Share Capital

101
101
101

102
103

3.3
3.3.1
3.3.2
3.3.3
3.3.4
3.3.5
3.3.6
3.3.7

Shareholdings and Voting Rights
Shareholding Structure at the End of 2018
Relationships with Principal Shareholders
Form of Shares
Changes in the Shareholding of the Company
Persons Exercising Control over the Company
Simpliﬁed Group Structure Chart
Purchase by the Company of its Own Shares

104
104
105
107
108
108
108
110

3.4
3.4.1
3.4.2
3.4.3
3.4.4

Dividends
Dividends and Cash Distributions Paid
Dividend Policy of the Company
Unclaimed Dividends
Taxation

112
112
112
112
112

101

Corporate
Governance

115

4.1
Management and Control
4.1.1 Corporate Governance Arrangements
4.1.2 Dutch Corporate Governance Code,“Comply or Explain”
4.1.3 Enterprise Risk Management System
4.1.4 Internal Audit
Interests of Directors and Principal
Executive Ofﬁcers
4.2.1 Remuneration Policy
4.2.2 Long-Term Incentives Granted to the Chief
Executive Ofﬁcer
4.2.3 Related Party Transactions

116
116
134
135
137

4.2

4.3
4.3.1
4.3.2
4.3.3

138
138
150
151

Employee Proﬁt Sharing and Incentive Plans 151
Employee Proﬁt Sharing and Incentive Agreements 151
Employee Share Ownership Plans
151
Long-Term Incentive Plans
153

5

Entity Responsible
for the Information Document
5.1
5.2
5.3
5.4
5.5

Entity Responsible
for the Information Document
Statement of the Entity Responsible
for the Information Document
Information Policy
Undertakings of the Company regarding
Information
Signiﬁcant Changes

159

160
160
161
161
161

Airbus / Information Document 201805

Risk Factors

06

Airbus / Information Document 2018

Risk Factors
1.

Financial Market Risks

08

2.

Business-Related Risks

11

3.

Legal Risks

18

4.

Environmental, Health and Safety Risks

20

Airbus / Information Document 201807

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Risk Factors /1 Financial Market Risks

INFORMATION DOCUMENT 2018

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5

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3

4

5

The Company is subject to many risks and uncertainties that may affect its ﬁnancial performance. The business, resultsof operations or ﬁnancial condition of the Company could be materially adversely affected by the risks described
below. These are not the only risks the Company faces. Additional risks and uncertainties not presently known to theCompany or that it currently considers immaterial may also impair its business and operations.

1.

Financial Market Risks

Global Economic Concerns
As a global company, the Company’s operations and performance
depend signiﬁcantly on market and economic conditions in
Europe, the US, Asia and the rest of the world. Market disruptions
and signiﬁcant economic downturns may develop quickly due to,among other things, crises affecting credit or liquidity markets,regional or global recessions, sharp ﬂuctuations in commodity
prices (including oil), currency exchange rates or interest rates,
inflation or deflation, sovereign debt and bank debt rating
downgrades, restructurings or defaults, or adverse geopoliticalevents (including the impact of Brexit, discussed below, US policy
and elections in Europe). Any such disruption or downturn could
affect the Company’s activities for short or extended periods andhave a negative effect on the Company’s ﬁnancial condition andresults of operations.
On 29 March 2017, the UK triggered Article 50 of the Lisbon
Treaty, the mechanism to leave the European Union (“Brexit”),
before having achieved a roadmap for the complex negotiations.
The negotiation period ends on 29 March 2019 and if noagreement is ratiﬁed by this time, the UK leaves the European
Union with effect from this date and is considered as a third
country without a privileged relationship with the European
Union. Although the terms of the UK’s post-Brexit relationshipwith the EU are still unknown, the Company, its operations andsupply chain may be disrupted by this uncertainty and may beaffected by potentially divergent national laws and regulations
between the EU and the UK. This will in particular include but
not limited to:
greater restrictions on the import and export of goods andservices between the UK and EU countries in which theCompany operates along with increased regulatory and legal
complexities;changes in customs regime between the UK and the European
Union, which could result in signiﬁcant changes at borders
and customs controls. An insufﬁcient level of preparedness
could also signiﬁcantly delay the import and export of goods
including goods which are transferred between Airbus (andits suppliers’) entities in the UK to Airbus (and its suppliers’)
entities in the EU;
limitations on the free movement of people and skilled labour
are also possible.

--

The administration of US President Donald Trump has introduced
greater uncertainty with respect to US tax and trade policies,
tariffs and government regulations affecting trade between the
US and other countries.

08

Airbus / Information Document 2018

Although the impact of these geopolitical events cannot
reasonably be assessed, the consequences could have anegative effect on the Company’s ﬁnancial condition and resultsof operations.
If economic conditions were to deteriorate, or if more pronounced
market disruptions were to occur, there could be a new orincremental tightening in the credit markets, low liquidity, andextreme volatility in credit, currency, commodity and equity
markets. This could have a number of effects on the Company’sbusiness, including:requests by customers to postpone or cancel existing orders
for aircraft (including helicopters) or decisions by customers toreview their order intake strategy due to, among other things,
lack of adequate credit supply from the market to ﬁnanceaircraft purchases or change in operating costs or weak levelsof passenger demand for air travel and cargo activity moregenerally;an increase in the amount of sales ﬁnancing that the Company
must provide to its customers to support aircraft purchases,
thereby increasing its exposure to the risk of customer defaults
despite any security interests the Company might have in theunderlying aircraft;
variations in public spending for defence, homeland security
and space activities;
ﬁnancial instability, inability to obtain credit or insolvency on thepart of key suppliers and subcontractors, thereby impacting
the Company’s ability to meet its customer obligations in asatisfactory and timely manner;continued de-leveraging as well as mergers, rating
downgrades and bankruptcies of banks or other ﬁnancial
institutions, resulting in a smaller universe of counterparties
and lower availability of credit, which may in turn reduce theavailability of bank guarantees needed by the Company for its
businesses or restrict its ability to implement desired foreign
currency hedges;
default of investment or derivative counterparties and otherfinancial institutions, which could negatively impact theCompany’s treasury operations including the cash assets of
the Company; anddecreased performance of the Company’s cash investments
due to low and partly negative interest rates.

-

-

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FINANCIAL STATEMENTS 2018

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1

The Company’s financial results could also be negatively
affected depending on gains or losses realised on the saleor exchange of ﬁnancial instruments; impairment charges
resulting from revaluations of debt and equity securities andother investments; interest rates; cash balances; and changes
in fair value of derivative instruments. Increased volatility inthe ﬁnancial markets and overall economic uncertainty would

2

Risk
3
4 Factors
5 /1 Financial Market Risks
Risk Factors /1 Financial Market Risks

2

3

4

5

increase the risk of the actual amounts realised in the future on
the Company’s ﬁnancial instruments differing signiﬁcantly fromthe fair values currently assigned to them.
In the Commercial Aircraft activities, revision clauses in sales
contracts and in supplier contracts can be based on different
indexes and therefore can evolve differently.

Foreign Currency Exposure
The Company is exposed to certain price risks such as foreignexchange rate as well as interest rate risks, changes in commodity
prices and in the price of its own stocks. Adverse movementsof these prices may jeopardise the Company’s proﬁtability if
not hedged. Airbus intends to generate proﬁts only from its
operations and not through speculation on the development ofsuch prices. The Company uses hedging strategies to manage
and minimise the impact of such price ﬂuctuations on its proﬁts,
including foreign currency derivative contracts, interest rateand equity swaps and other non-derivative ﬁnancial assets or
liabilities denominated in a foreign currency.
The major part of its hedging activities is devoted to foreignexchange risks, as a signiﬁcant portion of the Company’s
revenues is denominated in US dollars, while a major portionof its costs is incurred in euro, and to a lesser extent, in pounds
sterling. Consequently, to the extent that the Company does notuse ﬁnancial instruments to hedge its exposure resulting fromthis foreign currency mismatch, its proﬁts will be affected bymarket changes in the exchange rate of the US dollar against
these currencies. The Company has therefore implemented along-term hedging portfolio to help secure the rates at which
a portion of its future US dollar-denominated revenues (arising
primarily at Airbus) are converted into euro or pound sterling.
There are complexities inherent in determining whether andwhen foreign currency exposure of the Company will materialise,in particular given the possibility of unpredictable revenue
variations arising from order cancellations, postponements ordelivery delays. The Company may also have difﬁculty in fully
implementing its hedging strategy if its hedging counterparties
are unwilling to increase derivatives risk limits with the Company,
and is exposed to the risk of non-performance or default by
these hedging counterparties. The exchange rates at which
the Company is able to hedge its foreign currency exposure
may also deteriorate, as the euro could appreciate against
the US dollar for some time as has been the case in the past
and as higher capital requirements for banks result in higher
credit charges for uncollateralised derivatives. Accordingly,*

the Company’s foreign currency hedging strategy may notprotect it from signiﬁcant changes in the exchange rate of the
US dollar to the euro and the pound sterling, in particular overthe long term, which could have a negative effect on its ﬁnancial
condition and results of operations. In addition, the portion of
the Company’s US dollar-denominated revenues that is nothedged in accordance with the Company’s hedging strategy
will be exposed to ﬂuctuations in exchange rates, which may
be signiﬁcant.
Currency exchange rate fluctuations in currencies otherthan the US dollar in which the Company incurs its principal
manufacturing expenses (mainly the euro) may affect the abilityof the Company to compete with competitors whose costs
are incurred in other currencies. This is particularly true withrespect to ﬂuctuations relative to the US dollar, as many of theCompany’s products and those of its competitors (e.g., in the
defence export market) are priced in US dollars. The Company’s
ability to compete with competitors may be eroded to the extent
that any of the Company’s principal currencies appreciates
in value against the principal currencies of such competitors.
The Company’s consolidated revenues, costs, assets andliabilities denominated in currencies other than the euro aretranslated into the euro for the purposes of compiling its ﬁnancial
statements. Changes in the value of these currencies relative
to the euro will therefore have an effect on the euro value of theCompany’s reported revenues, costs, earnings before interestand taxes (“EBIT”), other ﬁnancial results, assets, liabilities andequity.
See “— Management’s Discussion and Analysis of Financial
Condition and Results of Operations — 2.1.7 Hedging Activities”
for a discussion of the Company’s foreign currency hedging
strategy. See “— Management’s Discussion and Analysisof Financial Condition and Results of Operations — 2.1.2.3
Accounting for Hedged Foreign Exchange Transactions in
the Financial Statements” for a summary of the Company’s
accounting treatment of foreign currency hedging transactions.

Unless otherwise indicated, EBIT ﬁgures presented in this report are Earning before Interest and Taxes. It is identical to Proﬁt before ﬁnance cost and income taxes
as deﬁned by IFRS Rules.

Airbus / Information Document 201809

ANNUAL REPORT 2018
Risk Factors /1 Financial Market Risks
Risk Factors /1 Financial Market Risks

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

Sales Financing Arrangements
In support of sales, the Company may agree to participate inthe ﬁnancing of selected customers. As a result, the Company
has a portfolio of leases and other ﬁ nancing arrangementswith airlines and other customers. The risks arising from theCompany’s sales ﬁnancing activities may be classiﬁed into two
categories: (i) credit risk, which relates to the customer’s ability
to perform its obligations under a ﬁnancing arrangement, and(ii) aircraft value risk, which primarily relates to unexpected
decreases in the future value of aircraft. Measures taken by
the Company to mitigate these risks include optimised ﬁnancing
and legal structures, diversiﬁcation over a number of aircraft
and customers, credit analysis of ﬁ nancing counterparties,
provisioning for the credit and asset value exposure, andtransfers of exposure to third parties. No assurances may
be given that these measures will protect the Company fromdefaults by its customers or signiﬁcant decreases in the valueof the ﬁnanced aircraft in the resale market.
The Company’s sales ﬁnancing arrangements expose it toaircraft value risk, because it generally retains security interests
in aircraft for the purpose of securing customers’ performanceof their ﬁnancial obligations to the Company, and/or because it
may guarantee a portion of the value of certain aircraft at certain
anniversaries from the date of their delivery to customers. Under
adverse market conditions, the market for used aircraft could
become illiquid and the market value of used aircraft could
signiﬁcantly decrease below projected amounts. In the event of aﬁnancing customer default at a time when the market value for aused aircraft has unexpectedly decreased, the Company would
be exposed to the difference between the outstanding loan

amount and the market value of the aircraft, net of ancillary costs(such as maintenance and remarketing costs, etc.). Similarly, if
an unexpected decrease in the market value of a given aircraft
coincided with the exercise window date of an asset value
guarantee with respect to that aircraft, the Company would be
exposed to losing as much as the difference between the market
value of such aircraft and the guaranteed amount, though suchamounts are usually capped. The Company regularly reviews
its exposure to asset values and adapts its provisioning policyin accordance with market ﬁndings and its own experience.
However, no assurance can be given that the provisions taken by
the Company will be sufﬁcient to cover these potential shortfalls.
Through the Airbus Asset Management department or as aresult of past ﬁnancing transactions, the Company is the ownerof used aircraft, exposing it directly to ﬂuctuations in the market
value of these used aircraft.
In addition, the Company has outstanding backstop
commitments to provide ﬁnancing related to orders on Airbus’
and ATR’s backlog. While past experience suggests it is unlikelythat all such proposed ﬁnancing actually will be implemented,
the Company’s sales ﬁnancing exposure could rise in line with
future sales growth depending on the agreement reachedwith customers. Despite the measures taken by the Company
to mitigate the risks arising from sales ﬁnancing activities as
discussed above, the Company remains exposed to the risk ofdefaults by its customers or signiﬁcant decreases in the valueof the ﬁnanced aircraft in the resale market, which may havea negative effect on its future ﬁnancial condition and results ofoperations.

Counterparty Credit
In addition to the credit risk relating to sales ﬁnancing as
discussed above, the Company is exposed to credit risk
to the extent of non-performance by its counterparties forﬁnancial instruments, such as hedging instruments and cash
investments. However, the Company has policies in place to
avoid concentrations of credit risk and to ensure that credit risk
exposure is limited.
Counterparties for transactions in cash, cash equivalents andsecurities as well as for derivative transactions are limited tohighly rated ﬁnancial institutions, corporates or sovereigns. The
Company’s credit limit system assigns maximum exposurelines to such counterparties, based on a minimum credit rating
threshold as published by Standard & Poor’s and Moody’s.
If neither is present Fitch ratings is used. Besides the credit
rating, the limit system also takes into account fundamental
counterparty data, as well as sector and maturity allocations
and further qualitative and quantitative criteria such as credit risk
indicators. The credit exposure of the Company is reviewed ona regular basis and the respective limits are regularly monitored
and updated. The Company also seeks to maintain a certain levelof diversiﬁcation in its portfolio between individual counterparties
as well as between financial institutions, corporates and10

Airbus / Information Document 2018

sovereigns in order to avoid an increased concentration of credit
risk on only a few counterparties.
However, there can be no assurance that the Company will not
lose the beneﬁt of certain derivatives or cash investments in caseof a systemic market disruption. In such circumstances, thevalue and liquidity of these ﬁnancial instruments could decline
and result in a signiﬁcant impairment, which may in turn havea negative effect on the Company’s ﬁnancial condition andresults of operations.
Moreover, the progressive implementation of new ﬁ nancial
regulations (MiFiD II / MiFIR, CRD4, Bank Restructuring
Resolution Directive, etc.) will have an impact on the businessmodel of banks (for example, the split between investmentbanking and commercial banking activities) and on thecapital structure and cost of such banks’ activities in relation
to over-the-counter derivatives, and therefore on the funding
consequences of central clearing and collateralisation of overthe-counter derivatives for corporations like the Company.
This may ultimately increase the cost and reduce the liquidityof the Company’s long-term hedges, for example, as banks
seek to either pass-on the additional costs to their corporate
counterparties or withdraw from low-proﬁt businesses altogether.

ANNUAL REPORT 2018

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FINANCIAL STATEMENTS 2018

1

1

2

Risk
3
4 Factors
5 /2 Business-Related Risks
Risk Factors /2 Business-Related Risks

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4

5

Pension Commitments
The Company participates in several pension plans for both
executive as well as non-executive employees, some of which
are underfunded. For information related to these plans,
please refer to the “Notes to the IFRS Consolidated Financial
Statements — Note 29.1: Post-employment Benefits —Provisions for Retirement Plans”. Although the Company hasrecorded a provision in its balance sheet for its share of theunderfunding based on current estimates, there can be noassurance that these estimates will not be revised upward in
the future, leading the Company to record additional provisions
in respect of such plans.
Necessary adjustments of such provisions include but are notlimited to (i) the discount factor (dependent in part on interest

rates) and the inﬂation rate applied to calculate the net present
value of the pension liabilities, (ii) the performance of the asset
classes which are represented in the pension assets, and(iii) additional cash injections contributed by the Company fromtime to time to the pension assets. The Company has taken
measures to reduce potential losses on the pension assets
and to better match the characteristics of the pension liabilities
with those of the pension assets as a long-term objective.
Nevertheless, any required additional provisions would have anegative effect on the Company’s total equity (net of deferredtaxes), which could in turn have a negative effect on its futureﬁnancial condition.

Tax Exposure
As a multinational group with operations and sales in various
jurisdictions, the Company is subject to a number of different
tax laws. It is the Company’s objective to adhere to the relevant
tax regulations and to ensure tax compliance in each country.
The Company’s policy is to have its economic results taxed
in a compliant manner in all countries where it creates value.
The Company’s decisions on its structure and on the transactions
it enters into are based on its own fair interpretations of applicable
tax laws and regulations. The Company aims for certainty on
the tax positions it adopts, though in a complex environment
with increasing uncertainty, there can be no assurance that the
tax authorities will not seek to challenge such interpretations,consequently the Company or its afﬁliates could become subject
to tax claims.

2.

The Company will always act to minimise the risk associatedwith a tax position, while aiming for tax efﬁciency as described
below. Where tax law is unclear or subject to interpretation,
the Company may decide to take a written opinion from an
independent third-party tax advisor, detailing the facts, risks andconclusions, so as to support the decision-making process, or to
engage with tax authorities to secure alignment on interpretationof tax rules. The level of risk will be deemed to be acceptable
where strong technical arguments exist to support the position
and where stakeholders have been consulted appropriately
according to the value at stake.
In case weaknesses may be identiﬁed in tax processes, theCompany will act to remediate the issues in a timely manner toensure continued compliance.

Business-Related Risks

Commercial Aircraft Market Factors
Historically, order intake for commercial aircraft has shown
cyclical trends, due in part to changes in passenger demand
for air travel and the air cargo share of freight activity, which arein turn driven by a range of economic variables, such as grossdomestic product (“GDP”) growth, private consumption levels
or working age population size. Other factors, however, play animportant role in determining the market for commercial aircraft,such as (i) the average age and technical obsolescence of theﬂeet relative to new aircraft, (ii) the number and characteristics
of aircraft taken out of service and parked pending potential
return into service, (iii) passenger and freight load factors,(iv) airline pricing policies and resultant yields, (v) airline ﬁnancial

health and the availability of third party ﬁnancing for aircraft
purchases, (vi) evolution of fuel price, (vii) regulatory environment,(viii) environmental constraints imposed upon aircraft operations,such as the Carbon Offsetting and Reduction Scheme forInternational Aviation (CORSIA), carbon standards and otherenvironmental taxes, and (ix) market evolutionary factors suchas the growth of low-cost passenger airline business models or
the impact of e-commerce on air cargo volumes. The market forcommercial aircraft could continue to be cyclical, and downturns
in broad economic trends may have a negative effect on its
ﬁnancial condition and results of operations.

Airbus / Information Document 201811

ANNUAL REPORT 2018
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FINANCIAL STATEMENTS 2018

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1

The commercial helicopter market could also be inﬂuenced by anumber of factors listed above. The civil & parapublic and oil &gas market softness has led to a postponement of investmentsin the acquisition of new platforms by offshore helicopter players
and a reduction of ﬂight hours. Structural changes of the oil &

2

3

4

5

2

3

4

5

gas segment are not anticipated at current oil price levels. The
uncertainty on the lead time of the market recovery may havean impact on Airbus Helicopters ﬁnancial results and could leadto cancellations or loss of bookings and services.

Physical Security, Terrorism, Pandemics and Other
Catastrophic Events
Past terrorist attacks and the spread of disease (such as theH1N1 ﬂu pandemic or the Ebola epidemic in 2013-2016) havedemonstrated that such events may negatively affect public
perception of air travel safety, which may in turn reduce demand
for air travel and commercial aircraft. The outbreak of wars,
riots or political unrest or uncertainties may also affect thewillingness of the public to travel by air. Furthermore, major
aircraft accidents may have a negative effect on the public’s orregulators’ perception of the safety of a given class of aircraft,a given airline, form of design or air traffic management.
As a result of such factors, the aeronautic industry may be
confronted with sudden reduced demand for air transportation
and be compelled to take costly security and safety measures.
The Company may therefore suffer from a decline in demand

for all or certain types of its aircraft or other products, and theCompany’s customers may postpone delivery or cancel orders.
In addition to affecting demand for its products, catastrophic
events could disrupt the Company’s internal operations or
its ability to deliver products and services. Disruptions may
be related to threats to infrastructure, personnel security andphysical security and may arise from terrorism, drone attacks,
natural disasters, damaging weather, and other crises. Any
resulting impact on the Company’s production, services orinformation systems could have a signiﬁcant adverse effecton the Company’s operations, ﬁnancial condition and resultsof operations as well as on its reputation and on its products
and services.

Cyber Security Risks
The Company’s extensive information and communications
systems are exposed to cyber security risks, which are rapidlychanging, and increasing in sophistication and potential
impact.
The Company is exposed to a number of different types ofpotential security risks, arising from actions that may be intentionaland hostile, accidental or negligent. Industrial espionage,
cyber-attacks including systems sabotage, data breaches(conﬁdential data, personal data and intellectual property), anddata corruption and availability (notably ransomware) are themain risks that the Company may face. Risks related to theCompany’s industrial control systems, manufacturing processes
and products are growing, with the increase of interconnectivity
and digitalisation, and with a growing gap developing between
the defences of older, relatively insecure industrial systems andthe capabilities of potential attackers as well as an increasinglycompetitive landscape in both historical and new businessesof the Company.

12

Airbus / Information Document 2018

All of the above mentioned risks are heightened in the context ofgreater use of cloud services, increasingly capable adversaries,
integration with the extended enterprise, the relatively insecure“internet of things” and the growing use in the Company’s IT
systems of sophisticated mobile devices. Social engineering isa growing threat, exacerbated by advances in machine learning.
Finally, the Company is exposed to reputational damage fromthe growing volume of false and malicious information injected
to media and social networks.
While the Company continues to make significant efforts
to prevent such risks from materialising, making targeted
investments will reduce but not eradicate likelihood and impact
through strengthening the business cyber resilience.
The materialisation of one or several of such risks could lead tosevere damage including but not limited to signiﬁcant ﬁnancial
loss, need for additional investment, contractual or reputational
performance degradation, loss of intellectual property, loss ofbusiness data and information, operational business degradation
or disruptions, and product or services malfunctions.

ANNUAL REPORT 2018

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FINANCIAL STATEMENTS 2018

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Risk
3
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5 /2 Business-Related Risks
Risk Factors /2 Business-Related Risks

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4

5

Dependence on Key Suppliers and Subcontractors
The Company is dependent on numerous key suppliers andsubcontractors to provide it with the raw materials, parts,
assemblies and systems that it needs to manufacture its
products.
The Company relies upon the good performance of its suppliers
and subcontractors to meet the obligations deﬁned under theircontracts. Supplier performance is continually monitored andassessed so that supplier development programmes can belaunched if performance standards fall below expectations.
In case of supplier non-performance a systematic review andapplication of contractual liabilities linked to contract execution
allows the Company to mitigate its ﬁnancial exposure due tothe supplier non-performance. The Company also implements
performance improvement agreements with suppliers toincentivise suppliers to sustainably restore contractual
performance levels.
In addition, the Company beneﬁts from its inherent ﬂexibility
in production lead times to compensate for a limited nonper formance of suppliers, protecting the Company’scommitments towards its customers. In certain cases, dual
sourcing is utilised to mitigate the risk. However, no absoluteassurance can be given that these measures will fully protect
the Company from non-performance of a supplier which could
disrupt production and in turn may have a negative effect on its
ﬁnancial condition and results of operations.
Changes to the Company’s production or development
schedules may impact suppliers so that they initiate claims
under their respective contracts for ﬁnancial compensation.
However the robust, long-term nature of the contracts and astructured process to manage such claims, limits the Company’s

exposure. Despite these mitigation measures, this could still
result in a negative impact on the ﬁnancial condition and resultsof operations of the Company.
As the Company’s global sourcing footprint extends, some
suppliers (or their sub-tier suppliers) may have production
facilities located in countries that are exposed to socio-politicalunrest or natural disasters which could interrupt deliveries.
Country-based risk assessment (including of applicable laws
and regulations) is performed by the Company to monitor such
exposures and to ensure that appropriate mitigation plans orfall-back solutions are available for deliveries from suppliersconsidered to be at risk. Despite these measures, the Company
remains exposed to interrupted deliveries from suppliers
impacted by such events and/or regulations, which could
have a negative effect on the ﬁnancial condition and results ofoperations of the Company.
Suppliers (or their sub-tier suppliers) may also experiencefinancial difficulties requiring them to file for bankruptcy
protection, which could disrupt the supply of materials andparts to the Company. However, ﬁnancial health of suppliers
is analysed prior to selection to minimise such exposureand then monitored during the contract period to enable theCompany to take action to avoid such situations. In exceptional
circumstances, the Company may be required to provide
ﬁnancial support to a supplier and therefore face limited credit
risk exposure. If insolvency of a supplier does occur, theCompany works closely with the appointed administrators tosafeguard contractual deliveries from the supplier. Despite thesemitigation measures, the bankruptcy of a key supplier could still
have a negative effect on the ﬁnancial condition and results ofoperations of the Company.

Industrial Ramp-Up
As a result of the large number of new orders for aircraft
recorded in recent years, the Company is in the process ofaccelerating its production in order to meet the agreed upondelivery schedules for such new aircraft. The Company’s ability
to further increase its production rate will be dependent upon avariety of factors, including execution of internal performanceplans, availability of raw materials, parts (such as aluminium,
titanium and composites) and skilled employees given the highdemand by the Company and its competitors, conversion of
raw materials into parts and assemblies, and performance by
suppliers and subcontractors (particularly suppliers of enginesand buyer-furnished equipment) who may experience resource
or ﬁnancial constraints due to ramp-up. Management of suchfactors is also complicated by the development of new aircraft
programmes in parallel, across Airbus and the two Divisions,which carry their own resource demands. Therefore, failures
relating to any or all of these factors could lead to missed ordelayed delivery commitments, and depending on the lengthof delay in meeting delivery commitments, could lead to
additional costs and customers’ rescheduling or terminating
their orders. The associated risks may increase as the Company
and its competitors announce further production rate increases.
Signiﬁcant efforts have been made to improve supply chain
stability and performance. Speciﬁc areas of risk with suppliersof engines and of cabin equipment continue to be carefully
managed.

Airbus / Information Document 201813

ANNUAL REPORT 2018
Risk Factors /2 Business-Related Risks
Risk Factors /2 Business-Related Risks

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

Technologically Advanced Products and Services
The Company offers its customers products and services
that are technologically advanced, the design, manufacturing,components and materials utilised can be complex and require
substantial integration and coordination along the supply chain.
In addition, most of the Company’s products must function
under demanding operating conditions. Throughout the lifecycleof our products, the Company performs checks and inspections,which may result in modiﬁcations, retroﬁts or other corrective
actions each of which may have an adverse effect on production,
operations, in-service performance or ﬁnancial condition. Even
though the Company believes it employs sophisticated design,
manufacturing and testing practices, there can be no assurance
that the Company’s products or services will be successfully
developed, manufactured or operated or that they will perform
as intended.
Certain of the Company’s contracts require it to forfeit part ofits expected proﬁt, to receive reduced payments, to provide a
replacement launch or other products or services, to provide
cancellation rights, or to reduce the price of subsequent sales
to the same customer if its products fail to be delivered ontime or to perform adequately. No assurances can be giventhat performance penalties or contract cancellations will not be
imposed should the Company fail to meet delivery schedules

or other measures of contract performance — in particularwith respect to new development programmes such as theA350-900 and -1000 XWB, A400M, H175 or H160 and tomodernisation programmes such as the A320neo and theA330neo. See “— Programme-Speciﬁc Risks” below.
In addition to the risk of contract cancellations, the Company
may also incur signiﬁcant costs or loss of revenues in connection
with remedial action required to correct any performance issues
detected in its products or services. See “— Management’s
Discussion and Analysis of Financial Condition and Results ofOperations — 2.1.1.3 Signiﬁcant programme developments,
restructuring and related ﬁnancial consequences in 2016, 2017and 2018”. Moreover, to the extent that a performance issue isconsidered to have a possible impact on safety, regulators could
suspend the authorisation for the affected product or service.
Any signiﬁcant problems with the development, manufacturing,
operation or performance of the Company’s products
and services could have a signiﬁcant adverse effect on the
Company’s ﬁnancial condition and results of operations as wellas on the reputation of the Company and its products andservices.

Dependence on Public Spending and on Certain Markets
In any single market, public spending (including defence andsecurity spending) depends on a complex mix of geopoliticalconsiderations and budgetary constraints, and may therefore be
subject to signiﬁcant ﬂuctuations from year to year and country
to country. Any termination or reduction of future funding orcancellations or delays impacting existing contracts may havea negative effect on the Company’s ﬁnancial condition andresults of operations. In instances where several countries
undertake to enter together into defence or other procurement

contracts, economic, political or budgetary constraints in any
one of these countries may have a negative effect on the abilityof the Company to enter into or perform such contracts.
The Company has a geographically diverse backlog. Adverse
economic and political conditions as well as downturns in broad
economic trends in certain countries or regions may have anegative effect on the Company’s ﬁnancial condition and resultsof operations generated in those regions.

Availability of Government and Other Sources of Financing
From 1992 to 2004, the EU and the US operated under anagreement that sets the terms and conditions of ﬁnancial support
that governments may provide to civil aircraft manufacturers.
In late 2004, however, the US unilaterally withdrew from thisagreement, which eventually led to the US and the EU making
formal claims against each other before the World Trade
Organization (“WTO”). While both sides have expressed apreference for a negotiated settlement that provides for a levelplaying ﬁeld when funding future aircraft developments, they
have thus far failed to reach agreement on key issues. Separately,
Brazil has initiated WTO proceedings citing Canadian support to
the C Series aircraft. Here too, a negotiated outcome would be
preferable. Domestic proceedings in the United States basedon alleged subsidies to the C Series were dismissed. The terms

14

Airbus / Information Document 2018

and conditions of any new agreement, or the ﬁnal outcome of theformal WTO or other trade law proceedings, may limit accessby the Company to risk-sharing-funds for large projects, may
establish an unfavourable balance of access to government
funds by the Company as compared to its US competitors or
may in an extreme scenario cause the involved governments
to analyse possibilities for a change in the commercial termsof funds already advanced to the Company.
In prior years, the Company and its principal competitors
have each received different types of government ﬁnancing ofproduct research and development. However, no assurances
can be given that government ﬁnancing will continue to be madeavailable in the future, in part as a result of the proceedings

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

mentioned above. Moreover, the availability of other outside
sources of financing will depend on a variety of factors
such as market conditions, the general availability of credit,
the Company’s credit ratings, as well as the possibility that
lenders or investors could develop a negative perception of theCompany’s long- or short-term ﬁnancial prospects if it incurred

2

Risk
3
4 Factors
5 /2 Business-Related Risks
Risk Factors /2 Business-Related Risks

2

3

4

5

large losses or if the level of its business activity decreased
due to an economic downturn. The Company may therefore
not be able to successfully obtain additional outside ﬁnancing
on appropriate terms, or at all, which may limit the Company’s
future ability to make capital expenditures, fully carry out its
research and development efforts and fund operations.

Competition and Market Access
The markets in which the Company operates are highly
competitive. In some areas, competitors may have more
extensive or more specialised engineering, manufacturing andmarketing capabilities or better access to funding than the
Company. In addition, some of the Company’s largest customers
and/or suppliers may develop the capability to manufacture
products or provide services similar to those of the Company.
This would result in these customers/suppliers marketing theirown products or services and competing directly with theCompany for sales of these products or services, all of which
could signiﬁcantly reduce the Company’s revenues. Further, newplayers are operating or seeking to operate in the Company’s
existing markets which may impact the structure and proﬁtabilityof these markets. In addition, enterprises with different businessmodels could substitute some of the Company’s products andservices. There can be no assurance that the Company will

be able to compete successfully against its current or futurecompetitors or that the competitive pressures it faces in all
business areas will not result in reduced revenues, market shareor proﬁt.
In addition, the contracts for many aerospace and defence
products are awarded, implicitly or explicitly, on the basis of homecountry preference. Although the Company is a multinational
company which helps to broaden its domestic market, it may
remain at a competitive disadvantage in certain countries,
especially outside of Europe, relative to local contractors
for certain products. The strategic importance and politicalsensitivity attached to the aerospace and defence industries
means that political considerations will play a role in the choiceof many products for the foreseeable future.

Major Research and Development Programmes
The business environment in many of the Company’s principal
operating business segments is characterised by extensive
research and development costs requiring signiﬁcant up-front
investments with a high level of complexity. The business plans
underlying such investments often contemplate a long payback
period before these investments are recouped, and assume acertain level of return over the course of this period in order tojustify the initial investment. There can be no assurances thatthe commercial, technical and market assumptions underlying
such business plans will be met, and consequently, the payback
period or returns contemplated therein achieved.
Successful development of new programmes also depends on
the Company’s ability to attract and retain aerospace engineers
and other professionals with the technical skills and experience
required to meet its speciﬁc needs. Demand for such engineers
may often exceed supply depending on the market, resulting
in intense competition for qualiﬁed professionals. There canbe no assurances that the Company will attract and retain the
personnel it requires to conduct its operations successfully.
Failure to attract and retain such personnel or an increase in
the Company’s employee turnover rate could negatively affect
the Company’s ﬁnancial condition and results of operations.

No assurance can be given that the Company will achieve
the anticipated level of returns from these programmes andother development projects, which may negatively affect theCompany’s ﬁnancial condition and results of operations andcompetitiveness.
In the context of the post-Brexit relationship between the UK
and the EU, there is a risk that the Company might lose accessto pooled expertise and knowledge and could face disruptions
within its interdependent and extensively integrated researchand innovation networks across the UK and the EU countries.
The Company may also face lack of certainty with respect tointellectual property rights for existing or new programmes
and established or potential partnerships with private or publicorganisations, academic institutions and research councils,
charities and government departments, where the relevant
intellectual property frameworks or user-rights/ownershipgoverning those relationships is dependent on the UK’s status
as a member state of the EU.

Airbus / Information Document 201815

ANNUAL REPORT 2018
Risk Factors /2 Business-Related Risks
Risk Factors /2 Business-Related Risks

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

Digital Transformation, Continuous Improvement
and Competitiveness Programmes
In order to improve current operational performance while
preparing for the future, the Company launched in 2017 theintegration of its headquarters and corporate functions with thelargest Division, Airbus Commercial Aircraft (now referred to as“Airbus”), and has initiated a wide-reaching digital transformation
programme, Quantum. In parallel, continuous improvement
and competitiveness programmes running in all businesses
are pursued.

Traditional Cost-Saving and Competitiveness
Programmes

Digital Transformation

In addition to the risk of not achieving the anticipated level ofcost savings, efﬁciency gains and other beneﬁts from these
programmes, the Company may also incur higher than expected
implementation costs. In many instances, there may be internal
resistance to the various organisational restructuring and cost
reduction measures contemplated. Restructuring, closures, sitedivestitures and job reductions may also harm the Company’s
labour relations and public relations, and have led and could
lead to work stoppages and/or demonstrations. In the eventthat these work stoppages and/or demonstrations become
prolonged, or the costs of implementing the programmes above
are otherwise higher than anticipated, the Company’s ﬁnancial
condition and results of operations may be negatively affected.

The Quantum transformation programme was launched toaccelerate transformation of end to end operations and todeﬁne our future set-up (operations, new services, new businessmodel) driven by customer requirements. In the short to midterm Quantum will focus on accelerating and industrialising themost promising digitally-enabled performance improvement
initiatives permitting a step change. In the longer term, Quantum
will redesign end to end digital operations and enable new
proﬁ table business model and services for our customers.
Quantum is supported by the Digital Transformation Ofﬁce (DTO)
and Chief Technology Ofﬁce (CTO) organisations.

To improve competitiveness in soft markets, offset costs andachieve proﬁtability targets, among other things, the Company
and its Divisions have launched several restructuring, cost saving
and competitiveness programmes over the past several years.
These include Boost Competitiveness in Commercial Aircraft,
Adapt in Helicopters and Compete in Defence and Space.

Acquisitions, Divestments, Joint Ventures and Strategic Alliances
As part of its business strategy, the Company may acquireor divest businesses and/or form joint ventures or strategic
alliances. Executing acquisitions and divestments can be
difﬁcult and costly due to the complexities inherent in integratingor carving out people, operations, technologies and products.
There can be no assurance that any of the businesses that
the Company intends to acquire or divest can be integrated or
carved out successfully, as timely as originally planned or thatthey will perform well and deliver the expected synergies or costsavings once integrated or separated. In addition, despite theefforts and expenditures of the parties, regulatory, administrativeor other contractual conditions can prevent transactions
from being ﬁnalised. While the Company believes that it has
committed sufﬁcient resources and established appropriate
and adequate procedures and processes necessary to mitigate
these risks, there is no assurance that these transactions will
be successfully completed or produce the expected beneﬁts.

Public-Private Partnerships and Private Finance Initiatives
Defence customers may request proposals and grant contracts
under schemes known as public-private partnerships (“PPPs”)
or private ﬁnance initiatives (“PFIs”). PPPs and PFIs differ
substantially from traditional defence equipment sales, as theyoften incorporate elements such as:
the provision of extensive operational services over the lifeof the equipment;
continued ownership and ﬁnancing of the equipment by a party
other than the customer, such as the equipment provider;mandatory compliance with speciﬁc customer requirements
pertaining to public accounting or government procurement
regulations; andprovisions allowing for the service provider to seek additionalcustomers for unused capacity.

-

16

Airbus / Information Document 2018

The Company is party to PPP and PFI contracts, for example
Skynet 5 and related telecommunications services, and in the
AirTanker (FSTA) project both with the UK MoD. One of thecomplexities presented by PFIs lies in the allocation of risks
and the timing thereof among different parties over the life-timeof the project.
There can be no assurances of the extent to which the Company
will efﬁciently and effectively (i) compete for future PFI or PPP
programmes, (ii) administer the services contemplated under
the contracts, (iii) ﬁnance the acquisition of the equipment andthe ongoing provision of services related thereto, or (iv) accessthe markets for the commercialisation of excess capacity. The
Company may also encounter unexpected political, budgetary,
regulatory or competitive risks over the long duration of PPP
and PFI programmes.

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

Risk
3
4 Factors
5 /2 Business-Related Risks
Risk Factors /2 Business-Related Risks

2

3

4

5

Programme-Speciﬁc Risks
In addition to the risk factors mentioned above, the Company
also faces the following programme-speciﬁc risks (while thislist does not purport to be exhaustive, it highlights the current
risks believed to be material by management and that could
have a signiﬁcant impact on the Company’s ﬁnancial condition
and results of operations):

A330 programme. In connection with the A330 programme,
the main challenge the Company faces is to manage thetransition to A330neo. The A330neo development progresses
after successful EIS (Entry Into Service). For the engine supplier,the main challenges relate to meeting the delivery commitments
and ensuring engine maturity.

A320neo programme. In connection with the A320neo
programme, the Company faces the following main challenges:
A320neo (new engine option) ramp up including the A321neo
ACF (Airbus Cabin Flex); management of the internal and external
supply chain pressure as a result of the industrial ramp-up;
ensuring maturity and high quality service support for a growing
number of operators of A320neo. The main focus will be withthe further ramp-up for Airbus and both engine suppliers. For
both engine suppliers, challenges are to (i) meet the delivery
commitments in line with agreed schedule and ensure sufﬁcientengine availability; (ii) ﬁx in-service maturity issues in line with
Airbus and customer expectations and mitigate the associatedconsequences; (iii) manage engine upgrades and performance.
The E2E industrial and delivery process at Airbus is under review
and will result in signiﬁcant process and organisation changes.

A220 programme. In connection with the A220 programme,
the main challenges the Company faces are to build commercial
momentum, ramp up production and reduce costs.

A400M programme. In 2018, Airbus continued with development
activities toward achieving the technical capabilities, including
the achievement of an important development milestone
according to schedule. After the signature of a Declaration ofIntent (“DOI”) in February 2018, the Company has been working
together with OCCAR and concluded the negotiations on thecontract amendment. The customer Nations are now set toendorse the agreement to allow pursuing the domestic approval
processes before signing the contract amendment.
Risks remain on development of technical capabilities and theassociated costs, on securing sufﬁcient export orders in time,on aircraft operational reliability in particular with regards toengines and on cost reductions as per the revised baseline.
For further information, please refer to the “— Notes to the IFRS
Consolidated Financial Statements — Note 10: Revenue and
Gross Margin”.
A350 XWB programme. In connection with the A350 XWB
programme, the Company faces the following main challenges:
ensuring satisfaction of operators and high quality support totheir operations; maintaining supply chain performance andproduction ramp-up; controlling and reducing the level ofoutstanding work in ﬁnal assembly line; reducing recurringcosts during the ongoing ramp-up; maintaining customisation
and ramp-up of Heads of Version; maintaining the development
schedule in line with learning curve assumptions beyond theinitial ramp up phase of A350-1000 XWB; maintaining attention
on engine development; and customer support for new typein service.
A380 programme. In connection with the A380 programme,
the Company faces the following main challenges: ramp down
the yearly production rate in line with demand and further reduce
ﬁxed costs and adjust resources to the new delivery level; andmanage maturity in service.

H225 programme and AS332 L2 ﬂeet. In connection with the
H225 programme and the AS332 L2 ﬂeet, the Company faces
the following main challenges: since the crash in April 2016of a H225 in Norway, the Company is dealing with protective
measures validated by EASA who lifted the ﬂight suspension on
7 October 2016 and by UK and Norwegian aviation authorities
on 7 July 2017 to put the ﬂeet back into ﬂight operations.
Publication of the ﬁnal AIBN report in July 2018 conﬁrmed thework on incremental improvements on the H225 as part of its
ongoing, continuous improvement.
H175 programme. In connection with the H175 programme
produced in cooperation with Avic, the Company faces thefollowing main challenges: after the delivery of the ﬁrst H175
in VIP conﬁguration in 2016, the delivery of the 6 ﬁrst H175 in
Public Services intermediate operational conﬁguration in 2018,
the Company is working on the maturity plan of the aircraftwith the associated industrial ramp-up and on the customer
support.
NH90 and Tiger programmes. In connection with the NH90
and Tiger programmes, the Company is delivering according tocontracts whilst negotiations for the end of some contracts andsome new contract amendments are still ongoing. In connection
with multiple ﬂeets entering into service it faces the challengeof assuring support readiness.
H160 programme. In connection with the H160 programme, themain challenge the Company faces is to manage the certiﬁcationand the production ramp-up. H160 development and supply
chain performance and production ramp-up progress after
1,050 ﬂights hours performed by the end of 2018 by prototypes
and pre-serial 2 (PS2) move to the ﬂight line.
Border security. In connection with border security projects,
the Company faces the following main challenges: meetingthe schedule and cost objectives taking into account thecomplexity of the local infrastructures to be delivered andthe integration of commercial-off-the-shelf products (radars,
cameras and other sensors) interfaced into complex system
networks; assuring efﬁcient project and stafﬁng; managing therollout including subcontractors and customers. Negotiations
on change requests and schedule re-alignments remain
ongoing. Export licenses from Germany to Saudi Arabia are
currently suspended.

Airbus / Information Document 201817

ANNUAL REPORT 2018
Risk Factors /3 Legal Risks
Risk Factors /3 Legal Risks

3.

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

Legal Risks

Dependence on Joint Ventures and Minority Holdings
The Company generates a substantial proportion of its revenues
through various consortia, joint ventures and equity holdings.
These arrangements include primarily:
the Euroﬁghter and AirTanker consortia; andfour principal joint ventures: ArianeGroup, ATR, CSALP and
MBDA.

-

The formation of partnerships and alliances with other market
players is an integral strategy of the Company, and the
proportion of sales generated from consortia, joint venturesand equity holdings may rise in future years. This strategy may
from time to time lead to changes in the organisational structure,or realignment in the control, of the Company’s existing joint
ventures.
The Company exercises varying and evolving degrees ofcontrol in the consortia, joint ventures and equity holdings inwhich it participates. While the Company seeks to participate

only in ventures in which its interests are aligned with those of
its partners, the risk of disagreement or deadlock is inherent
in a jointly controlled entity, particularly in those entities that
require the unanimous consent of all members with regard
to major decisions and specify limited exit rights. The otherparties in these entities may also be competitors of theCompany, and thus may have interests that differ from thoseof the Company.
In addition, in those holdings in which the Company is aminority partner or shareholder, the Company’s access tothe entity’s books and records, and as a consequence, theCompany’s knowledge of the entity’s operations and results,
is generally limited as compared to entities in which theCompany is a majority holder or is involved in the day-to-day
management.

Product Liability and Warranty Claims
The Company designs, develops and produces a number ofhigh proﬁle products of large individual value, particularly civil
and military aircraft and space equipment. The Company issubject to the risk of product liability and warranty claims in
the event that any of its products fails to perform as designed.

While the Company believes that its insurance programmes
are adequate to protect it from such liabilities, no assurances
can be given that claims will not arise in the future or that suchinsurance coverage will be adequate.

Intellectual Property
The Company relies upon patents, copyright, trademark,conﬁdentiality and trade secret laws, and agreements with its
employees, customers, suppliers and other parties, to establish
and maintain its intellectual property (IP) rights in its products
and services and in its operations. Despite these efforts toprotect its IP rights, any of the Company’s direct or indirect IP
rights could be challenged, invalidated or circumvented. Further,
the laws of certain countries do not protect the Company’s
proprietary rights to the same extent as the laws in Europe andthe US. Therefore, in certain jurisdictions the Company may beunable to protect its proprietary technology adequately against
unauthorised third-party copying or use, which could adversely
affect its competitive position.

18

Airbus / Information Document 2018

In addition, although the Company believes that it lawfullycomplies with the monopolies inherent in the IP rights granted
to others, it has been accused of infringement on occasion
and could have additional claims asserted against it in the
future. These claims could harm its reputation, result in ﬁnancial
penalties or prevent it from offering certain products or services
which may be subject to such third-party IP rights. Any claims
or litigation in this area, whether the Company ultimately
wins or loses, could be time-consuming and costly, harm
the Company’s reputation or require it to enter into licensing
arrangements. The Company might not be able to enter into
these licensing arrangements on acceptable terms. If a claim of
infringement were successful against it, an injunction might beordered against the Company, causing further losses.

ANNUAL REPORT 2018

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FINANCIAL STATEMENTS 2018

1

1

2

3

Risk
4 Factors
5 /3 Legal Risks
Risk Factors /3 Legal Risks

2

3

4

5

Export Controls Laws and Regulations
The export market is a signiﬁcant market for the Company.
In addition, many of the products the Company designs andmanufactures for military use are considered to be of national
strategic interest. Consequently, the export of such products
outside of the jurisdictions in which they are produced may
be restricted or subject to licensing and export control
requirements, notably by the UK, France, Germany and Spain,
where the Company carries out its principal activities relating
to military products and services as well as by other countries
where suppliers are based, notably, the US. There can be noassurance (i) that the export controls to which the Company issubject will not become more restrictive, (ii) that new generationsof the Company’s products will not also be subject to similar
or more stringent controls or (iii) that geopolitical factors orchanging international circumstances will not make it impossible
to obtain export licenses for one or more clients or constrain
the Company’s ability to perform under previously signed
contracts. Reduced access to military export markets may
have a signiﬁcant adverse effect on the Company’s businessﬁnancial condition and results of operations.

Operating worldwide, the Company must comply with several,
sometimes inconsistent, sets of sanctions laws and regulations
implemented by national / regional authorities. Depending on
geopolitical considerations including national security interestsand foreign policy, new sanctions regimes may be set up or thescope of existing ones may be widened, at any time, immediately
impacting the Company’s activities.
Although the Company seeks to comply with all such laws andregulations, even unintentional violations or a failure to comply
could result in suspension of the Company’s export privileges,or preclude the Company from bidding on certain government
contracts (even in the absence of a formal suspension or
debarment).
Furthermore, the Company’s ability to market new products andenter new markets may be dependent on obtaining government
certiﬁcations and approvals in a timely manner.

Anti-Corruption Laws and Regulations
The Company is required to comply with applicable anti-bribery
laws and regulations in jurisdictions around the world where it
does business. To that end, an anti-corruption programme has
been put in place that seeks to ensure adequate identiﬁcation,assessment, monitoring and mitigation of corruption risks.
Despite these efforts, ethical misconduct or non-compliancewith applicable laws and regulations by the Company, its
employees or any third party acting on its behalf could expose
it to liability or have a negative impact on its business.
In 2016, for example, the Company announced that it had
discovered misstatements and omissions in certain applications
for export credit ﬁnancing for Airbus customers, and had
engaged legal, investigative and forensic accounting experts
to conduct a review. Separately, the UK Serious Fraud Ofﬁceannounced that it had opened a criminal investigation into
allegations of fraud, bribery and corruption in the civil aviation
business of Airbus, relating to irregularities concerning third
party consultants. Airbus was subsequently informed that the
French authorities, the Parquet National Financier (“PNF”), hadalso opened a preliminary investigation into the same subject

and that the two authorities will act in coordination going
forward. The Company has engaged with the government of
the United States relating to conduct forming part of the SFO/PNF investigation that could fall within US jurisdiction. The
Company has also engaged with the government of the UnitedStates concerning potential issues of ITAR Part 130 and related
matters. See “— Information on the Company’s Activities —1.1.7 Legal and Arbitration Proceedings”.
The Company cannot predict at this time the impact on it asa result of these matters, and accordingly cannot give any
assurance that it will not be adversely affected. The Company
may be subject to administrative, civil or criminal liabilities
including signiﬁcant ﬁnes and penalties, as well as suspension
or debarment from government or non-government contracts
for some period of time. The Company may also be required tomodify its business practices and compliance programme and/or have a compliance monitor imposed on it. Any one or moreof the foregoing could have a signiﬁcant adverse effect on the
Company’s reputation and its business, ﬁnancial condition andresults of operations.

Airbus / Information Document 201819

ANNUAL REPORT 2018
Risk Factors /4 Environmental, Health and Safety Risks
Risk Factors /4 Environmental, Health and Safety Risks

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

Legal and Regulatory Proceedings
The Company is currently engaged in a number of active
legal and regulatory proceedings. See “— Information on the
Company’s Activities — 1.1.7 Legal and Arbitration Proceedings”.
The Company expects to continue to incur time and expenses
associated with its defence, regardless of the outcome, and thismay divert the efforts and attention of management from normal
business operations. Although the Company is unable to predict
the outcome of these proceedings, it is possible that they will
result in the imposition of damages, ﬁnes or other remedies,
which could have a material effect on the Company’s business,ﬁnancial condition and results of operations. An unfavourable
ruling could also negatively impact the Company’s stock priceand reputation.

4.

Environmental, Health and Safety Risks

Given the scope of its activities and the industries in which it
operates, the Company is subject to stringent environmental,
health and safety laws and regulations in numerous jurisdictions
around the world. The Company therefore incurs, and expects
to continue to incur, signiﬁcant capital expenditure and otheroperating costs to comply with increasingly complex laws andregulations covering the protection of the natural environment
as well as occupational health and safety. This expenditure
includes the identiﬁcation and the prevention, elimination orcontrol of physical and psychological risks to people arisingfrom work, including chemical, mechanical and physical agents.
Environmental protection includes costs to prevent, control,
eliminate or reduce emissions to the environment, waste
management, the content of the Company’s products, andreporting and warning obligations. Moreover, new laws andregulations, the imposition of tougher licence requirements,
increasingly strict enforcement or new interpretations of existinglaws and regulations may cause the Company to incur increased
capital expenditure and operating costs in the future in relation
to the above, which could have a negative effect on its ﬁnancial
condition and results of operations.
If the Company fails to comply with health, safety andenvironmental laws and regulations, even if caused by factors
beyond its control, that failure may result in the levying of civil or
criminal penalties and ﬁnes against it. Regulatory authorities may
require the Company to conduct investigations and undertake
remedial activities, curtail operations or close installations or
facilities temporarily to prevent imminent risks. In the event of
an industrial accident or other serious incident, employees,
customers and other third parties may ﬁle claims for ill-health,personal injury, or damage to property or the environment(including natural resources). Further, liability under some health,20

In addition, the Company is from time to time subject togovernment inquiries and investigations of its business andcompetitive environment due, among other things, to the heavily
regulated nature of its industry. In addition to the risk of an
unfavourable ruling against the Company, any such inquiry or
investigation could negatively affect the Company’s reputationand its ability to attract and retain customers and investors,
which could have a negative effect on its business, ﬁnancial
condition and results of operations. See “— Non-Financial
Information — 1.1.8.4(a) Responsible Business — EthicalBusiness Practices”.

Airbus / Information Document 2018safety and environmental laws can be imposed retrospectively,on a joint and several basis, and, in relation to contaminatedsites, without any ﬁnding of non-compliance or fault. These
potential liabilities may not always be covered by insurance, or
may be only partially covered. The obligation to compensate forsuch damages could have a negative effect on the Company’s
ﬁnancial condition and results of operations.
In addition, the various products manufactured and sold by
the Company must comply with relevant health, safety andenvironmental laws, for example those designed to protect
customers and downstream workers, and those covering
substances and preparations, in the jurisdictions in which they
operate. Although the Company seeks to ensure that its products
meet the highest quality standards, increasingly stringent andcomplex laws and regulations, new scientific discoveries,
delivery of defective products or the obligation to notify orprovide regulatory authorities or others with required information(such as under the EU Regulation known as “REACH”, which
addresses the production and use of chemical substances)
may force the Company to adapt, redesign, redevelop, recertify
and/or eliminate its products from the market. Seizures ofdefective products may be pronounced, and the Company may
incur administrative, civil or criminal liability. Any problems inthis respect may also have a signiﬁcant adverse effect on the
reputation of the Company and its products and services.
Despite compliance with all applicable laws and regulations,the Company’s reputation may also be affected by the public
perception of environmental impacts of the Company’s products
in operation (such as the emission of greenhouse gases ornoise) and of the local environmental impacts of Airbus and its
supply chain industrial operations on local air and water quality.

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

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3

Risk
4 Factors
5 /

2

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5

Risk Factors /Airbus / Information Document 201821

Chapter

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Airbus / Information Document 2018

1

Information on the
Company’s Activities
1.1
Presentation of the Company
1.1.1 Overview
1.1.2 Airbus (Commercial Aircraft)
1.1.3 Helicopters
1.1.4 Defence and Space
1.1.5 Investments
1.1.6 Insurance
1.1.7 Legal and Arbitration Proceedings
1.1.8 Non-Financial Information

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Information on the Company’s Activities /1.1 Presentation of the Company
Information on the Company’s Activities /1.1 Presentation of the Company

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

1.1 Presentation of the Company
1.1.1 Overview
Due to the nature of the markets in which the Company operates and the conﬁdential nature of its businesses,
any statements with respect to the Company’s competitive position set out in paragraphs 1.1.1 through 1.1.5 below
have been based on the Company’s internal information sources, unless another source has been speciﬁed below.
With consolidated revenues of €63.7 billion in 2018, the Company
is a global leader in aeronautics, space and related services.
Airbus offers the most comprehensive range of passenger
airliners. The Company is also a European leader providing tanker,
combat, transport and mission aircraft, as well as one of theworld’s leading space companies. In helicopters, the Company
provides the most efﬁcient civil and military rotorcraft solutions
worldwide. In 2018, it generated 84.5% of its total revenues in thecivil sector (compared to 85% in 2017) and 15.5% in the defence
sector (compared to 15% in 2017). As of 31 December 2018, theCompany’s active headcount was 133,671 employees.

Strategy
2018 was the year Airbus operated as One Company after thecompletion of the Airbus Group and Airbus integration. Thisevolution simplified our company’s governance, eliminatedredundancies and supported further efﬁciencies, while at the sametime driving further integration of the entire group. The Company
overall will derive considerable beneﬁt from the integration throughmore focused business support and reduced costs.
Airbus Defence and Space continued to reshape its portfolio andrefocus on military aircraft, missiles, launchers and satellites. The
Company pursued the divestment process of the businesses
that do not ﬁt with the new strategic goals and have better
futures in more tailored ownership structures. The Company
completed the divestment of its North American Airbus DS
Communications Inc. business.
Airbus Helicopters retained its leadership in civil and parapublicsegment and managed to increase its market share in military
segment, while operating in a challenging market environment.
The eight long term paths of the Company’s strategy remain
as follows:
1. Remain a leader in commercial aerospace, strengthenmarket position and profitability
The commercial aircraft business aims to be largely self-sufficient
going forward. Focus upon on-time, on-cost and on-quality
deliveries is paramount given the huge backlog execution
challenge (over 7,500 aircraft). Airbus aims to further strengthen
its position through focusing on digitalisation, innovation, services,
improving our industrial system, and a more global approach.
On 1 July 2018, Airbus announced the closing of the A220
(formerly known as C Series) transaction between Airbus SAS,
Bombardier Inc. and Investissement Québec. Airbus now owns
a 50.01% majority stake in the aircraft programme. A220 aircraft

24

Airbus / Information Document 2018

expand the Airbus single-aisle family to cover the 100-150 seat
segment – and respond to a worldwide market demand forsingle-aisle jetliners in that segment.
Despite challenges in the traditional helicopter market, Airbus
Helicopters has shown resilient performance, keeping its market
leadership in the civil & parapublic segments.
2. Preserve our leading position in European Defence, Spaceand Government markets by focusing on providing militaryplatforms, space assets, and associated services, as wellas through our participation in missile and launcher joint
ventures
The disproportionate scale of our commercial aircraft businesscompared to our Defence, Space and Government activities
has diluted the latter’s ability to serve as an effective tool tomanage and hedge against commercial cycles. Nevertheless,
the Company remains fully committed to serving its
institutional and government customers by actively shaping
and strengthening its Defence, Space and Government
businesses. The Company is doing so by: (i) leveraging
customer funding to develop and deliver high performance
military aircraft, space, and related service offerings as wellas through its participation in missile and launcher joint
ventures; and (ii) focusing on productivity improvements –both through internal means and in the context of European
industrial optimization – that will better position the Company
in Space and export markets.
In 2018, the Company worked with our government andinstitutional customers to anticipate and prepare competitive
next generation solutions – including in the domains of Future
Combat Air Systems, European MALE RPAS, Maritime Airborne
Warfare Systems, and space situational awareness – while
concurrently developing new digital and other services, e.g
SmartForce offerings that will improve availability and total
lifecycle costs of our military aircraft fleets.
On military markets, Airbus Helicopters also showed strong
performance, as market share increased.
3. Pursue incremental innovation potential within productprogrammes while pioneering and fostering disruptions
in our industry, and developing necessary skills andcompetencies required to compete in the future
Airbus innovates every day to increase its value propositions
by enhancing product performance, creating new customer
benefits and reducing costs. Our cutting-edge technologies

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Information on the Company’s Activities /1.1 Presentation of the Company

and scientific excellence contribute to global progress andto delivering solutions for society’s challenges, such asenvironmental protection, mobility and safety.
After many new product developments in recent years, themajority of the Company’s revenues are generated today insegments where we have competitive, mature products thatare far from the end of their lifecycle. Innovation will therefore
target maintaining, expanding and continually leveraging thecompetitiveness of these products.
In addition, the Company raised its ambitions to pioneer anddisrupt the aerospace industry in areas that will shape the market
and our future and made a substantial effort in breakthroughinnovation.
A prime example of how the Company leads disruption in theaerospace industry is Urban Air Mobility, “UAM”: we expect alarge-scale market to emerge by adding the third dimension
to transport options in megacities. This will require new endto-end solutions combining electrical Vertical Take Off andLanding “eVTOL” vehicles, self-piloting/automation, and adigital, services driven economy with new mobility-as-a-service
business models and seamless integration into other transportsystems. Starting around 2014, the Company has madesignificant progress on technical solutions (e.g., eVTOL vehicle
demonstrators, air traffic management, infrastructure) andbusiness aspects (disruptive strategy, on-demand helicoptertransport, policy making support) and has become a precursor
in the field.
4. Exploit digitalisation to enhance our current businessas well as pursue disruptive business models
Digitalisation will support the Company’s transformation
by focusing on five main axes: (i) enabling high employee
engagement, (ii) digital operational excellence, (iii) mastering
our product data value chain and turning product data into
insight, (iv) capturing the end-user experience and (v) driving
our business agility.
Airbus launched Skywise, a data platform in collaboration withpioneers in data integration and advanced analytics. Skywise
has established an early lead in the race to connect the aviationindustry since its launch in 2017 at the Paris Air Show. Skywise
aims to become the single platform of reference used by all major
aviation players to improve their operational performance andbusiness results and to support their own digital transformation.
In 2018, Airbus Defence and Space together with Airbus
Helicopters launched the SmartForce suite of services to enable
military operators to exploit the data gathered by their aircraft
to enhance operational safety, boost mission availability andreduce maintenance support costs.
5. Adapt to a more global world as well as attract and retain
global talents
The Company has a worldwide presence in 38 countries. The
number of employees employed outside core countries is circa
15,300 and this will continue to grow. In Canada alone ournumbers have increased significantly from 152 in 2017 to about
2,300 employees in 2018 following our C Series Joint Venturewith Bombardier.

FINANCIAL STATEMENTS 2018

1

2

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4

5

An important aspiration for the Company with a global workforce
is to build on its diversity and multicultural teams to support
our Industrial cooperation, help us anticipate and respond togeopolitical changes. Our desire to move from an ethnocentric
to a geocentric approach is reflected in our mobility strategy
which aims to enrich our founding countries with international
talents. Our “Regional Focus Reviews” is another platform
used to identify and develop our top talents in all regions andencourage inter and intra mobilities between our regions andfounding countries.

1

Other key programmes introduced are as follows:– iJet: launched in 2017 to create customised development
programmes to accelerate the career of our top juniorinternational talents (internal);– IGP: a two-year international development programme
aimed to attract young and talented individuals (external).
Our Airbus Global University Partner Programme connects a
global network of universities and aims to develop engineeringand technology specialists of the future. The programmecurrently covers 26 universities in 13 countries over 4 continents.
We are also looking at developing new innovative ideas for the
future like designing an end-to-end process between Airbus
Foundation and Airbus HR programmes to channel students
into Airbus jobs and to conduct a feasibility study on launchingan International Bursary Programme to inspire less privilegedchildren from countries such as Africa and India to study
aerospace engineering.
Last but not least, with a view to obtaining external perspectives,
the Company is building an external community of international
leadership profiles to facilitate open exchanges with theCompany.
6. Focus services on and around the Company’s platforms
The strategy going forward is to focus on services where theCompany can differentiate and add value for its customers
according to the motto “no one knows our products better thanwe”, aiming at developing long-term customer intimacy andbringing competitive advantage to its customers. As services are
executed locally, the portfolio will be adapted to the increasingly
global customer base. Cooperation with military customers is
set to increase substantially through maintenance and support
services thanks to the new platforms in the still growing fleet,which will include about 600 Eurofighters, over 170 A400M
aircraft, around 550 NH90s and over 200 Tiger helicopters.
Since 1974, Airbus has delivered close to 12,000 commercial
aircraft with over 7,500 still to be delivered. As the installed baseis expanding rapidly, new innovative services (power by thehour, maintenance, and training) are being offered successfully.
Airbus Helicopters is a typical example of a well-balanced
business mix between platform manufacturing and services.
Through the HCare service offer, Airbus Helicopters provides
material management, helicopter maintenance, technicalsupport, training and flight ops, and connected services.
Airbus Defence and Space is developing GEO-Information &GEO-Intelligence services to better cater not just to governments
but also commercial needs.

Airbus / Information Document 201825

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1

Information on the Company’s Activities /1.1 Presentation of the Company
Information on the Company’s Activities /1.1 Presentation of the Company

7. Strengthen the value chain position
The Company’s core capability has been to master programmemanagement and architect / integrator capabilities in orderto design, develop, manufacture, market and service largescale aeronautics / space platforms and integrated systems.
As the Company performs a strong platform prime integratorrole, managing the supplier base to enable the delivery of ontime and on quality product to the final customer. We aim tostrengthen and optimise selected strategic value chain areas
to protect our intellectual property, manage risks, improvecustomer satisfaction, increase profit, offer services, build
competencies and differentiate our offerings. The Company’s
suppliers provide a large proportion of the value in our
products, necessitating a robust supply-chain governanceframework. This is supported by processes and tools that
foster partnership, risk mitigation and supplier performancedevelopment.
In order to secure our value chain position and maintain acompetitive advantage, the Company is continually assessing
its strategy with regard to topics such as, supplier selection,
dual source, make or buy, core non-core and M&A. This
allows the Company to offer and deliver the best productto the customer whilst consistently enhancing key bricks inthe value chain.
8. Focus on profitability, value creation and market position;no need to chase growth at any cost; actively manage
portfolio
Thanks to strong organic growth potential, mainly in thecommercial airplane business, Airbus is going through a seriesof production ramp-ups with associated financial needs. On
top of that, targeted investments are expected to help toposition the Company for the future. The financial strength of
the Company is vital for mastering these challenges, and toensure that we have enough room for manoeuvre for further
strategic moves. As a prerequisite, the Company must remain
attractive for investors, notably compared to its peers.

Organisation of the Company’s Businesses
In 2018, the Company organised its businesses into the following
three operating segments: (i) Airbus (formerly Commercial
Aircraft), (ii) Helicopters and (iii) Defence and Space. However, asa continuation of a number of integration and normalisation steps
that took place in 2012, 2013 and 2015, the Company merged
its Group structure with its largest division Commercial Aircraft.
The merger began mid-2017 and provided the opportunity tointroduce a single Airbus brand for the Company and all its
entities, effective since January 2017. In 2017, Airbus Group
SE’s name was changed to Airbus SE, following approval at
the Annual General Meeting. Therefore, Airbus SE together
with its subsidiaries is referred to as “the Company” and nolonger the “Group”. Consequently, the segment formerly known
as “Airbus Commercial Aircraft” is referred to as “Airbus”. In
this new set-up, the Company retains Airbus Defence andSpace and Airbus Helicopters as Divisions. The chart set
out in “— General Description of the Company and its Share
Capital — 3.3.6 Simpliﬁed Group Structure Chart” illustrates
the allocation of activities.

26

Airbus / Information Document 2018

2

3

4

5

2

3

4

5

Airbus (Commercial Aircraft)
Airbus is one of the world’s leading aircraft manufacturersof passenger airliners. Across all its aircraft families Airbus’
unique approach ensures that aircraft share the highest
commonality in airframes, on-board systems, cockpits andhandling characteristics. This signiﬁcantly reduces operating
costs for airlines.
Since it was founded in 1970 and up to the end of 2018,
Airbus has received net orders for 19,340 commercial aircraftfrom 414 customers around the world. In 2018, Airbus
delivered 800 aircraft (compared to 718 deliveries in 2017) andreceived 831 gross orders (compared to 1,229 gross orders
in 2017), or 41% of the gross worldwide market share (in value
terms) of aircraft with more than 100 seats (compared to 50%
in 2017). After accounting for cancellations, net order intake for2018 was 747 aircraft (compared to 1,109 aircraft in 2017). As
of 31 December 2018, Airbus’s backlog of commercial orders
was 7,577 aircraft (compared to 7,265 aircraft in 2017).
In 2018, Airbus recorded total revenues of € 47.97 billion– representing 75% of the Company’s revenues. See“— 1.1.2 Airbus”.
Helicopters
Airbus Helicopters is a global leader in the civil and militaryrotorcraft market, offering one of the most complete and modern
ranges of helicopters and related services. This product range
currently includes light single-engine, light twin-engine, medium
and medium-heavy rotorcraft, which are adaptable to all kindsof mission types based on customer needs.
Airbus Helicopters delivered 356 helicopters in 2018 (409
in 2017) and received 381 net orders in 2018 (compared to
335 net orders in 2017). Order intake amounted to € 5.95 billion(2017: € 6.23 billion). Civil contracts accounted for 43% of thisorder volume, with military sales representing the remaining
57%. At the end of 2018, Airbus Helicopters order book stoodat 717 helicopters (2017: 692 helicopters).
In 2018, Airbus Helicopters recorded total revenues of€ 5.93 billion, representing 9% of the Company’s revenues.
See “— 1.1.3 Helicopters”.
Defence and Space
Airbus Defence and Space is Europe’s number one defence andspace enterprise, one of the world’s leading space companies
and among the top 10 global defence enterprises. Defence
and Space puts a strong focus on core businesses: space,
military aircraft, missiles and related systems and services.
Airbus Defence and Space is organised in four ProgrammeLines: Military Aircraft; Space Systems; Communications,Intelligence & Security (CIS); and Unmanned Aerial Systems(UAS). It develops and engineers cutting-edge products in theﬁeld of defence and space, enabling governments, institutions
and commercial customers alike to protect resources andpeople while staying connected to the world. Airbus Defence
and Space solutions guarantee sovereignty in foreign affairs
and defence matters.
In 2018, Airbus Defence and Space recorded total revenuesof € 11.1 billion, representing 17% of the Company’s revenues.
See “— 1.1.4 Defence and Space”.

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FINANCIAL STATEMENTS 2018

1

2

3

4

5

Summary Financial and Operating Data
The following tables provide summary ﬁnancial and operating
data for the Company for the past three years.
The 2017 ﬁ nancial information has been restated to reﬂ ect
the new segment structure. In addition, the 2017 ﬁ nancial
information has been restated under IFRS 15 when requiredby the standard.

The 2016 ﬁnancial information has not been restated under
IFRS 15. See “— Management’s Discussion and Analysis ofFinancial Condition and Results of Operations — 2.1 Operating
and Financial Review”.

1

Additionally, the 2017 and 2016 ﬁgures for order intake and orderbacklog have not been restated for IFRS 15. See “— 2.1.3.2:
Order Intake and Order Backlog”.

REVENUE BY BUSINESS SEGMENT

Year ended
31 December 2018Year ended
31 December 2017as restatedYear ended
31 December 2017as reported

Year ended
31 December 2016as reported

Airbus47,97043,48650,95849,237

Airbus Helicopters

5,934

6,335

6,450

6,652

(In € million)

Airbus Defence and Space

11,063

10,596

10,804

11,854

Subtotal segmental revenue

64,96760,417

68,212

67,743

Transversal / Eliminations(1)(1,260)(1,395)(1,445)(1,162)

Total

63,70759,022

66,767

66,581(1) “Transversal / Eliminations” comprises activities not allocable to the reportable segments, combined together with consolidation effects.

REVENUE BY GEOGRAPHICAL AREAS

Year ended
31 December 2018
(In € billion) (In percentage)(1)Asia / Pacific

23.3

36.6%

Europe17.8

North America

11.1

Other countries(2)TotalYear ended
31 December 2017as restated(In € billion) (In percentage)(1)

21.3

36.1%

27.9%

15.8

26.8%

17.4%

10.8

18.3%

11.5

18.1%

11.1

18.8%

63.7

100%

59.0

100%

Year ended
31 December 2017as reported

Year ended
31 December 2016as reported(In € billion) (In percentage)(1)24.8(In € billion) (In percentage)(1)

37.2%

21.3

32.0%

17.0

25.4%

21.4

32.1%

12.6

18.9%

8.9

13.4%

12.4

18.5%

15.0

22.5%

66.8

100%

66.6

100%

(1) Percentage of total revenue after eliminations.
(2) Including the Middle East.

ORDER INTAKE BY BUSINESS SEGMENT(1)Year ended
31 December 2018
(In € billion) (In percentage)(2)Year ended
31 December 2017

Year ended
31 December 2016

(In € billion) (In percentage)(2)(In € billion) (In percentage)(2)

Airbus

41.5

73.7%

143.4

90.3%

114.9

Airbus Helicopters

6.3

11.3%

6.5

4.1%

6.1

84.3%
4.4%

Airbus Defence and Space

8.4

15.0%

8.9

5.6%

15.4

11.3%

Subtotal segmental order intake

56.3

100%

158.8

100%

136.4

100%

Transversal / Eliminations

(0.8)

(1.1)

(1.9)

Total

55.5

157.7

134.5

(1) Without options.
(2) Before “Transversal / Eliminations”.

Airbus / Information Document 201827

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INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

ORDER BACKLOG BY BUSINESS SEGMENT(1)Year ended
31 December 2018
(In € billion) (In percentage)(2)

Airbus

411.7

89.1%

Year ended
31 December 2017

Year ended
31 December 2016

(In € billion) (In percentage)(2)

950.4

95.1%

(In € billion) (In percentage)(2)

1,010.2

95.0%

Airbus Helicopters

14.9

3.2%

11.2

1.1%

11.3

1.1%

Airbus Defence and Space

35.3

7.7%

37.4

3.8%

41.5

3.9%

Subtotal segmental order backlog

461.9

100%

999.0

100%

1,063.0100%

Transversal / Eliminations

Total

(2.4)

(2.1)

(2.6)

459.5

996.8

1,060.4(1) Without options.
(2) Before “Transversal / Eliminations”.

Relationship between Airbus SE and the Company
In line with the previous organisational structure, Airbus SE
itself does not engage in the core aerospace, defence or spacebusiness of the Company but coordinates related businesses,
sets and controls objectives and approves major decisions for
the Company. As the parent company, Airbus SE conducts
activities which are essential to the Company’s activities andwhich are an integral part of the overall management of theCompany. In particular, ﬁnance activities pursued by Airbus SE
are in support of the business activities and strategy of theCompany. In connection therewith, Airbus SE provides or
procures the provision of services to the subsidiaries of theCompany. General management service agreements have been

put in place with the subsidiaries and services are invoiced ona cost plus basis.
For management purposes, Airbus SE acts through its Board of
Directors, Executive Committee, and Chief Executive Ofﬁcer inaccordance with its corporate rules and procedures as described
below under “— Corporate Governance — 4.1 Management
and Control”.
Within the framework deﬁned by Airbus SE, Airbus, each Division,
Business Unit and subsidiary is vested with full entrepreneurial
responsibility.

1.1.2 Airbus (Commercial Aircraft)
Airbus is one of the world’s leading aircraft manufacturers ofpassenger airliners. In order to help shape the future of airtransportation and drive steady growth around the world.
Airbus seeks incremental innovative technological solutions
and the most efﬁcient sourcing and manufacturing possible– so airlines can grow and people can connect. Airbus’
comprehensive product line comprises successful families ofjetliners ranging in capacity from 100 to more than 600 seats:
the A220 Family (formerly Bombardier Inc.’s C Series); the A320
Family, which is civil aviation’s best-selling product line; the A330
Family, including the advanced A330neo; the new-generation
widebody A350 XWB; and the double-deck A380. Across its
aircraft families Airbus’ solutions ensure that aircraft share highcommonality in airframes, on-board systems, cockpits andhandling characteristics. This signiﬁcantly reduces operating
costs for airlines. See “— 1.1.1 Overview” for an introduction
to Airbus.
Airbus’ global presence includes, on top of France, Germany,
Spain and the United Kingdom, fully-owned subsidiaries in
the United States, China, Japan, India and in the Middle East,and spare parts centres in Hamburg, Frankfurt, Washington,
Beijing, Dubai and Singapore. Airbus also has engineering andtraining centres in Toulouse, Miami, Mexico, Wichita, Hamburg,
Bangalore, Beijing and Singapore, as well as an engineering
centre in Russia. There are also hubs and ﬁeld service stations

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Airbus / Information Document 2018

around the world. Airbus also relies on industrial co-operationand partnerships with major companies and a wide network ofsuppliers around the world.

Strategy
Airbus’ primary goal is to deliver strong results in a sustainedmanner, while commanding a further increased share of theworldwide commercial aircraft market over the long-term andexpanding its customer services offering. To achieve thesegoals, Airbus is actively:
Developing the Most Comprehensive Line of Products
in Response to Customer Needs
Airbus continuously seeks to develop and deliver new products
to meet customers’ evolving needs, while also improving its
existing product line. Several products entered into service
in 2018:- the A321LR, extending the capabilities of the A320 Single-

Aisle Family in order to maintain its position as the mostadvanced and fuel-efﬁcient single-aisle aircraft family;
the A330neo (new engine option), the new generation of theA330 Family;
the A350-900 ULR (Ultra Long Range), variant of the A350
XWB capable of ﬂying up to 9,700 nautical miles;

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A350-1000, Airbus’ latest and largest widebody in the- thetwin-aisle category.
To support the A350 XWB ramp-up and other production
increases, a new super transporter is under development, withthe ﬁrst of ﬁve Beluga XL aircraft to enter into service in 2019.
The ﬁrst ﬂight of the Beluga XL took place in July 2018.
Airbus remains at the forefront of the industry by expanding its
customer services offering – see Customer Services.
Building a Leaner, More Fully Integrated Company
In order to build a leaner, more fully integrated company andthereby bolster its competitiveness, Airbus is adapting its
organisation to foster an entrepreneurial spirit and empower
more teams, while maintaining harmonised processes acrossall sites. For series programmes, additional responsibilities andmeans have been delegated to plants for delivery at increased
rates. Airbus also has become a more integrated company,
working towards one common culture across its global
workforce, as well as aligning processes and planning withthe global supplier base.

MarketMarket Drivers
The main factors affecting the commercial aircraft market include
passenger demand for air travel, cargo activity, economic
growth cycles, oil prices, national and international regulation(and deregulation), the rate of replacement and obsolescenceof existing ﬂeets and the availability of aircraft ﬁnancing sources.
The performance, competitive posture and strategy of aircraft
manufacturers, airlines, cargo operators and leasing companies
as well as wars, political unrest, pandemics and extraordinary
events may also precipitate changes in demand and lead toshort-term market imbalances.
According to internal estimates, demand for 37,400 passenger
and freight aircraft is forecast in the next 20 years with AsiaPaciﬁc accounting for 42% of deliveries. In recent years, China
and India have emerged as signiﬁcant new aircraft markets. As
a result, Airbus has sought to strengthen its commercial andindustrial ties in these countries.
The no-frills / low-cost carriers also constitute a signiﬁcantsector, and are expected to continue growing around the world,
particularly in Asia, where emerging markets and continued
deregulation should provide increased opportunities. While
single-aisle aircraft continue to be a popular choice for thesecarriers, demand for Airbus’ range of twin-aisle aircraft may also
increase as some of these carriers develop or further develop
their long-range operations.
Overall growth. The long-term market for passenger aircraft
depends primarily on passenger demand for air travel, which
is itself primarily driven by economic or GDP growth, fare levels
and demographic growth. Measured in revenue passenger
kilometres, air travel increased in every year from 1967 to
2000, except for 1991 due to the Gulf War, resulting in an
average annual growth rate of 7.9% for the period. Demand
for air transportation also proved resilient in the years following
2001, when successive shocks, including 9/11 and SARS in
Asia, dampened demand. Nevertheless, the market quickly
recovered.

FINANCIAL STATEMENTS 2018

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At the end of 2008 and in 2009, the ﬁnancial crisis and global
economic difﬁculties witnessed resulted in only the third periodof negative trafﬁc growth during the jet age, and a cyclical
downturn for airlines in terms of trafﬁc (both passenger andcargo), yields and proﬁtability.

1

More recently, air travel demand growth has maintained solid
momentum, supported by positive ongoing improvement inglobal economic conditions throughout the year. World real
GDP growth is projected to be at +3.2% in 2018, and forecast
to remain positive with +3.0% in 2019 and +2.9% in 2020.
Preliminary ﬁgures released at the end of 2018, by the International
Civil Aviation Organisation (ICAO), conﬁrmed that some 4.3 billion
passengers made use of the global air transport network for theirbusiness, tourism needs or for simply visiting friends and relatives(VFR) in 2018. The annual passenger total is up 6.1% compared
to 2017 and the number of departures rose to approximately
38 million globally. World passenger trafﬁc, expressed in termsof total scheduled revenue passenger-kilometres (RPKs), posted
an increase of 6.7% with approximately 8.2 trillion revenue
passenger kilometres performed.
Through its analysis Airbus continues to believe in the longterm growth potential of our industry. The commercial aviationindustry has been resilient to external shocks and trafﬁc hasgrown X2.3 since 2000. Based on internal estimates, Airbus a
growth rate of 4.4% annually during the period 2018-2037. If theactual growth rate equals or exceeds this level, Airbus expects
that passenger trafﬁc, as measured in revenue passenger
kilometres, will double in the next 15 years.
Cyclicality. Despite an overall growth trend in air travel, aircraft
order intake can vary signiﬁcantly from year to year and withindifferent regions, due to the volatility of airline proﬁtability,
cyclicality of the economy, aircraft replacement waves andoccasional unforeseen events which can depress demand for
air travel. However, new product offerings and growth acrossthe market has resulted in good levels of order activity in recent
years. For example, in 2018, Airbus added 747 net orders to
its order book, with orders for aircraft from all segments of themarket.
Despite some cyclicality in airline demand, Airbus aims to securestable delivery rates from year to year, supported by a strong
backlog of orders and a regionally diverse customer base. At theend of 2018, the backlog stood at 7,577 aircraft. Through carefulbacklog management, close monitoring of the customer baseand a prudent approach to production increases, Airbus has
successfully increased annual deliveries for 16 years running,
even through the economic crisis of 2008-2009.
Regulation / Deregulation. National and international
regulation (and deregulation) of international air services andmajor domestic air travel markets affect demand for passenger
aircraft as well. In 1978, the US deregulated its domestic airtransportation system, followed by Europe in 1985. The more
recently negotiated “Open Skies Agreement” between the
US and Europe, which became effective in 2008, allows any
European or US airline to ﬂy any route between any city in the
EU and any city in the US. Other regions and countries arealso progressively deregulating, particularly in Asia. This trend
is expected to continue, facilitating and in some cases driving
demand. In addition to providing greater market access (which
may have formerly been limited), deregulation may allow for thecreation and growth of new airlines or new airline models, asAirbus / Information Document 201829

ANNUAL REPORT 2018
Information on the Company’s Activities /1.1 Presentation of the Company
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INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 20181

1

has been the case with the no-frills / low-cost airline model,
which has increased in importance throughout major domestic
and intra-regional markets since deregulation (e.g., in the US
and Europe).
Airline network development: “hub” and “point-to-point”
networks. Following deregulation, major airlines have sought
to tailor their route networks and ﬂeets to continuing changes
in customer demand. Accordingly, where origin and destination
demand prove sufﬁciently strong, airlines often employ direct,
or “point-to-point” route services. However, where demand
between two destinations proves insufﬁcient, airlines havedeveloped highly efﬁcient “hub and spoke” systems, which
provide passengers with access to a far greater number of
air travel destinations through one or more ﬂight connections.
The chosen system of route networks in turn affects aircraft
demand, as hubs permit ﬂe et standardisation around both
smaller aircraft types for the short, high frequency and lower
density routes that feed the hubs (between hubs and spokes)
and larger aircraft types for the longer and higher density
routes between hubs (hub-to-hub), themselves large pointto-point markets. As deregulation has led airlines to diversify
their route network strategies, it has at the same time therefore
encouraged the development of a wider range of aircraft in orderto implement such strategies.
Airbus, like others in the industry, believes that route networks
will continue to grow through expansion of capacity on existing
routes and through the introduction of new routes, which will
largely be typiﬁed by having a major hub city at least at one endof the route. These new route markets are expected to be wellserved by the latest product offering, the A350 XWB. In addition,
the A380 has been designed primarily to meet the signiﬁcantdemand between the major hub cities, which are often among
the world’s largest urban centres (such as London, Paris, NewYork and Beijing). Airbus has identiﬁed 58 major hub cities in
its current market analysis, with this number expected to growto over 95 by 2036. Airbus believes that it is well positioned tomeet current and future market requirements given its complete
family of products.
Alliances. The development of world airline alliances has
reinforced the pattern of airline network development describedabove. According to data from Ascend, a UK-based aviationindustry consultancy, one-third of the world’s jetliner seats
being ﬂown today are operated by just 18 airlines. In the 1990s,
the major airlines began to enter into alliances that gave eachalliance member access to the other alliance members’ hubs androutings, allowing airlines to concentrate their hub investments
while extending their product offering and market access.
Market Structure and Competition
Market segments. According to a study conducted by Airbus,
some 19,800 passenger aircraft with more than 100 seats werein service with airlines worldwide at the beginning of 2018.
Currently, Airbus competes in each of the four principal market
segments for aircraft with more than 100 seats.
“Small” aircraft, such as the A220 and A320 Families, having 100
to more than 200 seats, and which are used principally for shortrange and medium-range routes of up to 3,000 nautical miles.
“Medium” aircraft typically offering up to 300 seats on routes of
up to 5,000 nautical miles. This includes long range versions of
the A220 and A320 as well as the A330 family.

30

Airbus / Information Document 2018

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4

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“Large” aircraft, such as the A330’s and variants of the A350900 XWB. These families are typically conﬁgured with two aisles
and seat up to 350 on routes of up to 10,000 nautical miles.
“Very Large aircraft”, such as the A350-1000 and A380, aredesigned to carry more than 350 passengers and also tooperate on routes of up to 10,000 nautical miles.
Freight aircraft, which form a ﬁfth, related segment, are a
combination of new build and converted ex-passenger aircraft.
Converted aircraft are prevalent in the expanding e-commercemarket which typically sees relatively low aircraft utilization. Thiscan provide an economical “second life” for in-service aircraftfrom the A320 and A330 families. See “— Regional Aircraft,
Aerostructures, Seats and Aircraft Conversion — EFW”.
Airbus also competes in the corporate, VIP business jetmarket with the ACJ. Airbus continues to develop corporate
jet versions of its modern airliner family, notably the ACJ319neo
and ACJ320neo, as well as offering new variants, such as the
ACJ330neo and ACJ350 XWB. The increased range of theseaircraft extends Airbus’ leadership in cabin comfort to evenlonger ﬂights. First ﬂight of the ACJ320neo took place on
16 November 2018 with the ﬁrst aircraft delivered on 16 January
2019.
Airbus’ ACJ319neo will ﬂy eight passengers 6,750 nm/12,500 km
or 15 hours, while the ACJ350 XWB can transport 25 passengers
for 10,800 nm/20,000 km or 22 hours.
An ACJ Service Centre Network is progressively being
implemented, building on Airbus’ philosophy of customer care.
More than 200 Airbus aircraft operate worldwide in service withcompanies, individuals and governments.
Geographic differences. The high proportion of single-aisle
aircraft in use in both North America and Europe reﬂects the
predominance of domestic short-range and medium-range
ﬂights, both from the expansion of the low-cost carrier andparticularly in North America due to the development of hubs
following deregulation. In comparison with North America andEurope, the Asia-Paciﬁc region uses a greater proportion oftwin-aisle aircraft, as populations tend to be more concentrated
in fewer large urban centres. The tendency towards use of twinaisle aircraft is also reinforced by the fact that many of theregion’s major airports limit the number of ﬂights, due either
to environmental concerns or to infrastructure constraints that
limit the ability to increase ﬂight frequency. These constraints
necessitate higher average aircraft seating capacity per ﬂight.
However, Airbus believes that demand for single-aisle aircraft in
Asia will grow over the next 20 years, particularly as domestic
markets in China and India and low-cost carriers continue todevelop in the region. Aircraft economics will also help to drive
aircraft size, with airlines looking to reduce the cost per seatthrough higher density aircraft cabins and the use of larger
aircraft types and variants where possible.
Competition. Airbus has been operating in a duopoly since
Lockheed’s withdrawal from the market in 1986 and Boeing’s
acquisition of McDonnell Douglas in 1997. As a result, the market
for passenger aircraft of more than 100 seats has been divided
between Airbus and Boeing. According to the manufacturers’
published ﬁgures for 2018, Airbus and Boeing, each accounted
for 50% of total commercial aircraft deliveries, 46% and 54% of
total net orders (in units), and 56% and 44% of the total yearend backlog (in units). With 800 deliveries, 2018 was Airbus’
16th year in a row of increased production.

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Nevertheless, the high technology and high value nature of
the business makes aircraft manufacturing an attractive
industry in which to participate, and besides Boeing, Airbus
faces international competitors. Regional jet maker Embraer,
coming from the less than 100-seat commercial aircraft
market, continues to develop larger airplanes and is working
towards a strategic partnership with Boeing. Additionally, othercompetitors from Russia, China and Japan will enter the 70 to
150 seat aircraft market over the next few years, and today are
studying larger types.
In October 2017, Airbus SE and Bombardier Inc. agreed to forma partnership in relation to the C Series. Having received all
required regulatory approvals, Airbus SE, Bombardier Inc. andInvestissement Québec closed the C Series transaction effective
on 1 July 2018 and as a result, the Company has acquired amajority stake in the C Series Aircraft Limited Partnership.
The partnership brings together two complementary productlines, the A220-100 and A220-300, targeting the 100-150 seatmarket segment with an addressable market of at least 7,000
new aircraft over the next 20 years in the segments in which
they compete.
The Mirabel-based partnership beneﬁts from Airbus’ global
reach, scale, procurement organisation and expertise in selling,
marketing and producing the A220. Signiﬁcant production
efﬁciencies are anticipated by leveraging Airbus’ production
ramp-up expertise.
Customers
As of 31 December 2018, Airbus had 414 customers and a
total of 19,340 Airbus aircraft had been ordered, of which
11,763 aircraft had been delivered to operators worldwide. The
table below shows Airbus’ largest commitments in terms of total
gross ﬁrm orders by customer for the year 2018.
Customer

Firm orders(1)(2)Avolon100

Jetblue Airways

60

Moxy

60

Vietjet Air

50

Scandinavian Airlines

36

Lufthansa

32

Aegean Airlines

30

Delta Air Lines

25

Turkish Airlines

25

Viva Aerobus

25

FINANCIAL STATEMENTS 2018

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Products and Services
The Family Concept — Commonality across the Fleet

1

Airbus’ aircraft families promote fleet commonality. Thisphilosophy takes a central aircraft and tailors it to create
derivatives to meet the needs of speciﬁc market segments,
meaning that the A320, A330, A350 and A380 all share thesame cockpit philosophy, ﬂy-by-wire controls and handlingcharacteristics. Pilots can transfer among these aircraft within
the Airbus family with minimal additional training. Cross-crewqualiﬁcation across families of aircraft provides airlines withsigniﬁcant operational ﬂexibility. In addition, the emphasis on
ﬂeet commonality permits aircraft operators to realise signiﬁcant
cost savings in crew training, spare parts, maintenance andaircraft scheduling. The extent of cockpit commonality within
and across families of aircraft is a unique feature of Airbus that,in management’s opinion, constitutes a sustainable competitive
advantage.
In addition, technological innovation has been at the coreof Airbus’ strategy since its creation. Each product in the
Airbus family is intended to set new standards in areas crucial
to airlines’ success, such as cabin comfort, cargo capacity
performance, economic performance, environmental impact
and operational commonality. Airbus innovations often provide
distinct competitive advantages, with many becoming standard
in the aircraft industry.
A220 Family. Complementing the A320 Family, the A220-100
and A220-300 models cover the segment between 100 and
150 seats and offer a highly comfortable ﬁve-abreast cabin.
With the most advanced aerodynamics, CFRP materials, highbypass engines and ﬂy-by-wire controls, the A220 delivers
20 percent lower fuel burn per seat compared with previous
generation aircraft. The type will serve a worldwide market forsmaller single-aisle airliners, estimated at least at 7,000 suchaircraft over the next 20 years. Airbus manufactures, markets
and supports A220 aircraft under the “C Series Aircraft Limited
Partnership” (CSALP) agreement, ﬁnalised in 2018.

(1) Options are not included in orders booked or year-end backlog.
(2) Excludes undisclosed customers.

Airbus / Information Document 201831

ANNUAL REPORT 2018
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Information on the Company’s Activities /1.1 Presentation of the Company

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A220 FAMILY TECHNICAL FEATURES (CURRENT VERSION)
Model

Entry-into-service

Passenger capacity(1)Range (km)Length (metres)

Wingspan (metres)

A220-100

2016

116

2,950

35.0

35.1

A220-300

2016

141

3,200

38.7

35.1

(1) Two-class layout.

A320 Family. With more than 15,000 aircraft sold, and nearly
8,700 delivered, the Airbus family of single-aisle aircraft, basedon the A320, includes the A319 and A321 derivatives, as well as
the corporate jet family (including new members ACJ319neo and
ACJ320neo). Each aircraft in the A320 Family shares the same
systems, cockpit, operating procedures and cross-section.
At 3.95 metres diameter, the A320 Family has the widest fuselage
cross-section of any competing single-aisle aircraft. This
provides a roomy six-abreast passenger cabin, a high comfort
level and a spacious under ﬂoor cargo volume. The A320 Family
incorporates digital ﬂy-by-wire controls, an ergonomic cockpit
and a modern structural material selection. The A320 Family’scompetitor is the Boeing 737 series.
To ensure this market leader keeps its competitive edge, Airbus
continues to invest in improvements across the product line,
including development of the A320neo Family. The A320neo
incorporates many innovations including latest generationengines, Sharklet wing-tip devices and cabin improvements,
which together will deliver up to 20% in fuel savings comparedwith earlier A320 family aircraft. The A320neo received joint Type
Certiﬁcation from the European Aviation Safety Agency (EASA)
and the Federal Aviation Administration (FAA) in November 2015.
The A320neo with Pratt & Whitney engines was the ﬁrst variant
in the Neo Family to receive Type Certiﬁcation. The A320neo
with CFM engines was certiﬁed in May 2016. The A321neo

with Pratt & Whitney engines received Joint Type Certiﬁcationin December 2016 and with CFM engines in March 2017. Type
Certiﬁcation for the A319neo with CFM engines was achievedin December 2018 with the variant with the Pratt & Whitneyengine to follow.
The A320neo Family versions have over 95% airframe
commonality with the A320ceo (current engine option) versions,enabling them to ﬁt seamlessly into existing A320 Family ﬂeets– a key factor for Airbus customers and operators.
Since its launch in December 2010, the A320neo Family hasreceived 6,526 ﬁrm orders from 104 customers, with a total of
635 aircraft delivered to the end of 2018. A320neo deliveriescommenced in February 2016 followed by the ﬁrst A321neo in
April 2017 and in November 2018 the ﬁrst A321 LR. Overall,
the A320 family retains a 56% share of the backlog against the
Boeing 737 Family.
During 2018, Airbus received 577 gross orders for the A320
Family of aircraft and 541 net orders.
In October 2015, Airbus announced the decision to further
increase the production rate of the Single Aisle Family to
60 aircraft a month in mid-2019, in response to strong customer
demand and following thorough studies on production ramp-up
readiness in the supply chain and in Airbus’ facilities.

A320 FAMILY TECHNICAL FEATURES (CURRENT VERSION)
Model

Entry-into-service

Passenger capacity(1)Range (km)Length (metres)

Wingspan (metres)

2003

107

5,750

31.4

34.1

(2)

A318
A319

1996

124

6,950

33.8

35.8

A320

1988

150

6,100(2)37.6

35.8(3)

A321

1994

185

5,950(2)44.5

35.8(3)

140

6,950

33.8

35.8

A319neo
A320neo

2016

165

6,500

37.6

35.8

A321neo

2017

206

7,400

44.5

35.8

(1) Two-class layout.
(2) Range with sharklets.
(3) Wingspan with sharklets.

A330 Family. With 1,734 aircraft sold (of which 238 A330neo)
and 1,439 delivered, the A330 Family covers all market segmentswith one twin-engine aircraft type and is designed to carry
between 247 and 287 passengers. The A330 Family offers highlevels of passenger comfort as well as large under-ﬂoor cargo
areas. The competitors of the A330 Family are the Boeing 767,
777 and 787 aircraft series.

32

Airbus / Information Document 2018

The newest evolution to the A330 Family is the A330neo (newengine option), comprising the A330-800neo and A330-900neo
versions. These aircraft incorporate latest generation RollsRoyce Trent 7000 engines and enhanced aerodynamics for
improved fuel efﬁciency. The ﬁrst ﬂight took place in October 2017and both Type Certiﬁcation and ﬁrst delivery were achievedin 2018, with TAP taking delivery of its ﬁrst three A330-900s
during the year. The ﬁnal assembly of the A330-800 started
in November 2017 and the aircraft performed its ﬁrst ﬂight on
6 November 2018.

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Airbus is continuously developing the A330 Family to keep theaircraft at the leading edge of innovations and future versionsof the A330neo will offer increased take-off weight of up to 251
tonnes, offering a 15,000 km range for the A330-800.

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In 2018, Airbus received 37 gross orders (27 net) for the A330
Family of aircraft including 18 for the A330neo, and delivered
49 aircraft to customers.

1

A330 FAMILY TECHNICAL FEATURES (CURRENT VERSION)
Model

Entry-into-service

Passenger capacity(1)Maximum range (km)Length (metres)

Wingspan (metres)

A330-200

1998

247

13,45058.8

60.3

A330-300

1994

277

11,750

63.7

60.3

257

13,900

58.8

64

2018

287

12,13063.7

64A330-800neo
A330-900neo(1) Three-class configuration.

A350 XWB Family. The A350 XWB is an all-new family of widebody aircraft, designed to accommodate between 325 and366 passengers. The A350 XWB features a wider fuselage
than that of competing new generation aircraft, Rolls-Royce
Trent XWB engines, A380 technology and over 50% composite
material. The A350 XWB’s main competitors are the Boeing 787
and 777 aircraft series.
With the Ultra-Long Range (ULR) version of the A350-900
launched in 2015, the A350 XWB demonstrates its versatility
by offering the capability to perform ﬂights of up to 19 hours.

The ﬁrst A350-900 ULR was delivered in September 2018 toSingapore Airlines.
Airbus has also developed the larger A350-1000, which is now
certiﬁed by EASA and the FAA and was delivered to its ﬁrst
customer in February 2018 with a total of 14 aircraft delivered
during the year.
In 2018, Airbus received 62 gross orders for the A350 XWBFamily (40 net), and delivered 93 aircraft, achieving the target
rate of 10 aircraft per month by the end of the year.

A350 XWB FAMILY TECHNICAL FEATURES
Entry-into-service

Passenger capacity(1)Maximum range (km)Length (metres)

Wingspan (metres)

A350-900

2014

325

15,00066.8

64.8

A350-1000

2018

366

15,557

73.8

64.8

Model

(1) Three-class layout.

A380. The double-deck A380 is the world’s largest commercial
aircraft ﬂying today. Its cross-section provides ﬂexible andinnovative cabin space, allowing passengers to beneﬁt fromwider seats, wider aisles and more ﬂoor space, tailored to theneeds of each airline. Carrying 575 passengers in a comfortablefour-class configuration and with a range of 8,000 nm /14,800 km, the A380 offers superior economic performance,
lower fuel consumption, less noise and reduced emissions. The
A380’s competitor is the Boeing 747-8.

In 2018, Airbus Commercial Aircraft delivered 12 aircraft.
In February 2019, following a review of its operations, and in lightof developments in aircraft and engine technologies, Emirates
reduced its A380 orderbook from 162 to 123 aircraft. Emirates
will take delivery of 14 further A380s over the next two years.
As a consequence and given the lack of order backlog withother airlines, Airbus will cease deliveries of the A380 in 2021.

A380 TECHNICAL FEATURES
Model

Entry-into-service

Passenger capacity(1)Maximum range (km)Length (metres)

Wingspan (metres)

2007

575

14,80072.7

79.8

A380-800(1) Four-class layout.

Customer Services
Airbus seeks to remain at the forefront of the industry by
expanding its customer services offering to meet customers’
evolving needs. As a result, Airbus has developed a wide rangeof customer centric and value-added services. This approachprovides Airbus operators with solutions to signiﬁcantly reduce
their operating costs, increase aircraft availability, enhance thequality of their operations and passenger experience.

Customer Services’ primary role is to support its customers
in operating their Airbus ﬂeet safely and proﬁtably and to
the satisfaction of passengers all around the world. As aresult of its continued growth, Airbus’ customer base has
increased consistently over the past years reaching more than
10,700 aircraft in operation by the end of 2018 operated bymore than 430 operators. The ﬂeet is maintained by more than
100 Maintenance and Repair Organisations and partially owned
by 100 leasing companies.

Airbus / Information Document 201833

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A worldwide network of more than 6,500 people cover all areasof support from technical engineering / operational assistanceand spare parts supply to crew and maintenance training.
Hundreds of technical specialists provide Airbus customers
with advice and assistance 24 hours a day, 7 days a week.
There are 142 ﬁeld service stations available worldwide for onsite assistance to our operators, covering 159 operators. 216
operators are covered by 16 Hubs. Airbus worldwide support
is also based on an international network of support centres,
training centres and spares warehouses.
As the worldwide ﬂeet is growing, so is the demand in theservices market. Airbus offers optimised aircraft operational
availability, streamlined flight operations and enhanced
passenger experience by covering the full aircraft lifecycle andfocusing on adding value to its customers. Growing fast on
the market with organic growth, JVs, co-developments andacquisitions in recent years, here are some examples:in 2016, full acquisition of Navtech, now re-named Navblue,
offering products in the Flight Operations area;in 2017, full acquisition of Sepang Aircraft Engineering (SAE),an MRO centre based in Kuala Lumpur, Malaysia, that had
been partially owned by Airbus since 2011;
launch of Airbus Interiors Services (2017) specialised intimely and ﬂexible solutions for cabin equipments. For its ﬁrst
participation in the Crystal Cabin Award 2018, Airbus Interiors
Services was among the ﬁnalists of the “Visionary Concepts”
category, presenting its novel “Day & Night” concept seat;
the Airbus MRO alliance was launched in 2017;
the Airbus Training network has tripled in the last three years
and currently counts 17 training network locations around theworld, the latest acquisition being a ﬂight training center in
Denver, Colorado (January 2018). In December 2018, Airbus
and the French Civil Aviation University, ENAC, have obtained
EASA certiﬁcation for a co-developed Ab initio Pilot Cadet
Training Programme that will be used by a worldwide networkof partner ﬂight schools, starting with the ﬁrst customer
Escuela de Aviacion Mexico (EAM) in Mexico City early 2019;
Airbus’ worldwide support is also based on an international
network of support centres, training centres and spares
warehouses all around the world, offering customers thesolutions they need close to their operational base. To ensure
this proximity Airbus empowered local teams and developed
hubs in the regions, most recently in Asia and China;
since the launch of Skywise at Le Bourget in 2017, Airbus has
accelerated with its digital transformation. In October 2018,
Airbus created the Skywise campus – “a place to foster internaland external collaboration” – and developing new ways ofworking, with customers at the heart of each service, to offer
the best value proposition across the full lifecycle, securing
and optimising their operations end-to-end, providing tailoredsolutions that deliver impactful outcomes and enhancing theuser’s experience all along the way.

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Skywise brings all the ecosystem data to a single platform. 52
customers have now chosen Skywise, representing a potentialof over 4,000 aircraft connected.
Leveraging on Skywise digital capabilities, Airbus’ Customer
Services portfolio offer is evolving to provide the best and most
efﬁcient solutions available on the market:
FHS powered by Skywise: stepping-up services capabilities
with digital Skywise (April 2018);
launch of Skywise Reliability Services (October 2018);
launch of Skywise Predictive Maintenance (October 2018).

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Preparing the future of Airbus Services, at the Farnborough 2018
Air show Airbus presented its route to US$ 10 billion revenues
in the next decade, to further address market needs.
Customer Finance
Airbus favours cash sales, and does not envisage customer
ﬁnancing as an area of business development. However, Airbus
recognises the commercial need for manufacturers to assist
customers in arranging ﬁnancing of new aircraft purchases,
and in certain cases to participate in ﬁnancing those aircraft
for the airline.
Extension of credit or assumption of exposure is subject tocorporate oversight and monitoring, and follows strict standardsof discipline and caution. Airbus’ dedicated customer ﬁnanceteam has accumulated decades of expertise in aircraft ﬁnance.
When Airbus ﬁnances a customer, the ﬁnanced aircraft generally
serves as collateral, with the engine manufacturer participatingin the ﬁnancing. These elements assist in reducing the risk borne
by Airbus. The difference between the gross exposure resulting
from the ﬁnancing and the collateral value is fully provisioned for(for further information, please refer to the “— Notes to the IFRS
Consolidated Financial Statements — Note 25: Sales Financing
Transactions”). Airbus’ customer ﬁnancing transactions aredesigned to facilitate subsequent sell-down of the exposure to
the ﬁnancial markets, third-party lenders or lessors.
In 2018, Airbus continued to beneﬁt from market appetite
for both aircraft financing and sale and leaseback lessor
opportunities, supported by a high level of liquidity available inthe market at good rates for Airbus aircraft. Airbus customer
ﬁnancing exposure remained limited in 2018 and decreased
compared to 2017. Airbus will continue to provide direct aircraft
ﬁnancing support as it deems necessary. Management believes,in light of its experience, that the level of provisioning protecting
Airbus from default costs is adequate and consistent withstandards and practice in the aircraft ﬁnancing industry. See“— Risk Factors – Financial Market Risks – Sales Financing
Arrangements”.
Asset Management
The Asset Management department was established in 1994 to
manage and re-market used aircraft acquired by Airbus, originallyas a result of customer bankruptcies, and subsequently in thecontext of certain buy-back commitments. The department
operates with a dedicated staff and manages a ﬂeet comprisedof used aircraft across a wide range of models. Through its
activities, the Asset Management department helps Airbus torespond more efﬁciently to the medium- and long-term ﬂeet
requirements of its customers.
Its key roles comprise commercial, technical and ﬁnancial
risk management of its used aircraft portfolio, as well as theenhancement of all Airbus products’ residual value.
It also provides a full range of remarketing services, including
assistance with entry-into-service, interior reconfigurationand maintenance checks. Most of the aircraft are available tocustomers for cash sale, while some can also be offered on
operating lease. In the latter, the Airbus Asset Management teamaims at eventually selling down the aircraft with lease attachedto further reduce its portfolio exposure.
At the end of 2018, the Asset Management portfolio contained
15 aircraft, representing a 44% net portfolio reduction from 2017.

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Production
Industrial Organisation
Each task in the building of Airbus aircraft (from design toproduction) is allocated to a designated plant. The Airbus plants
are typically organised around different aircraft components
and sections, in component delivery teams. Each component
delivery team is either in charge of one aircraft programme, ororganised by manufacturing technology clusters dependingon the optimum solution for each plant. Every plant isorganised with production, engineering, quality, supply chain,manufacturing, engineering and logistics capabilities to ensure
a seamless production ﬂow of operations.
A transversal “Industrial Systems” Centre of Competences
is in charge of ensuring that harmonised and standardised
processes, methods and tools are developed and implemented
across the plants, in order to increase efﬁciency, based on bestpractices. Another transversal “Manufacturing technologies”
Centre of Competences is in charge of disseminating newtechnologies and innovation in manufacturing across theplants and preparing manufacturing solutions for future productevolutions.
Following production by the respective plants, the various
aircraft sections are transferred between the network of sites
and the ﬁnal assembly lines using dedicated transport means,such as the “Beluga” Super Transporters.
Programme management is then responsible for the final
assembly line activities. The programme management works
closely with the plants to secure delivery of aircraft sections tothe ﬁnal assembly lines on time, cost and quality.
In 2018, construction started on the new FAL in Mobile, Alabama(US) for the A220. The ﬁrst A220 delivery from Mobile is expectedin mid-2020.
Airbus announced the following programme production rates:- A220 family: by next mid-decade, rate 10 per month targetedin Mirabel and rate 4 per month targeted in Mobile;family: rate 60 per month targeted by mid 2019 with a- A320A320 line in Hamburg, Mobile fully on schedule and Tianjin-

4th(China) ramping- up further;
A350: rate 10 reached at the end of 2018;
A380: Airbus expects to deliver 8 aircraft in 2019, 7 in 2020
and the remaining 2 in 2021.

Engineering
Airbus Engineering is a global organisation that develops civil
aircraft and aircraft components, and that conducts innovative
research applicable to the next generation of aircraft. Airbus
Engineering operates transnationally, with most engineers
employed in France, Germany, the UK and Spain. A growing
population of experienced aerospace engineers is also employedworldwide at ﬁve other engineering centres in Wichita (Kansas,
US), Mobile (Alabama, US), Moscow (Russia), Bangalore (India)
and Beijing (China).
A key part of the Airbus engineering organisation is the architect
and integration centre, which ensures, together with a team ofsenior aircraft architects and the programme chief engineers,that a consistent and multi-disciplinary approach is applied
during aircraft development.

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Research & Technology activities continue to deliver incremental
innovations for existing aircraft, matured breakthroughtechnologies, with reinforced focus on industrial aspects. Airbus
Engineering is a major contributor to numerous international
initiatives dedicated to the preservation of the environment
and the reduction of noise and CO2 emissions. Fully integratedchange projects are also implemented to continuously
implement innovative and efﬁcient ways of working.

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Regional Aircraft, Aerostructures,
Seats and Aircraft Conversion
ATR
ATR (Avions de Transport Régional) is a world leader in themarket for regional aircraft up to 90 seats. Its aircraft are currently
operated by more than 200 airlines in over 100 countries. ATR
is an equal partnership between Airbus and Leonardo, with
Airbus’ 50% share managed by Airbus. Headquartered inToulouse, ATR employs more than 1,400 people. Since thestart of the programme in 1981, ATR has registered net orders
for 1,717 aircraft (483 ATR 42s and 1,234 ATR 72s).
In 2018, ATR delivered 76 new aircraft (compared to 78 in 2017)
and recorded net ﬁrm orders for 46 new aircraft (compared to 103
in 2017), including orders from NAC/Silver. As of 31 December
2018, ATR had a backlog of 205 aircraft (compared to 235 in2017).
Products and Services
ATR 42 and ATR 72. ATR has developed a family of highwing, twin turboprop aircraft in the 30- to 78-seat market
which comprises the ATR 42 and ATR 72, designed for optimal
efﬁciency, operational ﬂexibility and comfort. Like Airbus, theATR range is based on the family concept, which provides
for savings in training, maintenance operations, spare parts
supply and cross-crew qualiﬁcation. ATR is now entering thecargo market as 2018 is the year of the launch of the ATR72/F(Freighter) with a brand new windowless fuselage, a forward
Large Cargo Door (LCD) and a rear upper hinged cargo door.
First delivery is planned in 2020 to FedEx.
By the end of 2018, ATR had delivered 1,512 aircraft.
Customer service. ATR has established a worldwide customer
support organisation committed to supporting aircraft over theirservice life. Service centres and spare parts stocks are locatedin Toulouse, Paris, Miami, Singapore, Bangalore, Auckland,
Sao Paulo and Johannesburg. ATR worldwide presence also
includes representative ofﬁces in Beijing and Tokyo.
ATR Asset Management addresses the market for second-handaircraft by assisting in the placement and ﬁnancing of usedand end-of-lease aircraft. ATR Asset Management activity ismarginal today as the leasing market has strongly developedsince 2007.
Production
The ATR fuselage is produced in Naples, Italy, and ATR wings
are manufactured in Merignac near Bordeaux, France. Finalassembly takes place in Saint Martin near Toulouse on the Airbus
commercial aircraft production site. Flight-testing, certiﬁcationand deliveries also occur in Toulouse. ATR outsources certain
areas of responsibility to Airbus, such as wing design andmanufacturing, ﬂight-testing and information technology.

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STELIA Aerospace
STELIA Aerospace is a wholly-owned subsidiary of Airbus.
It offers global solutions for aeronautical manufacturers andairlines supported by its aerostructure, cabin interior and pilot
seats business lines.
As one of the world leading tier-1 aerostructure suppliers,
STELIA Aerospace designs and manufactures fully integrated
aircraft sections for civil and military programmes.
From aircraft wings and fuselage sections, to fully equipped
and tested work packages, STELIA Aerospace is a global
partner for major aeronautical players worldwide, such as
Airbus, ATR, or Bombardier Aerospace.
With more than 7,000 employees worldwide, working
within 11 Centres of Excellence based in France, Canada,
Morocco and Tunisia, STELIA Aerospace has a wide range ofcapabilities, from Build-to-Print to Design & Build solutions,
including mechanical milling of rolled and stretched panels
and tubes & pipes covering all ATA systems.
Through its cabin interior specialty, STELIA Aerospace designs
and manufactures luxury First Class and Business Seats for
key partners in the world including Etihad Airways, Singapore
Airlines or Thaï Airways.
By combining innovative materials and technology with a drive
to improve the passenger experience, STELIA Aerospace hascreated an outstanding range of seats used in civil aircraft
globally.
STELIA Aerospace – a joint world leader Pilot seats
manufacturer – provides cockpit and pilot seats for all kindsof aircraft, and offers support from design to production,
including after-sales service.
As part of its development strategy, STELIA Aerospace hastaken a majority stake in Portalliance Engineering end of 2018.
Portalliance Engineering is an SME founded in 2006 andfocuses on modelisation and digital simulation of structural
calculation. This acquisition will enable STELIA Aerospace
to beneﬁt sustainably from innovative digital solutions andstrengthen its position on the aerostructure market.

Premium AEROTEC
Premium AEROTEC is a wholly owned subsidiary of theCompany (consolidated within Airbus), is one of the world’s
leading tier-1 suppliers of commercial and military aircraft

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structures and is a partner in the major European international
aerospace programmes.
Its core business is the development and production of large
aircraft components from aluminum, titanium and carbon ﬁber
composites (CFRP). Premium AEROTEC is Europe’s no. 1 inthis segment with roughly 10,000 employees at various sites inGermany and Romania. Premium AEROTEC is represented byits products in all Airbus commercial aircraft programmes. The
current military programmes include the Euroﬁghter “Typhoon”
and the new military transport aircraft A400M.
Besides main customer Airbus, Premium AEROTEC will further
intensify business with other customers and actively approachother aircraft or structural manufacturers. Premium AEROTEC
is also striving to expand its maintenance, repair and spareparts business.
In order to contribute successfully to the shaping of the
future of aviation, the engineers and developers at Premium
AEROTEC are continuously working on the new and further
development of lightweight and highly durable aircraft
structures. They cooperate closely with universities andresearch institutes in the process. Premium AEROTEC
plays a significant role in the design of new concepts in suchfields as carbon composite technologies (incl. thermoplastic
processes) or 3D-printing of aircraft components made oftitanium or aluminum.

Elbe Flugzeugwerke GmbH — EFW
EFW combines various aviation and technology activities
under a single roof: development and manufacturing of ﬂat
ﬁbre-reinforced composite components for structures andinteriors, the conversion of passenger aircraft into freighter
conﬁguration, maintenance and repair of Airbus commercial
aircraft as well as engineering services in the context ofcertiﬁcation and approval.
On 17 June 2015, Airbus signed an agreement with Singaporebased ST Aerospace Ltd. (STA) to offer passenger-to-freighter(P2F) conversion solutions for its A320 and A321 aircraft. STA
acquired an additional 20% of the shares of EFW, Dresden(Germany) by way of a contribution in kind and a capitalincrease to EFW. The transaction closed on 4 January 2016.
Consequently, 45% of the shares of EFW were retained andAirbus effectively lost its control over EFW (previously reported
in Airbus).

1.1.3 Helicopters
Airbus Helicopters is a global leader in the civil and militaryrotorcraft market, offering one of the most complete andmodern ranges of helicopters and related services. This productrange currently includes light single-engine, light twin-engine,
medium and medium-heavy rotorcraft, which are adaptable
to all kinds of mission types based on customer needs. See“— 1.1.1 Overview” for an introduction to Airbus Helicopters.

Strategy
Airbus Helicopters’ strategy is to continue driving improvement
initiatives via its company-wide digital transformation plan, whichplaces customer satisfaction, quality and safety at the core of
its operations, along with increasing industrial competitiveness.
A Commitment to Innovation
Development of the next-generation H160 medium helicopter –the ﬁrst of the “H Generation” – is ongoing at a steady pace.

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Flight-test activities were carried out throughout 2018. The three
H160 prototypes have already accumulated over a 1,000 ﬂight
hours in the ﬁnal steps of the ﬂight test campaign. The ﬁrst
serial H160 has performed its ﬁrst ﬂight on 14 December 2018.
In 2018, products and services continued to be enhanced, withseveral initiatives such as the ﬁrst H175 Public Services version
delivered in July 2018.
Airbus Helicopters is investigating future unmanned VTOL
(Vertical Take-off and Landing) systems. In that frame, Airbus
Helicopters is currently working on the design and developmentof the VSR700 unmanned aerial vehicle. The French Direction
Générale de l’Armement (DGA) has awarded a contract to theNaval Group and Airbus Helicopters consortium to identify,
deploy and test the necessary technologies for the integration ofa tactical drone-system capacity within a heavily armed vessel.
A ﬁrst unmanned ﬂight took place at the end of 2018.
Airbus Helicopters is also actively involved into the Urban Air
Mobility (UAM) via several commercial and military projects:
CityAirbus project, which is an electrically operated platform
concept for multiple passengers;
as part of Clean Sky 2 European Research programme,
Airbus Helicopters has unveiled at the Le Bourget airshow
the aerodynamic conﬁguration of the high speed demonstrator
codenamed Racer. This demonstrator will incorporate a hostof innovative features and will be optimised for a cruise speedof more than 400 km/h.

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Focusing on Customers
Airbus Helicopters achieved the second wave of its
transformation plan in 2018 by further enhancing customer
support and services, with safety as the top priority. This isunderscored by indicators like increasing ﬂeet availability forcustomers and operators, or improved On Time Delivery rates
for spare parts.
The transformation, which began ﬁve years ago, continues toyield results in various areas, with the objective of responding
fully to customers’ requirements and over-achieve market
standards in terms of quality, safety, customer satisfaction andcompetitiveness. This transformation is and remains based on
fundamental requirements: quality and safety, leadership, digitaland competitiveness.
Delivering Safety
Airbus Helicopters’ chief priority is to enhance ﬂight safety
for the thousands of men and women around the world who
are transported in its aircraft every day. This commitment is
reﬂected across all company activities involving the lifecycleof a helicopter, with focus on meeting and exceeding industry
safety standards and supporting the safe operation of its aircraft.
Following a H225 Super Puma helicopter accident on 29 April
2016 in Norway, a ﬁnal AIBN report was published and closed
the investigations. The accident was the result of a fatigue
fracture in a second stage planet gear in the epicyclic moduleof the main rotor gearbox.
Neither aviation authorities nor industry had ever seen thetype of failure mode that lead to this accident.
Extensive analysis of the accident has led to the developmentof a set of safety measures, approved by global aviation
authorities, which have allowed the H225 ﬂ eet to resume
worldwide.

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Subsequently, Airbus Helicopters has reviewed and applied
new safety measures to its product range. Furthermore, designchanges have been introduced on the Super Puma and Dauphinfamily of helicopters.

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Market Drivers
According to market forecasts produced by Airbus Helicopters,
around 22,000 civil helicopters and 14,000 military helicopters
are expected to be built globally over the next 20 years. This
forecast, particularly with respect to the military sector, relies to alarge extent on large US development programmes. Overall, theglobal helicopter market is still evolving in a difﬁcult environment,
despite improved economic indicators in 2018.
Helicopters sold in the civil and parapublic sector, where Airbus
Helicopters is a leader, provide transport for private owners andcorporate executives, offshore oil operations, diverse commercial
applications and state agencies, including coast guard, police,
medical and ﬁre-ﬁghting services. Thanks to its existing mission
segment diversity, the helicopter market (both Platforms andServices activities) is expected to be resilient through the coming
decade, even though one of the key segments, Oil & Gas (invalue), continues to experience challenging conditions. Airbus
Helicopters expects market softness to continue in the shortterm but believes that the demand over the next 20 years
will be driven by large replacement needs from advanced
economies and by growth from emerging countries (especiallyin Asia still largely under equipped). Airbus Helicopters’ market
data indicates that in 2018, worldwide deliveries of civil andparapublic turbine helicopters of ﬁve seats and above stood at~510 units. Demand for military helicopters and related services
is mainly driven by budgetary and strategic considerations, andthe need to replace ageing ﬂeets. Airbus Helicopters believes
that the advanced age of current ﬂeets, the emergence of a newgeneration of helicopters equipped with integrated systems andthe ongoing introduction of combat helicopters into many nationalarmed forces will contribute to increased military helicopter
procurement in the medium term. Nevertheless, demand fromthe military sector has historically been subject to large yearto-year variations due to evolving strategic considerations, andmay be limited, due to budgetary constraints on public spending
in some regions like Western Europe and Middle East, whileother regions like Asia Paciﬁc or Eastern Europe are expected
to continue to grow. Despite recent threats and a growing
geopolitical instability, which has accelerated military spending
and a reassessment of defence budgets, the military market
is still low in 2018. Economic difﬁculties (i.e. low commodities
prices), saturation of the Western countries markets as well as
postponement of signiﬁcant military campaigns have resulted
in a decrease for all mission segments. According to Airbus
Helicopters’ market data, worldwide deliveries of military turbine
helicopters have decreased at ~620 units in 2018.
Competition
Airbus Helicopters’ primary competitors in the civil andparapublic sector are Leonardo and Bell Helicopter. Sikorsky
and Russian Helicopters (except in Russia) continue to reﬂect
very low order intake in the C&P market while concentrating
their activity on the military sector.
The civil and parapublic sector has seen more local competitors
in recent years (China, India, Japan, South Korea, Turkey). Airbus
Helicopters has maintained its leading market share (in bookings

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of 2.0t helicopters and ﬁve seats and above), in a low market,
with ~52% in unit in 2018, followed by Leonardo and Bell withrespectively 26% and 13%.
Airbus Helicopters’ main competitors in the military sector are
Sikorsky, Boeing and Russian Helicopters, thanks to large
captive market and strong political support for export.
The military sector is highly competitive and is characterisedby major restrictions on foreign manufacturers’ access to thedomestic defence bidding process (i.e. USA, China, Russia).
Thanks to several major contracts (i.e. H145M/Lakota andNH90), Airbus Helicopters increased its market share on this
sector (in units) from 9% in 2017 to 25% in 2018. The Company
will continue to focus on large military campaigns in 2019.

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Customers
More than 3,000 operators currently ﬂy Airbus Helicopters’rotorcraft in over 150 countries. Airbus Helicopters’ principal
military clients are Ministries of Defence (“MoDs”) in Europe,Asia, the US and Latin America. In the civil and parapublic
sector, Airbus Helicopters has a leading market share in Europe,
the Americas and Asia-Paciﬁc.
With 54% of the worldwide market share-based on deliveries in
2018, the versatility and reliability of Airbus Helicopters products
have made them the preferred choice of the most prominent
civil and parapublic customers (turbine helicopters of ﬁve seats
and above).

Products and Services
Airbus Helicopters offers a complete range of helicopters that covers nearly the entire civil and military market spectrum, whichit continuously improves with leading-edge technologies. This product range includes single-engine, light twin-engine, medium
and medium-heavy helicopters, and is based on a series of new-generation platforms designed to be adaptable to both militaryand civil applications. In addition, products share multiple technical features as part of a family concept approach.
The following table sets forth Airbus Helicopters’ existing product line, consisting of optimised products for different mission types:
Helicopter TypePrimary Missions

Single Engine (“Ecureuil” family)
H125 “Ecureuil” / H125M “Fennec”
H130

Public Services(1), Military Utility(2) & Armed Reconnaissance, Corporate /Private, Commercial Pax Transport & Aerial Work
Commercial Pax Transport & Multipurpose, Emergency Medical, Tourism, Corporate / Private

Light Twin Engine
H135 / H135M

VIP, Military Utility & Armed Reconnaissance, Emergency Medical, Public Services(1)VIP, Military Utility(2), Emergency Medical, Public Services(1)H145 / LUH (UH-72) / H145M
Medium (“Dauphin” family)
AS365 “Dauphin” / AS565 “Panther”

Military Naval Warfare Mission & Maritime Security, Public Services(1)(in particular Coast Guard & SAR), Oil & Gas, Commercial Pax Transport & Multipurpose

H155

Corporate / Private, VIP, Oil & Gas, Public Services(1)H160

Corporate / Private, VIP, Oil & Gas, Public Services(1)H175

Corporate / Private, VIP, SAR, Emergency Medical, Public Services(1), Oil & Gas

Medium-Heavy
H215 “Super Puma” / H215M “Cougar”
H225 / H225M

Civil Utility, Military Transport / SAR, Oil & Gas
SAR, Combat-SAR, Military Transport, Oil & Gas, VIP, Public Services(1)NH90 (TTH / NFH)

SAR, Military Transport, Naval

AttackTiger

Combat, Armed Reconnaissance / Escort(1) Public Services includes homeland security, law enforcement, fire-fighting, border patrol, coast guard and public agency emergency medical services.
(2) Civil Utility includes different kinds of commercial activities such as aerial works, electrical new gathering (ENG), passenger and cargo transport.

Civil Range
Airbus Helicopters’ civil range includes single-engine, lighttwin-engine, medium and medium-heavy helicopters, which
are adaptable to all mission types based on customer needs. To
maintain and strengthen its competitive edge in the civil sector,
Airbus Helicopters is maintaining R&D investments including:certiﬁcation of the H160, which realised its ﬁrst serial ﬂight inDecember 2018;
improvement of the existing range in the ﬁeld of performancesand safety in order to meet customer’s requirements;-

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- preparing the future H generation with major upgrades andnew products pursuing a fast-paced product range renewal.

Military Range
Airbus Helicopters’ military range comprises platforms derived
from its commercial range (such as the H145M and H225M
respectively derived from the H145 and H225) as well as purely
military platforms developed for armed forces (the NH90 and
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Designed for modern multi-mission capabilities and costeffectiveness throughout its lifecycle, the NH90 has beendeveloped as a multi-role helicopter for both tactical transport(TTH) and naval (NFH) applications. The programme, mainly
ﬁnanced by the governments of France, Germany, Italy and theNetherlands, has been jointly developed by Airbus Helicopters,
Leonardo of Italy and Fokker Services of the Netherlands
as joint partners in NATO Helicopter Industries (“NHI”) in
direct proportion to their countries’ expressed procurement
commitments. Airbus Helicopters’ share of NHI is 62.5%.
There were 36 NH90 deliveries in 2018, for a cumulative totalof 381 deliveries as of the end of 2018. The NH90 ﬂeet has
accumulated ~187,000 ﬂight hours.
The Tiger combat attack helicopter programme includes four
variants based on the same airframe: the HAP (turreted gun,rockets and air-to-air missile); the UHT (antitank missile, air-toair missile, axial gun and rockets); the ARH (antitank missile,turreted gun and rockets); and the HAD (antitank missile, airto-air missile, turreted gun, rockets and upgraded avionics
and engines) Overall in 2018, 9 Tigers were delivered, for a
cumulative total of 180 deliveries by year-end. The Tiger ﬂeet
has accumulated more than 122,000 ﬂight hours.

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this large ﬂeet generated 38% of Airbus Helicopters’ revenues
for 2018 (in 2017 it would have been 37% without Vector)
Airbus Helicopters’ customer service activities consist
primarily of maintenance, repairs, spare parts supply, training
and technical support. In order to provide efﬁcient worldwide
service, Airbus Helicopters has established an international
network of subsidiaries, authorised distributors and service
centres.

Production
Airbus Helicopters’ industrial activities in Europe are conductedin four primary locations, two in France, one in Germany andone in Spain. The French sites are in Marignane, southern
France and Paris-Le Bourget. The German site is located in
Donauwörth, and the Spanish site is located in Albacete.
In the US, Airbus Helicopters, Inc. has two industrial sites: Grand
Prairie, Texas and Columbus, Mississippi. Grand Prairie serves
as the company’s headquarters and main facility and also serves
as the Airbus Helicopters Training facility for North America. The
Columbus facility is dedicated to the assembly and delivery of
the UH-72A Lakota and H125.

Airbus is also a major contractor to the US Army, having beenchosen to supply the service’s UH-72A Lakota helicopter. As
of 1 January 2019, 442 aircraft had been delivered to the US
Department of Defense for operation by US Army and Army
National Guard units, the Navy and foreign military sales buyers.

In Australia, Australian Aerospace upgrades and maintains
NH90 and Tiger for the country’s armed forces; while a rotarywing centre of excellence in Helibras — Itajuba, Brazil produces,assembles and maintains H225M helicopters acquired by theBrazilian armed forces.

Customer Services

Part of the transformation and its competitiveness branch is to
optimise its production footprint, especially in term of production
by creating some centers of excellence and avoid duplicationof work.

With more than 3,000 operators in over 150 countries, Airbus
Helicopters has a large ﬂeet of some 12,000 in-service rotorcraftto support. As a result, customer service activities to support

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1.1.4 Defence and Space
Airbus Defence and Space develops and engineers cuttingedge products, systems and services in the ﬁeld of defence
and space, enabling governments, institutions and commercial
customers to protect people and resources while staying
connected to the world.
Airbus Defence and Space is organised in four ProgrammeLines: Military Aircraft; Space Systems; Communications,Intelligence & Security; and Unmanned Aerial Systems, which
are focusing on the following key activities respectively:
Military Aircraft designs, develops, delivers and supports
military aircraft. It is the leading ﬁxed-wing military aircraft
centre in Europe, and one of the market leaders for combat,
mission, transport and tanker aircraft worldwide. Key products
include the Euroﬁghter Typhoon, the A400M, the A330 Multi
Role Tanker Transport (“MRTT”) and the C295;
Space Systems covers a broad range of civil and military space
applications. Its satellite solutions for telecommunications,
earth observation, navigation and science include spacecraft,
ground segments and payloads for institutional customers aswell as the export market, for the latter as recognised world

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leader. It also manufactures orbital and space exploration
systems. Space transportation capabilities (comprisinglaunchers and services) are offered via ArianeGroup, a 50/50
joint venture between Airbus and Safran;Communications, Intelligence & Security (“CIS”) includes ﬁve
main business clusters: Secure Communications, Intelligence,
Cyber Security, Security Solutions and Secure Land
Communications. These clusters develop speciﬁc solutions forcustomers ranging from governments to small companies andcommercial enterprises. In addition, CIS houses a dedicatedunit for developing future applications for commercial markets,leveraging Airbus Defence and Space innovations, products
and capabilities;
Unmanned Aerial Systems (“UAS”) develops, delivers andoperates UAS and UAV solutions for airborne intelligence,
surveillance, reconnaissance, and combat missions. The
commercial part of the UAS Programme Line, Airbus Aerial,delivers actionable data for different vertical markets,connectivity and cargo delivery services – ﬁtting customer
needs.

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Strategy
The ambition of Airbus Defence and Space is to become theworld’s leading provider of smart aerospace and defence
solutions. Following a comprehensive strategy review andupdate in 2016 and adaptation to evolving market dynamics,
Airbus Defence and Space is currently implementing a growthstrategy based on strengthening its core product portfolio
and expanding its services business, with a major emphasison digitalisation (“Smarter Products – More Services – More
Digital”).
Airbus Defence and Space is applying its growth strategy along
three domains:
Defence: Airbus Defence and Space is leveraging momentumin Franco-German cooperation and pursuing new European
programme opportunities as it works to deliver its vision for
Future Air Power. Key opportunities include Future Combat
Air System, European Medium-Altitude Long-Endurance(“MALE”), Maritime Airborne Warfare System, special mission
aircraft, and space situational awareness initiatives, among
others. The Division is concurrently working to shape andaddress future secure, upgradeable, and dynamic network
and Command and Control architecture requirements while
continuing to evolve existing platforms and capabilities (e.g.,Euroﬁghter Typhoon, A330 MRTT, A400M, C-295, predictive
aircraft maintenance) for long-term competitiveness and value
to future force structures;
Space: Airbus Defence and Space will retain its leadership
position in space within Europe and in the export market
and growing above market rate by leveraging competitivity
programmes across all sectors (equipment, satellite, vehicle
and infrastructure domains, etc.). In parallel, it is developing
end-to-end solutions and accelerating new products andservices to strengthen its position across the space value chain.
Last but not least, it is working with European Governments
and institutions to ensure long-term competitiveness of theentire European space industrial base;
Digital Ser vices and Secure Connectivity: Digitaltransformation and digital platforms will be a key enabler tounlocking greater value from our portfolio while providing new
data-driven services and business models. The division will
provide imagery intelligence, aircraft in-service support, andother services while also striving to be a leader in end-to-end
secure connectivity across satellite, terrestrial, maritime, andairborne network and communication domains.

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Globally, the Division intends to leverage its existing products
and services, innovate new offerings, and strike selectedstrategic partnerships in order to strengthen its position in the
US and other international markets.

MarketAirbus Defence and Space is mainly active in public andpara-public markets. As a general trend, defence budgets
in Europe are expected to continue to grow, triggered bygeopolitical tensions, heightened security risks and reinforced
by recent discussions on NATO defence spending target of
2% of GDP. In addition, the implementation of the European
Defence Action Plan of November 2016 was bolstered by thejoint declaration published in July 2017 by the French andGerman governments outlining the intention to strengthen
European defence, then by the agreement in 2018 to develop
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MALE drone and the Future Maritime Airborne Warfare
Systems. Together, these may provide new sales opportunities
through members’ collaborative procurement mechanisms.
Market access outside the home countries may be subject
to restrictions or preconditions such as national content or
local industrial participation. Nevertheless, Airbus Defence
and Space, in conjunction with Airbus, is well-placed to beneﬁt
from growth in defence expenditure. The upward outlook for
defence spending may continue to drive M&A activity in theindustry as has been the case since 2017. The market may
be inﬂuenced in the short-term by a potential softening of the
global economy and Brexit.
Military Aircraft
Customers
The Military Aircraft Programme Line with its products combat
aircraft, military transport aircraft, mission aircraft and related
services supplies the public sector, mainly armed forces.
Customer relationships in this segment are characterised by theirlong-term, strategic nature and long decision-making cycles.
Once a contract is signed, its life span including considerable
services business often amounts to decades. Beyond a strong
foothold in home countries, the customer base is increasingly
global, in particular due to the success of the A330 MRTT and
C295 programmes.
The turbulence created by changes in the US administration andthe Russian situation is gradually leading to a shift in importanceof defence in Europe. The commitment to go towards 2% of
the GDP is being gradually pursued and should lead to new
optimism for the sector. The Franco-German declaration insummer 2017 and the establishment of “Permanent Structured
Cooperation (PESCO)” by the European Union on 11 December
2017 are also clear signals in this direction.
Competitors
The market for military aircraft is dominated by large- andmedium-sized American and European companies capableof complex system integration. Among the competitive factors
are affordability, technical and management capability, theability to develop and implement complex, integrated systemarchitectures and the ability to provide solutions to customers.
In particular special mission aircraft, such as heavy tankers, arederived from existing aircraft platforms. Adapting them requires
thorough knowledge of the basic airframe, which generally only
the aircraft manufacturer possesses. The skills necessary forthe overall systems integration into the aircraft are extensive andthe number of participants in the world market is very limited.
The main competitors in military transport and mission aircraft
include Boeing, Embraer, Lockheed Martin, Leonardo, UAC,
Kawasaki, AVIC and Antonov.
Heavy military transport has historically been driven by US policy
and budget decisions and has therefore been dominated by
US manufacturers and split in strategic and tactical aircraft
segments. The A400M represents the Company’s entry into thismarket, at a time when nations are expected to begin replacing
their existing ﬂeets. The aircraft is designed to disrupt thedivide between strategic and tactical transport by offering both
capabilities in one. This saves both time and cost as you can ﬂya long range strategic aircraft into a tactical zone of operation.

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In terms of revenues, Airbus Defence and Space is the largest
continental European combat aircraft manufacturer. The
major combat aircraft activities are taking place through thecontribution to the Euroﬁghter Typhoon programme jointly withthe consortium partner companies BAE Systems and Leonardo.
Competitors in the segment of combat aircraft include Boeing,
Dassault, Lockheed Martin, Saab and UAC.
Market Trends
The sale of aircraft is expected to remain stable in the transportand special mission aircraft segments and could grow for theheavy transport segment, where the A400M occupies a uniqueposition.
After-sales services are an important business for Military
Aircraft and are undergoing strong growth in line with thedeliveries of A400M and A330 MRTT on top of the existing
robust revenue stream associated with Euroﬁghter Typhoon
in-service support.
The agreement signed between France and Germany inApril 2018 to jointly develop and procure the FCAS and the
Future Maritime Airborne Warfare System will also contributeto safeguarding critically-needed European defence capabilities
in the future.
Space Systems
Public Sector: Satellites, Space Infrastructure, Launchers,
Deterrence
In the public market for earth observation, science / explorationand navigation satellites, competition in Europe is organised
on a national and multinational level, primarily through theEuropean Space Agency (ESA), the European Commission(EC) and national space agencies. Space Systems, through its
Programme Unit Earth Observation, Navigation and Science, isa major actor in these respective segments and the recognised
European leader on ESA science programmes.
Decisions at the latest ESA Ministerial Conferences andunder EC Horizon 2020 paved the way for future European
programmes in which Airbus Defence and Space does or may
seek to participate. There is also important export demand forearth observation systems, of which the Company is the world’s
leading provider. The export market is expected to continue
growing over the medium-term driven by the demand comingfrom new governmental operators on top of the replacementof existing assets.
On the military customer side, demand for telecommunicationand observation satellites has increased in recent years.
The equipment segment can rely on a stable European market,
with potential growth to come from developing space countries
as well as the US.
The orbital infrastructure segment comprises manned andunmanned space systems mainly used for space exploration,i.e. scientific missions. Demand for orbital infrastructure
systems originates solely from publicly funded space agencies,
in particular from ESA, NASA, Roscosmos (Russia) and JAXA
(Japan). Such systems are typically built in cooperation withinternational partners. Continuing support to the operations of
the International Space Station (ISS), together with vehicle andequipment development programmes and services such as
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the predominant ﬁeld of activity in this segment, and Airbus
Defence and Space leads the European contribution on
industrial level as prime contractor. As the future explorationplans of the various national space agencies take shape witha growing focus on a sustainable return to the Moon, Airbus
Defence and Space is well-positioned to take a leading rolein providing vehicles, platforms and services to support theseambitious endeavours.

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The joint venture ArianeGroup is prime contractor for the
Ariane 5 launcher system. ArianeGroup is contracted for thedevelopment of the future Ariane 6 launcher and is the prime
contractor responsible for the development, manufacturing andmaintenance of the French deterrence systems.
Commercial Sector: Telecommunications Satellites, Launch
Services
The commercial telecommunication satellite market is highly
competitive, with customer decisions primarily based on price,technical expertise and track record. The main competitors fortelecommunications satellites are Boeing, Lockheed Martin,
MAXAR and Northrop Grumman in the US, Thales Alenia Spacein France and Italy, Information Satellite Systems Reshetnev
in Russia, and CASC in China. The market for commercial
geostationary telecommunications satellites has experienced
a down turn since 2017 and is expected to gradually recoverin the mid-term. In parallel, the demand for large constellationsof smaller telecom satellites in Low Earth Orbit has increased
dramatically in the last few years.
The market for commercial launch services continues to evolve.
Competitive pressure is increasing in light of new entrants
into the market. ArianeGroup provides a complete range oflaunch services with the Ariane, Soyuz, and Vega launchers.
Competitors for launch services include SpaceX, ULA, ILS andCGWIC. The accessible market to Arianespace for commercial
launch services for geostationary satellites is expected to remain
stable at around 20 payloads per year. However, due to various
factors (such as technology advances, increasing competitionand consolidation of customers), the ﬁgure remains volatile. This
market does not include institutional launch services for the
US, Russian or Chinese military and governmental agencies.
In 2015, Airbus Defence and Space announced the creationof OneWeb Satellites JV, an equally owned company with
OneWeb that designs and builds satellites for the OneWeb
constellation programme. The satellite constellation aims toprovide competitive global internet access. This participationis entrepreneurial in nature and is meant to drive innovation in a
new space market – an area that is set to expand dramatically incoming years. In 2017, OneWeb Satellites JV broke ground on theworld’s ﬁrst state of the art high-volume satellite manufacturing
facility in Exploration Park, Florida, and inaugurated its serial
production line for the assembly, integration, and test of
OneWeb’s ﬁrst satellites in Toulouse. In 2018, design of thepilot satellites was completed. The launch of the ﬁrst satellites
in 2019 will allow validation of the design.
Communications, Intelligence & Security
The CIS Programme Line brings together the growing, but
increasingly competitive market for satellite and terrestrial
communication, intelligence and security services andsolutions. CIS serves a common customer base which
includes governments, defence institutions, security and public

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safety agencies, and increasingly commercial sectors suchas transportation (maritime, aviation, road), energy (oil, gas,
electricity), mining and agriculture.
This programme line is divided into ﬁve main clusters: Intelligence,
Secure Communications, Cyber Security, Security Solutions
and Secure Land Communications.

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services. CIS has the objective to develop and scale digital
services, e.g. new services based on data generated by existing
Airbus Defence and Space products, to generate signiﬁcantrevenues.
Unmanned Aerial Systems

Through Intelligence, Airbus Defence and Space develops
Command and Control solutions for ministries of defence.
Competitors in this area largely come from European or American
based defence companies. Intelligence is also amongst thelargest players in the satellite imagery (optical and radar) market.
This sector remains mainly government orientated. However, thedemand for satellite imagery is growing in commercial markets
as many companies see geospatial data as key information for
their business development.

Customers

Through its Secure Communications cluster, Airbus Defence andSpace is also a leader in governmental satellite communications.
This cluster offers a full portfolio of mobile and ﬁxed satellite
communication and terrestrial secure communications solutions
for application at sea, on land and in the air. Customers areministries of defence, ministries of interior and NGOs.

With regards to platforms, Chinese, Israeli and US ﬁrms arewell established in the UAS market segment, along with other
European companies such as BAE Systems, Leonardo andThales, who are competing for new European projects. The
market itself features strong growth with signiﬁcant opportunities
in Europe, the US and Asia Paciﬁc.

Airbus Defence and Space is also a leading provider of cybersecurity products and services, including consultancy services in
Europe. The market growth is driven by an exponential increasein cyber-attacks, the increased use of connected assets andglobal digital transformation. Customers are governments andprivate companies with a high grade security requirement.
Combining our heritage in the defence domain and expertisein maritime safety and security systems, Security Solutions
answers manifold operational needs in security and criticalinfrastructure protection by providing adaptable solutions
and services needed to achieve everyday missions. As aworld-leading system integrator for border security, maritime
surveillance, critical national infrastructure protection and site
security services, Security Solutions’ aim is to build on theseassets in operation, thereby fulﬁlling the requirements of the
security market today and in the future with the latest technology
and most attractive service packages.
Secure Land Communications offers communication andcollaboration solutions with the highest standards of security
and reliability. These include voice, messaging and multimedia
sharing solutions based on Tetra, Tetrapol and 4G / 5G
technologies tailored to the needs of professionals from
Public Safety and Transport, Utility and Industry (TUI). As theEuropean leader and a key international player, Secure Land
Communications has customers in more than 80 countries.
In addition to the business clusters, CIS also houses Future
Applications, which is a business accelerator taking existing
capabilities from anywhere within the Division to new markets
not traditionally served. The goal is to form stable and sustainable
new business bringing proﬁtable revenue to Airbus Defence andSpace on a scale signiﬁcant to the Division within ﬁve years.
CIS focuses on public customers such as armed forces forgovernment satellite communications - an area characterised
by long-term relationships with customers. Whereas budget
pressures on public expenditure are high in Europe, investment
into the services and solutions offered by CIS is likely to continue
in the face of new global security threats, a re-emphasis on
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Unmanned Aerial Systems could lead to diversiﬁcation into
services-driven markets. It is also a sector in which Europe has
a strong need for investment, which could set the stage for newcooperation programmes. France, Germany, Italy and Spain havesignaled their intention to cooperate on a medium altitude, long
endurance UAS and Airbus Defence and Space and its partners
ﬁnalised the two-year deﬁnition study of the system end of 2018.
Competitors

Market Trends
UAS have a very promising growth potential. Market structuresin this segment are not clearly set out yet and will see somemovement, including a new European collaborative programme.
Services verticals will offer increasingly interesting prospects
as the market evolves.

Products and Services
Military Aircraft
A400M — Heavy military transport. The A400M is designed
to be the most capable new generation airlifter on the market
today. It is designed to meet the needs of the world’s armed
forces and other potential operators for military, humanitarianand peacekeeping missions in the 21st century. The A400M
is designed to do the job of three different types of militarytransport and tanker aircraft conceived for different types of
missions: Tactical (short to medium range airlifter capability withshort, soft and austere ﬁeld operating performance), strategictransport (longer range missions for outsized loads) as well astactical tanker.
A total of 174 aircraft have been ordered so far by the seven launchcustomer nations Belgium, France, Germany, Luxembourg,
Spain, Turkey, the UK and one export customer, Malaysia. Type
Certiﬁcate and Initial Operating Clearance have been achieved in
2013. Since then, 74 units have been delivered to six nations by
the end of 2018. The A400M is already deployed operationallysince 2014 and military capability is expected to grow over time.
Multi-role tanker transport — A330 MRTT. The A330 MRTT,a derivative of the Airbus A330 family, offers military strategic
air transport as well as air-to-air refueling capabilities. Its large
tank capacity is sufﬁcient to supply the required fuel quantities
without the need for any auxiliary tanks. This allows the entire
cargo bay to be available for freight, with the possibility ofincorporating standard LD3 or LD6 containers, military pallets
and/or any other type of load device in use today, as well as thefull cabin available for personnel transport. The A330 MRTT isANNUAL REPORT 2018

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equipped with state of the art refueling systems, including an
Aerial Refueling Boom System (ARBS) and under-wing refuelingpods. At the end of 2018, the A330 MRTT programme has
a total of 60 aircraft ﬁrm orders by eight customers (twelve
countries (seven through direct acquisition, ﬁve through poolingacquisition in the frame of the MMF (Multinational MRTT Fleet)programme)), of which 35 already delivered and in service inseven nations.

Defence and Space, conducting upgrade programmes foraircraft such as the Tornado and P-3 Orion. Airbus Defence
and Space maintains a network of Maintenance, Repair andOverhaul centers strategically located throughout the world
for greater proximity to the customer, for example in Seville or
Manching in Europe, in Mobile, Alabama (US) or at subsidiaries
in Saudi Arabia or Oman.

Eurofighter Typhoon combat aircraft. The Eurofighter
Typhoon multi-role combat aircraft (also referred to as Typhoon)
has been designed to enhance ﬂeet efﬁciency through a single
ﬂying weapon system capable of fulﬁlling both air-to-air andair-to-ground missions.

Space Systems

The Euroﬁghter Jagdﬂugzeug GmbH shareholders are Airbus
Defence and Space (46% share), BAE Systems (33% share)
and Leonardo (21% share). With regard to series production,
the respective production work shares of the participating
partners within the Euroﬁghter Typhoon consortium stand at
43% for Airbus Defence and Space, 37.5% for BAE Systems and19.5% for Leonardo. Airbus Defence and Space develops andmanufactures the center fuselage and the right wing and leadingedge slats for all aircraft, and is in charge of ﬁnal assemblyof aircraft ordered by the German and Spanish air forces. In
addition, Airbus Defence and Space is responsible for thedevelopment of the ﬂight control system and the identiﬁcationand communication sub-systems.
At the end of 2018, a total of 623 Euroﬁghter Typhoon aircraft
had been ordered by nine customers (UK, Germany, Italy,
Spain, Austria, Saudi Arabia, Oman, Kuwait, and Qatar), witha total of 557 aircraft delivered. Export opportunities are being
actively developed together with the other shareholders of theEuroﬁghter consortium.
C295 — Light and Medium military transport/mission
aircraft. The C295 is the work horse of tactical military transport,
conducting logistical missions including the transport anddelivery of personnel and cargo as well as medical evacuations.
The aircraft are deployed in demanding environments(meteorological conditions, operational complexity, etc.), suchas peacekeeping on the Sinai Peninsula. The aircraft are offeredin varied versions and conﬁgurations beyond the traditional
airlifter version, for example maritime patrol and anti-submarine
warfare, airborne early warning and control, ﬁreﬁghting andintelligence surveillance reconnaissance (ISR), etc. In over
30 years in service, this family of aircraft has proven to be robust,reliable, high-performing, efﬁcient, ﬂexible, easy to operate inany environment, and at low operating costs. 492 orders had
been recorded for both CN235 and C295 types together atthe end of 2018.
Customer Services. Airbus Defence and Space offers andprovides various services for and related to military aircraft.
Throughout the life-time of our aircraft, Military Aircraft Services
includes integrated logistics support, in-service support,
maintenance, upgrades, training or ﬂight hour service. For
example, the A330 MRTT contract with the UK Ministry of
Defence through the AirTanker consortium includes alongside
14 aircraft the provision for all necessary infrastructure, training,
maintenance, ﬂight management, ﬂeet management and groundservices to enable the Royal Air Force to ﬂy air-to-air refuelingand transport missions worldwide. Customer services go
beyond the ﬂeet of aircraft currently in production at Airbus

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Manned Space Flight. Airbus Defence and Space has been
the prime contractor for the European part of the International
Space Station (ISS). This includes the development andintegration of Columbus, the pressurised laboratory module
on ISS with an independent life-support system successfully inorbit since 2007. It provides a full-scale research environment
under microgravity conditions (material science, medicine,human physiology, biology, Earth observation, ﬂuid physics
and astronomy) and serves as a test-bed for new technologies.
In 2015, ESA awarded Airbus Defence and Space a contract tohandle the engineering support of the European componentsof the ISS, which represents a key part of the ISS operational
activities. Airbus Defence and Space was also the prime
contractor for the development and construction of theAutomated Transfer Vehicle (ATV) cargo carrier. The expertise
gained on the ATV positioned Airbus Defence and Space tobecome the prime contractor for the European service moduleof NASA’s next generation Orion manned capsule.
Launch services. Airbus Defence and Space is active in theﬁeld of launch services through its ArianeGroup joint venture.
ArianeGroup is responsible for the coordination and programmemanagement of civil activities of the launcher business andrelevant participations that have been transferred. ArianeGroupowns a total 74% stake in Arianespace, 46% of Starsem and
51% of Eurockot, providing a complete range of launch services
with the Ariane, Soyuz, Vega and Rockot launchers.
Commercial launchers. ArianeGroup manufactures
launchers and performs research and development for the
Ariane programmes. Member States, through ESA, fundthe development cost for Ariane launchers and associatedtechnology. Airbus Defence and Space has been the soleprime contractor for the Ariane 5 system since 2004. In
December 2014, the Ariane 6 programme was decided
by ESA ministerial conference with an approval of the joint
Airbus Defence and Space and Safran concept. In addition,a new industrial set-up was announced with the creation of
ArianeGroup between the two main Ariane manufacturers.
This vertical integration secures the future by cutting costs andbeing more competitive. Ariane 6 is targeted to be launchedin 2020.
Telecommunication satellites. Airbus Defence and Space
produces telecommunication satellites used for both civil andmilitary applications, such as television and radio broadcasting,ﬁxed and mobile communication services and Internet broadband
access. Current Airbus Defence and Space geostationary
telecommunication satellites are based on the Eurostar familyof platform, including all-electric variant. In 2018, Airbus Defence
and Space was selected by Eutelsat to build the HotBird newgeneration satellites, two sophisticated telecom satellites
based on Eurostar Neo platform, the new ﬂagship product for

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Airbus Telecom Geo Satellites. Airbus Defence and Space also
develops the Eutelsat Quantum telecommunication satellite,
the ﬁrst satellite that can be fully reconﬁgured in orbit throughits ﬂexible antennae and repeater. Through its contract with
OneWeb to design and produce small telecommunication
satellites for a constellation in Low Earth Orbit, Airbus Defence
and Space is spearheading the industrial and commercial
development of very large satellite constellations.
Observation and scientiﬁc / exploration satellites. Airbus
Defence and Space supplies Earth observation satellite systems
including ground infrastructures for both civil and military
applications. Customers can derive signiﬁcant beneﬁts fromthe common elements of Airbus Defence and Space’s civil
and military observation solutions, which allow the collectionof information for various applications, such as cartography,
weather forecasting, climate monitoring, agricultural and forestry
management, mineral, energy and water resource management,
as well as military reconnaissance and surveillance.
Airbus Defence and Space also produces scientiﬁc satellites andspace infrastructure, which are tailor-made products adapted
to the speciﬁc requirements of the mostly high-end mission
assigned to them. Applications include astronomical observationof radiation sources within the Universe, planetary explorationand Earth sciences. Airbus Defence and Space designs andmanufactures a wide range of highly versatile platforms, opticaland radar instruments and equipment. For example, Airbus
Defence and Space contributed to the scientiﬁc community
with the launches of the Sentinel-1B radar, Sentinel-2A and LISA
pathﬁnder. It also signed a major contract to develop and build
the JUICE spacecraft, ESA’s next life-tracker inside the Solar
System. JUICE will study Jupiter and its icy moons.
Navigation satellites. Airbus Defence and Space plays a majorindustrial role in the “Galileo” European navigation satellite
system, which delivers signals enabling users to determine
their geographic position with high accuracy and is expected to
become increasingly signiﬁcant in many sectors of commercial
activity. Airbus Defence and Space was responsible for the
Galileo in-orbit validation phase (IOV) to test the new satellite
navigation system under real mission conditions. The IOVphase covered the construction of the ﬁrst four satellites of theconstellation and part of the ground infrastructure for Galileo.
After the successful launch of the ﬁrst four Airbus Defence
and Space Galileo IOV satellites in 2011 and 2012, this early
constellation was successfully tested in orbit and handed overto the customer in 2013. Airbus Defence and Space is playing
an active role in the Galileo full operation capability phase(FOC) with a nearly 50% work share, including the FOC groundcontrol segment and providing the payloads for the ﬁrst 22 FOC
satellites through its subsidiary SSTL.
Satellite products. Airbus Defence and Space offers anextensive portfolio of embedded subsystems and equipment
for all types of space applications: telecommunications, Earthobservation, navigation, scientific and space exploration
missions, manned spaceﬂight and launchers.
French deterrence systems. ArianeGroup as prime contractor
holds the contracts with the French State for the submarinelaunched deterrence system family.

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Communications, Intelligence & Security
Intelligence. Airbus Defence and Space is a provider ofcommercial satellite imagery, C4ISR systems and related
services with unrivalled expertise in satellite imagery acquisition,
data processing, fusion, dissemination and intelligenceextraction allied to signiﬁcant command and control capabilities.
The cluster is a designer and supplier of C4I systems (Command,
Control, Communications, Computers and Intelligence), which
provides information systems and solutions to armed forces
worldwide to support land, air and sea operations, assuring
information superiority and supporting decision making at alllevels of the command chain.
Airbus Defence and Space’s lead systems integration offering
includes the ability to design, develop and integrate the widest
possible range of individual platforms and subsystems into asingle effective network.
Airbus Defence and Space is also a provider of both optical andradar-based geo-information services to customers includinginternational corporations, governments and authorities aroundthe world.
With the very-high-resolution twin satellites Pleiades 1A and 1B,
SPOT 6 and SPOT 7, Airbus Defence and Space’s optical satellite
constellation offers customers a high level of detail across wide
areas, a highly reactive image programming service and uniquesurveillance and monitoring capabilities. Spot 6 and 7 provide
a wide picture over an area with its 60-km swath, Pleiades 1A
and 1B offer, for the same zone, products with a narrower ﬁeldof view but with an increased level of detail (50 cm).
Airbus Defence and Space is currently producing four Pléiades
Neo, Airbus’ new very high resolution satellites. They will join
the already large Airbus constellation of optical and radar
satellites and will offer enhanced performances and the highest
reactivity in the market thanks to direct access to the data relay
communication system, known as SpaceDataHighway.
TerraSAR-X, a radar-based Earth observation satellite thatprovides high-quality topographic information, enabled Airbus
Defence and Space to signiﬁcantly expand its capabilities by
proposing new kinds of images based on radar. TanDEM-X,
its almost identical twin, was successfully launched in 2010
and achieved in 2014 WorldDEM, the ﬁrst high precision 3-D
elevation model of the entire surface of the Earth.
Secure Communications. Airbus Defence and Space offersa full portfolio of mobile and ﬁxed satellite communication andsecure terrestrial communications solutions for application
at sea, on land and in the air. Airbus Defence and Space
provides armed forces and governments in the UK, Germany,
France and Abu Dhabi with secure satellite communications.
For example in the UK, Airbus Defence and Space delivers
in the frame of the “Skynet 5 programme” tailored end-toend in-theatre and back-to-base communication solutions forvoice, data and video services, ranging from a single voicechannel to a complete turnkey system incorporating terminals
and network management. This contract, pursuant to which
Airbus Defence and Space owns and operates the UK military
satellite communication infrastructure, allows the UK MoD toplace orders and to pay for services as required. The service
is fully operational since 2009 and will extend to 2022. In Abu
Dhabi, Airbus Defence and Space together with Thales Alenia
Space built a secure satellite communication system.

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Cyber Security. Airbus Defence and Space has establisheda cyber security business to meet the growing cyber security
needs of users of critical IT infrastructure, including governments
and global companies. Airbus Defence and Space provides
expertise and solutions to help such organisations to protect
themselves against, detect, analyse, prevent and respond to
cyber threats. As a leading provider of security operation centres,
incident response services, key management, cryptography
and high-security national solutions and consulting and training
services, Airbus Defence and Space has a long track record inproviding the most sensitive secure IT and data handling andtraining solutions to defence and security customers throughout
France, Germany, the UK and other NATO countries.
Security Solutions include sensor networks ranging from
infrared and video cameras through radars to airborne andspace surveillance systems, all connected to command andcontrol centres, mainly for border security systems. Apart fromIntelligence, Surveillance and Reconnaissance (ISR) systems forgathering, aggregation and evaluation of incident data, highly
reliable and encrypted digital data and voice networks areprovided. Sophisticated decision-making tools support security
forces to prioritise incidents, allocate required resources andcontrol events in real-time. Services for long-term sustainable
operation and life-cost optimisation such as simulation andtraining, maintenance, support to operation, local partnerships
are also proposed.
Secure Land Communications. Airbus Defence andSpace offers advanced communication and collaboration
solutions enabling its customers to gather process and deploy
intelligence. Its portfolio is tailored to the needs of professionals
from Public Safety and Transport, Utility and Industry (TUI).
It includes infrastructures, devices, applications and services
based on Tetra, Tetrapol and Broadband technologies. As theEuropean leader and a key international player, Secure Land
Communications has customers in more than 80 countries.
Unmanned Aerial Systems
In the ﬁeld of UAS, Airbus Defence and Space is active at bothproduct and service level. Airbus Defence and Space is theleading UAS service provider for the German air forces meeting
their MALE Intelligence, Surveillance and Reconnaissanceneeds in the operational theatre. These interim solutions, basedon non-proprietary MALE systems, will be replaced by a newgeneration European MALE RPAS system where Airbus Defence
and Space is working with its European partners. Airbus Defence
and Space also provides mini-UAS to the French armed forces
and selected export customers and the KZO UAS to the German
armed forces. It is developing the solar-powered Zephyr for bothmilitary and civil applications such as relay stations for internet
provision to remote or sparsely populated regions.

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Airbus Aerial brings together a variety of aerospace technologies– including drones and satellites – combines them in a software
infrastructure, and applies industry speciﬁc analytics to deliver
tailored solutions to help its customers efﬁ ciently run theirbusiness. The portfolio of services focuses primarily on three
applications – remote sensing, cargo drone services andconnectivity. The Airbus Aerial activities will span both drone
enabled digital services as well as the development of certiﬁable
drones. Its focus lies on commercial customers in agriculture,
insurance, infrastructure, utilities, state and local government.

1

Production
Airbus Defence and Space is headquartered in Munich. The
main engineering and production facilities of the Division arelocated in France (Paris region and southwest France), Germany(Bavaria, Baden-Württemberg and Bremen), Spain (Madrid
region and Andalusia) and the UK (southern England and Wales).
In addition, Airbus Defence and Space operates a global networkof engineering centres and ofﬁces in more than 80 countries.

MBDA
The Company’s missile business, in addition to the ArianeGroupjoint venture, derives from its 37.5% stake in MBDA (a joint
venture between the Company, BAE Systems and Leonardo).
MBDA offers missile systems capabilities that cover the whole
range of solutions for air dominance, ground-based air defence,maritime superiority and battleﬁeld engagement. Beyond its
role in European markets, MBDA has an established presence
in export markets like Asia, the Gulf region and Latin America.
The broad product portfolio covers all six principal missile
system categories: air-to-air, air-to-surface, surface-to-air, antiship, anti-submarine and surface-to-surface. MBDA’s productrange also includes a portfolio of airborne countermeasures
such as missile warning and decoy systems, airborne combat
training and counter-IED and counter-mine solutions. The mostsigniﬁcant programmes currently under development are theground based air defence system TLVS/MEADS for Germany,
the Aster Block 1 NT air and missile defence family of systems
for France and Italy, the Sea Venom/ANL anti-ship missile for the
UK and French navies’ helicopters, the portable medium range
battleﬁeld “Missile Moyenne Portée (MMP)”, the network enabled
precision surface attack SPEAR missile and the “Common AntiAir Modular Missile (CAMM)”, which is an anti-air missile familywith land, naval and air launched applications.

ArianeGroup
Airbus Defence and Space is active in the ﬁeld of launchers andlaunch services through its ArianeGroup joint venture, whichprior to July 2017 was named Airbus Safran Launchers (ASL).

1.1.5 Investments
Dassault Aviation
As a result of the implementation of Dassault Aviation’s
capital increase, which took place on 27 June 2018, at theoccasion of which 36,782 shares were issued to remunerate
the shareholders who opted for a dividend payment throughattribution of shares, the Company holds approximately 9.89%

of Dassault Aviation’s share capital and 6.15% of its voting rights.
In case of exchange in full of the bonds issued by the Company
and which are due in 2021, the Company will no longer holdany of Dassault Aviation shares and voting rights.

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1.1.6 Insurance
The Company’s Insurance Risk Management function (“IRM”)
is established to proactively and efﬁciently respond to risks thatcan be treated by insurance techniques. IRM is responsible forall corporate insurance activities and related protection for theCompany and is empowered to deal directly with the insurance
and re-insurance markets via the Company’s inhouse broker
entity Airbus Aéroassurances. IRM’s continuous task in 2018
was to further implement and improve efﬁcient and appropriate
corporate and project-related insurance solutions.
IRM’s mission includes the deﬁnition and implementation of
the Company’s strategy for insurance risk management to help
ensure that harmonised insurance policies and standards arein place for all insurable risks worldwide for the Company.
A systematic review, monitoring and reporting procedure
applicable to all Divisions is in place to assess the exposure andprotection systems applicable to all the Company’s sites. The
Company’s insurance programmes cover high risk exposuresrelated to its assets and liabilities.

Asset and liability insurance policies underwritten by IRM for
the Company cover risks such as property damage, businessinterruption, cyber, aviation and non-aviation general andproduct liability. IRM also provides a Group insurance policy for
Supervisory and Managing Board members and certain other
employees of the Company, which is renewed on an annual
basis. The Company follows a policy of seeking to transfer the
insurable risk of the Company to external insurance markets at
reasonable rates, on customised and sufﬁcient terms and limits
as provided by the international insurance markets.
The insurance industry remains unpredictable. There may be
future demands to change scope of coverage, premiums anddeductible amounts. Thus, no assurance can be given that theCompany will be able to maintain its current levels of coverage
nor that the insurance coverages in place are adequate to cover
all signiﬁcant risk exposure of the Company.

1.1.7 Legal and Arbitration Proceedings
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
the Company’s or Airbus SE’s ﬁnancial position or proﬁtability.
Regarding the Company’s provisions policy, the Company
recognises provisions for litigation and claims when (i) it
has a present obligation from legal actions, governmental
investigations, proceedings and other claims resulting frompast events that are pending or may be instituted or asserted in
the future against the Company, (ii) it is probable that an outﬂow
of resources embodying economic beneﬁts will be required tosettle such obligation and (iii) a reliable estimate of the amountof such obligation can be made. Although the Company believes
that adequate provisions have been made to cover current orcontemplated general and speciﬁc litigation and regulatory
risks, no assurance can be provided that such provisions will
be sufﬁcient. For the amount of provisions for litigation andclaims, please refer to the “— Notes to the IFRS Consolidated
Financial Statements — Note 22: Provisions, Contingent Assets
and Contingent Liabilities”.

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

46

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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

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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.

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 GmbH andformer 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 procurementof Euroﬁghter combat aircraft made by the Austrian Defence
Minister. The Company is cooperating fully with the authorities.

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 andFINANCIAL STATEMENTS 2018

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PNF. 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.

1

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.

ECA Financing
The Company and the ECAs reached agreement on a process
under which it is able to resume making applications for ECAbacked ﬁnancing for its customers across the Company on acase-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 inﬁlings made with the US Department of State pursuant to Part
130 of the US International Trafﬁc in Arms Regulations (“ITAR”)(a US export control regulation). The Company is cooperatingwith the US authorities. The Company is unable to reasonably
estimate the time it may take to resolve the matter or the amountor range of potential loss, penalty or other government action, if
any, that may be incurred in connection with this matter.

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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.

1.1.8 Non-Financial Information
1.1.8.1

terms of respect for human rights, labour, the environment
and anti-corruption. In addition, the Company encourages
initiatives that contribute to tackling societal challenges
whether through its products and services, skills andresources or via key partnerships.

The Company’s Approach to
Responsibility & Sustainability

The Company and its Main Stakeholders
Airbus is an industrial company operating in businesses with longproduct lifecycles and corresponding returns on investment.
There are signiﬁcant costs and risks in programme development
and cyclical markets. These features deﬁne the Company andshape its relationships with all stakeholders. For a descriptionof the Company’s business model, see “— 1.1.1 Overview”.
The Company is engaged in stakeholder dialogue at various
levels. The responsibility for stakeholder engagement isdecentralised at the Company and employees are encouraged toinitiate, develop and maintain relationships with their respective
stakeholders. The Company often seeks a sectorial approachin order to strengthen the impact.
The Company’s main purpose, its missions and the objectives
resulting from them, are deﬁned in relation to these stakeholders.
The Company has deﬁned the following objectives:
generate long-term value by developing a sustainably
proﬁtable portfolio of aeronautics, helicopter, defence andspace businesses. For its shareholders, lenders and otherﬁnancial counterparts, the Company must meet its obligations
and foster its standing of creditworthiness and proﬁtability;
be a provider of choice, offering superior value-for-money
products and services to customers;
engage employees to share its goals and rise to its challenges.
Within the confines of applicable laws and regulations,the Company must respond to their expectations aboutdevelopment, people management and values;
build sustainable relationships with its suppliers basedon mutual interest to satisfy its customers to encourage
responsible practices. The Company promotes the Supplier
Code of Conduct as standards consistent with its own codeof conduct, and also develops and implements adequate
mechanisms to monitor supplier performance;
Play a key role in society and towards local communities. The
Company is committed to responsible business practices in

In order to prioritise its responsible and sustainable efforts, theCompany performed a materiality assessment in 2017. The
Company approached a set of stakeholders through qualitativeinterviews. A list of top issues for the Company was developed,
consolidated and ranked by the Company’s Responsibility &Sustainability Network. The network gathers a group of experts
advising on Airbus’ Responsibility & Sustainability (“R&S”)
strategy, monitoring progress in their respective areas of
responsibility, sharing knowledge and best practices throughout
the entire Company. It is trans-functional, trans-national andtrans-divisional and meets on a regular basis.
You will ﬁnd these issues covered within the following sectionsof this chapter:
Responsible Manufacturer: 1.1.8.2(a) Aviation and Product
Safety (“product responsibility” in the matrix), 1.1.8.2(b)Research and Technology (“technology and innovation” in thematrix), 1.1.8.2(c) Environment (“environmentally responsible
products” and “environmental management of operations”
in the matrix), 1.1.8.2(d) Responsible Defence and Space
products (“security” and “product responsibility” in the matrix);
Responsible Employer: 1.1.8.3(a) Workforce and 1.1.8.3(b)Human Capital Management, Labour Relations and Human
Rights (“responsible employer” in the matrix), 1.1.8.3(c) Healthand Safety (same in the matrix), 1.1.8.3(d) Inclusion andDiversity (“business culture and leadership” in the matrix);
Responsible Business: 1.1.8.4(a) Ethical business practices(“business culture and leadership” in the matrix), 1.1.8.4(b)Responsible Suppliers (“responsible supply chains” in thematrix), 1.1.8.4(c) Community Engagement (“community
impact” in the matrix).

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CRITICALHIGHEST

Responsible
employerTechnology& innovation
Product
responsibility

Business culture& leadership

Environmentally
responsible products
Health & Safety

Environmental
management of operations

HIGHERHIGH

INCREASING CONCERN TO STAKEHOLDERS

MATERIALITY MATRIX 2017

Responsible
supply chains

Stakeholder
engagement

Economic

Community
impactSecurity

HIGH

HIGHERHIGHEST

CRITICAL

INCREASING CONCERN / IMPACT ON AIRBUS
Environment

SocialEconomy & Governance

UN Sustainable Development Goals
Airbus has been a signatory to the UN Global Compact since2003 and has reached “Advanced Level”.
The Company adopted the UN Sustainable Development
Goals (SDGs) in December 2015 as a framework to align its
responsible and sustainable contributions. Over 2016, theCompany performed a mapping of its contributions basedon its publicly available information which demonstrated thatat least eight of the 17 SDG goals are directly relevant to theCompany’s businesses and stakeholders’ feedback conﬁrmedthat the Company is actively contributing to:SDG 4: Quality education;
SDG 5: Gender equality;
SDG 8: Decent work and economic growth;
SDG 9: Industry, innovation and infrastructure;
SDG 12: Responsible consumption and production;
SDG 13: Climate action;
SDG 16: Peace, justice and strong institutions; andSDG 17: Partnerships for the goals.

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Airbus Responsibility & Sustainability Charter
In 2017, the Company has outlined its commitments in its
Responsibility & Sustainability Charter (“the Charter”). The
Charter demonstrates how Airbus intends to contribute to
the requirements and needs of society and how employees
will live the Company’s six values – respect, customer focus,
reliability, creativity, integrity, team work – in their daily workwith all stakeholders whether customers, suppliers, partners,
shareholders. The Charter is available at www.airbus.com.
In 2018, the Charter was the subject of a series of internal
communication activities.

In 2017, Airbus started to put in place an internal mapping of
its contributions to the commitments it made in the Charterand the corresponding SDGs. Airbus has worked on mapping
internally and identifying targets or KPIs to assess its overall
contributions. The objective is to reach common agreement
on one target per commitment contained within the Charter.
Airbus’ Way Forward: Vigilance Plan
The Company is determined to conduct its business responsibly
and with integrity. The Company is convinced that promoting
responsible business conduct within our value chain is key tosustainable growth.
As far as its own operations are concerned, the Company has
adopted internal policies and management tools to performthe assessment, monitoring, mitigation, reporting of risk
and compliance allegations, which are fully embedded into
the Company’s culture and processes. At Airbus, heads ofprogrammes and functions, as well as managing directors
of afﬁliates, supported by respective specialists, shall ensure
proper deployment of the Company’s policies, managementof Enterprise Risk Management (“ERM”) in their fields or
perimeters as well as duly reporting issues to top management.
The Company’s approach is thus based on its existing strengths,
namely strong management process already established andadopted by employees; empowerment of specialists; industry
approach whenever possible.
In 2017, Airbus established a working group composedof specialists representing supplier management, healthand safety, environmental affairs, labour rights, ethics andcompliance, corporate governance as well as risk managers
and representatives from the Company’s two Divisions.

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One of the tasks of the working group was to perform a risk
assessment and deﬁne concrete actions in order to ensure
continuous monitoring of the entire Company and to mitigate
principal risks or prevent serious violations. In 2018, the working
group focused on leveraging every opportunity to embed R&S
elements throughout the Company and including them into
internal processes and tools.
With regard to risk management, Airbus performed an in-depth
review of its ERM system in order to identify potential missing
risks related to human rights and fundamental freedoms, healthand safety and the environment in 2017. The ERM system was
updated to take into account the most signiﬁcant potential
risks related to these areas that the Company may generateas part of its operations. These risks and related action plans
are now consolidated and reported to the top managementof the Company. For more information on ERM, see “- 4.1.3,
Enterprise Risk Management System”. For more information on
the Company’s risks, see “— Risk Factors”.
To support our commitment to and promotion of a speak-up
culture, Airbus created the OpenLine to provide the Company’s
employees with an avenue for raising concerns in a conﬁdential
way. In 2018, the Company decided to extend the scope to
responsibility and sustainability related topics. For more
information on the OpenLine, see “– 1.1.8.4(a) Ethical Business
Practices”.
In addition to the current training catalogue of over 80 e-learning
courses on labour relations, diversity, environmental and healthand safety matters, as well as R&S and human rights, theCompany is working on speciﬁc learning programmes for target
groups. One programme targeting all the Company’s employees
worldwide will focus on increasing general awareness on R&S aswell as Airbus’ commitments as outlined in the Charter. A second
programme will be dedicated to risk-exposed populations, suchas directors of subsidiaries and buyers, aiming at developing
in-depth understanding of legal requirements with regards toenvironment, health & safety, human rights, labour relations,anti-corruption within the Company’s operations and supply
chain, and promoting the Company’s internal processes to help
mitigate potential risks and help prevent violations. The Airbus
Leadership University took the lead to embed R&S strategy
and commitments into the courses it offers in order to ensure
the Company’s managers are trained and equipped to instil
the right behaviours, foster cultural change and encourage thesearch for innovative solutions to answer societal challenges. In
addition, the Company also provides training to its employeeson the Airbus Standards of Business Conduct.
All Airbus afﬁliates (afﬁliates where Airbus owns more than one
half of the voting rights, or is able to appoint or discharge morethan one half of the members of the board) with operational
activities are expected to deploy similar internal policies
applying Airbus directives. A corporate directive assists
Airbus afﬁliates in effectively fulﬁlling their responsibilities while
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corporate governance. In 2018, Airbus, working closely with
its two Divisions, approved one single directive on corporate
governance for the Company’s afﬁliates, which deﬁnes rules,
processes and procedures applicable to Airbus afﬁliates andtheir respective boards, directors and ofﬁcers. Airbus leveraged
this in-depth work to integrate enhanced requirements on
labour and human rights, environment, health and safety andprocurement matters into the new directive on the basis ofrelated Airbus internal policies including:International Framework Agreement;
Agreement on the European Works Council;
Supplier Code of Conduct;
Health & Safety Policy;
Standard of Business Conduct;
Environmental Policy; andAirbus Anti-corruption Policy and Directives.

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In 2018, Airbus and its two Divisions each sent their respective
affiliates a questionnaire to assess their internal controls
including as they relate to the environment, human resources
and compliance. Regarding all the above activities, afﬁliates
were asked to conﬁrm that all relevant Airbus policies wereaccessible to their employees and duly communicated to themand that dedicated training was organised for risk-exposed
employees. In 2019, the scope of the questionnaire will evolve
to cover topics included in the new Directive, including R&S,
and harmonised between Airbus and the two Divisions.
In 2019, afﬁliates will be asked to evaluate risks via the Airbus
ERM system as well as to regularly monitor them as part of theirrisk assessment process. Airbus endeavours to ensure that theprocedures to assess, investigate and manage allegations arewell aligned throughout the Company.
Each afﬁliate with operational activities has in place a Boardof Directors and/or a shareholders’ meeting where strategic
decisions are made. Each afﬁliate has an Airbus supervisor
who is a member or chairman of the board who ensuresthat all Airbus requirements are considered by the afﬁliate’s
management. At least once a year the agenda of the board will
include an update on ethics and compliance matters (including
training, awareness and any other relevant issues).
In order to ensure proper and systematic cascading of R&Srelated policies throughout the Company, Airbus’ head of
Afﬁliates has joined the R&S Network.
For its principal minority joint ventures, Airbus will ensure theproper application of its policies or those of its partner.
A dedicated programme has been launched by the Procurement
function in order to monitor Airbus’ suppliers. For more
information on the programme and its implementation, including
the vigilance plan for suppliers, see section 1.1.8.4(b) Responsible
Suppliers. For more information on Airbus’ approach to theenvironment, see section 1.1.8.2(c). For more information on
Airbus’ approach to human rights and health and safety, seesections 1.1.8.3(b) and 1.1.8.3(c).

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1.1.8.2

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Responsible Manufacturer

a. Aviation and Product Safety
Airbus recognises the signiﬁcant trust placed in its products by
their operators and passengers, and takes its responsibility for
their safety seriously. Whilst the foundations of safety are built
on regulatory compliance, Airbus goes beyond airworthiness
requirements to also focus on safety enhancement activities in
products, services, customer operation, and with international
stakeholders, whilst also adapting the organisation to meet
evolving conditions.
Whenever safety topics must be discussed, it is done at theappropriate level, including by Airbus’ senior executives.
The Product Safety Process (PSP) is Airbus’ primary meansof responding to what is happening with the 10,000 Airbus
aircraft ﬂying today, and of maintaining continued airworthiness.
It enables Airbus to analyse reports from the ﬁeld and other inservice events, and frequently leads to the introduction of safetyenhancements either to new products under development or
to existing designs.
Regulatory compliance
Product certiﬁcations are provided by the competent aviation
authorities including the main civil aviation authorities (EASA,
FAA, NAA) and specific military authorities (EMAR, NAA).
Speciﬁc approvals are granted by these authorities to therelevant parts of Airbus’ organisation at commercial aircraft
level and within each Division, according to their function.
Airbus therefore works to ensure compliance through:design and certiﬁ cation of products under EASA Part 21
Design Organisation Approvals (DOA), ECSS-QST-40-C for(Space Products) and Def-Stan 00-56 (Defence Products);
manufacturing under Production Organisation Approvals(POA);
monitoring of in-service safety through approved EASA
Part-M Continuing Airworthiness Management Organisations(CAMO);
aircraft maintenance and retroﬁt operations conducted in linewith civil and military EASA Part 145 regulations;training provided to ﬂight crews, cabin crews and maintenancecrews through EASA Part 147 Approved Training Organisations(ATO).

-

The certiﬁed organisations of Airbus are audited by the aviation
authorities to ensure the surveillance of the full compliance ofAirbus to regulatory requirements. Additional audits are also
conducted by third parties as part the quality certiﬁcations
appropriate to each Division, including EN9100, EN9001,
EN9110, AQAP 2110, AQAP 2210 and AQAP 2310.
Going beyond compliance
For enhancing safety by managing and reducing safety risks, anumber of company-wide organisational initiatives ensure thatdepartments throughout Airbus work together to harmonise
the Company’s overall approach to aviation and product safety.
Airbus commercial aircraft and each Division includes a
dedicated Aviation and Product Safety function which provides
a voice for safety which is independent of other corporate
priorities, and empowered to take action across each businessto ensure the highest levels of product safety.

For the commercial aircraft activities of Airbus and in each
Division, a Safety Management System (SMS) is deployed
in order to ensure deﬁnition and clarity of safety policy andobjectives, manage safety risks, assure effectiveness of
implemented risk control strategies and promote safety culture
amongst the workforce.

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Safety policy is set within the Divisions, following common
themes in behavioural values:
putting safety ﬁrst with a commitment to recognising thatlives depend on safety;
being engaged with safety, and aware of the impact of ouractions on safety;
ensuring that potential safety topics are reported andapplicable lessons learnt shared with stakeholders.

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One of the key elements of the Company’s safety culture is
the open sharing of technical information and lessons learnt
with operators and industry stakeholders, including during
major investigations within the constraints of ICAO Annex
13 practices. Safety culture is reinforced by the provision ofmeans for conﬁdential reporting of safety topics across Airbus.
Just & Fair Culture policies and commitments, which provide
assurance and protection from penalisation to employees whoreport unintentional errors, are deﬁned and deployed throughout
the Company.
The Company’s safety policies identify axes of safetyenhancement activity including in the safety of Airbus products,
the safety of ﬂight operations of Airbus products, and safety ofthe environment in which products are operated. Enhancement
activities are tailored to take into account differences in thecustomer base and operating environment of Airbus commercial
aircraft and each Division.
b. Research and Technology
The Chief Technology Ofﬁce (CTO) applies a lean, project-based
approach, encouraging collaboration with external researchcommunities and develop partnerships, especially through open
innovation with technical and scientiﬁc experts.
CTO is responsible for: guiding all R&T activities of theCompany and ensuring Airbus-wide integration of technology
through Technology Planning and Roadmapping, accelerating
the development of selected technologies through Flight
Demonstrators together with the Divisions, providing expertisein breakthrough technologies in support of the group wide
projects in Central R&T and developing technologies for the
next generation aircraft in Airbus R&T. Technology Planningand Roadmapping provides R&T Portfolio exhaustive view
across the Company, manages CTO portfolio planning process
and develops technology roadmaps including the use of key
Figures of Merit to enable a value based technology planning.
Flight Demonstrators provide a maturation mechanism andmaturity gates for the group R&T portfolio. The Demonstrators
employ a CTO-established development methodology,
including phasing and key gates, lightweight project
management and earned-value management processes,
including budgeting, HR and contracting mechanisms tailoredfor speed of execution.

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Central R&T is an R&T planning and delivery vehicle identifying
and delivering technology through breakthrough research for
future product generations. Central R&T portfolio is shared with
Division R&T and is organised in ﬁve boost areas - data science,materials, communication technologies, electrics expertise andvirtual product engineering.
Ax R&T The Divisional R&T functions are primarily planning,decision making and arbitration teams accountable within
their perimeters to both CTO and to Divisional Engineeringand Product Strategy. Their responsibilities include securingcontinuous improvement in Divisional competitivenessand ability to develop business. Fast Track Domains serve
as principal advisors to the CTO on technical vision androadmaps for associated Technology Domain areas. Fast Tracks
established to ensure coherency in the portfolio of activities andto rapidly advance strategic priorities are:
Electriﬁcation;
Industrial Systems and Manufacturing;
Connectivity;
Autonomy;
Materials;
Artiﬁcial Intelligence.

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Key Progress in 2018
Flight Demonstrators
Flight Demonstrators are a technology delivery vehicle fortechnological breakthroughs, providing a maturation mechanismand maturity gate for the R&T portfolio. The E-Fan family oftechnology demonstrators is a bold step towards all-electricand hybrid-electric ﬂight aimed at establishing requirements
for future certiﬁcation of electrically powered airplanes and attraining a new generation of designers and engineers for thechallenges of electric ﬂying.
A3
A 3 (pronounced “A-cubed”), is the advanced projects andpartnerships outpost of the Company in Silicon Valley with themission to disrupt the aerospace industry.
Altiscope helps integrating unmanned aircraft systems (UAS)
into the airspace. Using a simulator to evaluate policy options
and operational models for air trafﬁc management systems,
it aims to service all forms of airborne trafﬁc.
Vahana is an electric urban air mobility vehicle designed tocarry a single passenger or cargo. The objective is to ﬂy at fullscale an all-electric, self-piloted VTOL aircraft and discover
the core set of requirements and technologies to enableself-piloted operations. The ﬁrst Vahana full-size prototype
successfully completed its ﬁrst test ﬂights in early 2018.
Adam (Advanced Digital Design and Manufacturing) aims todevelop methods and tools to drastically reduce development
lead-time and production cost by leveraging emerging digitaltechnologies.
Wayfinder develops a scalable and certiﬁable platform forAutonomy and Machine Learning to enable future autonomous
ﬂight projects.
Voom delivers an on-demand urban air mobility service using
helicopters. It successfully completed its beta phase pilot in
Sao Paulo, Brazil, and Mexico City.

--

The operational management of Vahana, Voom and Altitscopeis exercised by the new UAM organisation.

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Airbus / Information Document 2018

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Airbus China Innovation Centre (ACIC)
ACIC, based in Shenzhen, is the ﬁrst Innovation Centre set up
by Airbus in Asia. Its mission is to fully leverage local advantages
including innovative talents, partners and the eco-system, andcombine this with Airbus’ expertise in aerospace to explore
breakthroughs in technologies, business models and new
growth opportunities.
BizLab
Airbus BizLab is the aerospace accelerator where startups andthe Company’s intrapreneurs speed up the transformation of
innovative ideas into valuable businesses. BizLab offers earlystage selected projects wide-ranging support in the form of aprogramme with a six-month acceleration phase. Startups andinternal projects beneﬁt from free hosting in BizLab facilities,
have access to a large number of the Company’s coaches andexperts in various domains, and participate in events such asa Demo Day with the Company’s decision makers, customers
and partners.
Airbus Helicopters
Safety remained the 2018 priority by signiﬁcant progress oncomponents architecture and advanced usage and healthsystems development. Advanced algorithms to provide speciﬁc,early and reliable damaging diagnostic on crack initiation weredeveloped to provide our H225 customers with maintenancecredit.

City Airbus, a three-to-four passenger optionally piloted electricvehicle demonstrator for unmanned air mobility, was a top priorityof 2018 to gain experience and expertise on urban mobility andvehicle requirements. It has transitioned into Airbus Helicoptersfrom the ExO and has successfully performed a power-on in
November 2018 to launch the ﬂight campaign in January 2019.
The urban last mile delivery solution, Skyways, has demonstrated
a delivery solution in 2018 after a ﬁrst ﬂight in January.
Airbus Defence and SpaceA priority in 2018 was technology development supporting
unmanned aerial systems data driven services to accelerate
the business development in this area. Light weight sensors
and communication links deployed on the Zephyr High-Altitude
Pseudo Satellite were equally important than the automateddata analytics on images and other surveillance data which
in future will be more and more based on artiﬁcial intelligencealgorithms.

Integration and implementation of 3-D printing capabilities
across the Division’s ﬂying products was accelerated throughgroup-wide initiatives and will continue to be qualiﬁed for ﬂight(in military and commercial aircraft as well as in spacecraft /satellites).
Technologies ensuring ef ficient satellite constellation
management as well as preparing the next generation payload
modules were matured to Technology Readiness for ProductIntegration.
c. Environment
The industry faces a variety of environmental challenges,
including climate change, and Airbus invests and cooperates
with stakeholders across the value-chain in researching andimplementing innovative ways to meet them.

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As aviation represents around 2% of global man-made CO 2
emissions, Airbus recognises its role in reducing the global
environmental footprint of the sector and the importance ofstaying in line with the global 2°C trajectory. Climate change
may also affect the environmental conditions in which Airbus’
manufacturing activities and products are operated. Anotherarea of attention is the elimination of substances that may posea risk to human health or the environment. Airbus is continuallyseeking technically-feasible sustainable solutions to reduce
the environmental impacts of its products and operations, incooperation with Airbus’ suppliers and industrial stakeholders.
The following section explains Airbus’ engagement in managing
these challenges.

This provides a greater understanding of the environmental
impact of Airbus products and operations.

1. Environmental Management at Airbus

Working in Cooperation
Airbus understands the importance of working together withother stakeholders to ﬁnd solutions.

“Shaping the future” for Airbus means developing products
and services taking into consideration current and foreseeable
future environmental challenges for future generations and withlong-term value creation in mind. In 2018, Airbus updated its
environmental policy, with a strong engagement from the CEO.
The new policy focuses on three main directions:driving development of eco-efﬁcient products and services
taking into account environmental challenges;
continually improving our manufacturing and site operations;working in cooperation with the aerospace sector to develop
sustainable operations of air transportation.

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Airbus Environment Steering Committee coordinates on all
matters related to the environment. The Steering Committee
meets four times a year and is composed of the heads
of Environment for Helicopters, Defence and Space andthe commercial aircraft activities of Airbus, as well as arepresentative from the R&S department. The responsibilities ofthe members are to provide consistency in environmental policy
across divisions and businesses in a harmonised manner, whereappropriate and speciﬁc actions are agreed for operational
implementation.
Airbus also monitors environmental regulatory developments
to understand, evaluate and prepare for legal and regulatory
evolutions applicable to its activities and products.
Airbus has put in place robust Environmental Management
Systems (EMS) based on ISO 14001. Airbus was the ﬁrst aircraft
manufacturer to be ISO 14001 certiﬁed. Amongst this year’sachievements was the successful certiﬁcation of the production
site in Mobile, Alabama, which is now part of the certiﬁcation
scope.
Environmental risks and opportunities are managed following
the company’s ERM process. Risks and opportunities arereported quarterly to the Executive Committee of each divisionand top risks are consolidated at company level to be brought
to the attention of Airbus’ top management.
On an annual basis, Airbus undertakes an extensive exercise tocollect, consolidate and report the Company’s environmental
performance data. Quantitative data is gathered as well as
qualitative data (including certiﬁcation, incidents and activities onsite). This enables Airbus to measure the environmental impact
of its site operations, track its performance and communicate
information on environmental matters to internal and external
stakeholders.
The reporting of environmental indicators is being extended toprogressively include relevant categories of Scope 3 emissions.

1

The emissions of the products in operation are largely inﬂuenced
by downstream stakeholders: airlines’ operations of aircraft,
air trafﬁc management, and fuel development are amongst
them, reinforcing the need for development of appropriate
methodology at sectorial level.
In 2018, Airbus reporting includes C02 emissions on the
upstream value chain, with emissions linked to employee
business travel and oversized transportation. Airbus is looking
into developing methodology regarding the C02 emissions ofpurchased goods and services.

Airbus is a Founding Member of International Aerospace
Environmental Group (IAEG) and participates in different areasof IAEG, such as greenhouse gas emissions, substancesmanagement, substitution technologies and supply chain toshare practises and promote development of global standards.
Airbus is an active board member of the Air Transport Action
Group (ATAG) which sets industry goals including CO2 emission
reduction goals, and mobilises action on strategic aviation
issues.
Aviation is a global industry and requires global solutions. ICAO,
a specialised agency of the UN, has a proven track recordof delivering robust aviation environmental standards andguidance (i.e. air quality, noise, CO2).
Airbus supported the ICAO agreement in 2016 on the CO 2
standard and also the adoption of the new Carbon Offsetting& Reduction Scheme for International Aviation (CORSIA) in
2017. Within the framework of this sectorial offsetting scheme,
airlines will start the monitoring and reporting process of CO2
emissions on 1 January 2019. CORSIA is the ﬁrst global sectorialoffsetting scheme.
Airbus continues to proactively support emissions andnoise reductions once the aircraft goes into service with ourcustomers, through fuel efﬁciency services, weight saving
projects, developing and offering retroﬁts (i.e. sharklets) andground operation solutions (i.e. e-Taxi) and the Sustainable
Aviation Engagement Programme.
Airbus has worked with the European Space Agency (ESA)in Earth observation for over 25 years. EarthCARE (Earthclouds, aerosols and radiation explorer) and Copernicus, themost ambitious Earth observation programme to date, are two
examples.
Recyclability is another important topic that Airbus is tacklingin cooperation with other entities. With TARMAC Aerosave, ajoint venture between Airbus SAS, Safran Aircraft Engines andSuez, more than 90% of an aircraft weight is today recycled or
re-used through a selective dismantling (reverse manufacturing)process. As airplanes manufactured with large volumes ofcomposites start retiring in the next few decades, Airbus isworking in cooperation with several specialist companies
involved in carbon ﬁbre recycling, as part of an industry goal todetermine the best processes and uses for recycled and reusedcarbon ﬁbre materials.

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2. Environmental Concerns
Regulated Substances across its Products’ Lifecycles
Many substances used in the global aerospace industry toachieve high levels of product quality, safety and reliability are
subject to strict regulatory requirements.

In the aerospace industry, regulations on substances impact
key processes and products, such as surface treatments, paints
and ﬁre protection.
Facing this challenge, Airbus remains committed to movetowards replacement of such substances in products andprocesses. To help achieve this, the Company has put in placea portfolio of activities and projects, working with suppliers
to identify, develop, qualify and deploy new technologies andsolutions that avoid use of substances classiﬁed as posing
a risk to human health or the environment, whilst satisfying
airworthiness, certiﬁcation and performance requirements.
Airbus also engages with suppliers to promote the adoption ofa similar approach through regular communication and, more
widely, by working together with the aerospace industry to
promote worldwide harmonisation of regulations and ways ofworking, taking into account the sector’s safety and lifecycle
speciﬁcities.
Using information obtained from its suppliers, Airbus tracks,
registers, assesses and declares regulated substances.
The Company has already qualiﬁed and deployed over 300
alternative products for substances such as ozone-depleting
substances and ﬂuorinated gases.
Airbus invests substantial time and resources in researchand development for technologies that use alternatives toregulated substances. When it can be demonstrated that thesetechnologies meet the strict safety and reliability criteria required
for aviation, Airbus seeks to implement them in its aircraft design
and manufacturing.
For example, in 2006, the Airbus Chromate-Free project was
launched with the aim of developing, qualifying and deploying
chromate-free alternatives to materials containing and processes
using chromates in aircraft production and maintenance.
Chromate-free external paint systems developed initially for the
A380 programme are now used in all Airbus commercial aircraft
manufacturing programmes and across the aerospace industry.
Another example is the Airbus Basic Primer project that
researches potential alternatives with the aim of phasing out
the green chromated primer coat.

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Baseline: 2015 and constant production.

Airbus / Information Document 2018

Environmental Impact of Airbus Industrial Operations
Airbus is engaged in an industrial transformation to anticipate
and prepare itself for mid-term evolutions of its industrial systems
as well as the longer-term solutions to build its “factories of the
future”. This company-wide initiative will support the reductionof Airbus’ environmental footprint on air, soil and water quality,
climate change, biodiversity and resource availability. An
evaluation of lifecycle hotspots on some main Airbus products
is also ongoing to help focus on appropriate topics.

Analysis of the current trends shows that regulatory pressure
on the international scene to reduce the environmental footprintof the aerospace industry is steadily growing (circular economy
and resources efﬁciency, energy transition and climate change
engagement, air and water quality improvement).
Airbus has committed and continues to commit to setting up
ambitious short-, mid- and long-term environmental targets.
In 2006, the environmental vision was set up for 2020 withgoals (by reference to a baseline of 2006 at constant revenue)
for reduction of energy consumption, CO 2 emissions, water
consumption, VOC emissions, and waste production.
So far, the Company’s energy consumption (stationary sources)
has been cut by 38%, exceeding the goal of 30%; CO2 emissions
have decreased by 40% (scope 1 stationary sources + scope 2
total) against the goal of 50%; VOC emissions have been cut by
60% exceeding the goal of 50%; water consumption has been
reduced by 46% against a goal of 50%; and waste production
has been diminished by 42% against a goal of 50%.
Thus, since 2017, Airbus has set an extended 2030 Vision.
The following operational objectives on commercial aircraft
manufacturing activities have been set:
respect the Paris Agreement by keeping a global temperaturerise well below 2°C above pre-industrial levels, and absorb
production ramp-up impacts by reducing CO 2 emissions
intensity by 60%*;
reduce its water intensity by 50%*;
maintain levels in compliance with air emissions regulations
and absorb production ramp-up impacts; anddeploy environmental requirements for and evaluation of
suppliers and use these results in supplier selection processes.

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The two Divisions are in the process of developing similar
approaches.

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Airbus monitors and makes available data veriﬁed by external auditors, and publishes transparently its industrial performance.
Environmental data has been externally audited since 2010. Below is a selection of externally reviewed environmental indicators.
Environmental
performance

Energy

GRI

EN3

EN16
EN17
Air emissions
EN20
EN21

Water

KPI

Unit

2018

2017

Total energy consumption (excluded electricity generated
by CHP on site for own use) ✔

MWh3,962,484

4,098,475

Energy consumption from stationary sources ✔

MWh1,296,135

1,357,724

Energy consumption from mobile sources ✔

MWh1,098,179

1,206,689

Total electricity consumption ✔

MWh1,568,169

1,534,062

Generated electricity from CHP on-site for own use ✔

MWh190,287

190,127

Total Scope 1 + Scope 2 CO2 emissions ✔

tonnes CO2

965,633

1,013,101

Total direct CO2 emissions (Scope 1) ✔

tonnes CO2

553,063

591,002

Total indirect CO2 emissions (Scope 2) ✔

tonnes CO2

412,570422,099

Indirect CO2 emissions Business Travel (Scope 3)

tonnes CO2

111,666na

Indirect CO2 emissions Oversize Transportation* (Scope 3)

tonnes CO2

185,500

na

Total VOC emissions**

tonnes

1,526

1,565

Total SOx emissions

tonnes17

15

Total NOx emissions

tonnes

321

314

EN8

Total water consumption ✔

m3

4,016,913

4,011,897

EN22

Total water discharge

m3

3,336,712

3,416,506

tonnes

98,592

105,839

Material recovery rate ✔

%

57,8

58,5

Energy recovery rate

%

20,7

20,6

Unit

60/71

61

%

89

90

Total waste production, excluding exceptional waste ✔
Waste

EMS certification

EN23

Number of sites with ISO 14001 / EMAS certification*** vs total
number of covered by environmental reporting
Workforce effectively covered by reporting over workforce subject
to reporting according to the environmental guidelines.****

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A220 sites are not yet included according to reporting rules.
✔ Data audited by Ernst & Young et Associés. Limited assurance report is available on www.airbus.com. 2018 data covers 89% of total group employees.
* Oversize emissions cover transport of large and non standards shipments. 2018 values cover Aircraft commercial aircraft activities.
** 2018 VOC emissions data is estimated. The precise 2018 data will be consolidated and available in March 2019*** Number of sites covered by the environmental reporting which are certified ISO 14001.
**** Airbus environmental reporting guidelines include sites worldwide with a workforce on-site higher or equal to 50 employees. Note that only 100% consolidated entities are taken
into account to calculate this 50 employee threshold. For electricity, coverage is slightly higher (90.3%) due to inclusion of AD Stevenage site.

Environmental IMPACT of Airbus Products in Operation
In the last 50 years, the aviation industry has cut fuel consumption
and CO2 emissions per seat / kilometre by more than 80%, NOxemissions by 90% and noise by 75% of aircraft in operation.

Whilst this performance is impressive, Airbus and the aviationindustry recognise the importance to continue improving thesector’s environmental performance in all areas – from noise
to air quality and GHG emissions, notably CO 2. Due to theindustry’s short- to medium-term reliance on fossil-based fuels
as well as potential additional impacts from non-CO2 factors,
the reduction of aviation’s impact on climate change remains
an environmental challenge.
To address the CO 2 challenge, Airbus, along with airlines,
airports, air trafﬁ c management and other manufacturers,
committed in 2008 to the ATAG CO2 emission goals:
improve ﬂeet fuel efﬁciency by an average of 1.5% per annum
between 2009 and 2020;stabilise: from 2020, net carbon emissions from aviation will
be capped through carbon neutral growth (CNG); and-- by 2050, net aviation carbon emissions will be half of what
they were in 2005.

Meeting these challenging goals will require a truly collaborative
approach across the industry, focused on a combination of
improvement measures encompassing technology (including
sustainable fuels), operational improvements, infrastructure(including air trafﬁc management) and global market based
measures.
Good progress has already been made on the ﬁrst two ATAG
CO2 emission targets:the average global fleet fuel efficiency has improved bymore than 2% per annum over the last 5 years. Airbus has
contributed signiﬁcantly to this reduction by delivering new
aircraft (such as the A350 XWB, 25% more efﬁcient than theprevious generation aircraft; the A320neo, offering today 15%
less fuel consumption compared to A320ceo (targeting 20%
in the near future); and the just recently delivered A330neo,
providing 14% improved fuel consumption efﬁciency);-

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- the recently agreed ICAO Carbon Offsetting & Reduction
Scheme for International Aviation (CORSIA) should also play
an important role towards achieving Carbon Neutral Growthfrom 2020.

Since 2008 Airbus has been actively supporting the developmentof sustainable aviation fuel, promoting its use with Airbus
customers and supporting its certiﬁcation. After having started
offering the possibility to perform commercial aircraft delivery
ﬂights with sustainable aviation fuel from its delivery centre in
Toulouse, Airbus has now enlarged the offer for sustainableaviation fuel delivery ﬂights to its delivery centre in Mobile
since October 2018. Airbus’ ambition is to further scale-up
these activities and to make available signiﬁcant quantities ofsustainable fuels for its commercial aircraft customers’ delivery
ﬂights on a regular basis – and in the longer term from all Airbus
commercial aircraft delivery centres around the world.
For the ambitious long-term 2050 target, the Company continues
its research in step-change technologies that further improve thesustainability of our products. Electriﬁcation and hybridisation
can bring not only signiﬁcant beneﬁts in addressing CO2 but
also for noise and NOx emissions reductions. The Company istherefore investing in research efforts on developing electric andhybrid-electric propulsion technologies. The Company alreadystarted its journey towards electric ﬂight with the E-Fan family of
aircraft in 2011, a success that permitted the Company to learn
from the hundreds of ﬂights performed since. In November 2017,
the Company launched E-Fan X in cooperation with Siemens andRolls-Royce. E-Fan X is an ambitious technology demonstrator
project that aims to be a stepping stone toward a hybrid electriccommercial aircraft at the scale of today’s single aisle family.
Alongside reducing CO2 emissions, Airbus’ latest aircraft models
also offer improvements in both noise and NO x emissions
reduction: A350 XWB with up to 21 EPNdB lower noise and 31%
lower NOx emission compared to CAEP/6 industry standards,
A320neo with up to 20 EPNdB lower noise compared to ICAO
chapter 4 and 60% lower NOx emission compared to CAEP/6
industry standards. Moreover, A330neo is the ﬁrst aircraft toreceive ICAO chapter 14 noise certiﬁcation, with a margin of 6
EPNdB and up to 13 EPNdB compared to chapter 4 as well as
27% lower NOx. The H160 helicopter brings noise levels downby 50% compared previous generation helicopters.
Airbus works with stakeholders across the industry including
engine manufacturers, airlines, air trafﬁc management providers
and airports to be part of the solution in reducing commercial
aircraft noise impacts through optimised operational techniques
and preferential routings, as well as quieter aircraft. Extensive
efforts to reduce noise at the source are already applied in thedesign process. High priority is being placed on ﬁnding new
innovative solutions and technology improvements such as lownoise nacelle designs.
With the establishment of an ecodesign team in 2018, Airbus
Defence and Space has broadened the environmental analyses
carried out on its products, including conducting life cycle
assessments on various space products. The aim is to advancethe environmental performance of its products. Engineers arebeing provided with such information to reduce the use ofregulated substances in product development and to increase
resource efﬁciency.

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Airbus / Information Document 2018

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Services for Products in Operation
The Company is supporting the CO 2 roadmap not only
through state-of-the-art technologies improving environmental
performance of aircraft, but also through services such as
NAVBLUE, a 100% Airbus company. NAVBLUE develops digital
ﬂight operations and air trafﬁc management solutions which offer
improved navigation, enhanced operational efﬁciency and fuelsavings (i.e. SkyBreathe software).

d. Responsible Defence and Space Products
The Company’s products provide invaluable insights on global
environmental challenges and natural disasters, contribute to asafer space environment, and are being deployed to meet world
governments’ ever-changing needs to protect citizen’s rights.
Defence & Security
The Company works with the EU, NATO and other governments
to supply the necessary equipment to support their efforts tomake the world a safer place. Nations need defence systems
and equipment to guarantee sovereignty, security and humanrights. The Company’s military aircraft, satellites and security
technologies help protect democratic values around the globe.
A partnership with the Company also helps them to protect
their nations from the changing nature of terrorism threats andcybercrime.
Unique product features include:- ALTAIR is an innovative unmanned airship that performs-

emission free, multi-hour visibility over cities and crowds ofpeople, enabling police forces to secure critical events;
Ocean Finder delivers fast satellite-based detection andidentification reports for assets at sea, including ships,
locating hijacked boats, illegal activities detection, maritime
mission preparation as well as supporting search and rescue
operations;
Spationav is the coastal surveillance project of Airbus DS SAS;
Deutsche Küste - As part of the security concept Deutsche
Küste (German Coast Security Concept), Airbus Security
Solutions is providing a maritime information system is used
for managing the planning and coordination of vessel trafﬁcand safety of shipping within German territorial waters.

For information on risks related to security, see “Risk Factors– Business-Related Risks – Physical Security, Terrorism,
Pandemics and Other Catastraphic Events” and “Cyber Security
Risks”.
Environmental Contributions
With its low earth orbit meteorology satellite systems, opticaland radar imagery from Airbus satellites shed light on signiﬁcantenvironmental issues such as climate change, pollution,
deforestation and natural disasters. Programme highlights
include:Copernicus is the European Union’s Earth Observation
programme. The satellites built and managed by the Company
as part of the EU’s programme include Sentinel 2 circles
the Earth’s landmasses every 10 days, delivering data for
agriculture, forestry, natural disaster control and humanitarianrelief efforts. ADM-Aeolus provides global observations ofatmospheric modelling and analysis techniques, which beneﬁt
operational weather forecasting and climate research;-

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5 /1.1 Presentation of the Company
Information on the Company’s Activities /1.1 Presentation of the Company- METOP mission provides meteorological observations from

FINANCIAL STATEMENTS 2018

1

2

3

4

5

Sustainable Space

polar orbit and contributes to the long-term climate monitoring
programme. It also has a search and rescue function;
BIOMASS will provide global scale maps of biomass, changes
due to forest loss (from logging/burning) and forest regrowth,
improving the understanding of the contribution of forests to
the global carbon budget;
Twin Grace-FO Satellite observes changes in the Earth’s
gravitational ﬁeld over time to better understand the dynamic
processes beneath the Earth’s surface and the changes in theice coverage at the poles;
Starling is a service that assists companies in verifying
commitments made to stop deforestation;
Zephyr is the world’s leading solar-powered High Altitude
Pseudo-Satellite (HAPS), providing persistent surveillance,
tracing the world’s changing environmental landscape, and will
be able to provide communications to the most unconnectedparts of the world.

The Company is working to ensure a safe and sustainable spaceenvironment for current and future generations by pioneering
relevant technologies and participating in leading sector
initiatives. Examples include:
RemoveDEBRIS, a collaborative space debris removal
technology mission;
Technology for Self-Removal of Spacecraft (TeSeR), is a
consortium which aims to reduce the risk of spacecraft
colliding with debris through a module that prevents collisionrisk;
O-Cubed is an on-orbit servicing solution for active debris
removal, satellite maintenance and in-space manufacturing.

The Airbus Foundation’s partners, such as non-governmentalorganisations, beneﬁt from Airbus satellite images to assist themin carrying out relief efforts following natural disaster events, aswell as the use of Airbus platforms in the transport of relief aide.
Further details on the Airbus Foundation are provided later inthis chapter.

As of 31 December 2018, the Company’s workforce amounted
to 133,671 employees (compared to 129,442 employees in2017), 95.78% of which consisted of full-time employees. Thesestatistics take into account consolidation effects and perimeterchanges throughout 2018. Depending on country and hierarchy
level, the average working time is between 35 and 40 hours
per week.

--

1.1.8.3

Responsible Employer

a. Workforce

Entries & Leaves

2018

2017

2016

Newcomers

10,959

7,318

7,532

Core division

5,246

3,900

3,843

Subsidiaries

5,713

3,418

3,689

Leavers (including partial retirement)

6,198

5,151

4,698

Core division

3,245

2,646

2,274

Subsidiaries

2,953

2,505

2,424

In terms of nationalities, 36.3% of the Company’s employees
are from France, 31.5% from Germany, 9.0% from the UK and
9.9% from Spain. US nationals account for 1.8% of employees.
The remaining 11.6% are employees coming from a total of
136 other countries. In total, 90.7% of the Company’s active
workforce is located in Europe on more than 100 sites.

Employees by Business Segment

Furthermore, the Company expects its workforce to evolve
naturally to support the business.
Workforce by Business Segment and Geographic Area
The tables below provide a breakdown of the Company’s
employees by business segment and geographic area, as well
as by age, including the percentage of part-time employees.
31 December 201831 December 201731 December 2016

80,92474,54273,852

Airbus Helicopters ✔

19,745

20,161

22,507

Airbus Defence and Space ✔

33,002

32,171

34,397

0

2,568

3,026

133,671

129,442

133,782

Airbus* ✔

Airbus (former HQ) ✔

Group Total ✔

1* Airbus includes population of former HQ since 1 January 2018.
✔ Data audited by Ernst & Young et Associés. Limited assurance report is available on www.airbus.com.

Airbus / Information Document 201857

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1

Employees by geographic area

2

3

4

5

2

3

4

5

31 December 201831 December 201731 December 2016

France ✔

48,14447,86547,963Germany ✔

45,38744,21446,713

Spain ✔

13,684

13,177

12,682

UK ✔

11,214

11,304

12,020

US ✔

2,489

2,707

2,829

Other countries ✔

12,753

10,175

11,575

Group Total ✔

133,671

129,442

133,782

31 December 201831 December 201731 December 2016

4.22%

4.20%

4.13%

31 December 201831 December 201731 December 2016

130,131

126,534

131,153

3,540

2,908

2,629

% Part time employees
Group Total ✔

Active Workforce by contract type
Unlimited contract ✔
Limited contract > 3 months ✔

The Company´s attrition rate is 4.9% overall (incl. subsidiaries)
and 8.51% in subsidiaries only.

b. Human Capital Management, Labour Relationsand Human Rights

T h e C o m p a ny’s h e a d c o u nt re p o r ti n g i n c l u d e s a l lconsolidated companies worldwide. The internationallycomparative figures are based on the active workforce,i.e. the number of permanent and short-term employees,
irrespective of their individual working times. The headcountis calculated according to the consolidation quota of therespective companies. The scope for HR structure reporting
covers about 97% of the Company’s total active workforce
from consolidated companies. In total, about 3% of theCompany’s employees are not included in the scope, as
no detailed employee data is available at group level forsome companies belonging to the Company, usually recently
acquired.

The Company’s workforce is managed by the HR function
thanks to a set of HR policies and a strong labour structure.
HR policies are discussed and agreed with social partners
through continuous and regular meeting at global and local
levels. The current priorities of the Company’s HR function are:to ensure that the Company can attract, develop and retain
a world-class competent, motivated and ﬂexible workforce,
which ﬁts current and future business requirements;
to facilitate diversit y, continuous integration andinternationalisation of the Company and contribute to acommon culture based on strong company values;
to be a global employer of choice and an innovative, inclusive
and engaging place to work for all employees.

For more details on Scope and Methodology, please refer tothe Company’s website at http://www.airbus.com.

-

Training and Mobility
In 2018*, the Company provided more than 1,3 million training
hours and more than 11,000 employees participated to learning
linked to leadership domain.
2018*

2017

Number of Classroom Training ✔

114,327

134,427

Number of Digital Training ✔

248,448

144,624* Change of reporting period in 2018: from 1 Oct. 2017 to 30 Sep. 2018

In addition, in 2018 more than 30,000 employees beneﬁtted fromothers developments and transformation solutions proposed by
the Airbus Leadership University. The purpose of the university
is to strengthen the Company’s approach to leadership, offering
equivalent opportunities for all leaders to drive their development
one step ahead, while accelerating the culture evolution andhuman transformation in the Company.
Mobility of employees within or across Airbus and its Divisions is
one of the main priorities for the overall beneﬁt of the Company.

58

Airbus / Information Document 2018

In 2018, as of end of December, more than 12,500 employeeschanged jobs cross-divisionally and cross-country.
Labour Relations
Wherever it operates, the Company wishes to grow its economic
success in consideration of common principles and standards
consistent with International Labour Organisation (ILO)
conventions, the OECD Guidelines for Multinational Enterprises
and the principles laid down by the UN Global Compact, which
the Company has adopted. The principles are in complianceANNUAL REPORT 2018

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FINANCIAL STATEMENTS 2018

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4

5

with the Airbus Standards of Business Conduct and with theInternational Framework Agreement signed in 2005.

strategy and commitments reﬂecting the Company being an
employer of choice.

In the International Framework Agreement, the Company
reafﬁrms its willingness to respect the regulation regarding
fundamental human rights, equal opportunities, free choice of
employment, as well as prohibition of child labour and respectand ensuring the conditions for industrial dialogue.

In France, following the entry into force of a new legislative
framework related to employee representative bodies with thecreation of a single body — the new works council Comité Socialet Économique (CSE) — Airbus seized the opportunity for an
in-depth review of its social dialogue model which resulted in aunanimous signing of six revised agreements pertaining to theregeneration of the social dialogue. These agreements enable
the harmonised development within Airbus in France of a social
dialogue that is more focused on strategic issues and the general
operation of the company with an architecture giving employee
representatives access to an overall vision and the opportunity
to better support the transformation being undergone by Airbus(including digitalisation, new ways of working, competitiveness,etc.), without neglecting representation of proximity.

The Company in particular intends, via its agreements, torespect the disposition of the following ILO conventions:
numbers 111 (discrimination – employee and occupation), 100(equal remuneration), 135 (workers’ representatives), 29 (forced
labour), 105 (abolition of forced labour), 182 (child labour), 138(minimum age), 87 (freedom of association and protection of
the right to organise) and 98 (right to organise and collective
bargaining).
The head of each business is responsible for ensuring
compliance with these principles and will take appropriate
measures to ensure their implementation.
The Company is in continuous dialogue with social partners on its
sites in Europe, principally through meetings with management
at the European Committee level but also through meetings andnegotiations at national or local level. Sites outside Europe arecovered by Airbus’ ILA framing the social dialogue and social
culture in line with local labour legislation, culture and practicesof respective countries.
Regular social dialogue is ensured as per ILO requirements andlocal legislation thanks to the Company’s Societa Europea WorkCouncil (SEWC) agreement in 2015.
Strengthening the role of industrial relations and social dialogue
is an enabler of shaping the future of work through workplacecooperation, collective bargaining by enhancing cooperation
between employees’ representatives and the top managementof Airbus.
In line with its commitments, the Company demonstrated its
engagement through the following signiﬁcant milestones in2018:
in 2018, the Company signed the SEWC Reshape agreement
promoting mutual understanding and the co-constructionof transnational solutions, which should be then reﬂected atnational level. In this frame, the “Airbus Global Forum Initiative”
was launched, with the aim of piloting constructive exchange
of information with staff representatives at a global level, in linewith responsibility and sustainability policies to further engage
the social dialogue towards Company globalisation. The ﬁrst
meeting will be held in June 2019 chaired by the Airbus CEO;in October 2018, Airbus also joined the Global Deal for Decent
Work and Inclusive Growth initiative (“Global Deal”). Launchedin 2016, the Global Deal is a multi-stakeholders’ partnershipthat seeks to address two of the greatest challenges of ourtime: to reduce high and rising inequalities in opportunities
and outcomes and to restore fading trust in the ability of
governments and institutions to make economic growth work
for all against a backdrop of rapid changes in the world of work.
The Global Deal’s founding principles aim at encouraging
action through voluntary commitments, increasing knowledge
base about social dialogue and sound industrial relations
and providing platforms for sharing experiences and bestpractices. Airbus’ active representation demonstrates thatsocial dialogue’s globalisation is rooted in the Company’s R&S

-

-

1

In a fast-paced transforming business environment, the quality ofsocial dialogue, proximity and cooperation has demonstrated its
added value in supporting our employees. This was accomplishedthrough transnational restructuring plans by negotiating stateof the art accompaniment redeployment measures supporting
impacted employees in a constructive social climate with noprotests and resulting in ﬁnding redeployment solutions to 99%
of our employees mainly internally as a result of solidarity andpriority principles founded in the Company’s HR values.
Human Rights
The Company has a zero tolerance approach to all formsof human rights abuse, including modern slavery, within its
business, its operations and within its supply chain.
In light of changing regulatory requirements, Airbus has identiﬁed
a risk of insufﬁcient awareness of human rights impacts relating
to its business and its operations. In response, the Company
has decided to launch a programme of work to understandmore fully its negative and positive human rights impacts, andto undertake a human rights gap analysis that will consider
current and upcoming regulatory requirements, international
best practice, the UN Guiding Principles and the UN Global
Compact. This work is intended to commence in early 2019.
Modern slavery risks will also be covered in the human rights
impact and gap analysis.
As part of its obligations under the UK Modern Slavery Act, andin recognition of the global aim of this topic, Airbus publishedits second Modern Slavery Statement in 2018. Modern slavery,
along with wider human rights, is a topic followed by the Airbus
R&S Network. Actions to address these issues and understandassociated risks to its business and supply chain continued
during 2018. For further information on the evaluation of humanrights risks in Airbus’ supply chain, see section 1.1.8.4(b)Responsible Suppliers.
The Company also continued the roll-out of its e-learning
modules focused on helping employees identify the signs ofhuman rights abuse and modern slavery, including raisingawareness of what to do if they have concerns. At the endof 2018, 4,972 employees had completed this e-learning,which is available in four languages and forms part of the
ethics and compliance catalogue of learning. The Company
is also committed to promote awareness through internal
communication initiatives and awareness sessions and to train
its most impacted employees on potential risks.

Airbus / Information Document 201859

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1

During 2018, Airbus started to identify potential KPIs related tohuman rights which could be used to measure progress. The
Company is currently evaluating the availability of data in orderto start report using these KPIs.
c. Health and Safety
The health and safety of our employees is a top priority of theCompany. It is the Company’s policy to continuously reinforce
health and safety related to Airbus work activities as part ofthe business culture and to deliver responsible health andsafety management that sustainably reduces risk to people,
the environment and the business.
Governance of Health and Safety at Airbus
A new company-wide Occupational Health and Safety Policy
has been issued in 2018 as the foundation of the Company’ssystem for management of health and safety at work. The new
Policy reﬂects the changes in company structure and evolving
external and internal requirements.
The purpose of this new policy is to:- reinforce the following principles:- responsible management of health and safety, taking all

feasible steps to protect people and the business fromthe health and safety risks that could arise from its work
activities,
all employees accepting appropriate responsibility forthemselves and others,a health and safety management system that drives
continuous improvement and compliance,a preventative approach based on analysis of leading andlagging indicators and other occupational health and safety
data;
reiteration of the health and safety mission and vision:
our mission is to deliver a culture and management systems
that promote health and safety at work, related compliance,
and the sustained reduction of health and safety risk related
to Airbus work activities,
our vision is that Airbus has world class health and safety
risk management and is known as a company where safety,
health and welfare are valued as an integral part of our
success. Airbus aspires to zero work related injuries andill-health;focus on key initiatives:a health and safety management system based on theprinciples of the ISO Standard 45001,
the implementation of a company-wide health and safety
software platform (Federated Information on Safety and
Health called FISH),
the reinforcement of a company-wide health and safetyfunction by the harmonisation of health and safety philosophy
and methodology.

-

-

3

4

5

2

3

4

5

Airbus is structuring its corporate health and safety management
framework based on the principles of the newly introduced
international standard – ISO 45001. The new Policy is one of
the foundation documents which has evolved in this regard.
The FISH management platform and the harmonisation of thecompany-wide health and safety function are two of the pillars
supporting the health and safety management framework forhealth and safety at work. Airbus will progressively certify someentities under ISO 45001.
Tools
The company-wide management framework health and safety
at work is supported by FISH – the global health and safety
software platform. The deployment of this platform started in2018 and will enhance Airbus’ incident, risk health and safety
capability. This will enable improved aggregation and analysisof health and safety data to form a risk topography that focusesresources to best effect. Such module will support measurement
and evaluation of work-related incidents (eg: near misses) which
will improve accident avoidance.
The incident management module of this platform has been
deployed in France for Airbus commercial aircraft activities andAirbus Helicopters, in Spain for Airbus and its Divisions and in
UK for Airbus’ commercial aircraft activities and Airbus Defence
and Space. It is expected that the full deployment of this modulein the FISH tool will be completed in 2019. Thus Airbus will
progressively improve its ability to collect, analyse and reporton work related health and safety information, continuously
improving the identiﬁcation and mitigation of risk.
Commencing the deployment of the incident management
module and the overall harmonisation process have allowed
improvement in the production and collection of overall
company-wide KPIs which are detailed below.

-

Airbus has held an innovation workshop to focus on futuretechnologies to support and reinforce safety and ill-health riskprevention by using new technologies, such as exoskeleton,
ergonomic analysis and virtual reality training.

-

Risks and Management Performance-

To achieve the objectives of this Policy, Airbus is consolidating
health and safety resources into a single organisation to delivercompany-wide harmonisation and gain improvements in risk
control and efﬁciency beneﬁts. In this respect, Airbus has
deﬁned Transversal Expert Groups (TEG), for Industrial Hygiene,
Health and Wellbeing, and Safety Management. These TEG
span Airbus, its Divisions and countries, providing advice andhelping to improve management of risk control work.

60

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Airbus / Information Document 2018

The company identiﬁes work-related hazards and seeks toeliminate, substitute, isolate or otherwise manage them tosupport legal and regulatory compliance. It is intended thatcompany processes further be improved through the company
software platform, FISH. Risks that could arise from work
activities include the possibility of injury, physical and mental
ill-health, damage to equipment, business interruption andregulatory action. Any reputational risk and claims against
Airbus that may result will also need to be managed. In 2018,
main causes of injury remain slip, trip and fall events andergonomic/manual handling. Work at height and chemicals
present additional concerns.
Collection of health and safety data is being harmonised
company-wide using common indicators such as Frequency
Rate. The reporting scope of such harmonised health andsafety data (reﬂected in the table below) covers Airbus and its
Divisions for the four home countries and the Mobile USA and
Tianjin China plants, covering around 92% of the Airbus Active
Workforce, and will be progressively extended. Analyses ofsuch reporting data will continue and evolve in light of the levelof maturity of data collection.

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FINANCIAL STATEMENTS 2018

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4

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1

AIRBUS AND ITS DIVISIONS – ROLLING 12 MONTHS EMPLOYEE LOST TIME INJURY FREQUENCY RATE

6

5.73

5.75

J

F

5.64

5.71

5.68

5.74

M

A

M

J

5.87

5.85

5.82

5.83

J

A

S

O

5.93

5.90

N

D

5

4

3

2

1

2018
AIRBUSFISH (the new company-wide software platform for health andsafety) will develop consistency of health and safety incident
reporting and investigation to improve the Company’s incident
management results. This will in turn improve data analysis
capability and help reinforce preventative activities. The People
Safety@Work project was launched for Airbus commercial
aircraft activities mid-2018. This project aims to improve themanagement of work-related healthy and safety injuries inoperational areas and drive a safety mind-set. The project is
structured through a multi-functional team led by all impacted
functions (e.g., Human Resources, Industry, Final AssemblyLine, Facility Management, Procurement).
Key Initiatives
Airbus regularly consults and provides information to employee
representatives, for example in direct meetings and committees.
Airbus has health and safety committees involving employees
and their representatives in line with applicable regulations. As
examples of such interaction, the health and safety software
platform (FISH) project has been presented to more than 25
national and European employee committees and the healthand safety team has contributed to an agreement signed with
French social partners on quality of life at work (Qualité de vie
au travail).

Airbus continues to conduct communication campaigns with theongoing aim of encouraging employees to engage in health andsafety risk management. In April 2018, Airbus held a companywide risk awareness campaign to coincide with the ILO WorldH&S Day, extending to all employees throughout the group.
Numerous other initiatives have been deployed locally on sites
including the Safety Box (a dedicated space for safety training
and information); Safety Road Risk initiatives; the Extended
Enterprise Platform for onsite contractors; and the companywide health and safety colloquium, where health and safety
practitioners meet to exchange ideas and best practices.

The Airbus health and safety training catalogue is constantly
evolving to support Airbus’ risk management activities. Airbus
has deﬁned a health and safety development strategy focusing
on harmonised and standardised training. Airbus is also
continuously developing its health and safety learning catalogue
including digital solutions and alternative learning approaches.
From October 2017 to September 2018, the Company delivered
over 137,000 hours of dedicated health and safety training toapproximately 30,800 individual employees.
Protecting health and safety is one of the Company’s toppriorities, and Airbus is continuously reviewing its meansand processes across plants and sites with this in mind. The“REACH-IT” project within Airbus’ commercial aircraft activities,
including similar initiatives within the Divisions, reviews Airbus
manufacturing processes, tools and workstations in light of the
REACH authorisation application measures for environment,
health and safety protection. It contributes to continuous
improvement.
With regard to sub-contracting, as further detailed in
section 1.1.8.4(b) Responsible Suppliers, Airbus strives tocontinuously improve the integration of health and safety
elements into the purchasing process. Airbus standard
procurement contracts contain health and safety provisions to
be respected by suppliers.
In addition, on-site sub-contracting processes are in place andare continuously evolving with a harmonisation objective. Airbus
identiﬁes potential risks and deﬁnes prevention measures incooperation with on-site sub-contractors, jointly producing
dedicated documents, such as the prevention plans in France
or job registration forms in the UK. Airbus then monitors on-site
sub-contracting activities.

Airbus / Information Document 201861

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OutlookThe health and safety management system aims to focus
on proactive risk assessment and control, role appropriatecompetence and development, and active monitoring, analysis
and oversight reporting. It is key for Airbus to further expand
its health and safety management software platform (FISH)
to enhance the ability to capture company-wide performance
information in a common format to facilitate improved datacollection, analysis and performance. Such data analysis will
help reinforce preventative activities.

Airbus also aims to further use learning to support the integrationof health and safety into the business culture and is therefore
working on the harmonisation of employee training offers for
employees and customisation of such offers, for example
developing speciﬁc training for managers and executives.
d. Inclusion and Diversity
The Company is convinced that diversity helps foster innovation,collective performance and engagement. Harnessing everyone’s
unique potential while ensuring an inclusive workplace is what it
takes to succeed together. At Airbus, we live diversity as a core
part of our identity: Airbus is proud of its European roots andpassionate about its achievements around the world. More than
135 nationalities are represented and more than 20 languages
are spoken within the Company.
The Company’s approach to Inclusion & Diversity (“I&D”)
takes different forms including: I&D Steering Board chairedby the Airbus CEO, dedicated training and awareness, internal
incentives for international mobility, initiatives to attract women,
ﬂexible work-life solutions. In fact, the Company strives to ensure
I&D is embedded in all it does, serves business purposes andbeneﬁts all employees worldwide. With full support of theentire HR function, I&D initiatives are run and coordinated by a
dedicated team of experts worldwide. The Company’s efforts
are also supported by several employee networks such as
Balance for Business and platforms for exchange like “Knowing
Me, Knowing You”.
In line with its aspiration for a more diverse workplace, theCompany is working to increase the number of applications
from areas that are currently under-represented in its workforce,
including but not limited to women, nationalities, age groups andsocial backgrounds to ensure a broader range of candidates
for open positions.

2

3

4

5

2

3

5

In order to support recruitment of women in all areas, Airbus
has entered into partnerships to increase the number of womenstarting a career in the aeronautical industry – for example
with Capital Filles, Women in Aviation, IAWA. Internally, an
I&D network of over 4,000 employees work on how to attract,develop and retain diverse proﬁles, especially women, in the
Company. In parallel, Airbus strives to increase the number ofwomen in leadership positions, including through dedicatedcoaching and training such as “I Unleash My Potential” as well
as by ﬁghting stereotypes in internal conferences or workshops.
In terms of internationalisation of proﬁles, Airbus facilitates theattraction of talents from around the world to Airbus’ traditional
home countries (France, Germany, Spain, the United Kingdom)
through an International Graduate Programme enabling talentsfrom all around the world to come and work on their development
over one year at Airbus sites in Europe. In addition, Airbus also
put in place several actions to boost mobility from other regions
to the home countries.
Although the Company welcomes many forms of diversity, itmeasures the evolution of the diversity of its workforce witha speciﬁc focus on gender diversity and internationalisation
with key KPIs such as: proportion of women promoted to a
position of senior manager or above, proportion of womenamong white collar external hires, gender pay gap at all levels
between women and men, and the number of moves from the
key countries (including India, China, US) to the home countries.
The Company has launched several actions to embrace otherforms of diversity, including:reverse mentoring to connect all generations in the Company;
accompany the creation of Employees Resource groups like
Pride@Airbus (LGBT+ network);
coordinate all local strategies towards disability with several
thousand differently abled employees all around the world.

-

As far as the Airbus SE Board of Directors is concerned, theCompany is moving in the right direction with 3 women in 2017
compared to not a single woman on the Board in 2013.
For a description of the diversity policy of the Airbus SE Boardof Directors, see “— Corporate Governance — 4.1.1 Corporate
Governance Arrangements” under the heading “Board of
Directors” and “— Corporate Governance — 4.1.2 Dutch
Corporate Governance Code, ‘Comply or Explain’” under theheading “Gender Diversity”.

31 December 201831 December 201731 December 2016

Women in active workforce ✔

17.7%

17.5%

17.2%

Women in management positions ✔

12.6%

12.4%

11.4%

The reference to “management positions” in the ﬁgure above only applies to the top 4% of the active workforce.

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1.1.8.4. Responsible Businessa. Ethical Business Practices
Leading by Example
The Airbus Ethics & Compliance Programme seeks to ensurethat the Company’s business practices conform to applicablelaws, regulations and ethical business principles, as well as
developing a culture of integrity and speak-up.
In 2018, Ethics and Compliance was a top priority for theCompany as for 2017. In its list of priorities for the year, Airbus
set the objective to:“Continue to engage and develop our people worldwide to excel
today and tomorrow by adopting key digital skills and mind-set,
reinforced ethics & compliance adherence and a strong focus
on diversity”.
Compliance is at the heart of everything Airbus does today –Airbus is putting signiﬁcant resources and effort into supportingthe coordinated criminal investigations by the UK Serious Fraud
Ofﬁce (SFO) and France’s Parquet National Financier (PNF).
The Independent Compliance Review Panel (ICRP), a panelof eminent external consultants appointed by the Company
in May 2017, has also progressed in its mission over the past
year. The Company is committed to putting in place the ICRP’s
recommendations on how to further improve our compliance
processes, policies, organisation and culture.
Our E&C Organisation
The Ethics & Compliance organisation is part of the Legal
Department under the ultimate responsibility of the Airbus
General Counsel. The aim is to provide strong governancethroughout the Company with the global presence of qualiﬁed
compliance ofﬁcers who ensure the compliance programme
is implemented consistently in the different functional andoperational areas.

They do this in close cooperation with its employees andmanagement, who are expected to lead with integrity by
example and take responsibility for compliance within theirscope of activity.
Our Commitment
Over the years, the Company has earned the trust of passengers,
customers, operators and other stakeholders through the quality
and safety of our products. To fully serve our communities andthrive in the future, our commitment to business integrity mustbe just as robust – this means conducting our business ethicallyand based on Airbus values, and in compliance with all laws
and regulations.

As part of this commitment, the Company supports theprinciples of the UN Global Compact and IFBEC’s Global
Principles of Business Ethics which set a benchmark for highethical standards globally.
Our Standards
The foundation for integrity at Airbus is the Standards ofBusiness Conduct. These Standards are intended to guide
daily behaviour and help employees resolve the most common
ethical and compliance issues that they may encounter.

The Standards of Business Conduct apply to all employees,
officers and directors of the Company as well as entities
that the Company controls. Third-party stakeholders whom
the Company engages are also expected to adhere to theseStandards of Business Conduct in the course of performing
work on our behalf.

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Our Programme
While the Standards of Business Conduct provide a usefulstarting point, they cannot answer all questions, nor are they
sufﬁcient to ensure that the Company complies with the myriad
legal requirements applicable to its business. Because of this,Airbus has worked over the past several years to develop an
Ethics & Compliance programme that is structured aroundthe following key risk areas: Business Ethics/Anti-Corruption
Compliance, Export Compliance and Data Protection
Compliance.

Each of these areas is, in turn, supported by dedicatedcompliance policies and a team responsible for theirimplementation, together with the identiﬁcation and proposalof new measures to adapt to a constantly evolving regulatory
landscape.
More broadly, the Company’s Ethics & Compliance programmealso covers other areas such as conﬂ icts of interest, anticompetitive conduct, insider trading, fraud, etc., while also
working with the Airbus R&S Network.
Improving the Ethics & Compliance programme is a constantand ongoing process, not only in the area of Business Ethics/
Anti-Corruption but across the ethics and compliance spectrum
more generally in order to capitalise on our values.
Business Ethics/Anti-Corruption Compliance
The Company rejects corruption of any kind, whether public or
private, active or passive. This means that neither the Company,
its employees or third parties acting on its behalf may offer,promise, give, solicit or receive – directly or indirectly – money oranything of value to or from a government ofﬁcial or someone in
the private sector in order to obtain or retain business or securesome other improper advantage.
The Anti-Corruption Policy (available at airbus.com/company/
ethics-compliance.html) summarises its stance of zerotolerance. It also refers to some of the speciﬁc directives theCompany has adopted to address key anti-corruption risk areas,such as the engagement of third parties (e.g., business partners,
lobbyists, etc.), gifts and hospitality exchange and the makingof sponsorships and donations.
In addition to these existing anti-corruption directives, in 2018
the following new policies were adopted:
a method deﬁ ning the requirements for the prevention ofcorruption in the context of international cooperation &offset activities (IC&O), which provides employees with an
explanation of the compliance due diligence that must be
conducted on IC&O third parties depending on the function
or services they perform;a method deﬁning the requirements for the processes for“Manage Stafﬁng and On-Boarding” and “Recruit People”, on
how to manage applications, recommendations and referrals
for recruitment at Airbus;--

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- a method related to the requirements for the investigation ofcompliance allegations, to ensure that these investigations
are conducted in a consistent and professional manner inaccordance with company standards and relevant laws.

In 2018, the Ethics & Compliance team also worked to alignand integrate the compliance due diligence screening andon-boarding process of suppliers – formerly managed by theProcurement team through its “Watchtower” – into the overall
Ethics & Compliance policy framework and tools. Further
work will be conducted by the E&C team in 2019 to roll-out theprocess consistently across Airbus’ Divisions and subsidiaries.
Export Compliance

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The Company also decided to extend the scope of the OpenLine
to responsibility and sustainability related topics. Finally, andbeyond already existing measures to preserve the conﬁdential
use of the OpenLine, users are offered a new option allowing
them to remain anonymous, where legally permissible. Allof these improvements came into force on 1 January 2019.
The Company does not tolerate retaliation against employees
making reports in good faith and/or assisting in investigationsof suspected violations of the Standards of Business Conduct.
For further information, visit the OpenLine website.
b. Responsible Suppliers

Each of the countries in which the Company does business has
controls on the export and transfer of its goods and technologies
that are considered to be important to national security andforeign policies. As a global enterprise, it is the Company’s
responsibility to respect and comply with each of these controls.
The Export Compliance Directive deﬁnes its policies, processes
and organisation to ensure compliance with all relevant export
control laws and regulations.

The Company designs and integrates complex aerospaceand defence products, leveraging an extensive supply chain.
Co-operation with suppliers occurs in several ﬁelds of thebusiness and is key to ensure quality standards which lead toshared success, growth through innovation and a commitment
to sustainability. Airbus also engages its suppliers on its
sustainability journey and shares a commitment to improvesocial and environmental performance, constantly driven byvalues of integrity and transparency.

Data Protection Compliance1. Procurement at Airbus

Building on the solid Personal Data Privacy policy foundation,
governance and culture in place since years and the Binding
Corporate Rules (available at https://www.airbus.com/
c o n te n t /d a m /c o r p o r a te -to p i c s /c o r p o r a te - s o c i a l responsibility/ethics-and-compliance/Airbus-BindingCorporate-Rules%20.pdf) into force across the group since2014, the Company fully commits to Privacy and the General Data
Protection Regulation (“GDPR”) requirements in its operations
and products. Thus the Company has deployed updated
policies, tools and practices across its entire organisation tomeet the Privacy by Design and other GDPR requirements into
force since May 2018.

More than 12,000 suppliers from more than 100 countries
supply parts, components or sub-systems to Airbus. In 2017,
the overall external sourcing volume of Airbus is valued at around€ 52 billion.

Awareness and Training
The Company aims to educate its people about the standards ofconduct that apply to their jobs and the potential consequencesof violations. Target populations are reviewed annually andrequired to undergo training and awareness eLearning or face
to face sessions based on job function, role and responsibility.
In 2018, the Company’s employees followed 204,667 Ethics &Compliance digital training sessions. In coordination with aneffort to increase accessibility to the digital learning platform,
one of Airbus’ 2018 objectives was for all employees with accessto a computer to perform an Ethics and Compliance digitaltraining session.
Speak-Up Channel: OpenLine
The Company recognises that the Standards of BusinessConduct cannot address every challenging situation that may
arise. The Company therefore encourages its employees to
speak-up through various channels, including through OpenLine(available at https://www.airbusopenline.com/). The OpenLine
enables users to submit in good faith an alert securely andconﬁdentially and also to ask all questions related to Ethics andCompliance. In 2018, the Company decided to further improve
the accessibility and use of the OpenLine by extending thegeographical coverage of the tool, which should allow accessto all employees based in the countries where Airbus operates.

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Whilst Airbus products and services are sold all over the world,the majority of its workforce and supply chain are based inEurope and the Organisation for Economic Cooperation andDevelopment (OECD) countries. In the past few years, thesupply chain has become concentrated and more international.
Such rising concentration is the result of consolidation within
the aerospace and defence sector, as well as larger work
packages for the major new aircraft programmes being placedwith a smaller number of lead suppliers. Airbus has identiﬁed
global sourcing as one of its leading long-term objectives. To
promote the globalisation of its sourcing footprint, an Airbus
Global Sourcing Network (GSN) has been established including
regional sourcing ofﬁces in USA, China and India.
The Airbus “Procurement Academy” provides training on corecompetences and skills to develop procurement expertise. andprepare Procurement employees for the challenges of the future.
2. Responsible Supplier Management
As a global leader in aeronautics and space, the Company hastaken a commitment to conduct its business responsibly andwith integrity. Taking into consideration the level of outsourcing
at Airbus, the supply chain is an integral part of Airbus’
ecosystem and the Company is therefore committed to ensure
that, as far as possible within its own scope of responsibility andlegal obligations, potential adverse impacts of the Company’s
activities are managed.
Airbus suppliers must comply with all applicable laws andregulations of the countries in which operations are managed
or services provided. In addition, wherever suppliers are located,
all business should be conducted in a manner compatible with
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The Airbus Supplier Code of Conduct is the document ofreference for Airbus’ responsible supplier management (available
at https://www.airbus.com/content/dam/corporate-topics/
corporate-social-responsibility/ethics-and-compliance/
Supplier-Code-Conduct-EN.pdf). This Code represents thegroup-wide values and principles in line with internationallyrecognised standards and conventions (such as OECD and
ILO). Airbus implemented the International Forum on Business
Ethical Conduct (“IFBEC”) Model Supplier Code of Conduct
in its entirety as the Airbus Supplier Code of Conduct in 2016.
The Supplier Code of Conduct was sent to the 12,000 main
suppliers across the world with a letter from the Airbus’ Chief
Procurement Ofﬁcer and the Airbus General Counsel requesting
a commitment to the Code. Airbus expects its suppliers tocomply with the key values set out in this. Suppliers are also
expected to cascade these principles throughout their own
supply chains.
Supplier Mapping
As part of supplier management activities for commercial
aircraft, Airbus has put in place, the Supplier Mapping toolwith multiple capabilities, notably to identify Airbus supply
chain sub-tiers and support identiﬁcation of risks of supplier
non-performance. In 2018, a total of 8,680 suppliers from 64
countries were identiﬁed by the Supplier Mapping tool of which
1,071 were tier-one suppliers, 6,473 second tier suppliers, 1,314
qualiﬁed sub-tiers suppliers. A total of 141,148 activities wereinvolved and 45 quality alerts resulted from 422 analyses andreports. The alerts were managed internally by the Procurement
supply chain management department.
Ethics & Compliance Supplier Watchtower
in 2018, the Ethics & Compliance Supplier Watchtower was
managed by the Procurement Ethics & Compliance department
proactively checking speciﬁc suppliers for compliance aspects.

In 2018, suppliers were checked depending on the risks linked
to their country of registration. The risk rating of countries isdefined by the Procurement Compliance department andupdated regularly. Criteria comprise export restrictions andresponsibility and sustainability-related elements such as anticorruption, human and labour rights.
Supplier Integrity Checks investigate compliance concerns
which are triggered by certain business relationships. Such
concerns are comprised of, for the Company or its ownership,
among others: legal investigations or judgements, negative
press reports, incidents of corruption, listings on sanction
lists/blacklists, proximity to governments or risky entities(shareholders, customers, beneﬁcial owners and subsidiaries). In
case a Supplier Integrity Check yields concerns, a Procurement
management meeting is held to discuss potential additional due
diligence measures and mitigation actions. About 700 Supplier
Integrity Checks were conducted each year in both 2017 and2018.
A Supplier Integrity Check can be performed on demand and isalso embedded in the supplier registration process and eProc,an electronic platform where buyers and suppliers perform
all aspects of calls for tender, from identiﬁcation of potential
suppliers, contract awarding, to supplier evaluation and spend
analysis.

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Environment, Health and Safety in the Supply Chain
Identiﬁcation of potential risks related to legal and regulatory
requirements that may be applicable to Airbus’ management ofcompliance of its activities and products and the communicationof information on the composition of its products depends toa large extent on the level of information made available by the
supply chain.

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Airbus Procurement is continuously striving to improve theintegration of environmental, health and safety elements into
the purchasing process.
Current standard procurement contracts include i) requirements
for suppliers to comply with all applicable laws and regulations
regarding, products and services and ii) requirements for
suppliers to provide information on substances used in
manufacturing processes, contained in their products and on
environmental, health and safety matters, including information
for management of the product across its lifecycle (including
waste management). Suppliers are also requested to implement
an Environmental Management System – based on ISO 14001
or equivalent – which shall consider continuous improvement
through the mitigation of signiﬁcant environmental aspects andimpacts, including air emissions (e.g., greenhouse gas, volatileorganic compounds); waste, water discharges, raw material
consumption.
Regarding supplier environmental control and monitoring,
Airbus performs the following activities: collecting data fromsuppliers is made through a Material Declaration Form to enableAirbus to identify which substances are used, tracking anddeclaring them in the frame of substances regulation such as
REACH. Environmental requirements are included in supplieraudits and the Industrial Process Control Assessment (IPCA).
In addition, the Environmental Obsolescence Risk at Supplierquestionnaire (EORS) assesses the level of maturity of supplierprocesses to manage Airbus environmental requirements andregulated substances obsolescence. EORS is applicable to all
Airbus Commercial Aircraft suppliers – for the time being EORS
campaigns have targeted the suppliers of cabin, systems andequipment, engines and nacelles products.
As mentioned above under section 6.1.2(c) Environment, Airbus
is a founding member of IAEG, which is working on enablinga common approach at industry level, in regard to standards
and tools to manage environmental obligations.
The Procurement function is ISO 14001 certiﬁed as part of the
global Airbus environmental certiﬁcation.
Zero Tolerance Approach to Modern Slavery in the Supply Chain
As previously mentioned under section 1.1.8.3(b) under “Human
Rights” as part of its obligations under the UK Modern Slavery
Act, the Company published its second Modern Slavery
Statement in 2018 in recognition of the global aim of this
topic. Modern slavery, along with wider human rights, is a
topic followed by the Airbus R&S Network and Supplier R&S
Programme. Actions to address these issues and understandassociated risks in the supply chain continued during 2018
and are detailed in the chapter in regards to the Vigilance Plan.

In addition, the Company continued the roll-out of its e-learning
modules focused on helping all employees identify the signsof human rights abuse and modern slavery, including raisingawareness of what to do if they have concerns. This e-learning,
available in four different languages, is part of the mandatory

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Ethics & Compliance catalogue of learning. The Company alsoplans to launch an in-depth training course speciﬁcally focusedon human rights and modern slavery for employees engagedin activities in high risk areas identiﬁed through its supplier risk
mapping and assessment.
Promoting Disability Friendly Companies
Since 2011, Airbus in France has been promoting employmentof people with disabilities by its suppliers. Concretely, a speciﬁc
mention is integrated into all relevant calls for tender launched,requesting bidding suppliers to propose a partnership with adisability friendly company.

At the end of 2017, the global volume of business with disability
friendly companies in France was € 44.5 million with an increaseof 19% compared to 2016 for Airbus in France. At the end of
2018, 56 disability friendly companies are working with Airbus
compared to 10 in 2010. An extension of this project to Airbus
sites in Spain and Germany is planned based on the samephilosophy: create jobs for people with disabilities in specialised
companies.
3. Moving forward: Airbus Supplier R&S Programme:
Vigilance Plan
To deliver parts, components, sub-systems or services, quality,
reliability and economic efﬁciency is key to its operations.
However, Airbus believes that this should not be at any costand as such is committed to engage in due diligence actions
with its suppliers with regard to issues of Responsibility andSustainability.
Airbus strives to make Responsibility & Sustainability acore element of its procurement process. Airbus has a longestablished and integrity-driven procurement process which
manages relationship with suppliers from strategy, supplierselection, contract management to supplier management.
Environmental activities in Procurement have paved the way
to integration of wider corporate social activities within the
supply chain.
Airbus acknowledges the challenge of obtaining sufﬁcientvisibility of its supply chain and recognises a risk regarding
supplier compliance relating to stronger R&S regulations interms of human rights, labour and environmental standards
in the global supply chain. Willing to encourage developmentof responsible suppliers and manage the potential adverse
impacts of its activities as well as to create new opportunities,
in 2017 Airbus launched a Supplier R&S Programme, followinginternational guidance such as the OECD guidance on
responsible business conduct.
The Supplier R&S Programme initiated and deﬁned in 2017 for
Airbus’ commercial aircraft activities will continue and evolve
year on year on the principle of continuous improvement androll-out in Airbus’ Divisions. In 2019, Airbus will also launch the
Supply Chain Environmental Sustainability (SCES) project tocomplement the response to the Vigilance Plan. The Supplier
R&S Programme has been presented to and is regularly
reviewed by the Procurement Executive Team led by the Airbus
Chief Procurement Ofﬁcer.
The Supplier R&S Programme and its activities are managed
by the Airbus Procurement Ethics & Compliance department,
together with relevant Airbus Procurement stakeholders. To thisend, the existing Airbus Procurement environmental network

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with representatives from the different Procurement categories
of purchase has been extended to cover other R&S topics.
The aim of this network is to ensure that the entire Airbus
Procurement community is made aware of R&S-related topics
and support the identiﬁcation of risks according to the categoryof purchase. The Airbus Procurement R&S network can also
support initiating cooperation with suppliers as well promoting
industry-recognised practices. Additional governance exists
with the corporate R&S, Legal and Ethics & Compliancedepartments. The Supplier R&S Programme manager is alsopart of the corporate cross-functional Airbus R&S Network.
The Supplier R&S Programme is based on the following four
key elements:
A. R&S-Related Risk Identification and Mapping
All Procurement related risks for Airbus commercial aircraft
activities are embedded into the Company’s ERM system. A
speciﬁc risk category regarding R&S-related risks in the supply
chain has been integrated into the ERM system.

The Procurement function supported by the Procurement risk
department manage ERM in procurement ﬁelds, as well as
duly report issues to top management. Along with identiﬁcation
and reporting of R&S-related risks, a proactive supplier R&S
risk mapping has been performed in line with international
guidance. The risk mapping resulted from both a country risk
and a purchasing category approach for human and labour
rights and environmental matters. The R&S-related risks levelsin the existing supply base require an in-depth analysis andreview with the relevant Procurement commodities to agree on
the deployment of the relevant internal and external mitigation
actions.
This supplier risk mapping aims to detect areas where
procurement activities are exposed to signiﬁcant potential
risks. With those suppliers linked to higher risk activities,
speciﬁc actions started in 2017 and implementation continued
in 2018. For new suppliers joining the Airbus supply base such
mitigation actions currently include the performance of Supplier
Integrity Checks (see previously mentioned part on Ethics &Compliance Supplier Watchtower) and on-site assessments
including questions to evaluate maturity on Responsibility &Sustainability. New mitigation actions in the existing supply
base such as dedicated R&S Supplier assessments started
to be implemented in 2018 in a trial phase with a specialist
service provider.
B. R&S in Supplier Selection and Contracting
For the last few years, Procurement standard contracts
have evolved to include clauses on speciﬁc topics such asenvironment. In 2018, a more detailed clause on anti-corruption
has been incorporated into procurement contract templates tofurther specify Airbus’ requirements in this domain.

Furthermore, Airbus has agreed to reinforce R&S-related
requirements such as those on human and labour rights
along the selection and contracting phase with suppliers. In
2018 the Supplier Code of Conduct has been integrated asa new R&S annex in Airbus standard contract templates. The
implementation will be rolled out according to the contractual
roadmap of each purchasing commodity. During the call for
tender phase, results of the R&S-related risk assessment will be
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To enable successful implementation, Airbus will perform
training and awareness activities for its buyers in addition to thespeciﬁc training that already exists in the areas of environment
and ethics and compliance.
C. R&S Supplier Evaluation and Continuous Improvement
Supplier R&S-related evaluation assesses the compliance of
suppliers with Airbus requirements in these ﬁelds and allows theidentiﬁcation and integration of potential supplier improvement
actions. In 2018 Airbus has started the supplier assessment
activities in a trial phase with a specialist service provider thatassesses social criteria including human and labour rights andenvironmental performance of 55 potentially critical suppliers in
relation to R&S risks. Based on the outcome of the trial phase
Airbus will deﬁne the long-term solution of regular supplier R&Srelated evaluation and audits and its integration in the existing
supplier assessment activities, such as supplier self-evaluation,
desktop review or onsite audits. Airbus is also exploring potential
solutions for the wider aerospace and defence sector via its
participation to sector national associations. Clear guidance on
how to manage audit results and mitigation actions are being
integrated into the relevant Procurement processes.
D. R&S in the Procurement Process
Airbus is currently assessing all Procurement processes andtools in order to integrate R&S-related requirements where
relevant on top of environmental requirements, which are alreadylargely considered. This will lead over the next years to theadaptation of Procurement process documentation managed
by the Procurement strategy teams and set-up of dedicated
R&S monitoring tools.

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development of its employees, investing ﬁve times more than
the national average per employee. The Company’s employees
receive 4 hours more training per employee than the averagefor the Spanish industrial sector and 11 hours more than thenational average.

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On a municipal level, in Toulouse in 2018, the Company continued
to support regional economic, academic and institutional
players to create the conditions for long-term sustainability
and the development of innovation. Airbus provided answers
to calls for cooperation in the areas of artiﬁcial intelligence, data
management and urban mobility as well as sustainability andquality of life in the region. In terms of mobility, the partnershipwith Toulouse Metropole reached a new milestone in 2018 withthe deployment of a car-sharing initiative on all Airbus sites. The
job fair Carnet de Vol gathering over 650 young professionals
and 80 companies and the launch of an employers’ groups(GEIQ) supporting insertion and training of young professionals
around digitalisation were key highlights in terms of humancapital resources.
Sponsorships and donations are often meaningful ways to havea positive global impact in the communities and society at large.
By leveraging its skills, know-how, expertise and passion of its
employees, the Company can bring positive contributions tolocal communities around its sites. The Company’s directive
on sponsorships, donations and memberships provides aCompany-wide framework to ensure its local actions are alignedwith global strategy, priorities and values. While it naturally
supports the local aerospace and defence community, theCompany encourages initiatives around:
Education and Youth Development (preferably in Science,
Technology, Engineering and Mathematics (STEM));
Corporate citizenship and/or local community engagement;
Humanitarian and/or Environment;
Innovation, R&T and Science.

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In 2018 Airbus started to implement the above four elements,
deploying corresponding targets for each of them. The
programme is integrated into Airbus’ Procurement strategy
and the embodiment of R&S compliance in supplier selection
and management across the supply chain was part of the 2018
Procurement priorities for all employees. The R&S activities are
discussed and reviewed by a steering committee composed of
the Executive Committee of Procurement.

In addition, the Company is an active member in several industry
or other associations, and national or international advocacy
organisations, such as GIFAS, World Economic Forum andAdvanced Robotics for Manufacturing – ARM institute.

c. Community Engagement

Volunteering at Airbus

The Company recognises the importance of contributing to thedevelopment of the communities in which it operates. Airbus
was created by establishing a European partnership not only
on one aircraft programme but on a long term industrial project.
This same spirit of cooperation drives the development of theCompany’s international footprint. The Company’s approach tocommunity engagement is driven by the willingness to develop
a win-win cooperation with the local eco-system and often
materialises through partnerships with local NGOs, institutions
and other companies.

In 2018, more than 5,000 employees of the Company wereinvolved in volunteering for 97 initiatives.

Local Involvement

The Airbus Foundation

On a country level, take Spain as an example. In addition, in
2017, the direct contribution of the Company to the GDP of
Spain was just under € 1.3 billion, which represents 0.12% ofnational GDP and 60.7% of the contribution to GDP madeby the sector. In addition, the Company stands out in Spainfor its contribution to quality employment. The percentageof permanent contracts exceeds the national average by 11
percent and 100% of its employees are covered by a collective
agreement. The Company is also committed to training and

The Airbus Foundation’s goal is to support the international
aid organisations in regions where the Company operates andbeyond. It brings products and resources, from relief ﬂights tosatellite imagery, to the humanitarian aid community to help
alleviate some of the world’s most pressing challenges.

The Company encourages and looks for ways to facilitate its
employees’ social and environmental initiatives to contribute tosocietal challenges in the communities around their workplaces.
For example, each week during term time, 115 employees from
Airbus’ Filton site in Bristol, UK, voluntarily go into local primaryschools to provide valuable support in reading and maths hence
contributing to SDG4.

Through its Humanitarian Flight Programme, the Foundation
offers Airbus customers to use the delivery of their new aircraft tocontribute to humanitarian efforts. By doing so, the programme

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helps the humanitarian community reduce its high logistics costs
by delivering medical and school supplies, food, water sanitationequipment, toys, clothing and emergency response units to themost vulnerable around the world. The programme also utilises,
where possible, Airbus ﬂight test aircraft for such missions.
Since its launch in 2008, Airbus Foundation has coordinated66 humanitarian ﬂights, delivering over 827 tonnes of aid inover 27 countries. Since 2012, 495 helicopters ﬂight hours
have been chartered in 15 countries, amounting to € 820,000.
Finally, satellite images can be used to assist humanitarianorganisations in the wake of a crisis in a number of ways. In 2017,a Foundation branded satellite portal was opened, providing freeof charge access to satellite imagery to selected partners withwhom we have entered into partnerships, including IFRC, WFP,ACF, MSF and KRC. To date, it was responded to 15 requests
for satellite imagery to help our partners make assessments
following crisis or disaster situations.
Since the launch of its youth development activities in 2012,
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the aim to help them prepare for tomorrow’s challenges. Morethan 1,980 Airbus volunteers supported these programmes. One
of its ﬂagship programmes, the Flying Challenge, focuses on
young people who are at risk of dropping out of the educational
system and subsequently missing training and employment
opportunities. The programme has been deployed in sixteen
Airbus sites across France, Germany, Spain, the UK, the US
and Brazil.
With programmes like the Airbus Foundation Little Engineer (ALE)and Discovery Space (AFDS), the Foundation uses aerospace
to spark an interest in STEM, facilitating the access to STEM
skills for thousands of young minds around the world. In 2018,
over 5,800 students participated to the ALE programme; andsince its launch in May 2018, the Airbus Foundation Discovery
Space digital platform has reached more than 7,000 sciencecentres and obtained over 50,000 content views.
For more information, please refer to the latest Airbus Foundation
Activity Report (available at www.airbus.com).

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Management’s Discussion
and Analysis of Financial
Condition and Resultsof Operations
2.1
Operating and Financial Review
2.1.1 Overview
2.1.2 Signiﬁcant Accounting Considerations,
Policies and Estimates
2.1.3 Performance Measures
2.1.4 Results of Operations
2.1.5 Changes in Total Equity(Including Non-Controlling Interests)
2.1.6 Liquidity and Capital Resources
2.1.7 Hedging Activities

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2.2

Statutory Auditor Fees

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2.3

Information Regarding the Statutory Auditor

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2.1 Operating and Financial Review
The following discussion and analysis is derived from and should be read together with theaudited IFRS Consolidated Financial Statements as of and for the years ended 31 December
2018 and 2017. These ﬁnancial statements have been prepared in accordance with International
Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board
as endorsed by the European Union, and with Part 9 of Book 2 of the Dutch Civil Code. Whenreference is made to “IFRS”, this intends to be EU-IFRS.
The following discussion and analysis also contains certain “non-GAAP ﬁnancial measures”,
i.e. ﬁnancial measures that either exclude or include amounts that are not excluded or includedin the most directly comparable measure calculated and presented in accordance with IFRS.
Speciﬁcally, the Company makes use of the non-GAAP ﬁnancial measures (i.e. Alternative
Performance Measures) “EBIT Adjusted”, “net cash” and “Free Cash Flow”.
The Company uses these non-GAAP ﬁnancial measures to assess its consolidated ﬁnancial
and operating performance and believes they are helpful in identifying trends in its performance.
These measures enhance management’s ability to make decisions with respect to resource
allocation and whether the Company is meeting established ﬁnancial goals.
Non-GAAP ﬁnancial measures have certain limitations as analytical tools, and should not be
considered in isolation or as substitutes for analysis of the Company’s results as reported
under IFRS. Because of these limitations, they should not be considered substitutes for the
relevant IFRS measures.
The Company also measures and communicates its performance on the basis of “EBIT”(reported).

Reporting in Information Document 2018
The Management’s Discussion and Analysis of Financial Condition and Results of Operations
contained in Section 2 of this Information Document reﬂects the new segment structure
as described in section 2.1.1.2. The 2017 ﬁnancial information has been restated to provide
comparative information with respect to the new segment structure.
The Company has implemented IFRS 15 “Revenue from Contracts with Customers” on
1 January 2018. The Company has restated the comparative 2017 ﬁnancial information under
IFRS 15 when required.
The 2016 ﬁnancial information has not been restated under IFRS 15. For comparative purposes,
the 2017 ﬁnancial information before the application of IFRS 15 is also presented. The ﬁnancial
information that has not been restated is referred to as “reported” or “as reported”, i.e. notrestated.
In addition, the 2018 ﬁnancial information has been prepared under IFRS 9 “Financial
Instruments”, using the limited exemption in IFRS 9 relating to transition for classiﬁcation andmeasurement of ﬁnancial instruments and impairment. Accordingly, the Company has notrestated the comparative periods.

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INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

Management’s Discussion and Analysis of Financial Condition
Operations
1
2and Results
3 of 45 /2.1 Operating and Financial Review
Management’s Discussion and Analysis of Financial Condition and Results of Operations /2.1 Operating and Financial Review

1

2

3

4

5

2.1.1 Overview
With consolidated revenues of € 63.7 billion in 2018, theCompany is a global leader in aeronautics, space and related
services. The Company offers the most comprehensive rangeof passenger airliners. The Company is also a European leader
providing tanker, combat, transport and mission aircraft, as wellas one of the world’s leading space companies. In helicopters,
the Company provides the most efﬁ cient civil and military

2.1.1.1

rotorcraft solutions worldwide. In 2018, it generated 84% of
its total revenues in the civil sector (compared to 83% in 2017
(restated)) and 16% in the defence sector (compared to 17% in2017 (restated)). As of 31 December 2018, the Company’s active
headcount was 133,671 employees, an increase compared to2017 (129,442 employees) mainly reﬂecting perimeter change
from acquisitions.

2

Exchange Rate Information

The ﬁnancial information presented in this document is expressed in euro, US dollar or pound sterling. The following table setsout, for the periods indicated, certain information concerning the exchange rate between the euro and the US dollar and poundsterling, calculated using the ofﬁcial European Central Bank ﬁxing rate:
AverageYear ended€/US$

31 December 201631 December 201731 December 2018

2.1.1.2

Reportable Business Segments

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 andHeadquarters) — 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.

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

- Airbus Defence and Space — Military Aircraft design,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.

- “Transversal/Eliminations” comprises other activities notallocable to the reportable segments, combined together
with consolidation effects.

2.1.1.3

Year end
€/£

€/US$

€/£

1.10690.81951.05410.8562

1.12970.8767

1.19930.8872

1.18100.88471.14500.8945Signiﬁcant Programme Developments,
Restructuring and Related Financial
Consequences in 2016, 2017 and 2018

The following paragraphs present significant programme
information for the past three years. Prior year ﬁgures (i.e.
2016 and 2017) have not been restated due to the applicationof IFRS 15. 2018 description includes previous year ﬁgures
restated due to the application of IFRS 15.
A380 programme. In 2016, Airbus found an agreement with
Emirates and Rolls Royce to shift six deliveries from 2017 into
2018 and from 2018 into 2019, which secured the delivery proﬁleinto 2019. 12 aircraft remained the 2018 target for deliveries.
Fixed cost reduction measures were accelerated to minimise
the impact on breakeven at a lower level of deliveries. A totalof 28 A380s were delivered during 2016.
In 2017, Airbus delivered 15 A380 aircraft and planned todeliver 12 aircraft in 2018 and 8 aircraft in 2019. The Emirates
order in February 2018 provided increased visibility on the
A380 programme for the years to come. Based on that order,
at a baseline of 6 deliveries per year, Airbus could produce
the A380 in an industrial efﬁcient way over the coming years.
A reasonable industrial efﬁciency could be maintained at abaseline of 6 aircraft a year with an acceptable margin andcash dilution. As of 28 February 2018, Airbus had 331 orders
for A380s, of which 222 had been delivered to 13 airlines. At
that time, the A380 order book included orders for 8 customers.
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.

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INFORMATION DOCUMENT 2018

Management’s Discussion and Analysis of Financial Condition/5
1 and2Results3of Operations
4
2.1 Operating and Financial Review
Management’s Discussion and Analysis of Financial Condition and Results of Operations /2.1 Operating and Financial Review

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.
A350 XWB programme. In 2016, Airbus delivered 49 A350 XWB
aircraft, including to 7 new customers. To reﬂect expected
lower revenues escalation, increased learning curve costs anddelivery phasing, Airbus recorded a net charge of € 385 million
on A350 XWB loss making contracts in the second quarter 2016.
In 2017, Airbus delivered 78 A350 XWB aircraft. The levelof outstanding work in the Final Assembly Line had beensigniﬁcantly reduced. Despite the progress made, challenges
remained with recurring cost convergence as the ramp-up
continued. The A350 programme was preparing to reach thetargeted monthly production rate of 10 by the end of 2018.
In 2018, Airbus has delivered 93 A350 XWB aircraft. New
order intakes, cancellations, delivery postponements andother contractual agreements to the end of December 2018
have been reﬂected in the ﬁnancial statements. The industrial
ramp-up is progressing and associated risks continue to beclosely monitored in line with the schedule, aircraft performanceand overall cost envelope, as per customer commitments.
Despite the progress made, challenges remain with recurring
cost convergence as the ramp-up continues.
A400M programme. Technical progress on the A400M
programme resulted in the recognition of A400M-related
revenues of € 1.7 billion in 2016, € 1.9 billion in 2017 (reported),€ 2.2 billion in 2017 (restated) and € 2.1 billion in 2018.
In 2016, 17 A400M aircraft were delivered, resulting in 38
cumulative deliveries up to 31 December 2016. Acceptanceactivities of one additional aircraft were ﬁnalised at the endof December 2016, but transfer of title only took place on
1 January 2017 (corresponding revenues were recognised in2017). Industrial efﬁciency and military capabilities remained
a challenge for the A400M programme and furthermore, the
EASA Airworthiness Directive, linked to the Propeller Gear Box(“PGB”) on the engine, and various PGB quality issues strongly
impacted the customer delivery programme. The ﬁrst major
development milestone of the mission capability roadmap
defined with customers earlier in 2016 was successfullycompleted in June with certiﬁcation and delivery of “MSN 33”,
the ninth aircraft for the French customer, however achievementof contractual technical capabilities remained challenging. In
the ﬁrst half-year 2016, management reviewed the programmeevolution and estimated contract result incorporating theimplications at this time of the revised engine programme
and its associated recovery plan, technical issues related tothe aluminium alloy used for some parts within the aircraft,recurring cost convergence issues, an updated assumptionof export orders during the launch contract phase and ﬁnally74

Airbus / Information Document 2018

FINANCIAL STATEMENTS 2018

1

2

3

4

5

some delays, escalation and cost overruns in the development
programme. During the second half-year 2016, the programme
encountered further challenges to meet military capabilities andmanagement reassessed the industrial cost of the programme,
now including an estimation of the commercial exposure. As aresult of these reviews, Airbus Defence and Space recorded acharge of € 2,210 million in 2016 (thereof € 1,026 million in theﬁrst half-year 2016). This represented the best management
assessment at the time.
In 2017, 19 A400M aircraft were delivered. In total, 57 aircraft havebeen delivered as of 31 December 2017. In 2017, the Company
continued with development activities toward achieving therevised capability roadmap. Given the order of magnitudeof the cumulative programme loss, the Board of Directors
mandated the management in February 2017 to re-engage withcustomers to cap the remaining exposure. The Company signeda Declaration of Intent (“DOI”) with the A400M Launch Customer
Nations (Germany, France, United Kingdom, Spain, Turkey,
Belgium, Luxembourg) deﬁning the framework for achieving
a mutually binding contract amendment initially expected laterin the year. The Company, European defence agency OCCAR(who is managing the A400M programme on behalf of theseven Launch Customer Nations) and the Customer Nations
had agreed to work on a number of contractual elements
including a revamped delivery plan as well as a roadmap forthe development and completion of military capabilities for the
A400M. The DOI, ﬁnalised on 7 February 2018, represents
an important step towards reaching a contractually binding
agreement also mitigating the commercial exposure whilesatisfying customer needs with regard to capabilities andavailability of the aircraft. This DOI provided a new baselineon which to evaluate the A400M contract. A detailed reviewof the programme concluded in the fourth quarter of 2017
including an estimate of the ﬁnancial impacts of the above
mentioned adaptations on schedule, capabilities and retroﬁt
resulted in an update of the loss making contract provision of€ 1,299 million (reported) for the year 2017 (restated equivalentloss following the implementation of IFRS 15 was € 992 million
for the year 2017). The Company’s remaining exposure going
forward is expected to be more limited.
In 2018, 17 A400M aircraft were delivered. 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 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 ﬁrst 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.

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

Management’s Discussion and Analysis of Financial Condition
Operations
1
2and Results
3 of 45 /2.1 Operating and Financial Review
Management’s Discussion and Analysis of Financial Condition and Results of Operations /2.1 Operating and Financial Review

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.
A320 programme. In 2016, 68 aircraft on the A320neo
programme were delivered to 14 customers. Both engine
suppliers committed to deliver in line with customer expectations.
Challenges remained with the A320neo ramp-up and delivery
proﬁle. For the Pratt & Whitney engine, challenges were to(i) meet the delivery commitments in line with agreed schedule;(ii) ﬁx in-service maturity issues in line with Airbus and customer
expectations.
In 2017, a total of 181 A320neo Family aircraft were delivered.
Supplier Pratt & Whitney introduced new engine ﬁxes in the
fourth quarter which were certiﬁed. Unfortunately a new issue
arose likely unrelated to the prior ﬁxes, the impact of which
was under assessment with respect to 2018 deliveries. Engine
supplier CFM International meanwhile experienced somematurity issues in 2017 on some batches of the LEAP-1A engine.
The A320neo ramp-up remained challenging and required thatthe engine suppliers deliver in line with commitments.
In 2018, A320neo Family deliveries increased to 386 aircraft
and represented over 60% of overall A320 Family deliveries
durin g 2018. The ﬁrst long-range A321LR was delivered in
the fourth quarter. Deliveries of the Airbus Cabin Flex versionof the A321 are expected to increase in 2019 although the
ramp-up will remain challenging. Further upgrades of the Pratt& Whitney engine for the A320neo are due to arrive in 2019.
Airbus continues to monitor in-service engine performance.
Overall, the A320 programme is on track to reach the monthly
targeted production rate of 60 aircraft by mid-2019 with rate
63 targeted in 2021.
A330 programme. In 2016, the A330neo development was
ongoing.
In 2017, 67 A330 were delivered. On the A330neo, the ﬁrst ﬂight
was completed in October 2017. Two test aircraft were available.
The programme was on track to Type Certiﬁcation.
In 2018, 49 A330 were delivered. On the A330neo programme,
the ﬁrst A330-900s were delivered and the A330-800 conducted
its maiden ﬂight in the ﬁnal quarter of 2018. In 2019, A330neodeliveries are due to ramp-up. Airbus is working closely with its
A330neo engine partner to deliver on customer commitments.
A220 programme. As of 1 July 2018, the A220 aircraft
programme has been consolidated into Airbus. In 2018, theCompany delivered 20 A220s. The focus is on commercial
momentum, production ramp-up and cost reduction.
Generally, the Company makes estimates and provides, acrossthe programmes, for costs related to in-service technical issues
which have been identiﬁed and for which solutions have been

FINANCIAL STATEMENTS 2018

1

2

3

4

5

deﬁned, which reﬂects 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 beconsidered on a case by case basis.
Restructuring provisions. In 2016, a net € 182 million provision
related to restructuring measures was booked by the Company.

2

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 the
Company and the works councils in September 2017, and thereconciliation of interests were 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.
Litigation. For information, see “— 1.1.7 Legal and Arbitration
Proceedings” and “Notes to the IFRS Consolidated Financial
Statements — Note 22: Provisions, Contingent Assets andContingent Liabilities”.
Brexit. In June 2018, the Company published its Brexit Risk
Assessment outlining its expectation regarding the material
consequences and risks for the Company arising from the
UK leaving the EU without a withdrawal agreement (“No deal
Brexit”). The Company has also launched a project to attempt
to mitigate against the major disruptions Brexit is likely to cause
to the Company’s business and production activities. To date,progress has been made in mitigating these risks. However,
because of the unprecedented nature of a No deal Brexit, thispotential scenario would plunge the aerospace industry into
unknown territory where, despite the actions the Company
is taking internally (including e.g., modifying Airbus’ customs
systems, stockpiling of parts associated with complementarytransportation and logistics means), the Company’s operations
and supply chain may suffer from disruptions, the nature,materiality and duration of which is impossible to predict withany level of certainty. Hence the Company is complementing its
project with a crisis management plan to address and remediate
foreseeable post-Brexit issues if those were to materialise.

2.1.1.4

Current Trends

The Company expects the world economy and air trafﬁc to growin line with prevailing independent forecasts, which assume no
major disruptions.
The Company’s 2019 earnings and Free Cash Flow guidanceis based on a constant perimeter, before M&A: Airbus targets
880 to 890 commercial aircraft deliveries in 2019. On that basis,
the Company expects to deliver an increase in EBIT Adjustedof approximately +15% compared to 2018 and Free Cash
Flow before M&A and Customer Financing of approximately€ 4 billion.

Airbus / Information Document 201875

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FINANCIAL STATEMENTS 2018

1

2

3

4

5

2.1.2 Signiﬁcant Accounting Considerations, Policies and Estimates
The Company’s signiﬁcant accounting considerations, policies
and estimates are described in the Notes to the IFRS Consolidated
Financial Statements. On 1 January 2018, the Company has
implemented the new standards IFRS 15 “Revenue fromContracts 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, please refer to the “Notes to the IFRS Consolidated
Financial Statements — Note 2: Signiﬁcant Accounting Policies”
and “— Note 4: Change in Accounting Policies and Disclosures”.

2.1.2.1

Scope of and Changes in Consolidation

For further information on the scope of and changes in
consolidation as well as acquisitions and disposals of interests
in business, please refer to the “Notes to the IFRS Consolidated
Financial Statements — Note 5: Scope of Consolidation” and“Note 6: Acquisitions and Disposals”.

2.1.2.2 Capitalised Development Costs
Pursuant to the application of IAS 38 “Intangible Assets”,
the Company assesses whether product-related development
costs qualify for capitalisation as internally generated intangible
assets. Criteria for capitalisation are strictly applied. All researchand development costs not meeting the IAS 38 criteria are
expensed as incurred in the consolidated income statement.
Please refer to the “Notes to the IFRS Consolidated Financial
Statements — Note 2: Significant Accounting Policies —Research and development expenses” and “Note 17: Intangible
Assets”.

2.1.2.3

Accounting for Hedged Foreign
Exchange Transactions in the Financial
Statements

More than 75% of the Company’s revenues are denominatedin US dollars, whereas a substantial portion of its costs isincurred in euros and, to a smaller extent, in pounds sterling.
The Company uses hedging strategies to manage and minimise
the impact of exchange rate ﬂuctuations on its proﬁts, including
foreign exchange derivative contracts, interest rate and equity
swaps and other non-derivative ﬁnancial assets or liabilities
denominated in a foreign currency.
For further information, see “— 2.1.7 Hedging Activities”, “Risk
Factors — 1. Financial Market Risks — Foreign Currency
Exposure” and please refer to the “Notes to the IFRS Consolidated
Financial Statements — Note 2: Signiﬁcant Accounting Policies”
and “Note 35: Information about Financial Instruments”.

76

Airbus / Information Document 2018

2.1.2.4

Foreign Currency Translation

For information on transactions in currencies other than thefunctional currency of the Company and translation differences
for other assets and liabilities of the Company denominatedin foreign currencies, please refer to the “Notes to the IFRS
Consolidated Financial Statements — Note 2: Significant
Accounting Policies — Transactions in Foreign Currency”.
Currency Translation Mismatch
Customer advances (and the corresponding revenues recorded
when sales recognition occurs) are translated at the exchange
rate prevailing on the date they are received (historical rates
of customer advances). US dollar-denominated costs areconverted at the exchange rate prevailing on the date they are
incurred (historical rates of US dollar-denominated costs). To theextent those historical rates and the amounts received and paid
differ, there is a foreign currency exchange impact (mismatch)on EBIT. Additionally, the magnitude of any such difference, andthe corresponding impact on EBIT, is sensitive to variations in
the number of deliveries and spot rate (€/US$).

2.1.2.5 Accounting for Sales Financing
Transactions in the Financial Statements
The accounting treatment of sales ﬁnancing transactions varies
based on the nature of the ﬁnancing transaction and the resulting
exposure. Please refer to the “Notes to the IFRS Consolidated
Financial Statements — Note 19: Other Investments and Other
Long-Term Financial Assets”, “Note 22: Provisions, Contingent
Assets and Contingent Liabilities” and “Note 25: Sales Financing
Transactions”.
For further information on the signiﬁcance of sales ﬁnancing
transactions for the Company, see “— 2.1.6.4 Sales Financing”.

2.1.2.6

Provisions for Onerous Contracts

Provisions for onerous contracts are reviewed and reassessed
regularly. However, future changes in the assumptions usedby the Company or a change in the underlying circumstances
may lead to a revaluation of past provisions for onerous
contracts and have a corresponding positive or negative effecton the Company’s future ﬁnancial performance. Please referto the “Notes to the IFRS Consolidated Financial Statements— Note 2: Signiﬁcant Accounting Policies — Provisions for
Onerous Contracts” and “Note 22: Provisions, Contingent
Assets and Contingent Liabilities”.

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

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Operations
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2and Results
3 of 45 /2.1 Operating and Financial Review
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FINANCIAL STATEMENTS 2018

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2

3

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2.1.3 Performance Measures
2.1.3.1

Business Segments2

Airbus
The following table summarises the measures for the activities of Airbus for the past three years.

(In € million)

Year ended
31 December 2018Year ended
31 December 2017as restatedYear ended
31 December 2017as reported

Year ended
31 December 2016as reported

Revenue

47,97043,48650,95849,237

EBIT

4,295

2,257

3,428

1,543

in % of revenue

9.0%

5.2%

6.7%

3.1%

Airbus Helicopters
The following table summarises the measures for the activities of Airbus Helicopters for the past three years.

(In € million)

Year ended
31 December 2018Year ended
31 December 2017as restatedYear ended
31 December 2017as reported

Year ended
31 December 2016as reported

5,934

6,335

6,450

6,652

Revenue
EBIT

366

247

337

308

in % of revenue

6.2%

3.9%

5.2%

4.6%

Airbus Defence and Space
The following table summarises the measures for the activities of Airbus Defence and Space for the past three years.

(In € million)

Year ended
31 December 2018Year ended
31 December 2017as restatedYear ended
31 December 2017as reported

Year ended
31 December 2016as reported

Revenue

11,063

10,596

10,804

11,854

EBIT

676

462

212

(93)

in % of revenue

6.1%

4.4%

2.0%

(0.8%)

2.1.3.2

Order Intake and Order Backlog

Year-end order backlog consists of contracts signed up to that
date. Only ﬁrm orders are included in calculating order backlog
for commercial aircraft. A ﬁrm order is deﬁned as one for which
the Company receives a down payment on a deﬁnitive contract.
Defence-related orders are included in the backlog upon
enforcement of the signed contract (and the receipt, in mostcases, of an advanced payment). Commitments under defence“umbrella” or “framework” agreements by governmental
customers are not included in backlog until the Company isofﬁcially notiﬁed.
Up until 1 January 2018, amounts of order backlog forcommercial aircraft contracts reﬂected in the table below arederived from catalogue prices, escalated to the expected
delivery date and, to the extent applicable, converted into euro
(at the corresponding hedge rate for the hedged portion of
expected cash ﬂows, and at the period-end spot rate for the
non-hedged portion of expected cash ﬂows). The amount ofdefence-related order backlog is equal to the contract valuesof the corresponding programmes. Order intake is measured
under IFRS 15 principles starting on 1 January 2018.

As of 31 December 2018, the total backlog and order intake
represent the aggregate amount of the net transaction priceallocated to the unsatisﬁed and partially unsatisﬁed performanceobligations to the Company’s customers. The 2018 order backlog
represents the contractual view. The value of the backlog ismeasured in accordance with the revenue recognition standard(IFRS 15) implemented from 1 January 2018 and reﬂects therecoverable amount of revenues under these contracts. As
a result, contractual rebates, engine concessions variableconsiderations and recoverability are taken into consideration
for measurement. Contracts stipulated in a currency different
than the presentation currency are translated to euro using the
spot rate as of 31 December 2018. Adjustments to the valueof the backlog could result from changes in the transaction
price. The backlog will mainly be released into revenue over a
period of seven years.
The signiﬁcant reduction in order backlog value is mainly due tothe adjustment for net prices versus list prices. The 2018 orderintake value is measured consistently with IFRS 15. Prior year
ﬁgures have not been restated for IFRS 15. 2017 and 2016 ﬁgures
are based on catalogue prices for commercial aircraft activities.

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FINANCIAL STATEMENTS 2018

1

2

3

4

5

Order Intake(1)Year ended
31 December 2018
(In € billion) (In percentage)(2)Year ended
31 December 2017

Year ended
31 December 2016

(In € billion) (In percentage)(2)(In € billion) (In percentage)(2)

Airbus

41.5

73.7%

143.4

90.3%

114.9

84.3%

Airbus Helicopters

6.3

11.3%

6.5

4.1%

6.1

4.4%

Airbus Defence and Space

8.4

15.0%

8.9

5.6%

15.4

11.3%

Subtotal segmental order intake

56.3

100%

158.8

100%

136.4

100%

Transversal / Eliminations

(0.8)

(1.1)

(1.9)

Total

55.5

157.7

134.5

(1) Without options.
(2) Before “Transversal / Eliminations”.

Order Backlog(1)Year ended
31 December 2018
(In € billion) (In percentage)(2)

AirbusYear ended
31 December 2017

Year ended
31 December 2016

(In € billion) (In percentage)(2)

411.7

89.1%

Airbus Helicopters

14.9

3.2%

11.2

1.1%

11.3

1.1%

Airbus Defence and Space

35.3

7.7%

37.4

3.8%

41.5

3.9%

Subtotal segmental order backlog

461.9

100%

999.0

100%

1,063.0100%

Transversal / Eliminations

Total

950.4

95.1%

(In € billion) (In percentage)(2)

1,010.2

(2.4)

(2.1)

(2.6)

459.5

996.8

1,060.4

95.0%(1) Without options.
(2) Before “Transversal / Eliminations”.

2018 compared to 2017. Due to implementation of IFRS 15,
no comparison in terms of value is made between 2018 and2017. The decrease in the Company’s order backlog in terms ofvalue primarily reﬂects the change in measurement principles,
especially the use of contractual price versus catalogue price.
Airbus’ book-to-bill ratio amounted to 0.9 (calculated using
units of new net orders, i.e. new net orders in units divided bydeliveries in units). Order intake consisted of 747 net orders in2018 (as compared to 1,109 in 2017), driven mainly by the A320
Family, which received 541 net ﬁrm orders (531 A320neo and
10 A320ceo) and including 135 A220s. Total order backlog
at Airbus amounted to 7,577 aircraft at the end of 2018(as compared to 7,265 aircraft at the end of 2017). Airbus’
backlog includes CSALP. This represents a record year-end
level of backlog in units, showing the underlying health of themarket.
Airbus Helicopters’ book-to-bill ratio was above 1 in termsof units. Airbus Helicopters received 381 net orders in 2018(as compared to 335 in 2017). Total order backlog amounted
to 717 helicopters at the end of 2018 (as compared to
692 helicopters at the end of 2017).
Airbus Defence and Space’s book-to-bill ratio amounts to~0.8 with new net orders of € 8.4 billion, supported by key
contract wins including the Euroﬁghter contract with Qatar, 4A330 MRTT Tankers and 2 new generation telecommunication
satellites.

78

Airbus / Information Document 20182017 compared to 2016. The € -63.6 billion decrease in theorder backlog from 2016, to € 996.8 billion in 2017, primarily
reﬂects the weaker US dollar spot rate used for conversion of
the non-hedged portion of the backlog into euro at year-end(€/US$ 1.20 as compared to €/US$ 1.05 at the end of 2016)
which had a negative impact on order backlog of approximately€ -115 billion. Airbus’ strong order intake in 2017 (€ 158 billion
catalogue price) exceeded the reduction of the backlog from2017 deliveries.
Airbus’ backlog decreased by € -59.8 billion from 2016, to€ 950.4 billion in 2017, primarily reﬂecting the above mentioned
negative currency translation effects from the weaker US dollar
spot rate. A book-to-bill ratio of 1.5 (calculated using units of
new net orders, i.e. new net orders in units divided by deliveries
in units), however, contributed positively. Order intake consistedof 1,109 net orders in 2017 (as compared to 731 in 2016), driven
mainly by the A320 Family, which received 1,054 net ﬁrm orders(926 A320neo and 128 A320ceo). Total order backlog at Airbus
amounted to 7,265 aircraft at the end of 2017 (as comparedto 6,874 aircraft at the end of 2016). This represents a record
year-end level of backlog by units.
Airbus Helicopters’ backlog slightly decreased by € -0.1 billion
from 2016, to € 11.2 billion in 2017, reﬂecting a book-to-billratio, by value in euros, of around one with new net orders of€ 6.5 billion. Airbus Helicopters received 335 net orders in 2017(as compared to 353 in 2016). Total order backlog amounted
to 692 helicopters at the end of 2017 (as compared to 766
helicopters at the end of 2016).

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Operations
1
2and Results
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Airbus Defence and Space’s backlog decreased by € -4.1 billion
from 2016 to € 37.4 billion in 2017, reﬂecting a book-to-bill ratioof less than one with new net orders of € 8.9 billion. Defence
and Space had a book-to-bill of ~0.8. Good momentum wasseen in military aircraft with the order intake including 22
light and medium transport aircraft, ﬁve A330 MRTT Tankers

FINANCIAL STATEMENTS 2018

1

2

3

4

5

and the Eurofighter contract with Kuwait. Two all-electric
telecommunication satellites were booked in the fourth quarter
despite a soft market environment. Airbus Defence and Space’s
perimeter changes had a negative impact of € 1.9 billion on theorder book and € 1.5 billion on order intake.

2

The following table illustrates the proportion of civil and defence backlog at the end of each of the past three years.
Year ended
31 December 2018
(In € billion)(2) (In percentage)

Civil sector

420.2

Defence sector

Total

Year ended
31 December 2016

Year ended
31 December 2017
(In € billion)(2) (In percentage)

91%

959.9

(In € billion)(2) (In percentage)

96%

1,020.6

96%

39.3

9%

36.9

4%

39.8

4%

459.5

100%

996.8

100%

1,060.4

100%(1) Including “Transversal / Eliminations”.

2.1.3.3

EBIT Adjusted

The Company uses an alternative performance measure EBIT Adjusted as a key indicator capturing the underlying businessmargin by excluding material charges or proﬁts caused by movements in provisions related to programmes, restructurings orforeign exchange impacts as well as capital gains/losses from the disposal and acquisition of businesses.
The following table reconciles the Company’s EBIT with its EBIT Adjusted.
Year ended
31 December 2018Year ended
31 December 2017as restated(1)Year ended
31 December 2017as reported

Year ended
31 December 2016as reported

EBIT

5,048

2,665

3,421

2,258

PDP mismatch / BS revaluation

(129)

7

7

930

A380 programme

463

0

0

0

A400M business update

436

992

1,299

2,210

0

0

0

385

Compliance costs

123

117

117

0

Plant Holdings, Inc. gain

(159)

0

0

0

(In € million)

A350 XWB business update

ArianeGroup creation phase 2

0

0

0

(1,175)

Defence Electronics net capital gain

0

(604)

(604)

0

Dassault Aviation disposal

0

0

0

(868)

(29)

13

13

33

Restructuring / Transformation

8

0

0

182

Other costs

73

0

0

0

5,834

3,190

4,253

3,955

Portfolio in Airbus Defence and Spaceand other M&A

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

Airbus / Information Document 201879

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2.1 Operating and Financial Review
Management’s Discussion and Analysis of Financial Condition and Results of Operations /2.1 Operating and Financial Review

2.1.3.4

1

2

3

4

5

EBIT Adjusted by Business Segment(In € million)

Year ended
31 December 2018Year ended
31 December 2017as restatedYear ended
31 December 2017as reported

Year ended
31 December 2016as reported

4,808

2,383

3,554

2,811

AirbusAirbus Helicopters

380

247

337

350

Airbus Defence and Space

935

815

872

1,002

Subtotal segmental EBIT Adjusted

6,123

3,445

4,763

4,163

Transversal / Eliminations

(289)

(255)

(510)

(208)

Total

5,834

3,190

4, 253

3,955

Year ended
31 December 2018Year ended
31 December 2017as restatedYear ended
31 December 2017as reported

Year ended
31 December 2016as reported

4,295

2,257

3,428

1,543

366

247

337

308

2.1.3.5

EBIT by Business Segment(In € million)

AirbusAirbus Helicopters
Airbus Defence and Space

676

462

212

(93)

Subtotal segmental EBIT

5,337

2,966

3,977

1,758

Transversal / Eliminations

(289)

(301)

(556)

500

Total

5,048

2,665

3,421

2,258

2018 compared to 2017. 2018 financials reflect strong
operational performance and programme execution, evidenced
in record deliveries at Airbus and higher revenues at Airbus
Defence and Space. The Company’s consolidated EBIT
increased by 89.4%, from € 2.7 billion for 2017 (restated) to€ 5.0 billion for 2018.
A irbus’ EBIT increased from € 2.3 billion for 2017 (restated)to € 4.3 billion for 2018 reflecting the strong operational
performance and record deliveries. A net charge of € 463 million
was recorded related to the A380 programme for the period
ended at 31 December 2018. Airbus’ EBIT in 2018 also included
a negative impact of € 123 million related to compliance costs.
Airbus Helicopters’ EBIT increased from € 247 million for 2017
(restated) to € 366 million for 2018, reﬂecting higher Super Puma
deliveries, a favourable mix and solid underlying programme
execution.
Airbus Defence and Space’s EBIT increased from € 462 million for2017 (restated) to € 676 million for 2018 reﬂecting continued solid
programme execution and contributions from its joint ventures
MBDA and ArianeGroup. In 2018, it also included the impact
of disposals, mainly the gain from the Plant Holdings, Inc. of€ 159 million. A net charge of € 436 million was recorded related
to the A400M programme for the period ended 31 December
2018 (2017 (restated): € 992 million).
2017 compared to 2016 (as reported). 2017 financials
reﬂect the perimeter changes in Airbus Defence and Spaceand Helicopters resulting in reduction in revenues of around€ 2 billion and related EBIT impact. The Company’s consolidated
EBIT increased by 51.5%, from € 2.3 billion for 2016 to € 3.4 billion
for 2017.

80

FINANCIAL STATEMENTS 2018

Airbus / Information Document 2018

Airbus’ EBIT increased from € 1.5 billion for 2016 to € 3.4 billion
for 2017, reﬂecting the strong delivery performance supported
by improved foreign exchange rates. Good progress was madein reducing the A350 losses in line with expectations.
Airbus Helicopters’ EBIT increased from € 308 million for 2016
to € 337 million for 2017, reﬂecting transformation efforts whichhave globally supported the Division’s competitiveness in achallenging market and lower impact from past Super Puma
grounding. This was reduced by lower deliveries, an unfavourable
mix and lower commercial ﬂight hours in services and perimeterchange, following the divestment of the maintenance, repair andoverhaul business Vector Aerospace in November.
Airbus Defence and Space’s EBIT increased from € -93 million
for 2016 to € 212 million for 2017, reﬂecting a stable corebusiness performance and solid contributions from the MBDA
and ArianeGroup joint ventures. It was supported by the net
capital gain of € 604 million from the divestment of the defence
electronics business and some further small disposal impacts.
A net charge of € 1,299 million was recorded related to the
A400M programme for the period ended 31 December 2017(€ 2,210 million for the period ended 31 December 2016).
Airbus Defence and Space’s EBIT in 2017 also included
a negative impact of € 91 million related to compliance,
comprising an administrative penalty notice connected tothe termination of the Euroﬁghter Austria investigation by
the Munich Public Prosecutor. See “— 2.1.1.3 SigniﬁcantProgramme Developments, Restructuring and Related
Financial Consequences in 2016, 2017 and 2018”.

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Foreign currency impact on EBIT. More than 75% of
the Company’s revenues are denominated in US dollars,
whereas a substantial portion of its costs is incurred in euros
and, to a lesser extent, pounds sterling. Given the longterm nature of its business cycles (evidenced by its multiyear backlog), the Company hedges a signiﬁcant portion of
its net foreign exchange exposure to mitigate the impact of
exchange rate ﬂuctuations on its EBIT. Please refer to the “Notes
to the IFRS Consolidated Financial Statements — Note 35:
Information about Financial Instruments” and see “— Risk
Factors — 1. Financial Market Risks — Foreign Currency
Exposure”. In addition to the impact that hedging activities
have on the Company’s EBIT, the latter is also affected by
the impact of revaluation of certain assets and liabilities at theclosing rate and the impact of natural hedging.

FINANCIAL STATEMENTS 2018

1

2

3

4

5

During 2018, cash flow hedges covering approximately
US$ 25.4 billion of the Company’s US dollar-denominatedrevenues matured. In 2018, the compounded exchange
rate at which hedged US dollar-denominated revenues were
accounted for was €/US$ 1.24, as compared to €/US$ 1.29 in2017. See “— 2.1.2.4 Foreign Currency Translation”.

2

During 2017, cash flow hedges covering approximately
US$ 25.3 bil lion of the Company’s US dollar-denominatedrevenues matured. In 2017, the compounded exchange rate
at which hedged US dollar-denominated revenues were
accounted for was €/US$ 1.29, as compared to €/US$ 1.32 in
2016. See “— 2.1.2.4 Foreign Currency Translation”.

2.1.4 Results of Operations
The following table summarises the IFRS Company’s Consolidated Income Statements for the past three years:(In € million)

Year ended
31 December 2018Year ended
31 December 2017as restated(1)Year ended
31 December 2017as reported

Year ended
31 December 2016as reported

Revenue

63,70759,022

66,767

66,581

Cost of sales(54,920)(52,149)(59,160)(61,317)Gross margin

8,787

6,873

7,607

5,264

Selling and administrative expenses(2,435)(2,439)(2,439)(2,723)

Research and development expenses(3,217)(2,807)(2,807)(2,970)

Other income

1,656

981

981

2,689

Other expenses

(182)

(336)

(336)

(254)

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

439

393

415

252

Profit before finance costs andincome taxes

5,048

2,665

3,421

2,258

Interest result

(232)

(328)

(328)

(275)

(531)

1,489

1,477

(692)

Income taxes

Other financial result(1,274)(1,462)(1,693)(291)

Profit for the period

3,011

2,364

2,877

1,000

3,054

2,361

2,873

995

(43)

3

4

5

€

€

€

€

Basic

3.94

3.05

3.71

1.29

Diluted

3.92

3.04

3.70

1.29

Attributable to:Equity owners of the parent (Net income)Non-controlling interests
Ear nings per share(1) Previous year figures are restated due to the application of IFRS 15.

Airbus / Information Document 201881

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Management’s Discussion and Analysis of Financial Condition and Results of Operations /2.1 Operating and Financial Review

2.1.4.1

FINANCIAL STATEMENTS 2018

1

2

3

4

5

Revenues

The following table presents a breakdown of the Company’s revenues by business segment for the past three years:(In € million)

AirbusYear ended
31 December 2018Year ended
31 December 2017as restatedYear ended
31 December 2017as reported

Year ended
31 December 2016as reported

47,97043,48650,95849,237

Airbus Helicopters

5,934

6,335

6,450

6,652

Airbus Defence and Space

11,063

10,596

10,804

11,854

Subtotal segmental revenue

64,96760,417

68,212

67,743

Transversal / Eliminations(1,260)(1,395)(1,445)(1,162)

Total

63,70759,022

66,767

66,581For 2018, revenues increased by 7.9%, from € 59.0 billion for 2017
(restated) to € 63.7 billion for 2018, reﬂecting record commercial
aircraft deliveries at Airbus, and supported by Space Systems
and Military Aircraft activities at Airbus Defence and Space, partly
offset by the perimeter change in Airbus Helicopters.

For 2017 (as reported), revenues were stable at € 66.8 billion,
a 0.3% increase from € 66.6 billion in 2016, as higher aircraft
deliveries at Airbus were offset by the portfolio reshaping in
Airbus Defence and Space and in Airbus Helicopters resulting
in reduction of revenues of around € 2 billion.

Airbus
The following table presents a breakdown of deliveries of commercial aircraft by product type for the past three years.
(In units)

Year ended
31 December 2018Year ended
31 December 2017

Year ended
31 December 2016

A220

20

-

-

A320 Family

626

558

545

A330

49

67

66

A350 XWB

93

78

49

A380

12

15

28

Total

800

718

688

Airbus’ revenues increased by 10.3%, from € 43.5 billion for2017 (restated) to € 48.0 billion for 2018. This was due to recorddeliveries of 800 aircraft (compared to 718 deliveries in 2017)
including 93 A350 XWBs and 20 A220s supported by solid
operational performance.

For 2017 (as reported), Airbus’ revenues increased by 3.5%,
from € 49.2 billion for 2016 to € 51.0 billion for 2017. This was due
to record deliveries of 718 aircraft (compared to 688 deliveriesin 2016) including 78 A350 XWBs and a favourable foreignexchange impact.

Airbus Helicopters
The following table presents a breakdown of deliveries of helicopters by product type for the past three years.
Year ended
31 December 2018Year ended
31 December 2017

Light

156

166

177

Medium

137

178

165

Heavy

54

48

57

(In units)

thereof NH90

36

40

38

Tiger

9

17

19

Total

356

409

418

Airbus Helicopters’ revenues decreased by 6.3%, from€ 6.3 billion for 2017 (restated) to € 5.9 billion in 2018. Revenues
on a comparable perimeter are stable, despite lower deliveriesof 356 units. The perimeter reduction following the disposalof Vector Aerospace had a negative impact of approximately€ 0.5 billion.

82

Year ended
31 December 2016

Airbus / Information Document 2018

For 2017 (as reported), Airbus Helicopters’ revenues decreasedby 3.0%, from € 6.7 billion for 2016 to € 6.5 billion in 2017,
reﬂecting lower deliveries of 409 units and lower commercial
ﬂight hours in services impacted by Super Puma grounding.
The number of Heavy helicopters delivered continued todecrease in 2017, reﬂecting the soft Civil & Parapublic market,
particularly in Oil & Gas. The disposal of Vector Aerospace
had a negative perimeter change impact of around € 0.1 billion.

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FINANCIAL STATEMENTS 2018

1

2

3

4

5

Airbus Defence and Space
The following table presents a breakdown of deliveries of Airbus Defence and Space by product type for the past three years.
(In units)

Year ended
31 December 2018Year ended
31 December 2017

Year ended
31 December 2016

A400M

17

19

17

A330 MRTT (Tanker)

6

1

2

Light & Medium aircraft

6

7

14

Telecom satellites

2

4

1

Total

31

31

34

Airbus Defence and Space’s revenues increased by 4.4%
from € 10.6 billion for 2017 (restated) to € 11.1 billion in 2018,
supported by Space Systems and Military Aircraft activities.

of development costs has been capitalised, mainly related to
the A330neo and H160 programmes.

For 2017 (as reported), Airbus Defence and Space’s revenues
decreased by 8.9% from € 11.9 billion for 2016 to € 10.8 billion
in 2017, reﬂecting the Division’s perimeter changes of around€ 1.7 billion but were 7% higher on a comparable basis driven
mainly by military aircraft. The lower number of Light & Medium
aircraft delivered in 2017 is a function of lower order intake inrecent years.

2.1.4.5

2.1.4.2

Cost of Sales

Cost of sales increased by 5.3% from € 52.1 billion for 2017
(restated) to € 54.9 billion for 2018. The increase was principally
due to impairments and provisions recognised on the A380
programme of € 1,257 million. It also included a positive impact
from a lower net charge related to the A400M programme in theamount of € 436 million (2017 (restated): € 992 million) at Airbus
Defence and Space.
For 2017 (as reported), cost of sales decreased by 3.5% from€ 61.3 billion for 2016 to € 59.2 billion for 2017. The decrease
was primarily due to a lower net charge related to the A400M
programme in the amount of € 1,299 million (2016: € 2,210 million)
and the perimeter changes at Airbus Defence and Space. In
2016 a charge of € 385 million was booked for the A350 XWB
programme (2017: € 0 million).

2.1.4.3

Selling and Administrative Expenses

For 2018, selling and administrative expenses remained stableversus 2017 at € 2.4 billion.
For 2017, selling and administrative expenses decreased by
10.4%, from € 2.7 billion for 2016 to € 2.4 billion for 2017.

2.1.4.4

Research and Development Expenses

Research and development expenses increased by 14.6%, from€ 2.8 billion for 2017 to € 3.2 billion for 2018, mainly reﬂecting
development cost on the A320neo. In addition, an amount of€ 91 million of development costs has been capitalised, mainly
related to Airbus Helicopters programmes. See “— 2.1.2.2
Capitalised Development Costs”.
For 2017, research and development expenses decreased by
5.5%, from € 3.0 billion for 2016 to € 2.8 billion for 2017 primarily
reﬂecting a reduction of R&D activities on the A350 XWB
programme at Airbus. In addition, an amount of € 219 million

2

Other Income and Other Expenses

Other income and other expenses typically include gains andlosses on disposals of investments, of ﬁxed assets and income
from rental properties.
For 2018, other income and other expenses was € 1,474 million
net as compared to € 645 million net for 2017. In 2018, theincrease is mainly related to the release of liabilities on the A380
programme and the gain of € 159 million following the disposalof Plant Holdings, Inc.
For 2017, other income and other expenses was € +645 million
net as compared to € +2,435 million net for 2016. In 2017, it
mainly includes the capital gain of € 604 million from the disposalof the defence electronics business.

2.1.4.6

Share of Proﬁt from Investments
Accounted for under the Equity Method
and Other Income from Investments

Share of proﬁt from investments accounted for under the equity
method and other income from investments principally include
results from companies accounted for under the equity method
and the dividends attributable to unconsolidated investments.
For 2018, the Company recorded € 439 million in share of proﬁt
from investments accounted for under the equity method andother income from investments as compared to € 393 million
for 2017 (restated). Please refer to the “Notes to the IFRS
Consolidated Financial Statements — Note 7: Investments
Accounted for under the Equity Method” and “Note 12: Share ofProﬁt from Investments Accounted for under the Equity Method
and Other Income from Investments”.
For 2017 (as reported), the Company recorded € 415 million inshare of proﬁt from investments accounted for under the equity
method and other income from investments as compared to€ 252 million for 2016.

2.1.4.7

Interest Result

Interest result reﬂects the net of interest income and expense
arising from ﬁnancial assets and liabilities, including interest
expense on refundable advances provided by European
Governments to ﬁnance R&D activities. Please refer to the“Notes to the IFRS Consolidated Financial Statements —Note 14: Total Financial Result”.

Airbus / Information Document 201883

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For 2018, the Company recorded a net interest expenseof € -232 million, as compared to € -328 million for 2017.
The decrease in net interest expense was principally due tolower interest expense related to the European Governments’refundable advances.
For 2017, the Company recorded a net interest expense of€ -328 million, as compared to € -275 million for 2016. The
difference is primarily due to lower interest expense recordedon European Governments’ refundable advances in 2016.

2.1.4.8 Other Financial Result
Other ﬁnancial result includes the impact from the revaluationof ﬁnancial instruments, the effect of foreign exchange valuationof monetary items and the unwinding of discounted provisions.
Please refer to the “Notes to the IFRS Consolidated Financial
Statements — Note 2: Signiﬁcant Accounting Policies” and“Note 14: Total Financial Result”.
Other ﬁnancial result decreased from € 1,489 million for 2017
(restated) to € -531 million for 2018. This is due to a negative
impact from the revaluation of financial instruments of€ -732 million and foreign exchange valuation of monetary items,
partly compensated by the net effect of the change of treatmentof certain ﬁnancial instruments under IFRS 9. In addition, in2017 it included the impact of the refundable advances release.
Please refer to the “Notes to the IFRS Consolidated Financial
Statements — Note 23: Other Financial Assets and Other
Financial Liabilities”.
For 2017 (as reported), other financial result increased
from € -692 million for 2016 to € 1,477 million for 2017.
This is mainly related to a positive impact from bothforeign exchange valuation of monetar y items of €+439 million and the revaluation of ﬁnancial instruments of€ +743 million. In addition, it included the impact of the decreasein the European Governments’ refundable advances primarily
related to the A380 programme.

2.1.4.9

Income Tax

For 2018, income tax expense was € -1,274 million as comparedto € -1,462 million for 2017 (restated). The decrease, despite
the higher income before tax recorded in 2018 (€ 4,285 million)
as c ompared to 2017 (€ 3,826 million (restated)), is mainly
driven by a lesser volume of deferred tax asset impairment

FINANCIAL STATEMENTS 2018

1

2

3

4

5

than in 2017. The effective tax rate was 30% in 2018, mainly
impacted by non-realised tax losses in the period leading to
additional deferred tax asset impairment. This was partially
offset by the tax-free sale of Plant Holdings Inc. Without these
impacts, the effective tax rate would be approximately 26%.
Please refer to the “Notes to the IFRS Consolidated Financial
Statements — Note 15: Income Tax”.
For 2017 (as reported), income tax expense was € -1,693 million
as compared to € -291 million for 2016. The increase wasprimarily due to the higher income before tax recorded in 2017(€ 4,570 million) as compared to 2016 (€ 1,291 million). The
effective tax rate was 37% in 2017. It was mainly impacted
by non-realised 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
and the reduction in deferred tax asset due to the income tax rate
decrease in the US, both enacted end of 2017. This was partially
offset 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%.

2.1.4.10 Non-Controlling Interests
For 2018, proﬁt for the period attributable to non-controllinginterests was € -43 million, as compared to € 3 million for 2017
(restated).

2.1.4.11 Proﬁt for the Period Attributable
to Equity Owners of the Parent(Net Income)As a result of the factors discussed above, the Company
recorded net income of € 3,054 million for 2018, as comparedto € 2,361 million for 2017 (restated).

2.1.4.12 Earnings per Share
Basic earnings were € 3.94 per share in 2018, as compared to€ 3.05 per share in 2017 (restated). The number of issued shares
as of 31 December 2018 was 776,367,881. The denominator
used to calculate earnings per share was 775,167,941 shares(2017: 773,772,702), reﬂecting the weighted average numberof shares outstanding during the year. In 2016, the Company
reported basic earnings of € 1.29 per share, based on adenominator of 773,798,837 shares.

Year ended
31 December 2018Year ended
31 December 2017as restated(1)Year ended
31 December 2017as reported

Year ended
31 December 2016as reported

Profit for the period attributable to equity
owners of the parent (Net income)€ 3,054 million€ 2,361 million€ 2,873 million€ 995 million

Weighted average number of ordinary
shares775,167,941

773,772,702

773,772,702

773,798,837€ 3.94€ 3.05€ 3.71€ 1.29Basic earnings per share(1) Previous year figures are restated due to the application of IFRS 15.

Diluted earnings were € 3.92 per share in 2018, as comparedto € 3.04 per share in 2017. The denominator used to calculate
diluted earnings per share was 780,943,038 (2017: 779,301,228),
reﬂecting the weighted average number of shares outstanding

84

Airbus / Information Document 2018

during the year, adjusted to assume the conversion of all
potential ordinary shares. In 2016, the Company reported
diluted earnings of € 1.29 per share, based on a denominatorof 779,104,634 shares.

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

Management’s Discussion and Analysis of Financial Condition
Operations
1
2and Results
3 of 45 /2.1 Operating and Financial Review
Management’s Discussion and Analysis of Financial Condition and Results of Operations /2.1 Operating and Financial Review

FINANCIAL STATEMENTS 2018

1

2

3

4

5

Year ended
31 December 2018Year ended
31 December 2017as restated(1)Year ended
31 December 2017as reported

Year ended
31 December 2016as reported

Profit for the period attributable to equity
owners of the parent (Net income),
adjusted for diluted calculation€ 3,061 million€ 2,368 million€ 2,880 million€ 1,002 million

Weighted average number of ordinary
shares (diluted)

780,943,038

779,301,228

779,301,228

779,109,634€ 3.92€ 3.04€ 3.70€ 1.29Diluted earnings per share

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

For further information, please refer to the “Notes to the IFRS Consolidated Financial Statements — Note 16: Earnings per Share”
and “Note 32: Total Equity”.

2.1.5 Changes in Total Equity (Including Non-Controlling Interests)
The following table sets forth a summary of the changes in total equity for the period 1 January 2018 through 31 December 2018.
(In € million)

Balance at 31 December 2017, restated(1)10,742

Restatements(1)(2)
Balance at 1 January 2018, restated(8)(1)(2)

10,734

Profit for the period

3,011

Other comprehensive income(3,014)

thereof foreign currency translation adjustments

100

Capital increase

117

Cash distribution to shareholders / Dividends paid to non-controlling interests
Equity transactions (IAS 27)(1,161)
19

Share-based payment (IFRS 2)

62

Change in treasury shares(49)

Balance at 31 December 2018

9,719

(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.

Please refer to the “Airbus SE IFRS Consolidated Financial
Statements — IFRS Consolidated Statements of Changes in
Equity for the years ended 31 December 2018 and 2017” andto the “Notes to the IFRS Consolidated Financial Statements— Note 32: Total Equity”.

change of € 10.6 billion as of 31 December 2017 comparedto 31 December 2016, based on a closing rate of €/US$ 1.20.
For further information on the measurement of the fair valuesof ﬁnancial instruments, please refer to the “Notes to the IFRS
Consolidated Financial Statements — Note 35: Information
about Financial Instruments”.

2.1.5.1

Positive pre-tax mark to market values of cash ﬂow hedges
are included in other ﬁnancial assets, while negative pre-tax
mark to market values of cash ﬂow hedges are included inother ﬁnancial liabilities. Year-to-year changes in the mark tomarket value of effective cash ﬂow hedges are recognised as
adjustments to AOCI. These adjustments to AOCI are net ofcorresponding changes to deferred tax assets (for cash ﬂow
hedges with negative mark to market valuations) and deferred
tax liabilities (for cash ﬂow hedges with positive mark to market
valuations).

Cash Flow Hedge Related Impact
on AOCI

As of 31 December 2018, the notional amount of the Company’s
portfolio of outstanding cash flow hedges amounted to
US$ 81.9 billion, hedged against the euro and the pound sterling.
The year-end mark to market valuation of this portfolio required
under IFRS 9 (2017 under IAS 39) resulted in a negative pretax AOCI valuation change of € -3.0 billion as of 31 December
2018 compared to 31 December 2017, based on a c losing
rate of €/US$ 1.15 as compared to a pre-tax AOCI valuation

Airbus / Information Document 201885

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

Management’s Discussion and Analysis of Financial Condition/5
1 and2Results3of Operations
4
2.1 Operating and Financial Review
Management’s Discussion and Analysis of Financial Condition and Results of Operations /2.1 Operating and Financial Review

FINANCIAL STATEMENTS 2018

1

2

3

4

5

The following graphic presents the cash ﬂow hedge related movements in AOCI over the past three years. The mark to market ofthe backlog is not reﬂected in the accounts whereas the mark to market of the hedge book is reﬂected in AOCI.
CASH FLOW HEDGE RELATED MOVEMENTS IN AOCI IN € MILLION (BASED ON YEAR-END EXCHANGE RATES)OCI Net Asset-9,810836-1,918Net Deferred

2,616
-238
445

Net Equity OCI-7,194598-1,47331 December 2016: US$ 1.05

31 December 2017: US$ 1.20

31 December 2018: US$ 1.15

As a result of the negative change in the fair market valuation of the cash ﬂow hedge portfolio in 2018, AOCI amounted to a net
liability of € -1.9 billion for 2018, as compared to a net asset of € +0.8 billion for 2017. The corresponding € +0.7 billion tax effectled to a net deferred tax asset of € 0.4 billion as of 31 December 2018 as compared to a net deferred tax liabil ity of € -0.2 billion
as of 31 December 2017.
For further information, please refer to the “Notes to the IFRS Consolidated Financial Statements — Note 35.5: Information about
Financial Instruments — Derivative Financial Instruments and Hedge Accounting Disclosure”.

2.1.5.2

Foreign Currency Translation Adjustment Impact on AOCIThe € 99 million currency translation adjustment related impact on AOCI in 2018 mainly reﬂects the effect of the variations of the
US dollar and the pound sterling.

2.1.6 Liquidity and Capital Resources
The Company’s objective is to generate sufﬁcient operating
cash ﬂow in order to invest in its growth and future expansion,
honour the Company’s dividend policy and maintain ﬁnancial
ﬂexibility while retaining its credit rating and competitive accessto capital markets.
The Company deﬁnes its consolidated net cash position as thesum of (i) cash and cash equivalents and (ii) securities, minus(iii) ﬁna ncing liabilities (all as recorded in the Consolidated
Statements of Financial Position). Net cash position is analternative performance measure and an indicator that allows
the Company to measure its ability to generate sufﬁcient liquidity
to invest in its growth and future expansion, honour its dividend
policy and maintain ﬁnancial ﬂexibility. The net cash position
as of 31 December 2018 was € 13.3 billion (€ 13.4 billion as of
31 December 2017).

86

Airbus / Information Document 2018

The liquidity is further supported by a € 3.0 billion syndicatedback-up facility, undrawn as of 31 December 2018 with noﬁ nancial covenants, as well as a Euro Medium Term Note
programme and commercial paper programme. See “— 2.1.6.3
Consolidated Financing Liabilities” and please refer to the “Notes
to the IFRS Consolidated Financial Statements — Note 34.3: Net
cash – Financial Liabilities” and “Notes to the IFRS Consolidated
Financial Statements — Note 35.1: Information about Financial
Instruments — Financial Risk Management”. The factors
affecting the Company’s cash position, and consequently its
liquidity risk, are discussed below.
For information on Airbus SE’s credit ratings, please refer tothe “Notes to the IFRS Consolidated Financial Statements —Note 33: Capital Management” and see “— 2.1.6.1: Cash Flows”.

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

Management’s Discussion and Analysis of Financial Condition
Operations
1
2and Results
3 of 45 /2.1 Operating and Financial Review
Management’s Discussion and Analysis of Financial Condition and Results of Operations /2.1 Operating and Financial Review

2.1.6.1

1

2

3

4

5

Cash Flows

The Company generally ﬁnances its manufacturing activities and product development programmes, and in particular thedevelopment of new commercial aircraft, through a combination of ﬂows generated by operating activities, customer advances,risk-sharing partnerships with subcontractors and European Governments’ refundable advances. In addition, the Company’s
military activities beneﬁt from government-ﬁnanced research and development contracts. If necessary, the Company may raise
funds in the capital markets.
The following table sets forth the variation of the Company’s consolidated net cash position over the periods indicated.
2018

2017

2016

Net Cash position at 1 January

13,391

11,113

10,003Gross cash flow from operations(1)

5,515

4,451

3,565

Changes in other operating assets and liabilities (working capital)(2)

(633)

266

346

(In € million)

thereof customer financing
Cash used for investing activities(3)thereof industrial capital expenditures
Free Cash Flow(4)

79

(100)

(252)

(1,377)

(982)

(730)

(2,285)(2,558)(3,060)

3,505

3,735

3,181

thereof M&A transactions

514

886

2,025

Free Cash Flow before M&A(5)

2,991

2,849

1,156

Cash flow from customer financing (net)
Free Cash Flow before customer financing

79

(100)

(252)

3,426

3,835

3,433

Free Cash Flow before M&A and customer financing

2,912

2,949

1,408

Cash distribution to shareholders / non-controlling interests(1,161)(1,046)(1,012)Contribution to plan assets of pension schemes(2,519)

(458)

(290)

Changes in capital and non-controlling interests

117

83

60

Change in treasury shares / share buyback

(49)

0

(736)

OthersNet Cash position at 31 December

(3)

(36)

(93)

13,281

13,391

11,1132(1) Represents cash used for operating activities, excluding (i) changes in other operating assets and liabilities (working capital), (ii) contribution to plan assets of pension schemes and(iii) realised foreign exchange results on treasury swaps (€ -45 million in 2018, € 185 million in 2017, € -151 million in 2016). It is an alternative performance measure and an indicatorused to measure its operating cash performance before changes in working capital.
(2) Excluding reclassification of certain trade liabilities.
(3) Does not reflect change in securities (net investment of € -93 million in 2018, net investment of € -1,233 million in 2017, net investment of € 337 million in 2016), which are classified
as cash and not as investments solely for the purposes of this net cash presentation. Excluding bank activities.
(4) Does not reflect change of securities, change in cash from changes in consolidation, contribution to plan assets of pension schemes and realised foreign exchange results ontreasury swaps. Excluding bank activities. Free Cash Flow is an alternative performance measure and indicator that reflects the amount of cash flow generated from operations
after cash used in investing activities.
(5) Free Cash Flow before M&A refers to Free Cash Flow adjusted for net proceeds from disposals and acquisitions. It is an alternative performance measure and indicator that reflects
Free Cash Flow excluding those cash flows from the disposal and acquisition of businesses.

The net cash position as of 31 December 2018 was stable at€ 13.3 billion, a 0.8% decrease from 31 December 2017. The
increase in gross cash ﬂow from operations (€ 5.5 billion), wasoffset by the contributions to plan assets of pensions schemes(€ -2.5 billion), the cash used for investing activities (€ -1.4 billion)
and the cash distribution to shareholders / non-controllinginterests (€ -1.2 billion).
Gross Cash Flow from Operations
Gross cash ﬂow from operations is an alternative performancemeasure and an indicator used by the Company to measure its
operating cash performance before changes in working capital.
Gross cash ﬂow from operations increased to € 5.5 billion for
2018, which reﬂects the strong EBIT Adjusted.

Changes in Other Operating Assets and Liabilities
Changes in other operating assets and liabilities is comprisedof inventories, trade receivables, contract assets and contract
liabilities (including customer advances), trade liabilities, andother assets and other liabilities. They resulted in a negative
working capital variation of € -0.6 billion for 2018, versus a
positive impact of € +0.3 billion for 2017.
In 2018, the contributors to the negative working capital variation
were the change in trade receivables (€ -0.9 billion), the change inother assets and liabilities (€ -0.7 billion), the change in contract
assets and contract liabilities (€ -0.7 billion), and the change ininventories (€ -0.7 billion). This was partially compensated by
the increase in trade liabilities (€ 2.3 billion) due to favourable
payment terms to suppliers.

Airbus / Information Document 201887

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

Management’s Discussion and Analysis of Financial Condition/5
1 and2Results3of Operations
4
2.1 Operating and Financial Review
Management’s Discussion and Analysis of Financial Condition and Results of Operations /2.1 Operating and Financial Review

European Governments’ refundable advances. As of
31 December 2018, total European Governments’ refundable
advances liabilities, recorded on the statement of ﬁnancial
position in the line items “non-current other ﬁnancial liabilities”
and “current other ﬁnancial liabilities” due to their speciﬁc nature,amounted to € 4.6 billion, including accrued interest.
European Governments’ refundable advances (net ofreimbursements) decreased in 2018, primarily related to the
update of the measurement of refundable advances from
European Governments on the A380 programme. Please referto the “Notes to the IFRS Consolidated Financial Statements— Note 10: Revenue and Gross Margin” and “Note 23: Other
Financial Assets and Other Financial Liabilities”.
Cash Used for Investing Activities
Management categorises cash used for investing activities into
three components: (i) industrial capital expenditures, (ii) M&A
transactions and (iii) others.
Capital expenditures. Capital expenditures (investments inproperty, plant and equipment and intangible assets) amounted
to € -2.3 billion for 2018 as compared to € -2.6 billion for 2017and € 3.1 billion for 2016. The lower capital expenditures in2018 demonstrate the Company’s sound approach to capital
allocation and supports the current production rates. In 2018,
it related to Airbus programmes of € -1.6 billion (among others
for the Beluga XL, and the ramp-up phase of the A320 Family
and the A350 XWB) and additional projects in the Divisionsof € -0.7 billion. Capital expenditures include product-related
development costs that are capitalised in accordance with
IAS 38. See “— 2.1.2.2 Capitalised development costs”.
M&A transactions. In 2018, the € 0.5 billion ﬁgure includes
net proceeds from the disposal of Plant Holdings, Inc. andCompañía Española de Sistemas Aeronáuticos, S.A. (“CESA”).
Please refer to the “Notes to the IFRS Consolidated Financial
Statements — Note 6: Acquisitions and Disposals”.
In 2017, the € 0.9 billion ﬁgure includes net proceeds of around€ 600 million from the defence electronics disposal and around€ 400 million from the Vector Aerospace sale.
Free Cash Flow
The Company deﬁnes Free Cash Flow as the sum of (i) cash
provided by operating activities and (ii) cash used for investing
activities, minus (iii) change of securities, (iv) contribution toplan assets of pension schemes, (v) realised foreign exchange
results on treasury swaps and (vi) Airbus Bank activities. It isan alternative performance measure and key indicator that is
important in order to measure the amount of cash ﬂow generated
from operations after cash used in investing activities. As a resultof the factors discussed above, Free Cash Flow amounted to€ 3.5 billion for 2018 as compared to € 3.7 billion for 2017 and€ 3.2 billion for 2016.
Free Cash Flow before M&AFree Cash Flow before mergers and acquisitions refers toFree Cash Flow adjusted for net proceeds from disposals andacquisitions. It is an alternative performance measure and key
indicator that reﬂects Free Cash Flow excluding those cash
ﬂows resulting from acquisitions and disposals of businesses.

88

Airbus / Information Document 2018

FINANCIAL STATEMENTS 2018

1

2

3

4

5

Free Cash Flow before M&A and Customer Financing
Free Cash Flow before M&A and customer ﬁnancing refers toFree Cash Flow before mergers and acquisitions adjusted for
cash ﬂow related to aircraft ﬁnancing activities. It is an alternative
performance measure and indicator that may be used from time
to time by the Company in its ﬁnancial guidance, especially when
there is higher uncertainty around customer ﬁnancing activities.
Change in Treasury Shares
Change in treasury shares for 2018 amounted to € -49 million.
In 2017, there was no change in treasury shares. Change intreasury shares for 2016 amounted to € 0.7 billion, which was
mostly related to the share buyback programme that took
place between 2 November 2015 and 30 June 2016. As of
31 December 2018 and 2017, the Company held 636,924 and
129,525 treasury shares, respectively.
Contribution to Plan Assets of Pension Schemes
The cash outﬂows of € -2.5 billion, € -0.5 billion and € -0.3 billion
in 2018, 2017 and 2016, respectively, primarily relate to acontribution to the Contractual Trust Arrangement (“CTA”) for
allocating and generating pension plan assets in accordancewith IAS 19, as well as to plan assets in the UK and to German
beneﬁt funds. Please refer to the “Notes to the IFRS Consolidated
Financial Statements — Note 29.1: Post-employment Beneﬁts— Provisions for Retirement Plans”.

2.1.6.2

Cash and Cash Equivalents
and Securities

The cash and cash equivalents and securities portfolio of
the Company is invested mainly in non-speculative ﬁnancial
instruments, mostly highly liquid, such as certiﬁcates of deposit,
overnight deposits, commercial paper, other money market
instruments and bonds. Please refer to the “Notes to the IFRS
Consolidated Financial Statements — Note 35.1: Information
about Financial Instruments — Financial Risk Management”.
The Company has a partially automated cross-border anddomestic cash pooling system in all countries with majorgroup presence and whenever country regulations allow suchpractice (among others this includes mainly France, Germany,
Spain, the Netherlands, the UK and the US). The cash poolingsystem enhances Management’s ability to assess reliably andinstantaneously the cash position of each subsidiary within
the Company and enables Management to allocate cash
optimally within the Company depending upon shifting shortterm needs.

2.1.6.3

Financing Liabilities

The outstanding balance of the Company’s consolidated
financing liabilities decreased from € 11.2 billion as of
31 December 2017 to € 8.9 billion as of 31 December 2018. The
decrease is mainly due to early settlement of liabilities to ﬁnancial
institutions with the European Investment Bank (“EIB”) and theDevelopment Bank of Japan (“DBJ”), and to the settlement ofa Euro Medium Term Note (“EMTN”) bond in September 2018.
For further information, please refer to the “Notes to the IFRS
Consolidated Financial Statements — Note 34.3: Net Cash —Financing Liabilities”.

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

Management’s Discussion and Analysis of Financial Condition
Operations
1
2and Results
3 of 45 /2.1 Operating and Financial Review
Management’s Discussion and Analysis of Financial Condition and Results of Operations /2.1 Operating and Financial Review

2.1.6.4

FINANCIAL STATEMENTS 2018

1

2

3

4

5

Sales Financing

The Company favours cash sales and encourages independentﬁnancing by customers, in order to avoid retaining credit orasset risk in relation to delivered products. However, in orderto support product sales, primarily at Airbus and Airbus
Helicopters, the Company may agree to participate in theﬁnancing of customers, on a case-by-case basis, directly or
through guarantees provided to third parties.
The ﬁnancial markets remain unpredictable, which may cause
the Company to increase its future outlays in connection withcustomer ﬁnancing of commercial aircraft and helicopters,

mostly through ﬁnance leases and secured loans and if deemednecessary through operating lease structures. Nevertheless,
the Company intends to keep the amount as low as possible.
Dedicated and experienced teams structure such ﬁnancing
transactions and closely monitor total ﬁnance and asset value
exposure of the Company and its evolution in terms of quality,
volume and intensity of cash requirements. The Company
aims to structure all ﬁnancing it provides to customers in linewith market-standard contractual terms so as to facilitate any
subsequent sale or reduction of such exposure.

2

EVOLUTION OF AIRBUS GROSS EXPOSURE DURING 2018 IN US$ MILLION

1,516

31 December 2017123

Additions

Disposals-565

Amortisation

31 December 2018

Airbus gross customer ﬁnancing exposure as of 31 December
2018 is distributed over 38 aircraft, operated at any time byapproximately 11 airlines. In addition, the level of exposure
may include other aircraft-related assets, such as spare parts.
More than 90% of Airbus gross customer ﬁnancing exposure
is distributed over 7 countries (this excludes backstop
commitments).
Over the last three years (2016 to 2018), the average number ofaircraft delivered in respect of which ﬁnancing support has been
provided by Airbus amounted to less than 1% of the average

-155

919

number of deliveries over the same period, i.e. 4 aircraft ﬁnanced
per year out of 735 deliveries per year on average.
Airbus Helicopters’ gross customer financing exposureamounted to € 109 million as of 31 December 2018. This
exposure is distributed over 62 helicopters, operated byapproximately 6 companies.
For further information, please refer to the “Notes to the IFRS
Consolidated Financial Statements — Note 25: Sales Financing
Transactions”.

2.1.7 Hedging Activities
More than 75% of the Company’s revenues are denominatedin US dollars, with approximately 60% of such currency
exposure “naturally hedged” by US dollar-denominated costs.
The remainder of costs is incurred primarily in euros, and to alesser extent, in pounds sterling. Consequently, to the extent
that the Company does not use ﬁnancial instruments to hedge
its net current and future exchange rate exposure from thetime of a customer order to the time of delivery, its proﬁts will
be affected by market changes in the exchange rate of the
US dollar against these currencies, and to a lesser extent, bymarket changes in the exchange rate of pound sterling against
the euro.

As the Company intends to generate profits only from its
operations and not through speculation on foreign currency
exchange rate movements, the Company uses hedging
strategies solely to mitigate the impact of exchange rate
ﬂuctuations on its EBIT.
For further information on the Company’s hedging strategies in
response to its particular exposures as well as a description of
its current hedge portfolio, please refer to the “Notes to the IFRS
Consolidated Financial Statements — Note 35.1: Information
about Financial Instruments — Financial Risk Management”
and “Note 35.4: Notional Amounts of Derivative Financial
Instruments”.

Airbus / Information Document 201889

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

Management’s Discussion and Analysis of Financial Condition/5
1 and2Results3of Operations
4
2.2 Statutory Auditor FeesManagement’s Discussion and Analysis of Financial Condition and Results of Operations /2.2 Statutory Auditor Fees

FINANCIAL STATEMENTS 2018

1

2

3

4

5

2.2 Statutory Auditor Fees
Please refer to the “Notes to the IFRS Consolidated Financial Statements — Note 37: Auditor Fees”.

2.3 Information Regarding the Statutory Auditor

Ernst & Young Accountants LLP
Boompjes 258 – 3011 XZ Rotterdam
Postbus 488 – 3000 AL Rotterdam
The Netherlands
Represented by A.A. van Eimeren

Date of first appointment

Expiration of current
term of office(1)28 April 2016

10 April 2019(1) A resolution will be submitted to the Annual General Meeting of Shareholders in 2019, in order to appoint Ernst & Young Accountants LLP as the Company’s auditors for the2019 financial year.

Ernst & Young Accountants LLP has a licence from the AFM to perform statutory audits for Public Interest Entities and its
representative is member of the NBA (Koninklijke Nederlandse Beroepsorganisatie van Accountants – the Royal Netherlands
Institute of Chartered Accountants). The NBA is the professional body for accountants in the Netherlands.

90

Airbus / Information Document 2018

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

Management’s Discussion and Analysis of Financial Condition
Operations
1
2and Results
3 of 4
5 /FINANCIAL STATEMENTS 2018

1

2

3

4

5

Management’s Discussion and Analysis of Financial Condition and Results of Operations /2

Airbus / Information Document 201891

Chapter

3

92

Airbus / Information Document 2018

3

General Descriptionof the Company
and its Share Capital
3.1
General Description of the Company
94
3.1.1 Commercial and Corporate Names,
Seat and Registered Ofﬁce
94
3.1.2 Legal Form
94
3.1.3 Governing Laws and Disclosures
94
3.1.4 Date of Incorporation and Duration of the Company 95
3.1.5 Objects of the Company
96
3.1.6 Commercial and Companies Registry96
3.1.7 Inspection of Corporate Documents
96
3.1.8 Financial Year96
3.1.9 Allocation and Distribution of Income
96
3.1.10 General Meetings
97
3.1.11 Disclosure of Holdings
98
3.1.12 Mandatory Disposal
99
3.1.13 Mandatory Offers
100
3.2
3.2.1
3.2.2
3.2.3

General Description of the Share Capital
Issued Share Capital
Authorised Share Capital
Modiﬁcation of Share Capitalor Rights Attached to the Shares
3.2.4 Securities Granting Accessto the Company’s Share Capital
3.2.5 Changes in the Issued Share Capital

101
101
101

3.3
3.3.1
3.3.2
3.3.3
3.3.4
3.3.5
3.3.6
3.3.7

Shareholdings and Voting Rights
Shareholding Structure at the End of 2018
Relationships with Principal Shareholders
Form of Shares
Changes in the Shareholding of the Company
Persons Exercising Control over the Company
Simpliﬁed Group Structure Chart
Purchase by the Company of its Own Shares

104
104
105
107
108
108
108
110

3.4
3.4.1
3.4.2
3.4.3
3.4.4

Dividends
Dividends and Cash Distributions Paid
Dividend Policy of the Company
Unclaimed Dividends
Taxation

112
112
112
112
112

101
102
103

Airbus / Information Document 201893

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

General Description of the Company and its Share Capital 1/
3.1 General Description of the Company
General Description of the Company and its Share Capital /3.1 General Description of the Company

2

3

4

5

FINANCIAL STATEMENTS 2018

1

2

3

4

5

3.1 General Description of the Company
3.1.1 Commercial and Corporate Names, Seat and Registered Ofﬁce
Commercial Name: Airbus

Seat (statutaire zetel): Amsterdam

Statutory Name: Airbus SE

Tel: +31 (0)71,5245,600

Registered Office: Mendelweg 30, 2333 CS Leiden,
The Netherlands

Fax: +31 (0)71,5232,807

3.1.2 Legal Form
The Company is a European public company (Societas Europaea), with its corporate seat in Amsterdam, The Netherlands andregistered with the Dutch Commercial Register (Handelsregister) under number 24288945. As a company operating worldwide,
the Company is subject to, and operates under, the laws of each country in which it conducts business.

3.1.3 Governing Laws and Disclosures
The Company is governed by the laws of the Netherlands(in particular Book 2 of the Dutch Civil Code and the Dutch
Corporate Governance Code) and by its Articles of Association(the “Articles of Association”).
The Company is subject to various legal provisions of the Dutch
Financial Supervision Act (Wet op het financieel toezicht) (the“WFT”). In addition, given the fact that its shares are admitted
for trading on a regulated market in France, Germany and Spain,
the Company is subject to certain laws and regulations in thesethree jurisdictions. A summary of the main regulations applicableto the Company in relation to information to be made publicin these three jurisdictions, as well as the Netherlands, is set
out below.

3.1.3.1

Periodic Disclosure Obligations

Pursuant to Directive 2004 / 109 / EC on the harmonisationof transparency requirements in relation to information about
issuers whose securities are admitted to trading on a regulated
market (as amended, the “Transparency Directive”), theCompany is required to disclose certain periodic and ongoing
information (the “Regulated Information”).
Pursuant to the Transparency Directive, the Company must
disseminate such Regulated Information throughout theEuropean Community in a manner ensuring fast access to suchinformation on a non-discriminatory basis. For this purpose,
the Company may use a professional service provider (wire). In
addition, Regulated Information must be ﬁled at the same timewith the relevant competent market authority. The Company
must then ensure that Regulated Information remains publicly
available for at least 10 years.

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Finally, Regulated Information must be made available for central
storage by a mechanism that is ofﬁcially designated by theCompany’s home Member State.
Dutch Regulations
For the purpose of the Transparency Directive, supervision of theCompany is effected by the Member State in which it maintains
its corporate seat, which is the Netherlands. The competentmarket authority that assumes ﬁnal responsibility for supervisingcompliance by the Company in this respect is the AFM.
Under the Transparency Directive as implemented under Dutch
law, the Company is subject to a number of periodic disclosure
requirements, such as:
publishing an Annual Financial Report, together with an audit
report drawn up by the Statutory Auditors, within four months
after the end of each ﬁnancial year; andpublishing a semi-Annual Financial Report, within threemonths after the end of the ﬁrst six months of the ﬁnancial year.

-

In addition, the Company must ﬁle with the AFM, within ﬁve days
following their adoption by the Company’s shareholders, its
audited annual ﬁnancial statements (including the consolidatedones), the management report, the Auditors’ report and otherinformation related to the ﬁnancial statements.
French Regulations
In accordance with the requirement set forth in the Transparency
Directive to disseminate Regulated Information throughout theEuropean Community, the Company is required to provide
simultaneously in France the same information as that provided
abroad.

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German Regulations

Dutch Regulations

Due to the listing of the Company’s shares in the Prime Standard
sub-segment of the Regulated Market (regulierter Markt) of theFrankfurt Stock Exchange, the Company is subject to certain
post-listing obligations as described below. The Company isincluded inter alia in the selection index MDAX, the MidCap
index of Deutsche Börse AG.

Following the implementation of the Transparency Directive
into Dutch law, the Company must publicly disclose RegulatedInformation and also ﬁle Regulated Information with the AFM,
which will keep all relevant Regulated Information in a publicly
available register. The Company will, whenever it discloses
inside information pursuant to applicable mandatory law aspart of the Regulated Information, disclose and disseminate
throughout the European Community any such information.

Pursuant to the Exchange Rules (Börsenordnung) of theFrankfurt Stock Exchange, the Company is required to publish
consolidated annual and semi-annual ﬁnancial statements aswell as consolidated quarterly reports which may be preparedin English only. In addition, pursuant to the Exchange Rules,
the Company is required to publish a ﬁnancial calendar at the
beginning of each ﬁnancial year in German and English. The
Company is also required to hold an analysts’ meeting at least
once per year in addition to the press conference regarding theannual ﬁnancial statements.
Spanish Regulations
In accordance with the requirement set forth in the Transparency
Directive to disseminate Regulated Information throughout theEuropean Community, the Company is required to provide
simultaneously in Spain the same information as that provided
abroad.

3.1.3.2

Ongoing Disclosure Obligations

Pursuant to the Transparency Directive, Regulated Information
includes in particular “inside information” as deﬁned pursuant
to Article 7 of EU Regulation No. 596 / 2014 on market abuse(the “Market Abuse Regulation” or “MAR”). Such informationmust be disseminated throughout the European Community(see introduction to section “— 3.1.3.1 Periodic Disclosure
Obligations”).
Inside information consists of information of a precise nature
which has not been made public, relating, directly or indirectly,
to one or more issuers or to one or more ﬁnancial instruments
and which, if it were made public, would be likely to have asigniﬁcant effect on the prices of those ﬁnancial instruments oron the price of related derivative ﬁnancial instruments.
Inside information must be disclosed to the markets as soon as
possible. However, an issuer may under its own responsibility
delay the public disclosure of inside information so as not toprejudice its legitimate interests provided that such delay would
not be likely to mislead the public and provided that the issuer
is able to ensure the conﬁdentiality of that information.

Under Dutch law, the Company must also publish any change
in the rights attached to its shares, as well as any changes in
the rights attached to any rights issued by the Company toacquire Airbus shares.
French Regulations

3

Any inside information as deﬁned above will be disclosed in
France by means of dissemination throughout the European
Community, as it is organised under Dutch law implementing
the Transparency Directive so as to provide simultaneously inFrance equivalent information to that provided abroad.
German Regulations
Any inside information as deﬁned above will be disclosed inGermany by means of dissemination throughout the European
Community, as it is organised under Dutch law implementing
the Transparency Directive so as to provide simultaneously inGermany equivalent information to that provided abroad.
Spanish Regulations
Any inside information as deﬁned above will be disclosed
simultaneously in Spain by notifying it to the CNMV which shall,in turn, make it public through its webpage.
Any other information of a ﬁnancial or corporate nature which
the Company is required by law to make public in Spain or
which the Company deems necessary to disclose to investors
shall be also notiﬁed to the CNMV which shall also publish it
through its webpage.
Pursuant to the Spanish securities rules and regulations, theCompany is also required to make available to shareholders
and ﬁle with the CNMV a Corporate Governance Report in the
Spanish language or in a language customary in the sphere ofinternational ﬁnance on an annual basis.

3.1.4 Date of Incorporation and Duration of the Company
The Company was incorporated on 29 December 1998 for an unlimited duration.

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3.1.5 Objects of the Company
Pursuant to its Articles of Association, the objects of theCompany are to hold, co-ordinate and manage participations orother interests and to ﬁnance and assume liabilities, provide forsecurity and/or guarantee debts of legal entities, partnerships,
business associations and undertakings that are involved in:- the aeronautic, defence, space and/or communicationindustry; or- activities that are complementary, supportive or ancillary
thereto.

3.1.6 Commercial and Companies Registry
The Company is registered with the Dutch Commercial Register (Handelsregister) under number 24288945.

3.1.7 Inspection of Corporate Documents
The Articles of Association are available for inspection in Dutchat the Chamber of Commerce.
In France, the Articles of Association are available at theoperational headquarters of the Company (2, rond-point Emile
Dewoitine, 31700 Blagnac, France, Tel.: +33 5 81 31 75 00).

In Germany, the Articles of Association are available at theMunich ofﬁce of the Company (Willy-Messerschmitt-Strasse
1, 82024 Ottobrunn, Germany, Tel.: +49 89 60 70).
In Spain, the Articles of Association are available at the CNMV
and at the Madrid ofﬁce of the Company (Avenida de Aragón
404, 28022 Madrid, Spain, Tel.: +34 91,585 70 00).

3.1.8 Financial YearThe ﬁnancial year of the Company starts on 1 January and ends on 31 December of each year.

3.1.9 Allocation and Distribution of Income
3.1.9.1

Dividends

The Board of Directors shall determine which part of the proﬁts
of the Company shall be attributed to reserves. The remaining
distributable proﬁt shall be at the disposal of the shareholders’meeting.
The shareholders’ meeting may resolve (if so proposed by the
Board of Directors) that all or part of a distribution on shares shallbe paid in Airbus shares or in the form of assets as opposed
to cash.
The declaration of a dividend, an interim dividend or another
distribution to the shareholders shall be made known to themwithin seven days after such declaration. Declared dividends,
interim dividends or other distributions shall be payable on suchdate(s) as determined by the Board of Directors.

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Dividends, interim dividends and other distributions on sharesshall be paid by bank transfer to the bank or giro accounts
designated in writing to the Company by, or on behalf of,shareholders at the latest 14 days after their announcement.
The persons entitled to a dividend, interim dividend or other
distribution shall be the shareholders as at a record date to be
determined by the Board of Directors for that purpose, whichdate may not be a date prior to the date on which such dividend,interim dividend or other distribution is declared.

3.1.9.2

Liquidation

In the event of the dissolution and liquidation of the Company,
the assets remaining after payment of all debts and liquidation
expenses shall be distributed amongst the holders of the sharesin proportion to their shareholdings.

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3.1.10 General Meetings
3.1.10.1 Calling of Meetings
Shareholders’ meetings are held as often as the Board of
Directors deems necessary, when required under the Dutch
Civil Code (as a result of a decrease of the Company’s equity
to or below half of the Company’s paid up and called up capital)
or upon the request of shareholders holding, individually or
together, at least 10% of the total issued share capital of theCompany. The AGM of Shareholders of the Company is held
within six months of the end of the ﬁnancial year.
The Board of Directors must give notice of shareholders’meetings through publication of a notice on the Company’s
website (www.airbus.com), which will be directly andpermanently accessible until the shareholders’ meeting. The
Company must comply with the statutory rules providing fora minimum convening period, which currently require at least
42 days of notice. The convening notice must state the items
required under Dutch law.
Shareholders’ meetings are held in Amsterdam, The Hague,
Rotterdam or Haarlemmermeer (Schiphol Airport). The Boardof Directors may decide that shareholders’ meetings may beattended by means of electronic or video communication
devices from the locations mentioned in the convening notice.
The Board of Directors must announce the date of the AGM
of Shareholders at least 10 weeks before the Meeting. A
matter which one or more shareholders or other parties withmeeting rights collectively representing at least the statutory
threshold (which is currently 3% of the issued share capital)
have requested in writing to be put on the agenda for a General
Meeting of Shareholders shall be included in the convening
notice or shall be announced in the same fashion, if thesubstantiated request or a proposal for a resolution is received
by the Company no later than the 60th day before the general
meeting. When exercising the right to put a matter on theagenda for a General Meeting of Shareholders, the respective
shareholder or shareholders are obliged to disclose their fulleconomic interest to the Company. The Company must publish
such disclosure on its website.
A request as referred to in the preceding paragraph may only
be made in writing. The Board of Directors can decide that in“writing” is understood to include a request that is recorded
electronically.

3.1.10.2 Right to Attend Shareholders’ Meetings
Each holder of one or more shares may attend shareholders’meetings, either in person or by written proxy, speak andvote according to the Articles of Association. See “— 3.1.10.4
Conditions of Exercise of Right to Vote”. However, under (andsubject to the terms of) the Articles of Association these rights
may be suspended under certain circumstances. A shareholder,or another person who has the right to attend a shareholders’meeting, can be represented by more than one proxy holder,provided that only one proxy holder can exercise the rights
attached to each share.

The persons who have the right to attend and vote atshareholders’ meetings are those who are on record in aregister designated for that purpose by the Board of Directors
on the registration date referred to in the Dutch Civil Code which
is currently the 28th day prior to the day of the shareholders’meeting (the “Registration Date”), irrespective of who may beentitled to the shares at the time of that meeting.
As a prerequisite to attending the shareholders’ meeting and to
casting votes, the Company, or alternatively an entity or person
so designated by the Company, should be notiﬁed in writingby each holder of one or more shares and those who derive
the aforementioned rights from these shares, not earlier thanthe Registration Date, of the intention to attend the meeting inaccordance with the relevant convening notice.

3

Shareholders holding their Company shares through Euroclear
France S.A. who wish to attend general meetings will have torequest from their ﬁnancial intermediary or accountholder anadmission card and be given a proxy to this effect from Euroclear
France S.A. in accordance with the relevant convening notice.
For this purpose, a shareholder will also be able to requestthat its shares be registered directly (and not through Euroclear
France S.A.) in the register of the Company. However, only
shares registered in the name of Euroclear France S.A. may
be traded on stock exchanges.
In order to exercise their voting rights, the shareholders will
also be able, by contacting their financial intermediary or
accountholder, to give their voting instructions to Euroclear
France S.A. or to any other person designated for this purpose,as speciﬁed in the relevant convening notice.
Pursuant to its Articles of Association, the Company may provide
for electronic means of attendance, speaking and voting at theshareholders’ meetings in such circumstances and subject tosuch conditions as determined by the Board of Directors.

3.1.10.3 Majority and Quorum
All resolutions are adopted by means of a simple majority ofthe votes cast except when a qualiﬁed majority is prescribedby the Articles of Association or by Dutch law. No quorum isrequired for any shareholders’ meeting to be held except as
required under applicable law for a very limited number ofresolutions of an extraordinary nature. Dutch law requires a
special majority for the passing of certain resolutions: inter alia,
capital reduction, exclusion of pre-emption rights in connection
with share issues, statutory mergers or statutory de-mergers;
the passing of such resolutions requires a majority of two-thirdsof the votes cast if 50% of the share capital with voting rights
is not present at the shareholders’ meeting (or otherwise a
simple majority). In addition, resolutions to amend the Articles
of Association or to dissolve the Company may only be adopted
with a majority of at least two-thirds of the valid votes cast at ashareholders’ meeting, whatever the quorum present at suchmeeting, and resolutions to amend certain provisions of the
Articles of Association may only be adopted with a majority ofat least 75% of the valid votes cast at a shareholders’ meeting,whatever the quorum present at such meeting.

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3.1.10.4 Conditions of Exercise of Right to Vote
In all shareholders’ meetings, each shareholder has one vote inrespect of each share it holds. The major shareholders of theCompany – as set forth in “— 3.3.2 Relationships with Principal
Shareholders” – do not enjoy different voting rights from thoseof the other shareholders.
A shareholder whose shares are subject to a pledge or usufruct
shall have the voting rights attaching to such shares unlessotherwise provided by law or by the Articles of Association orif, in the case of a usufruct, the shareholder has granted voting
rights to the usufructuary. Pursuant to the Articles of Associationand subject to the prior consent of the Board of Directors, apledgee of shares in the Company may be granted the right tovote in respect of such pledged shares.
According to the Articles of Association, no vote may be castat the General Meeting on a share that is held by the Company
or a subsidiary, nor for a share in respect of which one of themholds the depository receipts. Usufructuaries and pledgees ofshares that are held by the Company or its subsidiaries are,however, not excluded from their voting rights, in case the rightof usufruct or pledge was vested before the share was held by
the Company or its subsidiary.

3.1.11 Disclosure of Holdings
Pursuant to the WFT, any person who, directly or indirectly,
acquires or disposes of an (actual or deemed) interest in thecapital, voting rights or gross short position of the Company
must immediately give written notice to the AFM by means ofa standard form, if, as a result of such acquisition or disposal,
the percentage of capital interest or voting rights held by such
person meets, exceeds or falls below the following thresholds:
3%, 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75%
and 95%. Any person whose interest in the capital, voting rights
or gross short position in the Company meets, exceeds orfalls below one or several of the above-mentioned thresholds
due to a change in the Company’s outstanding capital, or invoting rights attached to the shares as notiﬁed to the AFM by
the Company, should notify the AFM no later than the fourth
trading day after the AFM has published the notiﬁcation by theCompany. Among other things, the Company is required to
notify the AFM immediately if its outstanding share capital or
voting rights have changed by 1% or more since the Company’s
previous notiﬁcation. Additional disclosure and/or publication
obligations apply under European regulations for net shortpositions in respect of the Company.
If at the end of a calendar year the composition of a shareholder’sholding differs from its previous disclosure as a result of theconversion of certain types of securities or following the exerciseof rights to acquire voting rights, this shareholder must thenprovide an update of its previous disclosure within four weeksof the end of each calendar year by giving written notice thereof
to the AFM. The disclosures are published by the AFM on its
website (www.afm.nl).
Pursuant to the Articles of Association, shareholders must notify
the Company when meeting or crossing the thresholds above.
The Articles of Association also contain disclosure obligations
for shareholders that apply when their interests in the Company
reach or cross certain thresholds.

Under the Articles of Association, the disclosure obligationsof shareholders are enhanced in several ways beyond what isrequired under the WFT, including by requiring the disclosureof additional information, tying the disclosure obligations toa broader range of interests in the capital or voting rights of
the Company and by requiring a shareholder to notify theCompany if his or her interest reaches, exceeds or falls below
the Mandatory Disposal Threshold (as deﬁned below) or if theinterest of a shareholder (alone or a member of a concert) which
is above such Mandatory Disposal Threshold changes in its
composition, nature and/or size.
Failure to comply with the legal obligation to notify a change inshareholding under the WFT is a criminal offence punishable
by criminal and administrative penalties as well as civil law
penalties, including the suspension of voting rights. Failure tocomply with a notiﬁcation under the Articles of Association canlead to a suspension of meeting and voting rights.

Disclosure Requirements for Membersof the Board of Directors and the Executive
Committee
Disclosure of Holdings
In addition to the requirements under the WFT regarding thedisclosure of holdings in case the speciﬁed thresholds are met
or exceeded or if holdings fall below these thresholds, Membersof the Board of Directors must report to the AFM the numberof shares in the Company and attached voting rights (1) held byhim or an entity controlled by him, within two weeks following
his appointment as Director, whether or not such shareholdings
meet or exceed any of the speciﬁed thresholds. Subsequently,
any Member of the Board of Directors is required to notify the
AFM of any changes in such number of shares in the Company
and attached voting rights.

(1) In this context, the term “shares” also includes for example depositary receipts for shares and rights resulting from an agreement to acquire shares or depositary
receipts for shares, speciﬁcally call options, warrants, and convertible bonds. Equally, the term “voting rights” also includes actual or contingent rights to voting
rights (e.g., embedded in call options, warrants or convertible bonds).

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and2
3 its Share
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Disclosure of Transactions Carried Out on Any Securities
Issued by the Company
Based on the Market Abuse Regulation, certain persons
discharging managerial or supervisory responsibilities within
the Company as well as persons closely associated with them(together “Insiders”, as deﬁned below), are required to notify
the Company and the AFM within three trading days of alltransactions conducted for their own account involving sharesof the Company, or derivatives or other ﬁnancial instruments
related to such shares, unless the aggregate amount ofsuch transactions does not exceed € 5,000 in respect of alltransactions in a calendar year.
“Insiders” for the Company include (i) Members of the Boardof Directors and the Executive Committee of the Company aswell as certain other senior executives who are not membersof these bodies and who have regular access to inside
information relating directly or indirectly to the Company
and power to take managerial decisions affecting the future
developments and business prospects of the Company,(ii) persons closely associated with any person mentioned
under category (i) (including their spouses, life partners or any
partner considered by national law as equivalent to the spouse,dependent children and other relatives who have shared thesame household), and (iii) legal entities, trusts or partnerships

FINANCIAL STATEMENTS 2018

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whose managerial responsibilities are discharged by any personreferred to in categories (i) or (ii) or which are directly or indirectly
controlled by such a person, or that have been set up for the
beneﬁt of such a person, or whose economic interests aresubstantially equivalent to those of such a person.
The Company has adopted speciﬁc internal insider trading rules(the “Insider Trading Rules”) in order to ensure compliance withthe above requirements and with other share trading regulations
applicable in the Netherlands, France, Germany and Spain. The
Insider Trading Rules are available on the Company’s website,and provide in particular that: (i) all employees and Directors
are prohibited from conducting transactions in the Company’s
shares or stock options if they have inside information, and(ii) certain persons are only allowed to trade in the Company’s
shares or stock options within very limited periods and havespeciﬁc information obligations to the ITR Compliance Ofﬁcer of
the Company and the competent ﬁnancial market authorities withrespect to certain transactions. The ITR Compliance Ofﬁcer is
responsible for the implementation of the Insider Trading Rules.

3

Pursuant to the Market Abuse Regulation, the Company must
maintain a list of all persons working for it by virtue of a labour
relationship or otherwise, who may have access to inside
information.

3.1.12 Mandatory Disposal
3.1.12.1 Notiﬁcation Requirements andMandatory Disposal Threshold
Restricting Ownership to 15%
Under the Articles of Association, each shareholder must notify
the Company when it (or another party in respect of its interest in
the Company) must make a notiﬁcation to the AFM of a substantial
interest or short position with respect to the Company, when its
interest (alone or with concert parties) reaches or crosses the
Mandatory Disposal Threshold (as deﬁned below) or, subject
to certain conditions and exemptions, when changes occur inthe composition, nature and/or size of any interest held it or its
concert parties in excess of the Mandatory Disposal Threshold(as deﬁned below). Failure to comply with these obligations
may, subject to a prior notiﬁcation by the Company, result in thesuspension of voting and attendance rights until the shareholder
has complied with its obligations.
The Articles of Association prohibit any shareholder from holding aninterest of more than 15% of the share capital or voting rights of theCompany, acting alone or in concert with others (the “Mandatory
Disposal Threshold”). An interest (“Interest”) includes not
only shares and voting rights, but also other instruments thatcause shares or voting rights to be deemed to be at someone’s
disposal pursuant to the WFT, and must be notiﬁed to the Dutch
regulator, the AFM, if certain thresholds are reached or crossed.
Any shareholder having an interest of more than the Mandatory
Disposal Threshold must reduce its interest below the Mandatory
Disposal Threshold, for instance by disposing of its Excess Shares,
within two weeks after such notiﬁcation by the Company. Upon
receipt of such notiﬁcation, the voting, attendance and dividend
rights attached to the Excess Shares shall be suspended.
The same applies to concerts of shareholders and other persons

who together hold an interest exceeding the Mandatory Disposal
Threshold. Should such shareholder or concert not comply withnot exceeding the 15% Mandatory Disposal Threshold by the endof such two-week period, the voting, attendance and dividend
rights attached to all shares held by such shareholder or concert
shall be suspended, and their Excess Shares would be transferred
to a Dutch law foundation (“Stichting”), which can, and eventuallymust, dispose of them. The suspension of shareholder rights
described above shall be lifted once a shareholder or concert
complies with its obligations under the Articles of Association.
The Dutch law foundation would issue depositary receipts to therelevant shareholder in return for the Excess Shares transferredto the foundation, which would entitle the relevant shareholder tothe economic rights, but not the voting rights, attached to such
Company shares. The foundation’s articles of association andthe terms of administration governing the relationship between
the foundation and the depositary receipt holders provide, interalia, that:the Board Members of the foundation must be independent
from the Company, any grandfathered persons and their
afﬁliates (see “— 3.1.12.2 Exemptions from Mandatory Disposal
Threshold”) and any holder of depositary receipts and their
afﬁliates (there is an agreement under which the Company
will, inter alia, cover the foundation’s expenses and indemnify
the Board Members against liability);
the Board Members are appointed (except for the initial Board
Members who were appointed at incorporation) and dismissedby the Management Board of the foundation (the Company
may however appoint one Board Member in a situation where
there are no foundation Board Members);--

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General Description of the Company and its Share Capital /3.1 General Description of the Company- the foundation has no discretion as to the exercise of voting-

rights attached to any of the Company shares held by it andwill in a mechanical manner vote to reﬂect the outcome of thevotes cast (or not cast) by the other shareholders, and thefoundation will distribute any dividends or other distributions
it receives from the Company to the holders of depositary
receipts; andno transfer of a depositary receipt can be made without theprior written approval of the foundation’s Board.

For any shareholder or concert, the term “Excess Shares”,
as used above, refers to such number of shares comprisedin the interest of such shareholder or concert exceeding the
Mandatory Disposal Threshold which is the lesser of: (i) the
shares held by such shareholder or concert which represent a
percentage of the Company’s issued share capital that is equal
to the percentage with which the foregoing interest exceeds the
Mandatory Disposal Threshold; and (ii) all shares held by such
person or concert.
This restriction is included in the Articles of Association to reﬂect
the Company’s further normalised governance going forward,
aiming at a substantial increase of the free ﬂoat and to safeguard
the interests of the Company and its stakeholders (including all
its shareholders), by limiting the possibilities of inﬂuence above
the level of the Mandatory Disposal Threshold or takeovers otherthan a public takeover offer resulting in a minimum acceptanceof 80% of the share capital referred to below.

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3.1.12.2 Exemptions from Mandatory Disposal
Threshold
The restrictions pursuant to the Mandatory Disposal Thresholdunder the Articles of Association do not apply to a person who
has made a public offer with at least an 80% acceptance(including any Airbus shares already held by such person).
These restrictions also have certain grandfathering exemptions
for the beneﬁt of shareholders and concerts holding interests
exceeding the Mandatory Disposal Threshold on 2 April 2013
(the “Exemption Date”), which is the date of ﬁrst implementationof the Mandatory Disposal Threshold.
Different grandfathering regimes apply to such shareholders andconcerts, depending on the interests and the nature thereof heldby each such shareholder or concert on the Exemption Date.
The Company has conﬁrmed that: (i) the speciﬁc exemption in
Article 16.1.b of the Articles of Association applies to Sociétéde Gestion de Participations Aéronautiques (“Sogepa”), as
it held more than 15% of the outstanding Company voting
rights and shares including the legal and economic ownershipthereof on the Exemption Date; and (ii) the speciﬁc exemption in
Article 16.1.c applies to the concert among Sogepa, Gesellschaft
zur Beteiligungsverwaltung GZBV mbH & Co. KG (“GZBV”)
and Sociedad Estatal de Participaciones Industriales (“SEPI”),
as they held more than 15% of the outstanding Company voting
rights and shares including the legal and economic ownershipthereof on the Exemption Date.

3.1.13 Mandatory Offers
3.1.13.1 Takeover Directive
The Directive 2004 / 25 / EC on takeover bids (the “Takeover
Directive”) sets forth the principles governing the allocation oflaws applicable to the Company in the context of a takeover bid
for the shares of the Company. The Takeover Directive refers to
the rules of the Netherlands and the rules of the European Union
Member State of the competent authority that must be chosen
by the Company from among the various market authorities
supervising the markets where its shares are listed.
For the Company, matters relating to, inter alia, the consideration
offered in the case of a bid, in particular the price, and mattersrelating to the bid procedure, in particular the information on
the offeror’s decision to make a bid, the contents of the offer
document and the disclosure of the bid, shall be determinedby the laws of the European Union Member State having thecompetent authority, which will be selected by the Company
at a future date.
Matters relating to the information to be provided to theemployees of the Company and matters relating to company
law, in particular the percentage of voting rights which confers
control and any derogation from the obligation to launch a100

Airbus / Information Document 2018bid, the conditions under which the Board of Directors of theCompany may undertake any action which might result in thefrustration of the bid, the applicable rules and the competentauthority will be governed by Dutch law (see “— 3.1.13.2 Dutch
Law”).

3.1.13.2 Dutch Law
In accordance with the Dutch act implementing the Takeover
Directive (the “Takeover Act”), shareholders are required tomake a public offer for all issued and outstanding shares in
the Company’s share capital if they — individually or acting
in concert (as such term is defined in the Takeover Act),
directly or indirectly — have 30% or more of the voting rights(signiﬁcant control) in the Company. In addition to the otheravailable exemptions that are provided under Dutch law, therequirement to make a public offer does not apply to persons,
who at the time the Takeover Act came into force, alreadyheld – individually or acting in concert – 30% or more of thevoting rights in the Company. In the case of such a concert,a new Member of the concert can be exempted if it satisﬁes
certain conditions.

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

General Description of1the Company
and2
3 its Share
4 Capital
5 /3.2 General Description of the Share Capital
General Description of the Company and its Share Capital /3.2 General Description of the Share Capital

FINANCIAL STATEMENTS 2018

1

2

3

4

5

3.2 General Description of the Share Capital
3.2.1 Issued Share Capital
As of 31 December 2018, the Company’s issued share capital amounted to € 776,367,881, consisting of 776,367,881 fully paid-up
shares of a nominal value of € 1 each.

3

3.2.2 Authorised Share Capital
As of 31 December 2018, the Company’s authorised share capital amounted to € 3 billion, consisting of 3 billion shares of € 1 each.

3.2.3 Modiﬁcation of Share Capital or Rights Attached to the Shares
The shareholders’ meeting has the power to authorise theissuance of shares. The shareholders’ meeting may also
authorise the Board of Directors, for a period of no more thanﬁve years, to issue shares and to determine the terms andconditions of share issuances.

Pursuant to the shareholders’ resolutions adopted at theAGM held on 11 April 2018, the powers to issue shares andto grant rights to subscribe for shares and to limit or exclude
preferential subscription rights for existing shareholders havebeen delegated to the Board of Directors for the purpose of:

Holders of shares have a pre-emptive right to subscribe for any
newly issued shares in proportion to the aggregate nominal
value of shares held by them, except for (i) shares issued forconsideration other than cash, (ii) shares issued to employeesof Airbus and (iii) shares issued pursuant to a previously granted
right to subscribe for those shares. For the contractual position
as to pre-emption rights, see “— 3.3.2 Relationships with
Principal Shareholders”.

1. employee Share Ownership Plans and share-related Long-Term
Incentive Plans, provided that such powers shall be limited to
0.14% of the Company’s authorised share capital; andThe shareholders’ meeting also has the power to limit or to
exclude pre-emption rights in connection with new issues ofshares, and may authorise the Board of Directors for a periodof no more than ﬁve years, to limit or to exclude pre-emption
rights. All resolutions in this context must be approved by a
two-thirds majority of the votes cast during the shareholders’meeting in the case where less than half of the capital issued
is present or represented at said meeting.
However, the Articles of Association provide that the shareholders’meeting is not authorized to pass any shareholders’ resolution
to issue shares or to grant rights to subscribe for shares if theaggregate issue price is in excess of € 500 million per shareissuance, and no preferential subscription rights exist in respect
thereof (by virtue of Dutch law, or because they have been
excluded by the competent corporate body). The same limitation
applies if the shareholders’ meeting wishes to designate theBoard of Directors to have the authority to resolve on such shareissuance or granting of rights. These limitations in the Articles of
Association can only be changed by the shareholders’ meetingwith a 75% voting majority.

2. funding the Company and any of its subsidiaries, provided
that such powers shall be limited to 0.3% of the Company’s
authorised share capital.
Such powers have been granted for a period expiring at the
AGM to be held in 2019, and shall not extend to issuing shares or
granting rights to subscribe for shares if (i) there is no preferential
subscription right (by virtue of Dutch law, or because it has been
excluded by means of a resolution of the competent corporatebody) and (ii) it concerns an aggregate issue price in excess of€ 500 million per share issuance.
At the AGM held on 11 April 2018, the Board of Directors was
authorised, for a period of 18 months from the date of such AGM,
to repurchase shares of the Company, by any means, including
derivative products, on any stock exchange or otherwise, aslong as, upon such repurchase, the Company would not holdmore than 10% of the Company’s issued share capital, and at
a price per share not less than the nominal value and not morethan the higher of the price of the last independent trade andthe highest current independent bid on the trading venues of
the regulated market of the country in which the purchase iscarried out.
The shareholders’ meeting may reduce the issued share capitalby cancellation of shares, or by reducing the nominal valueof the shares by means of an amendment to the Articles of
Association. The cancellation of shares requires the approval ofa two-thirds majority of the votes cast during the shareholders’

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INFORMATION DOCUMENT 2018

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3.2 General Description of the Share Capital
General Description of the Company and its Share Capital /3.2 General Description of the Share Capital2

meeting in the case where less than half of the capital issued ispresent or represented at said meeting; the reduction of nominal
value by means of an amendment to the Articles of Association
requires the approval of a two-thirds majority of the votes castduring the shareholders’ meeting (unless the amendment to
the Articles of Association also concerns an amendment which
under the Articles of Association requires a 75% voting majority).

3

4

5

FINANCIAL STATEMENTS 2018

1

2

3

4

5

At the AGM held on 11 April 2018, the Board of Directors andthe Chief Executive Ofﬁcer were authorised, with powers of
substitution, to implement a cancellation of shares held or
repurchased by the Company, including the authorisation
to establish the exact number of the relevant shares thus
repurchased to be cancelled.

3.2.4 Securities Granting Access to the Company’s Share Capital
Except for convertible bonds (See “— Corporate Governance — 4.3.3 Long-Term Incentive Plans” and please refer to the “Notes
to the IFRS Consolidated Financial Statements — Note 34.3: Financing liabilities”), there are no securities that give access,
immediately or over time, to the share capital of the Company.
The table below shows the total potential dilution that would occur if all the convertible bonds issued as of 31 December 2018
were exercised:

Total number of Company shares issued as of 31 December 2018
Total number of Company shares which may be issued
following exercise of the convertible bonds

Total potential Company share capital

Number ofsharesPercentage ofdiluted capital

Number of
voting rights

Percentage ofdiluted voting
rights(1)776,367,881

99.357%775,730,957

99.357%

5,022,990

0.643%

5,022,990

0.643%

781,390,871

100%

780,753,947

100%(1) The potential dilutive effect on capital and voting rights of the exercise of these convertible bonds may be limited as a result of the Company’s share repurchase programmes
and in the case of subsequent cancellation of repurchased shares. See “— 3.3.7.1 Dutch law and information on share repurchase programmes”.

102

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ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

General Description of1the Company
and2
3 its Share
4 Capital
5 /3.2 General Description of the Share Capital
General Description of the Company and its Share Capital /3.2 General Description of the Share Capital

FINANCIAL STATEMENTS 2018

1

2

3

4

5

3.2.5 Changes in the Issued Share Capital
Nominal
Numbervalue of sharesperissued /share cancelled

Date

Nature of Transaction

20 June 2013

Cancellation of shares upon authorisation
granted by the Extraordinary General Meeting
held on 27 March 2013

€ 1 47,648,691

29 July 2013

Issue of shares for the purposeof an employee offering€1

27 September
2013

Cancellation of shares upon authorisation
granted by the Extraordinary General
Meeting held on 27 March 201327 September
2013

Total number
of issued
shares after
Premium(1) transaction

Total issued
capital after
transaction-

779,719,254€ 779,719,254

2,113,245€ 57,580,650

781,832,499€ 781,832,499€1

3,099,657-

778,732,842€ 778,732,842

Cancellation of shares upon authorisation
granted by the Annual Shareholders’Meeting held on 29 May 2013

€1

2,448,884-

776,283,958€ 776,283,958

In 2013

Issue of shares following exercise
of options granted to employees(2)€16,873,677€ 176,017,918

783,157,635€ 783,157,635

In 2014Issue of shares following exercise
of options granted to employees(2)€11,871,419€ 50,619,684

784,780,585€ 784,780,585

In 2015

Cancellation of shares upon authorisation
granted by the Annual Shareholders’Meeting held on 27 May 2015

€12,885,243-

785,333,784€ 785,333,784

In 2015

Issue of shares following exercise
of options granted to employees(2)€11,910,428-

785,344,784€ 785,344,784

In 2016

Cancellation of treasury shares€1

14,131,131-

771,213,653€ 771,213,653

In 2016

Issues of shares for the purposeof an employee offering€1

1,474,716-

772,688,369€ 772,688,369

In 2016

Issue of shares following exercise
of options granted to employees(2)€1

224,500-

772,912,869€ 772,912,869

In 2017

Issues of shares for the purposeof an employee offering€1

1,643,193-

774,556,062€ 774,556,062

In 2017

Issues of shares for the purposeof an employee offering€1

1,643,193-

774,556,062€ 774,556,062

In 2018

Issues of shares for the purposeof an employee offering€1

1,811,819-

776,367,881€ 776,367,881

3(1) The costs (net of taxes) related to the initial public offering of the shares of the Company in July 2000 have been offset against share premium for an amount of € 55,849,772.
(2) For information on Stock Option Plans under which these options were granted to the Company’s employees, see “— Corporate Governance — 4.3.3 Long-Term Incentive Plans”.

In the course of 2018, a total number of 1,811,819 new shares were issued, all in the framework of the Employee Share Ownership
Plan (“ESOP”). During 2018, (i) the Company repurchased 507,399 shares and (ii) none of the treasury shares were cancelled. As
a result, as at 31 December 2018, the Company held 636,924 treasury shares.

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3.3 Shareholdings and Voting Rights
General Description of the Company and its Share Capital /3.3 Shareholdings and Voting Rights

2

3

4

5

FINANCIAL STATEMENTS 2018

1

2

3

4

5

3.3 Shareholdings and Voting Rights
3.3.1 Shareholding Structure at the End of 2018
As of 31 December 2018, the French State held 11.06% of theoutstanding Company shares through Sogepa, the German
State held 11.04% through GZBV, a subsidiary of Kreditanstalt
für Wiederaufbau (“KfW”), a public law institution serving
domestic and international policy objectives of the Governmentof the Federal Republic of Germany, and the Spanish
State held 4.16% through SEPI. The public (including theCompany’s employees) and the Company held, respectively,
73.66% and 0.08% of the Company’s share capital.
The diagram below shows the ownership structure of theCompany as of 31 December 2018 (% of capital and of voting
rights (in parentheses) before exercise of the convertible bonds).
See “— Corporate Governance — 4.3.3 Long-Term Incentive
Plans”.

OWNERSHIP STRUCTURE OF AIRBUS SE AS OF 31 DECEMBER 2018

FRENCHSTATEGERMANSTATE

SPANISHSTATEOTHER GERMAN
PUBLIC ENTITIES

15.69%PUBLIC

KfW

84.31%

SOGEPASEPIGZBV(2)

11.06%(11.06%)

4.16%(4.16%)

11.04%(11.04%)73.74%(1)(73.72%)

Share subject to Shareholders’ Agreement

AIRBUS SE(1) Including shares held by the Company itself (0.08%).
(2) KfW & other German public entities.

104

In 2018, no listed entities have notiﬁed the AFM of their substantial
interest in the Company. For further details, please refer to thewebsite of the AFM at: www.afm.nl.

For the number of shares and voting rights held by Membersof the Board of Directors and Executive Committee, see“— Corporate Governance — 4.2.1 Remuneration Policy”.

As of 31 December 2018, the Company held, directly or indirectly
through another company in which the Company holds directly
or indirectly more than 50% of the share capital, 636,924 of its
own shares, equal to 0.08% of issued share capital. The treasury
shares owned by the Company do not carry voting rights.

Approximately 2.0% of the share capital (and voting rights) was
held by the Company’s employees as of 31 December 2018.

Airbus / Information Document 2018

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

General Description of1the Company
and2
3 its Share
4 Capital
5 /3.3 Shareholdings and Voting Rights
General Description of the Company and its Share Capital /3.3 Shareholdings and Voting Rights

FINANCIAL STATEMENTS 2018

1

2

3

4

5

3.3.2 Relationships with Principal Shareholders
In 2013, GZBV, Sogepa and SEPI entered into a shareholders’agreement (the “Shareholders’ Agreement”). The Shareholders’
Agreement, further details of which are set out in more detailbelow, does not give the parties to it any rights to designate
Members of the Board of Directors or management team or toparticipate in the governance of the Company. The Company
has also entered into state security agreements with each of
the French State and German State, which are also describedin more detail below.

3.3.2.1 Corporate Governance Arrangements
Corporate governance arrangements of the Company were
substantially changed in 2013, resulting in changes in thecomposition of the Board of Directors and its internal rules,
as well as amendments to the Articles of Association of theCompany. These changes were intended to further normalise
and simplify the Company’s corporate governance, reﬂecting
an emphasis on best corporate governance practices andthe absence of a controlling shareholder group. Changes to
the Company’s corporate governance arrangements in the
Articles of Association, included (i) disclosure obligations forshareholders that apply when their interests in the Company
reach or cross certain thresholds and (ii) ownership restrictions
prohibiting any shareholder from holding an interest of morethan 15% of the share capital or voting rights of the Company,
acting alone or in concert with others. See sections 3.1.11 and3.1.12 above and section 4 below.

3.3.2.2 Core Shareholder Arrangements
Grandfathering Agreement
At the Consummation, the French State, Sogepa, the German
State, KfW and GZBV (all parties together the “Parties” andeach, individually, as a “Party”) entered into an agreement withrespect to certain grandfathering rights under the Articles of
Association. Below is a summary of such agreement.

and such termination or exit is not for good cause and is
not based on material and ongoing violations of the Concert
arrangements, including, without limitation, of the Shareholders’
Agreement, by the other principal Member of the Concert.
In the event that in the future the voting rights in the Companyof the other principal Member of the Concert together withthose of its afﬁliates would for an uninterrupted period of threemonths represent less than 3% of the outstanding aggregate
voting rights of the Company, the Grandfathering Rights of theParty including its afﬁliates which were no longer entitled touse their Grandfathering Rights shall from then on revive andSogepa and GZBV shall jointly notify the Company to that effect.

3

Notification to the Company
The Company will not be required to take any of the actions
provided for in Article 15 of the Articles of Association pursuant
to the post-concert Grandfathering Agreement unless and until
it receives (i) a joint written instruction from Sogepa and GZBVwith respect to the taking of any of the actions provided for in
Article 15 of the Articles of Association pursuant to the postconcert Grandfathering Agreement, or (ii) a copy of a binding
advice rendered by three independent, impartial and neutral
Expert Adjudicators in order to settle any dispute between theParties arising out of or in connection with the post-concert
Grandfathering Agreement.
The Company will not incur any liability to any of the Parties bytaking such actions following receipt of any such joint instruction
or binding advice and the Company will not be required tointerpret the post-concert Grandfathering Agreement or any
such joint instruction or binding advice.
Notwithstanding the description under “Various provisions –Jurisdiction” below, the courts of the Netherlands will haveexclusive jurisdiction to resolve any dispute, controversy or
claim affecting the rights or obligations of the Company under
the post-concert Grandfathering Agreement.
Various Provisions

Individual Grandfathering Rights
A Party that is individually grandfathered pursuant to
Article 16.1.b of the Articles of Association (such Party holding“Individual Grandfathering Rights”) shall remain individually
grandfathered in accordance with the Articles of Association if
the new concert with respect to the Company (the “Concert”)
is subsequently terminated (for instance by terminating theShareholders’ Agreement) or if it exits the Concert.
Loss of Individual Grandfathering Rights
A Party holding Individual Grandfathering Rights as well as anyof its afﬁliates who are grandfathered pursuant to Article 16.1.b inconjunction with Article 16.3 of the Articles of Association (suchafﬁliates holding “Derived Grandfathering Rights”, and theIndividual Grandfathering Rights and the Derived Grandfathering
Rights, together, the “Grandfathering Rights”) shall all nolonger be entitled to exercise their Grandfathering Rights inthe event:
the Concert is terminated as a result of it or any of its afﬁliates
having actually or constructively terminated such Concert; or
it or its relevant afﬁliate(s) exit(s) the Concert;-

Termination. The post-concert Grandfathering Agreement
terminates only if either the French State and its afﬁliates or
the German State and its afﬁliates no longer hold shares in
the Company.
Governing law. Laws of the Netherlands.
Jurisdiction. The courts of the Netherlands shall have exclusive
jurisdiction. This is binding advice for any dispute, controversy
or claim arising out of or in connection with the post-concert
Grandfathering Agreement in accordance with the procedure set
forth in the post-concert Grandfathering Agreement; provided,
however, that application to the courts is permitted to resolve
any such dispute controversy or claim.
Shareholders’ Agreement
Below is a further description of the Shareholders’ Agreement,
based solely on a written summary of the main provisions of
the Shareholders’ Agreement that has been provided to theCompany by Sogepa, GZBV and SEPI (all parties together the“Shareholders”).

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3.3 Shareholdings and Voting Rights
General Description of the Company and its Share Capital /3.3 Shareholdings and Voting Rights

Governance of the Company
Appointment of the Directors. The shareholders shall votein favour of any draft resolution relating to the appointment
of Directors submitted to the shareholders’ meeting of theCompany in accordance with the terms and conditions of
the German State Security Agreement and the French State
Security Agreement (as described below). If, for whateverreason, any person to be appointed as a Director pursuant
to the German State Security Agreement or the French State
Security Agreement is not nominated, the shareholders shalluse their best endeavours so that such person is appointed
as a Director.
Sogepa and GZBV shall support the appointment of one
Spanish national that SEPI may present to them as Member ofthe Board of Directors of the Company, provided such person
qualiﬁes as an Independent Director pursuant to the conditions
set forth in the Board Rules, and shall vote as shareholders inany shareholders’ meeting in favour of such appointment andagainst the appointment of any other person for such position.
If, for whatever reason, the French State Security Agreement
and/or the German State Security Agreement has / have been
terminated, KfW or Sogepa, as the case might be, shall propose
two persons, and the shareholders shall exercise their best
endeavours so that these persons are appointed as Directors.
Modiﬁcation of the Articles of Association. Sogepa and
GZBV shall consult each other on any draft resolution intending
to modify the Board Rules and/or the Articles of Association.
Unless Sogepa and GZBV agree to vote in favour together ofsuch draft resolution, the shareholders shall vote against suchdraft resolution. If Sogepa and GZBV reach a mutual agreementon such draft resolution, the shareholders shall vote in favourof such draft resolution.
Reserved Matters. With respect to the matters requiring theapproval of a Qualiﬁed Majority at the Board level (“Reserved
Matters”), all the Directors shall be free to express their own
views. If the implementation of a Reserved Matter would requirea decision of the shareholders’ meeting of the Company, Sogepa
and GZBV shall consult each other with a view to reachinga common position. Should Sogepa and GZBV fail to reacha common position, Sogepa and GZBV shall remain free toexercise on a discretionary basis their votes.
Prior consultation. Sogepa and GZBV shall consult each otheron any draft resolution submitted to the shareholders’ meetingother than related to Reserved Matters and the Board Rules.

2

3

4

5

FINANCIAL STATEMENTS 2018

1

2

3

4

5

- to hold as closely as reasonably possible to 4% of the voting

rights for SEPI, together with any voting rights attributable
to SEPI and/or to the Spanish State, pursuant to Dutch
takeover rules except for voting rights attributable due toacting in concert with the other parties.

Mandatory Takeover Threshold
The total aggregate voting rights of the shareholders shall always
represent less than 30% of the voting rights of the Company,or less than any other threshold the crossing of which would
trigger for any shareholder a mandatory takeover obligation(the “MTO Threshold”). In the event that the total aggregate
voting rights of the shareholders exceed the MTO Threshold,the shareholders shall take all appropriate actions as soon asreasonably practicable, but in any event within 30 days, to fall
below the MTO Threshold.
Transfer of Securities
Permitted transfer. Transfer of securities by any shareholder
to one of its afﬁliates.
Pre-emption right. Pro rata pre-emption rights of theshareholders in the event any shareholder intends to transfer
any of its securities to a third party directly or on the market.
Call-option right. Call option right for the benefit of theshareholders in the event that the share capital or the voting
rights of any shareholders cease to be majority owned directly or
indirectly by the French State, the German State or the Spanish
State as applicable.
Tag-along right. Tag-along right for the beneﬁt of SEPI in theevent that Sogepa, the French State or any of their afﬁliates andany French public entity and GZBV, the German State or any of
their afﬁliates and any public entity propose together to transfer
all of their entire voting rights interests.
Various Provisions
Termination. The Shareholders’ Agreement may cease to
apply in respect of one or more Shareholders and/or their
afﬁliates, subject to the occurrence of certain changes in its
or their shareholding interest in the Company or in its or theirshareholders.
Governing law. Laws of the Netherlands.
Jurisdiction. Arbitration in accordance with the Rules ofArbitration of the International Chamber of Commerce, withthe seat of arbitration in The Hague (The Netherlands).

Balance of Interests
The shareholders agree their common objective to seek abalance between themselves of their respective interest in the
Company as follows:
to hold as closely as reasonably possible to 12% of the voting
rights for Sogepa, together with any voting rights attributable
to Sogepa and/or to the French State, pursuant to Dutch
takeover rules except for voting rights attributable due toacting in concert with the other parties;
to hold as closely as reasonably possible to 12% of the voting
rights for GZBV, together with any voting rights attributable to
GZBV and/or to the German State, pursuant to Dutch takeoverrules except for voting rights attributable due to acting inconcert with the other parties;-

106

Airbus / Information Document 2018

3.3.2.3 Undertakings with Respect to Certain
Interests of Certain Stakeholders
The Company has made certain undertakings and entered into
certain agreements in connection with certain interests of its
former core shareholders and the German State.
State Security Agreements and Related Undertakings
and Negotiations
The Company and the French State have entered into anamendment to the existing convention between the French
State and the Company relating to the ballistic missiles businessof the Company (as so amended, the “French State Security
Agreement”). Under the French State Security Agreement,

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

General Description of1the Company
and2
3 its Share
4 Capital
5 /3.3 Shareholdings and Voting Rights
General Description of the Company and its Share Capital /3.3 Shareholdings and Voting Rights

certain sensitive French military assets will be held by a Company
subsidiary (the “French Defence Holding Company”). At theConsummation, the Company contributed certain sensitive
French military assets to the French Defence Holding Company.
The French State has the right to approve or disapprove of —but not to propose or appoint — three outside Directors to theBoard of Directors of the French Defence Holding Company(the “French Defence Outside Directors”), at least two ofwhom must qualify as Independent Directors under the Board
Rules if they were Members of the Board of Directors. Two of
the French Defence Outside Directors are required to also be
Members of the Board of Directors. French Defence Outside
Directors may neither (i) be employees, managers or corporateofﬁcers of a company belonging to the Company (although they
may be Members of the Board of Directors) nor (ii) have material
ongoing professional relationships with Airbus.
The Company and the German State have entered into anagreement relating to the protection of essential interests to
the German State’s security (the “German State Security
Agreement”). Under the German State Security Agreement,
certain sensitive German military assets are held by a Company
subsidiary (the “German Defence Holding Company”). The
German State has the right to approve or disapprove of — but
not to propose or appoint — three outside Directors to theSupervisory Board of the German Defence Holding Company(the “German Defence Outside Directors”), at least two ofwhom must qualify as Independent Directors under the Board
Rules if they were Members of the Board of Directors. Two of
the German Defence Outside Directors are required to also
be Members of the Board of Directors. The qualiﬁcations toserve as a German Defence Outside Director are comparable
to those to serve as a French Defence Outside Director, with theadditional requirement that a German Defence Outside Director
may not be a civil servant.

FINANCIAL STATEMENTS 2018

1

2

3

4

5

Dassault Aviation
The Company entered into an agreement with the French State
pursuant to which the Company:
grants the French State a right of ﬁrst offer in case of thesale of all or part of its shareholding in Dassault Aviation; andcommits to consult with the French State prior to making any
decision at any shareholders’ meeting of Dassault Aviation.

-

For more information about Dassault Aviation, see “— Informationon the Company’s Activities — 1.1.5 Investments”.
Stock Exchange Listings
The Company has undertaken to the parties to the Shareholders’
Agreement that for the duration of the Shareholders’ Agreement
the Company’s shares will remain listed exclusively in France,
Germany and Spain.

3

Specific Rights of the French State
Pursuant to an agreement entered into between the Company
and the French State (the “Ballistic Missiles Agreement”),
the Company has granted to the French State (a) a veto rightand subsequently a call option on shares of the Company
performing the ballistic missiles activity exercisable undercertain circumstances, including if (i) a third party acquires,directly or indirectly, either alone or in concert, more than 15%
or any multiple thereof of the share capital or voting rights of
the Company or (ii) the sale of the shares of such companies
carrying out such activity is considered and (b) a right to oppose
the transfer of any such shares. The Company, the French Stateand the Company performing the ballistic missiles activity areparties to a similar convention regarding the assets comprising
the French nuclear airborne systems under which the French
State has similar rights.

3.3.3 Form of Shares
The shares of the Company are in registered form. The Boardof Directors may decide with respect to all or certain shares,
on shares in bearer form.
Shares shall be registered in the shareholders’ register without
the issue of a share certiﬁcate or, should the Board of Directors

so decide, with respect to all or certain shares, with the issue ofa certiﬁcate. Share certiﬁcates shall be issued in such form as
the Board of Directors may determine. Registered shares shallbe numbered in the manner to be determined by the Board of
Directors.

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General Description of the Company and its Share Capital /3.3 Shareholdings and Voting Rights

2

3

4

FINANCIAL STATEMENTS 2018

5

1

2

3

4

5

3.3.4 Changes in the Shareholding of the Company
The evolution in ownership of the share capital and voting rights of the Company over the past three years is set forth in the tablebelow:
Position as of
31 December 2018

Position as of
31 December 2016

Position as of
31 December 2017

Shareholders% ofcapital% ofvotingrightsNumber ofshares% ofcapital% ofvotingrightsNumber ofshares% ofcapital% ofvotingrightsNumber ofsharesSOGEPA

11.06%

11.06%

85,835,477

11.08%

11.08%

85,835,477

11.11%

11.11%

85,835,477

GZBV(1)11.04%

11.04%

85,709,822

11.07%

11.07%

85,709,822

11.09%

11.09%

85,709,822

SEPI

4.16%

4.16%

32,330,381

4.17%

4.17%

32,330,381

4.18%

4.18%

32,330,381

26.26%

26.28%

203,875,680

26.32%

26.33%

203,875,680

26.38%

26.38%

203,875,680

Sub-total New
Shareholder Agt.
Foundation “SOGEPA”

0.00%

0.00%

0

0.00%

0.00%

-

0.00%

0.00%

0

Public(2)73.66%

73.72%

571,855,277

73.66%

73.67%

570,550,857

73.60%

73.62%

568,853,019-

636,9240.02%-

129,525

0.02%-

184,170

100% 776,367,881

100%

100% 774,556,062

100%

Own share buyback(3)

0.08%

Total

100%

100% 772,912,869(1) KfW & other German public entities.
(2) Including Company employees. As of 31 December 2018, the Company’s employees held approximately 2.0% of the share capital (and voting rights).
(3) The shares owned by the Company do not carry voting rights.

To the knowledge of the Company, there are no pledges overthe shares of the Company.
The Company requested disclosure of the identity of the
beneﬁ cial holders of its shares held by identiﬁ able holders(“Titres au porteur identifiables”) holding 2,000 or more shares
each. The study, which was completed on 31 December 2018,
resulted in the identiﬁcation of 1,820 shareholders holding a totalof 572,267,264 Company shares (including 1,837,087 shares
held by Iberclear on behalf of the Spanish markets and29,668,256 shares held by Clearstream on behalf of the Germanmarket).
The shareholding structure of the Company as of 31 December
2018 is as shown in the diagram in “— 3.3.1 Shareholding
Structure at the end of 2018”.

3.3.5 Persons Exercising Control over the Company
See “— 3.3.1 Shareholding Structure at the end of 2018” and “— 3.3.2 Relationships with Principal Shareholders”.

3.3.6 Simpliﬁed Group Structure Chart
The following chart illustrates the simpliﬁed organisational structure of Airbus as of 31 December 2018, comprising three Divisions
and the main Business Units. See “— Information on the Company’s Activities — 1.1.1 Overview — Organisation of the Company’s
Businesses”. For ease of presentation, certain intermediate holding companies have been omitted.

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ArianeGroup50%*

Airbus Defence
and Space Holding
France SAS(France)

4.96%*

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

Airbus Helicopters
DeutschlandGmbH(Germany)

Airbus Helicopters(France)98.04%

3
4

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.

50%*

Airbus Group
Inc.
(USA)

Airbus Americas
Inc.
(USA)

Premium Aerotec
GmbH(Germany)

2

MBDA Group

Airbus Operations
GmbH(Germany)

ATR GIE(France)

AirbusOperations, S.L.
(Spain)Airbus Operations
Limited(UK)

Stelia Aerospace(France)

Airbus Operations
SAS(France)50.01%*

Airbus SAS(France)

C Series Aircraft
LimitedPartnership(Canada)

4.22%*

1

Ariane Group

Computadoras,Redese Ingenieria, S.A.
(Spain)Airbus Defence
and Space, S.A.
(Spain)95.78%

General Description of1the Company
and2
3 its Share
4 Capital
5 /3.3 Shareholdings and Voting Rights
General Description of the Company and its Share Capital /3.3 Shareholdings and Voting Rights

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%*(The Netherlands)

AIRBUS SE

INFORMATION DOCUMENT 2018

Airbus Defence and Space

Airbus Defence
and Space
Litmited(UK)

SIMPLIFIED GROUP STRUCTURE CHART

ANNUAL REPORT 2018
FINANCIAL STATEMENTS 2018

5

3

Airbus / Information Document 2018109

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

General Description of the Company and its Share Capital 1/
3.3 Shareholdings and Voting Rights
General Description of the Company and its Share Capital /3.3 Shareholdings and Voting Rights

2

3

4

5

FINANCIAL STATEMENTS 2018

1

2

3

4

5

3.3.7 Purchase by the Company of its Own Shares
3.3.7.1

Dutch Law and Information on Share
Repurchase Programmes

Under Dutch civil law, the Company may acquire its own shares,
subject to certain provisions of the law of the Netherlands andthe Articles of Association, if (i) the shareholders’ equity less thepayment required to make the acquisition does not fall below
the sum of paid-up and called portion of the share capital andany reserves required by the law of the Netherlands and (ii) the
Company and its subsidiaries would not thereafter hold or holdin pledge shares with an aggregate nominal value exceeding
one-half (50%) of the Company’s issued share capital. Shareacquisitions may be effected by the Board of Directors only if
the shareholders’ meeting has authorised the Board of Directors
to effect such repurchases. Such authorisation may apply for a
maximum period of 18 months.
For the authorisations granted to the Board of Directors at
the AGM of Shareholders held on 11 April 2018, see “— 3.2.3
Modiﬁcation of Share Capital or Rights Attached to the Shares”.

3.3.7.2

In addition, the Company must report to the competent authorityof each trading venue on which the shares are admitted to
trading or are traded no later than by the end of the seventh daily
market session following the date of execution of the transaction,
all the transactions relating to the buy-back programme andensure adequate disclosure of that certain information relating
thereto within the same time frame. These transactions must
be posted on the Company’s website and be made available tothe public for at least a 5-year period from the date of adequate
public disclosure.

French Regulations

As a result of its listing on a regulated market in France, theCompany is subject to the European regulations summarised
above in 3.3.7.2 (European Regulation).
In addition, the Autorité des marchés financiers (“AMF”)
General Regulations and AMF guidelines n°2017-04 deﬁne theconditions for a company’s trading in its own shares to bevalid in accordance with the Market Abuse Regulation and EU
Delegated Regulation no. 2016 / 1052.
Moreover, the Company must report to the AMF, on at least
a monthly basis, all the speciﬁed information regarding such
purchases previously published on its website and information
concerning the cancellation of such repurchased shares.

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German Regulations

As a foreign issuer, the Company is subject to German rules
on repurchasing its own shares only to a limited extent, sinceGerman rules refer to the law of the Member State in which theCompany is domiciled. In addition, general principles of German
law on equal treatment of shareholders are applicable.
The European regulations summarised above in 3.3.7.2(European Regulation) also applies to the Company in Germany.

3.3.7.5

Spanish Regulations

As a foreign issuer, the Company is not subject to Spanish
rules on trading in its own shares, which only apply to Spanish
issuers. The European regulations summarised above in 3.3.7.2(European Regulation) also applies to the Company in Spain.

3.3.7.6

European Regulation

Pursuant to the Market Abuse Regulation and EU DelegatedRegulation no. 2016/1052, the Company is subject to conditions
for share repurchase programmes and disclosure relating
thereto. In particular, prior to implementing the share repurchaseprogramme, the Company must ensure adequate disclosure of
the following information: the purpose of the programme, themaximum pecuniary amount allocated to the programme, themaximum number of shares to be acquired, and the durationof the programme.

3.3.7.3

3.3.7.4

Description of the Share Repurchase
Programme to be Authorised by the
Annual General Meeting of Shareholders
to be Held on 10 April 2019

Pursuant to Articles 241-2-I and 241-3 of the AMF General
Regulations, below is a description of the share repurchaseprogramme (“descriptif du programme”) to be implemented
by the Company:
date of the shareholders’ meeting to authorise the share
repurchase programme: 10 April 2019;intended use of the Airbus SE shares held by the Company
as of the date of this document: the owning of shares for the
performance of obligations related to employee share option
programmes or other allocations of shares to employees ofAirbus and Airbus’ companies;
purposes of the share repurchase programme to be
implemented by the Company (by order of decreasingpriority, without any effect on the actual order of use of
the repurchase authorisation, which will be determinedon a case-by-case basis by the Board of Directors basedon need):the reduction of share capital by cancellation of all or partof the repurchased shares, it being understood that the
repurchased shares shall not carry any voting or dividend
rights,the owning of shares for the performance of obligations
related to (i) debt ﬁnancial instruments convertible into
Airbus SE shares, or (ii) employee share option programmes
or other allocations of shares to employees of Airbus andAirbus’ companies,
the purchase of shares for retention and subsequent use forexchange or payment in the framework of potential external
growth transactions, andthe liquidity or dynamism of the secondary market of the
Airbus SE shares carried out pursuant to a liquidity agreement
to be entered into with an independent investment services
provider in compliance with the decision of the AMF dated
1 October 2008 (as amended) related to approval of liquidity
agreements recognised as market practices by the AMF;--

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

General Description of1the Company
and2
3 its Share
4 Capital
5 /3.3 Shareholdings and Voting Rights
General Description of the Company and its Share Capital /3.3 Shareholdings and Voting Rights- procedure:- maximum portion of the issued share capital that may be
repurchased by the Company: 10%,- maximum number of shares that may be repurchased by--

the Company:77,636,788 shares, based on an issued sharecapital of 776,367,881 shares as of 13 February 2019,the amounts to be paid in consideration for the purchase of
the treasury shares must be, in accordance with applicable
Dutch law, a price per share not less than the nominal
value and not more than the higher of the price of the last
independent trade and the highest current independent bid
on the trading venues of the regulated market of the country
in which the purchase is carried out.
The Company undertakes to maintain at any time a sufﬁcientnumber of shares in public hands to meet the thresholdsof Euronext,
shares may be bought or sold at any time (including during
a public offering) to the extent authorised by the stock
exchange regulations and by any means, including, without
limitation, by means of block trades and including the use of
options, combinations of derivative ﬁnancial instruments or
the issue of securities giving rights in any way to Airbus SE
shares within the limits set out in this document.
The portion of shares repurchased through the use of blocktrades may amount to all the shares to be repurchased in
the context of this programme,

FINANCIAL STATEMENTS 2018

1

2

3

4

5

- in addition, in the event that derivative ﬁnancial instruments

are used, the Company will ensure that it does not use
mechanisms which would signiﬁcantly increase the volatilityof the shares in particular in the context of call options,characteristics of the shares to be repurchased by theCompany: shares of Airbus SE, a company listed onEuronext Paris, on the regulierter Markt of the Frankfurt
Stock Exchange and on the Madrid, Bilbao, Barcelona andValencia Stock Exchanges,
maximum purchase price per share: € 100;
term of the share repurchase programme and othercharacteristics: this share repurchase programme shall bevalid until 11 October 2019 inclusive, i.e. the date of expiry of
the authorisation requested from the AGM of Shareholders
to be held on 11 April 2018.

-

-

-

3

As of the date of this document, the Company has not enteredinto any liquidity agreement with an independent investment
services provider in the context of the share repurchaseprogramme.
Share Repurchase Programme 2018
In February 2019, the Company started implementing a sharebuyback programme that was conferred by Board of Directors on
13 February 2019 following the authorisation by the Company’s
Annual General Meeting of shareholders on 11 April 2018. This
share buyback programme is reported in accordance with theMarket Abuse Regulation.

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ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

General Description of the Company and its Share Capital 1/
3.4 Dividends
General Description of the Company and its Share Capital /3.4 Dividends

2

3

4

5

FINANCIAL STATEMENTS 2018

1

2

3

4

5

3.4 Dividends
3.4.1 Dividends and Cash Distributions Paid
Cash distributions paid to the shareholders are set forth in the table below:
Financial year

Date of the cash distribution payment

Gross amount per share(1)2013

3 June 2014

€ 0.752014

3 June 2015

€ 1.202015

3 May 2016

€ 1.302016

20 April 2017

€ 1.352017

18 April 2018

€ 1.50(1) Note: figures have not been adjusted to take into account changes in the number of shares outstanding.

3.4.2 Dividend Policy of the Company
In December 2013, the Company formalised a dividend policy demonstrating a strong commitment to shareholders’ returns. This
policy targets sustainable growth in the dividend within a payout ratio of 30%-40%.
Based on earnings per share (EPS) of € 3.94 and a net income of € 3,054 million, the Board of Directors will propose to the AGM
the payment to shareholders on 17 April 2019 of a dividend of € 1.65 per share (FY 2017: € 1.50). This value is at the upper end of
the dividend policy reﬂecting our strong 2018 achievements, including the positive evolution of the 2018 underlying performanceand our 2018 cash generation. It highlights our conﬁdence in our future ﬁnancial performance as well as ongoing commitment
towards sustained dividend growth and increasing shareholder returns.
The record date should be 16 April 2019. This proposed dividend represents year-on-year dividend per share increase of 10%.

3.4.3 Unclaimed Dividends
Pursuant to the Articles of Association, the claim for payment of
a dividend or other distribution approved by the shareholders’meeting shall lapse ﬁve years after the day on which such claim
becomes due and payable. The claim for payment of interim

dividends shall lapse ﬁve years after the day on which the claim
for payment of the dividend against which the interim dividend
could be distributed becomes due and payable.

3.4.4 Taxation
The statements below represent a broad analysis of the current
tax laws of the Netherlands. The description is limited to thematerial tax implications for a holder of the Company’s shares(the “Shares”) who is not and is not deemed to be resident in
the Netherlands for any Dutch tax purposes (a “Non-Resident
Holder”). Certain categories of holders of the Company’s shares
may be subject to special rules which are not addressed below

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and which may be substantially different from the general rules
described below. Investors who are in doubt as to their tax
position in the Netherlands and in their state of residence should
consult their professional advisors. Where the summary refers
to “the Netherlands” or “Netherlands” or “Dutch”, it refers only
to the European part of the Kingdom of the Netherlands.

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

General Description of1the Company
and2
3 its Share
4 Capital
5 /3.4 Dividends
General Description of the Company and its Share Capital /3.4 Dividends

Withholding Tax on Dividends
In general, a dividend distributed by the Company in respectof Shares will be subject to Dutch withholding tax at astatutory rate of 15%. Dividends include dividends in cash orin kind, deemed and constructive dividends, repayment ofpaid-in capital not recognised as capital for Dutch dividend
withholding tax purposes, and liquidation proceeds in excessof the average paid-in capital recognised as capital for Dutch
dividend withholding tax purposes. Stock dividends paid out of
the Company’s paid-in-share premium, recognised as capitalfor Dutch dividend withholding tax purposes, will not be subject
to this withholding tax.

FINANCIAL STATEMENTS 2018

1

2

3

4

5

- the Non-Resident Holder is an individual and such holder or-a connected person to such holder (“verbonden persoon”)
has, directly or indirectly, a substantial interest (“aanmerkelijk
belang”) or a deemed substantial interest in the Company
which is not attributable to an enterprise; orthe income or capital gain qualifies as income frommiscellaneous activities (“belastbaar resultaat uit overigewerkzaamheden”) in the Netherlands as deﬁned in the Dutch
Income Tax Act 2001 (“Wet inkomstenbelasting 2001”),
including without limitation, activities that exceed normal, active
portfolio management (normaal actief vermogensbeheer).

A Non-Resident Holder of Shares can be eligible for a partial orcomplete exemption or refund of all or a portion of the above
withholding tax pursuant to domestic rules or under a tax
convention that is in effect between the Netherlands and the
Non-Resident Holder’s country of residence for tax purposes.
The Netherlands has concluded such conventions with the
US, Canada, Switzerland, Japan, almost all European Union
Member States and other countries.

Generally, a Non-Resident Holder of Shares will not have asubstantial interest in the Company’s share capital, unless the
Non-Resident Holder, alone or together with certain related
persons holds, jointly or severally directly or indirectly, Sharesin the Company, or a right to acquire Shares in the Company
representing 5% or more of the Company’s total issued andoutstanding share capital or any class thereof. Generally, a
deemed substantial interest exists if all or part of a substantial
interest has been or is deemed to have been disposed of withapplication of a roll-over relief.

Withholding Tax on Sale or Other Dispositions ofSharesGift or Inheritance Taxes

Payments on the sale or other dispositions of Shares will not
be subject to Dutch withholding tax, unless the sale or otherdisposition is, or is deemed to be, made to the Company ora direct or indirect subsidiary of the Company. In principle,
a redemption or sale to the Company or a direct or indirect
subsidiary of the Company will be deemed to be a dividend
and will be subject to the rules set forth in “Withholding Tax on
Dividends” above.

Taxes on Income and Capital Gains
A Non-Resident Holder who receives dividends distributed by
the Company on Shares or who realises a capital gain derived
from Shares, will not be subject to Dutch taxation on income
or a capital gain unless:the income or capital gain is attributable to an enterpriseor part thereof which is either effectively managed in the
Netherlands or carried on through a permanent establishment(“vaste inrichting”) or permanent representative (“vaste
vertegenwoordiger”) taxable in the Netherlands and the holderof Shares derives proﬁts from such enterprise (other than by
way of the holding of securities); or
the Non-Resident Holder is an entity and has, directly or
indirectly, a substantial interest (“aanmerkelijk belang”) ora deemed substantial interest in the Company and suchinterest is held by the Non-Resident Holder with the main
purpose of or one of the main purposes of avoiding personal
income tax for another person; or

-

-

3

Dutch gift or inheritance taxes will not be levied on the occasionof the transfer of Shares by way of gift by, or on the death of,a Non-Resident Holder, unless the transfer is construed as aninheritance or gift made by or on behalf of, a person who, at thetime of the gift or death, is or is deemed to be resident in the
Netherlands for the purpose of the relevant provisions.

Value Added Tax
There is no Dutch value added tax payable by a holder of Sharesin respect of dividends on the Shares or on the transfer of the
Shares.

Other Taxes and Duties
There is no Dutch registration tax, stamp duty or any other similar
tax or duty other than court fees payable in the Netherlands
by a holder of Shares in respect of or in connection with theexecution, delivery and/or enforcement by legal proceedings(including any foreign judgment in the courts of the Netherlands)
with respect to the dividends on the Shares or on the transferof the Shares.

Residence
A Non-Resident Holder will not become resident, or be deemed
to be resident, in the Netherlands solely as a result of holding
a Share or of the execution, performance, delivery and/or
enforcement of rights in respect of the Shares.

Airbus / Information Document 2018

113

Chapter

4

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4

Corporate Governance
4.1
Management and Control
4.1.1 Corporate Governance Arrangements
4.1.2 Dutch Corporate Governance Code,“Comply or Explain”
4.1.3 Enterprise Risk Management System
4.1.4 Internal Audit
Interests of Directors and Principal
Executive Ofﬁcers
4.2.1 Remuneration Policy
4.2.2 Long-Term Incentives Granted
to the Chief Executive Ofﬁcer
4.2.3 Related Party Transactions

116
116
134
135
137

4.2

4.3
4.3.1
4.3.2
4.3.3

Employee Proﬁt Sharing and Incentive Plans
Employee Proﬁt Sharing and Incentive Agreements
Employee Share Ownership Plans
Long-Term Incentive Plans

138
138
150
151
151
151
151
153

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ANNUAL REPORT 2018
Corporate Governance /4.1 Management and Control
Corporate Governance /4.1 Management and Control

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

4.1 Management and Control
The corporate governance arrangements of the Company were
substantially changed pursuant to the Multiparty Agreement,
including changes in the composition of the Board of Directors
and the rules governing its internal affairs (the “Board Rules”).
These changes are intended to further normalise and simplify

the Company’s corporate governance, reﬂecting an emphasis
on best corporate governance practices and the absence of acontrolling shareholder group. Below is a summary descriptionof such changes.

4.1.1 Corporate Governance Arrangements
4.1.1.1

Board of Directorsa) Composition Rules and Principles
Under the Articles of Association, the Board of Directors
consists of at most 12 Directors. Under the Board Rules, each
Board Director shall retire at the close of the AGM held three
years following his or her appointment, unless the said mandateis renewed. Under the Board Rules, at least a majority of theMembers of the Board of Directors (i.e. 7/12) must be European
Union (“EU”) nationals (including the Chairman of the Boardof Directors) and a majority of such majority (i.e. 4/7) must
be both EU nationals and residents. No Director may be an
active civil servant. The Board of Directors has one Executive
Director and 11 Non-Executive Directors. While the Board of
Directors appoints the Chief Executive Ofﬁcer of the Company(the “CEO”), the CEO is required to be an Executive Director andmust be an EU national and resident; therefore it is anticipatedthat the Board of Directors will appoint as CEO the person
appointed by the shareholders as an Executive Director. At
least nine of the Non-Executive Directors must be “Independent
Directors” (including the Chairman of the Board of Directors).
Under the Board Rules, an “Independent Director” is a nonExecutive Director who is independent within the meaning of
the Dutch Corporate Governance Code (the “Dutch Code”) andmeets additional independence standards. Speciﬁcally, where
the Dutch Code would determine non-independence, in part,by reference to a Director’s relationships with shareholders who
own at least 10% of the Company, the Board Rules determine
such Director’s non-independence, in relevant part, by reference
to such Director’s relationships with shareholders who own
at least 5% of the Company. According to the criteria of the
Dutch Code and the Board Rules, all non-Executive Directors(including the Chairman) presently qualify as an “Independent
Director”.
The Remuneration, Nomination and Governance Committeeof the Board of Directors (the “RNGC”) is charged withrecommending to the Board of Directors the names of candidates
to succeed active Board Members after consultation with the
Chairman of the Board of Directors and the CEO.
The Board of Directors, deciding by simple majority vote,proposes individuals to the shareholders’ meeting of theCompany for appointment as Directors by the shareholders’meeting. No shareholder or group of shareholders, or any

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Airbus / Information Document 2018

other entity, has the right to propose, nominate or appoint any
Directors other than the rights available to all shareholders underDutch law.
In addition to the membership and composition rules describedabove, the RNGC, in recommending candidates for the Boardof Directors, and the Board of Directors in its resolutions
proposed to the shareholders’ meeting regarding the renewal
or appointment of Directors, are both required to apply thefollowing principles:the preference for the best candidate for the position;
the preference for gender diversity between equal proﬁles;the maintenance of appropriate skills mix and geographicalexperience;
the maintenance, in respect of the number of Members of
the Board of Directors, of the observed balance among thenationalities of the candidates in respect of the location of
the main industrial centres of Airbus (in particular among thenationals of France, Germany, Spain and the United Kingdom,
where these main industrial centres are located); andat least a majority of the Members of the Board of Directors(i.e. 7/12) shall be EU nationals (including the Chairman), anda majority of such majority (i.e. 4/7) shall be both EU nationals
and residents.

--

In accordance with these principles the Board of Directors shallcontinue to seek greater diversity with respect to gender, age,geography, education, profession and background.
In 2018, three new Members joined the Board of Directors,
Mr. Clamadieu, Mr. Chu and Mr. Obermann. Respectively,
with an industrial background, expertise in the Asian market
and information technology and entrepreneurial background,they have the competencies and personal skills to fulﬁl these
positions in line with the Board’s expectations and the evolutionof the Company’s business.
At the end of 2018 more than half of the Members of the Boardof Directors were aged 60 or under. The proportion of female
representatives is today at 25% against 0% six years ago. The
Board composition shows a balanced mix of experience with, forexample, ﬁve Members having aerospace industry skills, eight
having geopolitical or economics skills, ﬁve having information
or data management skills and ﬁve having manufacturing
and production skills. More details about the diversity of theMembers of the Board of Directors are available in the tableentitled Composition of the Board of Directors in 2018.

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

The Board of Directors is required to take into account, in the
resolutions proposed in respect of the nomination of Directors
presented to the shareholders’ meeting, the undertakings of
the Company to the French State pursuant to the amendment
to the French State Security Agreement and to the German
State pursuant to the German State Security Agreement, ineach case as described more fully in “3.3.2.3 — Undertakings
with Respect to Certain Interests of Certain Stakeholders”. In
practice, this means that at all times the Board of Directors
needs to have (i) two Directors who should also be French
Defence Outside Directors (as deﬁned above) of the French
Defence Holding Company (as deﬁned above) who have been
proposed by the Company and consented to by the French
State and (ii) two Directors who should also be German Defence
Outside Directors (as deﬁned above) of the German Defence
Holding Company (as deﬁned above) who have been proposedby the Company and consented to by the German State.
The RNGC endeavours to avoid a complete replacementof outgoing Directors by new candidates and draws up an
appointment and reappointment schedule for the Directors after
consultation with the Chairman and the CEO. In drawing up sucha schedule, the RNGC considers the continuity of companyspeciﬁc knowledge and experience within the Board of Directors,
also taking into account that a Director should at the time of his/her appointment or re-appointment not be older than 75 years
and ensuring that at least one third of Directors’ positions areeither renewed or replaced every year for a term of three years.
This is to avoid large block replacements of Directors at one
single AGM, with the corresponding loss of experience andintegration challenges, provided that exceptions to these rules
may be agreed by the Board of Directors if speciﬁc circumstances
provide an appropriate justiﬁcation for such exceptions.
b) Role of the Board of Directors
Most Board of Directors’ decisions can be made by a simple
majority of the votes cast by the Directors (a “Simple Majority”),
but certain decisions must be made by a two-thirds majority(i.e. eight favourable votes) of votes cast by the Directors
regardless of whether they are present or represented in
respect of the decision (a “Qualified Majority”). In addition,
amendments to certain provisions of the Board Rules require
the unanimous approval of the Board of Directors, with no morethan one Director not being present or represented (including
provisions relating to nationality and residence requirementswith respect to Members of the Board of Directors and the
Executive Committee). However, no individual Director orclass of Directors has a veto right with respect to any Board of
Directors’ decisions.
The Board Rules specify that in addition to the Board of
Directors’ responsibilities under applicable law and the
Articles of Association, the Board of Directors is responsible
for certain enumerated categories of decisions. Under the
Articles of Association, the Board of Directors is responsible
for the management of the Company. Under the Board Rules,
the Board of Directors delegates the execution of the strategy
as approved by the Board of Directors and the day-to-day
management of the Company to the CEO, who, supported by
the Executive Committee, makes decisions with respect to the
management of the Company. However, the CEO should notenter into transactions that form part of the key responsibilitiesof the Board of Directors unless these transactions have been
approved by the Board of Directors.

2

Corporate
Governance
34
5 /4.1 Management and Control
Corporate Governance /4.1 Management and Control

2

3

4

5

Matters that require Board of Directors’ approval include among
others, the following items (by Simple Majority unless otherwise
noted):
approving any change in the nature and scope of the businessof the Company and Airbus;
debating and approving the overall strategy and the strategicplan of Airbus;
approving the operational business plan of Airbus (the“Business Plan”) and the yearly budget of Airbus (“Yearly
Budget”), including the plans for Investment, R&D, Employment,
Finance and, as far as applicable, major programmes;
nominating, suspending or revoking the Chairman of theBoard of Directors and the CEO (Qualiﬁed Majority);
approving of all of the Members of the Executive Committee
as proposed by the CEO and their service contracts and othercontractual matters in relation to the Executive Committee anddeciding upon the appointment and removal of the Secretary
to the Board of Directors on the basis of the recommendationof the RNGC;
approving the relocation of the headquarters of the principal
companies of Airbus and of the operational headquarters of
the Company (Qualiﬁed Majority);
approving decisions in connection with the location of new
industrial sites material to Airbus as a whole or the change ofthe location of existing activities that are material to Airbus;
approving decisions to invest and initiate programmes
ﬁnanced by Airbus, acquisition, divestment or sale decisions,in each case for an amount in excess of € 300 million;
approving decisions to invest and initiate programmes
ﬁnanced by Airbus, acquisition, divestment or sale decisions,in each case for an amount in excess of € 800 million (Qualiﬁed
Majority);
approving decisions to enter into and terminate strategic
alliances at the level of the Company or at the level of one ofits principal subsidiaries (Qualiﬁed Majority);
approving matters of shareholder policy, major actions or
major announcements to the capital markets; andapproving decisions in respect of other measures andbusiness of fundamental signiﬁcance for Airbus or which
involves an abnormal level of risk.

-

-

4

-

The Board of Directors must have a certain number of Directors
present or represented at a meeting to take action. This quorum
requirement depends on the action to be taken. For the Boardof Directors to make a decision on a Simple Majority matter,a majority of the Directors must be present or represented.
For the Board of Directors to make a decision on a Qualiﬁed
Majority matter, at least 10 of the Directors must be present or
represented. If the Board of Directors cannot act on a Qualiﬁed
Majority Matter because this quorum is not satisﬁed, the quorum
would decrease to eight of the Directors at a new duly calledmeeting.
In addition, the Board Rules detail the rights and duties ofthe Members of the Board of Directors and sets out the core
principles which each and every Member of the Board of
Directors shall comply and shall be bound by, such as acting in
the best interest of the Company and its stakeholders, devoting
necessary time and attention to the carrying out of his/her duties
and avoiding any and all conﬂicts of interest.

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c) The Board of Directors in 2018(i) Composition of the Board of Directors in 2018
AIRBUS SE BOARD OF DIRECTORS
Committee attendance
Board member
Age*, Gender, Nationality

Denis
RANQUE67, M, French

StatusSince

Term Primary occupation
expires & Other mandates

2013,
Independent last re-election 2020
in 2017

ThomasENDERS
Executive
60, M, German

2012,
last re-election 2019in 2016

VictorCHU
Independent 201861, M, Chinese /BritishJean-Pierre
CLAMADIEU
60, M, French

Independent 2018

Director expertise

Chairman of the Boardof Directors of Airbus SE

Boardattendance

Chief Executive Officer
of Airbus SE

9/10

Chairman and CEO
of First Eastern
Investment Group

2/3
6/9
(from
(from
AGM 2018) AGM 2018)2021

CEO and member ofthe Board of Solvay SA(until 1 March 2019) and
Chairman of the Boardof Engie and memberof the Board of AXA SA

8/9
(from
AGM 2018)

9/10

8/10

10/10

2020

Co-Founder andChairman of Drayson
Technologies Ltd and
Co-Founder and CEO
of Sensyne Health PLC

Catherine
2016,
GUILLOUARD** Independent re-election
in 201954, F, French

2022

Chairwoman and Chief
Executive Officer
of RATP and memberof the Board of Engie

ECC

11/11

2021

Lord DRAYSON
Paul
Independent 201759, M, British

RNGC

10/10

Ralph D.
2013,
Member of the Board
CROSBY, Jr.
Independent last re-election 2020 of Directors of American
Electric Power Corp.
in 201771, M, American

Hermann-Josef
2007,
Member of the
LAMBERTI
Independent last re-election 2020 Supervisory Boardof ING Group N.V.
in 201763, M, German

6/7
(from
AGM 2018)

4/5

8/9

7/8
(from
AGM 2018)

5/5

11/11

8/10

10/11
4/5

AmparoMORALEDA
54, F, Spanish

2015,
Independent last re-election 2021
in 2018

Member of the Boardof Directors of Solvay SA,
CaixaBank SA
and Vodafone PLC

9/10

Claudia
NEMAT**
50, F, German

2016,
Independent re-election
in 2019

2022

Member of the Boardof Management of
Deutsche Telekom AG

10/10

René
OBERMANN Independent 201856, M, German

2021Managing Directorof Warburg Pincus
Deutschland GmbH andmember of the Board of
Telenor ASA and Allianz
Deutschland AG

CarlosTAVARES**60, M,
Portuguese2022

Chairman of theManaging Board of
Peugeot SA
and member of the Boardof Directors of Total SA

2016,
Independent re-election
in 2019

Audit

10/11
9/9

5/7
2/2
(from
(until
AGM 2018) AGM 2018)

3/3
8/9
(from
(from
AGM 2018) AGM 2018)

6/10

Board and committee meetings in 2018

10

5

9

11

Average attendance rate in 2018

87%

88%

89%

93%

* As per AGM 2019 Date.
Independent
Executive
Chair** To be re-elected in 2019.
The professional address of all Members of the Board of Directors for any matter relating to Airbus SE is Mendelweg 30, 2333 CS Leiden, The Netherlands.

GlobalBusiness

118

Engineering& Technology

Manufacturing& Production

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AerospaceIndustry

Finance& Audit

Geopolitical
Economics

DefenceIndustry

Information & DataManagement

Asia

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The Company has not appointed observers to the Board of Directors. Pursuant to applicable Dutch law, the employees are notentitled to elect a Director. There is no minimum number of shares that must be held by a Director.
(ii) Curriculum Vitae and other Mandates and Duties Performed in any Company by the Membersof the Board of Directors in 2018
The Company has not appointed observers to the Board of Directors. Pursuant to applicable Dutch law, the employees are notentitled to elect a Director. There is no minimum number of shares that must be held by a Director.

Denis Ranque

67 years old
Director since 2013,
re-elected in 2017
Independent

Curriculum Vitae
Denis Ranque began his career at the French Ministry for Industry, where he held various positions in
the energy sector, before joining the Thomson group in 1983 as Planning Director. The following year,
he moved to the electron tubes division, ﬁrst as Director of space business, then, from 1986, as Directorof the division’s microwave tubes department. Two years later, the electron tubes division became the
afﬁliate Thomson Tubes Electroniques, and Denis Ranque took over as Chief Executive of this subsidiaryin 1989. In April 1992, he was appointed Chairman and CEO of Thomson Sintra Activités Sous-marines.
Four years later, he became CEO of Thomson Marconi Sonar, the sonar systems joint venture set upby Thomson-CSF and GEC-Marconi. In January 1998, Denis Ranque was appointed Chairman andChief Executive Ofﬁcer of the Thomson-CSF group, now called Thales. He resigned from this positionin May 2009, as a consequence of a change in shareholding. From February 2010 to June 2012 hehas been Non-Executive Chairman of Technicolor. Since October 2001, he has also been Chairman of
the Board of the École des Mines ParisTech, and since September 2002, Chairman of the Cercle del’Industrie, an association which unites France’s biggest industrial companies; both mandates ended inJune 2012. He is member of the Boards of Directors of Saint-Gobain and CMA-CGM. From 2013 to 2017,
he chaired The Haut Comité de Gouvernement d’Entreprise, the independent body put in place by the
French Code of corporate governance for monitoring and encouraging progress in this ﬁeld. From 2014
to 2017, he has also been co-Chairman of La Fabrique de l’industrie, a think tank dedicated to industry.
Since 2014, he is the Chairman of the Fondation de l’École Polytechnique and a member of the French
Academy for Technologies (“Académie des Technologies”). Denis Ranque, born 1952, is a graduate ofFrance’s École Polytechnique and the Corps des Mines.

4

Current Mandates:- Chairman of the Board of Directors of Airbus SE;- Member of the Board of Directors of Saint Gobain;- Member of the Board of Directors of CMA-CGM;- President of the Board of Foundation de l’École Polytechnique.
Former mandates for the last ﬁve years:- President of the French Haut Comité de Gouvernement d’Entreprise (until December 2017);- Co-Chairman of the Board of Directors of La Fabrique de l’industrie (until November 2017).
- Member of the Board of Directors of Scilab Enterprise SAS (until February 2017);

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Thomas Enders

60 years old
Director since 2012,
last re-elected in 2016
Executive

Curriculum Vitae
Dr. Thomas (“Tom”) Enders was appointed Chief Executive Ofﬁcer (CEO) of Airbus SE, on 1 June 2012,
after having been CEO of the Airbus Commercial Aircraft Division since 2007. Before that he served as
Co-CEO of EADS between 2005 and 2007. He was Head of the Group’s Defence Division from 2000 to
2005. He has been a member of the Executive Committee of Airbus since its creation in 2000.
Prior to joining the aerospace industry in 1991, Enders worked, inter alia, as a Member of the “Planungsstab”
of the German Minister of Defence and in various Foreign Policy think tanks. He studied Economics,
Political Science and History at the University of Bonn and at the University of California in Los Angeles.
In 2014, Enders joined the Advisory Council of the Munich Security Conference as well as the Senate of
the Max-Planck-Gesellschaft. He is patron of the German Mayday Foundation which supports airmen,
women and their families in times of need.
Tom Enders is a member of the BDI Board (German Industry Association) since 2009, the Advisory Councilof HSBC Trinkhaus since 2012 and the Supervisory Board of Linde AG since 2017 (which merged into
Linde plc in 2018).
Current Mandates:- Chief Executive Ofﬁcer of Airbus SE;- Member of the Board of Directors of Airbus SE;- Member of the Executive Committee of Airbus SE;- President of Airbus SAS;
- Chairman of the Supervisory Board of Airbus Defence and Space GmbH;- Member of the Board of Directors of BDI (Federation of German Industry);- Member of the Governing Board of HSBC Trinkaus;- Member of the International Advisory Board of Atlantic Council of the US;- Member of the Board of Directors of WORLDVU Satellites Ltd. (OneWeb);- Chairman of the Board of Directors of Fondation d’Entreprises Airbus- Member of the Board of Directors of AeroSpace and Defence Industries Association of Europe;- Member of the Board of Directors of Linde plc;
- Member of the Supervisory Board of Linde Intermediate Holding AG;- Member of the Advisory Counsel of EDB.
Former mandates for the last ﬁve years:- Member of the Joint Advisory Council of Allianz SE (until December 2018)120

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Victor Chu

61 years old
Director since 2018
Independent

Curriculum Vitae
Victor Chu graduated as a lawyer in London. He was admitted to practice law in England and Hong Kong.
After completing his training with Herbert Smith, the City law ﬁrm, Victor moved back to Hong Kong in 1982
with Herbert Smith. He has since handled a wide array of mandates in the ﬁeld of corporate, commercial
and securities law, with special emphasis on China and regional investment transactions. In late 1985,
he founded Victor Chu & Co., which has become one of the leading law ﬁrms in Hong Kong.
In 1988, Victor Chu created the First Eastern Investment Group, a Hong Kong based international investmentﬁrm. First Eastern specializes in private equity investments, venture capital investments and investmentsin the expansion stage of business development. Victor Chu was part of the ﬁrst wave of specialists in the
Chinese market. He penetrated China early and built a lot of relationships at the highest level in the country.
Victor Chu has been instrumental in gaining the conﬁdence of major international investors and institutions
ready to co-invest with First Eastern Investment Group. Key projects have included toll roads, water
treatment operations, property and manufacturing industries and FinTech, as well as the launch of Japanesebudget airline Peach Aviation.
Victor Chu is an extremely respected business ﬁgure in Hong Kong and Asia. In addition to his businessactivities, he has been very active with several international institutions such as The World Economic
Forum and The Royal Institute of International Affairs. He is also a generous philanthropist in the ﬁeld ofenvironmental protection (Global Ocean Commission, WWF) and education.

4

Current Mandates:- Member of the Board of Directors of Airbus SE;- Chairman and CEO of First Eastern Investment Group;- Member of the Borad of China Merchants China Direct;- Member of the Board of Grand Harbour Marina PLC;
- Member of the Board of Camper & Nicholsons Marina Investments;- Member of the Board of SE Securities;- Member of the Board of Peach Aviation;- Member of the Board of Evolution Securities Asia;- Member of the Board of Sustainable Development Capital;- Co-Chair of the International Business Council (by World Economic Forum);- Senior Partner of Victor Chu & Co.
Former mandates for the last ﬁve years:- Member of the Foundation Board of World Economic Forum (until August 2015);- Member of the Board of Zurich Insurance Co. (until April 2014).

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3

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Jean-Pierre Clamadieu

60 years old
Director since 2018
Independent

Curriculum Vitae
Jean-Pierre Clamadieu graduated from École Nationale Supérieure des Mines de Paris before becoming
Chief Engineer of the Corps of Mines. Between 1981 and 1993, he worked mainly for the French Ministryof lndustry and as Technical Advisor to the Minister of Labor.
In 1993, Jean-Pierre Clamadieu joined RhônePoulenc to develop new activities in the ﬁeld of automobile
pollution control. ln the following years, he held several executive positions in the Rhodia group, as
President of Rhodia’s Chemicals in Latin America, President of Rhodia Eco Services, Senior Vice President
for Rhodia Corporate Purchasing, President of Rhodia Organic Fine Chemicals division and President ofRhodia Pharmaceuticals & Agrochemicals division.
In October 2003, Mr Clamadieu was appointed CEO of Rhodia, and became its chairman & CEO in
March 2008. Following a merger between Rhodia and the Belgian chemical group Solvay in 2011,
Mr Clamadieu was appointed chairman of the Executive Committee and CEO of the new Solvay group.
Since his appointment, Jean-Pierre Clamadieu led the integration of the new group and its transformation
into a major player in the ﬁeld of specialty chemicals and advanced materials, which combines industrial
competitiveness with the quest for sustainable solutions for its clients. His mandate at Solvay SA ends
on 1 March 2019.
Mr Clamadieu has been appointed Chairman of the Board of Directors of Engie in May 2018.
Jean-Pierre Clamadieu also promotes an ambitious and coordinated European energy policy.
Current Mandates:- Member of the Board of Directors of Airbus SE;- Chairman of the Executive Committee and CEO of Solvay SA;- Chairman of the Board of Engie;- Member of the Board of Directors of AXA;
- Member of the Board of Solvay Specialty Chemicals Asia Paciﬁc Pte. Ltd (Singapore);- Director of Cytec Industries Inc.;- Director Cytec UK Holding Inc.;- Chairman of the Board of Opéra National de Paris.
Former mandates for the last ﬁve years:- Member of the Board of Solvay Finances SA (Luxembourg) (until March 2018);- Member of the Board of Faurecia SA (France) (until February 2018);- Member of the Board of (Solvay Iberica S.L. (Spain) (until September 2015);- Member of the Board of Directors of AXA (until September 2015);- Member of the Board of Solvay America, Inc. (USA) (until January 2014).

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Ralph Dozier Crosby, Jr.

71 years old
Director since 2013,
Re-elected in 2017

Curriculum Vitae
Ralph Crosby was Member of the Executive Committee of EADS from 2002-2012 and served as Chairman
and CEO of EADS North America from 2002-2009. He presently serves as an Independent Director of
American Electric Power headquartered in Columbus, Ohio, where he chairs the Human Resources
Committee and Excelitas Holdings, LP, headquartered in Boston. Prior to joining EADS, Mr Crosby wasan Executive with Northrop Grumman Corporation, where he had served as a Member of the Corporate
Policy Council with positions including President of the Integrated Systems Sector, Corporate Vice President
and General Manager of the company’s Commercial Aircraft Division and Corporate Vice President andGeneral Manager of the B-2 Division. Prior to his industry career, Mr Crosby served as an ofﬁcer in the
U.S. Army, where his last military assignment was as military staff assistant to the Vice President of theUnited States. Mr Crosby is a graduate of the US Military Academy at West Point, and holds Master’s
degrees from Harvard University, and the University of Geneva, Switzerland. He is the recipient of theJames Forrestal Award from the National Defense Industrial Association, and has been awarded Chevalierof the Légion d’Honneur of France.

Independent
Current Mandates:- Member of the Board of Directors of Airbus SE;- Member of the Board of Directors (Supervisory Board) of American Electric Power Corporation;- Member of the Board of Directors of Excelitas Holdings, LP.

4

Former mandates for the last ﬁve years:- Member of the Board of Directors and of the Executive Committee of the Atlantic Council of theUnited States (until August 2018);- Member of the Board of Directors (Supervisory Board) of Serco Group plc (until June 2017).

(Paul) Lord Drayson

59 years old
Director since 2017
Independent

Curriculum Vitae
Lord Drayson graduated as an engineer and ﬁnished his PhD in 1985 at Aston University. In 1987
he became Managing Director of The Lambourn Food Company Limited, a subsidiary of the TreborGroup and, after a management buy-out of the Company in 1989, completed its sale to a third party
in 1991. The same year, he founded Genisys Development Limited, a consultancy company for new
products development and management. In 1993, he co-founded PowderJect Pharmaceuticals Plc andled its business as Chairman and CEO until it was sold to Chiron Corporation, a US company, in 2003.
He co-founded Drayson Racing Technologies LLP in 2007 and, in 2014 he set up Drayson Technologies
Ltd, an Internet of Things platform company of which he currently is the co-founder, Chairman and CEO.
Lord Drayson was also elected chairman of the U.K. BioIndustry Association in 2001 and was appointed
to the House of Lords and a Member of the Science and Technology Committee of the House of Lords
in 2004. He was then appointed Parliamentary under Secretary of State for Defence Procurement in2005 and became Minister of State for Defence Equipment & Support in 2006 and Minister of State for
Science & Innovation in 2008.
Current Mandates:- Member of the Board of Directors of Airbus SE;- Chairman and CEO of Drayson Technologies Ltd;- Co-Founder and CEO of Sensyne Health plc;
- Science Entrepreneur in Residence of Magdalen College, Oxford;- Supernumerary Fellow of St. John’s College, Oxford;- Member of Her Majesty’s Privy Council;- Member of House of Lords;- Co-founder and Trustee of the Drayson Foundation.
Former mandates for the last ﬁve years:- Member of Project of the “Oxfordshire Innovation Engine” Project (until February 2018);- Trustee and External Member of Council at University of Oxford (until December 2017);- Chairman of the Executive Committee at OUC (Oxford University Clinic) Centres of Excellence LLP(until December 2017);- Non-Executive Director and Board Member of the Royal Navy (until November 2017);- President of the Motorsports Industry Association (until October 2015);- Co-founder and Managing Partner Drayson Racing Technologies LLP (until April 2014).

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Catherine Guillouard

54 years old
Director since 2016
Independent

Curriculum Vitae
Catherine Guillouard began her career in 1993 at the Ministry of Economy in the French Treasury working
for the department in charge of the Africa – CFA zone and later in the Banking Affairs Department.
She joined Air France in 1997 as IPO Senior Project Manager. She was subsequently appointed Deputy
Vice-President Finance Controlling in 1999, Senior Vice-President of Flight Operations in 2001, Senior
Vice-President of Human Resources and Change Management in 2003 and Senior Vice-President of
Finance in 2005. In September 2007, she joined Eutelsat as Chief Financial Ofﬁcer and member of theGroup Executive Committee. Catherine joined Rexel in April 2013 as Chief Financial Ofﬁcer and Group
Senior Vice-President. Between May 2014 and February 2017 she has been Deputy Chief Executive
Ofﬁcer of Rexel. On 2 August 2017, Ms Guillouard was appointed Chariwoman and Chief Executive Ofﬁcer
of RATP Group, the ﬁfth largest urban transportation operator in the world with nearly 16 million daily
passengers in 14 countries and 4 continents, a workforce of nearly 61,000 employees worldwide and arevenue of € 5,5bn in 2017. She is also Vis-President of Systra’s supervisory board, the RATP Group and
SNCF joint engineering subsidiary. Catherine Guillouard, born in 1965, is a graduate of the Institute of
Political Studies of Paris and the École Nationale d’Administration and she has a PhD of European laws
(Panthéon-Sorbonne).
Current Mandates:- Member of the Board of Directors of Airbus SE;- Member of the Board of Directors of ENGIE;- Chairwoman and Chief Executive Ofﬁcer of RATP Group;- Chairwoman of the Supervisory Board of RATP Group;- Vice-Chairwoman of the Supervisory Board of Systra.
Former mandates for the last ﬁve years:- Deputy Chief Executive Ofﬁcer of Rexel (until February 2017);

Hermann-Josef Lamberti
Hermann-Josef Lamberti was Member of the Management Board of Deutsche Bank AG from 1999
until 2012 and operated as the bank’s Chief Operating Ofﬁcer. As COO he had global responsibility for
Human Resources, Information Technology, Operations and Process Management, Building and Facilities
Management as well as Purchasing. He joined Deutsche Bank in Frankfurt in 1998 as Executive Vice
President. From 1985, he held various management positions within IBM, working in Europe and the UnitedStates, in the ﬁelds of controlling, internal application development, sales, personal software, marketingand brand management. In 1997, he was appointed Chairman of the Management of IBM Germany.
Mr Lamberti started his career in 1982 with Touche Ross in Toronto, before joining the Chemical Bank inFrankfurt. He studied Business Administration at the Universities of Cologne and Dublin, and graduatedwith a Master’s degree.
63 years old
Director since 2007,
last re-elected in 2017
Independent

Current Mandates:- Member of the Board of Directors of Airbus SE;- Member of the Board of Trustees of Institute for Law and Finance Frankfurt;- Member of the Advisory Board of Wirtschaftsinitiative FrankfurtRheinMain e.V.;- Member of the Board of Trustees of Johann Wolfgang Goethe-Universität Fachbereich
Wirtschaftswissenschaften;- Member of the Board of Trustees of Frankfurt Institute for Advanced Studies (FIAS) of
Goethe-Universität;- Member of the Supervisory Board of ING Group N.V.;- Senior Business Advisor of Advent International GmbH;- Owner / Managing Director of Frankfurt Technology Management GmbH;- Chairman of the Supervisory Board of Addiko Bank AG.
Former mandates for the last ﬁve years:- Member of the Board of LDM – Lefdal Data Mine, AS, Maloy, Norway (until December 2017);- Member of the Board of Stonebranch INC., Alpharetta, Georgia, USA (until June 2017);- Member of the Supervisory Board Open-Xchange AG (until June 2016);- Member of the Advisory Board of Barmenia Versicherungen Wuppertal (until December 2014).

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María Amparo Moraleda Martínez

54 years old
Director since 2015,
last re-election in2018
Independent

Curriculum Vitae
Amparo Moraleda graduated as an industrial engineer from the ICAI (Escuela Técnica Superior de Ingeniería
Industrial) Madrid and holdsa PDG from IESE Business School in Madrid. Between January 2009 andFebruary 2012, she was Chief Operating Ofﬁcer of Iberdrola SA’s International Division with responsibility
for the United Kingdom and the United States. She also headed Iberdrola Engineering and Construction
from January 2009 to January 2011. Previously, she served as General Manager of IBM Spain andPortugal (2001-2009). In 2005 her area of responsibility was extended to encompass Greece, Israel
and Turkey as well. Between 2000 and 2001, she was executive assistant to the chairman and CEO of
IBM Corporation. From 1998 to 2000, Ms Moraleda was General Manager of INSA (a subsidiary of IBM
Global Services). From 1995 to 1997, she was HR Director for EMEA at IBM Global Services and from1988 to 1995 held various professional and management positions at IBM España. Ms Moraleda is also amember of various boards and trusts of different institutions and bodies. She is member of the academyof “Ciencias Sociales y del Medio Ambiente” of Andalucía (Spain), member of the board of trustees of MD
Anderson Cancer Centre in Madrid, CurArte Foundation in Madrid, member of the International Advisory
Board of Instituto de Empresa Business School and member of the Board of the global alumni associationof IESE Business School.
In May 2017 she was inducted as a member of the Spanish Royal Academy of Economic and Financial
Sciences.
Current Mandates:- Member of the Board of Directors of AirbusSE;- Member of the Board of Directors of Vodafone plc;
- Member of the Board of Directors of Solvay SA;- Member of the Board of Directors of Caixabank SA;- Member of the Supervisory Board of CSIC (Consejo Superior d’Investigaciones Cientiﬁcas);- Member of the Advisory Board of SAP Spain;- Member of the Advisory Board of Spencer Stuart Spain.

4

Former mandates for the last ﬁve years:- Member of the Board of Directors of Faurecia SA (until October 2017);- Member of the Advisory Board of KPMG Spain (until June 2017);- Member of the Board of Directors of Meliá Hotels International SA (until June 2015);- Member of the Board of Directors of Alstom SA (until June 2015);- Member of the Board of Corporación Financiera Alba SA (until May 2015).

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Claudia Nemat

50 years old
Director since 2016
Independent

Curriculum Vitae
Born in 1968, Claudia Nemat has been a member of the Board of Management of Deutsche Telekom AG
since October 2011. Mrs. Nemat led the European business of DT until the end of 2016. Since January 2017she has led the new Board area Technology & Innovation.
Before joining Deutsche Telekom AG, Claudia Nemat spent 17 years working for McKinsey & Company
where she was elected Partner in 2000, and Senior Partner (“Director”) in 2006. Among other responsibilities
during her time there, she was Co-leader of the global Technology Sector and managed it in the EMEA
economic region.
She focuses on digital transformation, the impact of new technologies such as artiﬁcial intelligence on
business models, our work and lives, complex stakeholder management, and leading global teams. Mrs.
Nemat has worked in numerous European countries as well as North and South America. She was amember of the Supervisory Board of Lanxess AG and she has been a member of the Board of Directorsof Airbus since 2016.
Claudia Nemat studied physics at University of Cologne and taught at the Institute of Mathematics andTheoretical Physics.
Current Mandates:- Member of the Board of Directors of Airbus SE;- Member of the Board of Directors of Airbus Defence and Space GmbH;- Member of the Management Board of Deutsche Telekom AG;- Chairperson of the Supervisory Board of Deutsche Telekom IT GmbH (related to Deutsche Telekom);- Member of the University Council of University of Cologne.
Former mandates for the last ﬁve years:- Chairperson and Member of the Board of Buyln (related to Deutsche Telekom) (until January 2017);- Member of the Board of OTE (related to Deutsche Telekom) (until January 2017);- Member of the Supervisory Board of LANXESS AG (until May 2016);- Director of EE Limited (UK) (related to Deutsche Telekom) (until 2014).

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René Obermann

56 years old
Director since 2018
Independent

Curriculum Vitae
In February 2015 René Obermann joined Warburg Pincus, a leading private equity ﬁrm, as a Partner andManaging Director. Subsequent to investments made by Warburg Pincus, he assumed roles as Chairmanof the Board at 1&1 Internet Holding SE and Non-Executive Director of inexio KGaA. Furthermore, heserves on the boards of Allianz Deutschland AG, Telenor ASA and ThyssenKrupp AG, and is a memberof the Editorial Board of DIE ZEIT.
René worked as CEO of Ziggo B.V. in The Netherlands in 2014 until the merger with LibertyGlobal’s UPC
in November. Prior to Ziggo, René worked at Deutsche Telekom Group (DT) from 1998 until 2013. Afterrunning DT’s mobile division (T-Mobile International), he was appointed as CEO of Deutsche Telekom AG
in November 2006, where he remained until December 2013.
René began his career with a business traineeship at BMW AG in Munich. Next, he founded his own
business in Münster in 1986: ABC Telekom, a company marketing and distributing telecommunicationequipment and providing technical services. After the acquisition of ABC Telekom by Hutchison Whampoa
in 1991, René became Managing Partner of the resulting company: Hutchison Mobilfunk GmbH. Between
1993 and 1998, he was CEO of that company.
From 2007-2013, Rene also served as Vice President of the German Association for Information Technology,
Telecommunications and New Media (BITKOM).
Current Mandates:- Member of the Board of Directors of Airbus SE;- Managing Director of Warburg Pincus Deutschland GmbH;- Member of the Board of Directors of Telenor ASA;
- Member of the Board of Directors of Allianz Deutschland AG;- Chairman of the Board of Directors of 1&1 Internet Holding SE;- Member of the Board of Directors of Inexio Informationstechnologie und Telekommunikation KGaA.

4

Former mandates for the last ﬁve years:- Member of the Board of Directors of ThyssenKrupp AG (until August 2018);- Member of the Board of Directors of Compu Group Medical SE (until December 2017);- Member of the Board of Directors of Spotify Technology SA (until July 2016);- Member of the Board of Directors of E.ON (until June 2016).

Carlos Tavares
Curriculum Vitae
Carlos Tavares is a graduate of École Centrale Paris. He held a number of different positions with the
Renault Group from 1981 to 2004 before joining Nissan. In 2009, he was appointed Executive Vice
President, Chairman of the Management Committee Americas and President of Nissan North America.
He was named Group Chief Operating Ofﬁcer of Renault in 2011. Since 1 January 2014, he has joined
the Managing Board of PSA Peugeot Citroën. He was named Chairman of the Managing Board since
31 March 2014.

60 years old
Director since 2016
Independent

Current Mandates:- Member of the Board of Directors of Airbus SE;- Director of Banque PSA Finance;- Chairman of the Board of Directors of Peugeot Citroën Automobiles SA;- Member of the Board of Directors of Total Group SA.
Former mandates for the last ﬁve years:- Director of Faurecia SA (until October 2018);- Manager of Bed&Breakfast in Lisbon (until March 2015);- Director of PCMA Holding B.V. (until October 2014).

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REPLACEMENTS OF BOARD MEMBERS IN THE COURSE OF 2018
Until AGM 2018

From AGM 2018*

Name

Age

StatusName

Age

StatusMr. Hans-Peter KEITEL

70

Independent

Mr. René OBERMANN

55

Independent

Sir John PARKER

75

Independent

Mr. Victor CHU

60

Independent

Mr. Jean-Claude TRICHET

75

Independent

Mr. Jean-Pierre CLAMADIEU

59

Independent* Further information on the Board members can be found in the above table “Composition of the Board of Directors in 2018”.

CHANGES IN THE COMPOSITION OF THE BOARD COMMITTEES IN THE COURSE OF 2018
Until AGM 2018*

From AGM 2018

Committee

Name

StatusAudit

Ms. Claudia NEMAT**

Member

Sir John PARKER

ECC

Member

Sir John PARKER
RNGC

Name

StatusMr. Victor CHU

MemberMr. René OBERMANN

MemberLord Paul DRAYSON

Member

Ms. Amparo MORALEDA

Mr. Hans-Peter KEITEL

MemberMr. Jean-Pierre CLAMADIEU

MemberMr. Jean-Claude TRICHETMember

Ms. Claudia NEMAT

Member* Further information on the Committee members can be found in the above tables “Composition of the Board of Directors in 2018” and “Replacements of Board
Members in the course of 2018”** Ms. Nemat resigned from the Audit Committee in 2018 and was replaced by Mr. Victor Chu and Mr. René Obermann. The Audit Committee currently consists of
5 members instead of 4.
Chair

Independent Directors(iii) Operation of the Board of Directors in 2018

The Independent Directors appointed pursuant to the criteria
of independence set out above are Denis Ranque, Ralph
Crosby, Catherine Guillouard, Victor Chu (from AGM 2018),
René Obermann (from AGM 2018), Hermann-Josef Lamberti,
Lord Paul Drayson, Maria Amparo Moraleda Martinez, Claudia
Nemat, Carlos Tavares and Jean-Pierre Clamadieu (from AGM
2018).

Board of Directors Meetings
The Board of Directors met 10 times during 2018 and wasregularly informed of developments through business reports
from the CEO, including progress on the strategic andoperational activities. The average attendance rate at thesemeetings was 87%.

Prior Offences and Family Ties
To the Company’s knowledge, none of the Directors (in either
their individual capacity or as Director or senior manager of
any of the entities listed above) has been convicted in relation
to fraudulent offences, been the subject of any bankruptcy,
receivership or liquidation, nor been the subject of any ofﬁcial
public incrimination and/or sanction by a statutory or regulatory
authority, nor been disqualiﬁed by a court from acting as a
Member of the administrative, management or supervisory
bodies of any issuer or conduct of affairs of any company,
during at least the last ﬁve years. As of the date of this document,
there are no family ties among any of the Directors.

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Throughout 2018, the Board of Directors reviewed anddiscussed the technical and commercial progress of signiﬁcant
new and running programmes. For Airbus Commercial thiscomprised inter alia the ramp-up of the A320neo programme
and the respective measures taken to mitigate the engine
issues hampering the production at Airbus and the operations
with the customers, the development of the A330neo and theramp-up of the A350. For Defence and Space it concerned for
the A400M programme the progress on the military capabilities
and the retroﬁt and delivery plan in line with the agreement
reached with OCCAR and the states; on the space side theAriane 6 programme was the subject of a thorough review withregards to progress and the competitive landscape. Turning

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to the Helicopter business, the review focused on the overallmarket situation and the preparation of the H160 programme forserial production. Regarding mergers and acquisitions, the mostimportant topic was the closure of the acquisition of a majority
stake in the Bombardier C Series programme which represents
an important addition to complement the Airbus product range
at the smaller end of the aircraft market.
Last year’s off-site Board meeting in September in Beijing
focused on the review of the Division and product strategies
and the related business developments as well as the overall
strategy of the Company. The Board of Directors seized theopportunity to visit the A320 ﬁnal assembly line and the A330
completion and delivery centre in Tianjin.
In 2018, the Board of Directors continued to support theCompany’s digital transformation and to enhance the Company’s
ability to identify and capitalise on innovative technologies andbusiness models. After thorough preparation, 2018 saw theindustrialisation and acceleration of the digital concepts. Oneof the most advanced is the Skywise project, a global data
platform which can create signiﬁcant value across the wholeaerospace industry. Other projects transforming the engineeringand manufacturing landscape are are in progress.
Moreover the Board of Directors reviewed Airbus’ ﬁnancial
results and forecasts and, in line with the recommendationsof the Audit Committee, emphasised the importance of bothEnterprise Risk Management (“ERM”) and a strengthened
internal control system.
A substantial share of the Board activities was dedicated tocompliance matters. Following a recommendation by the
Ethics & Compliance Committee, the Board strengthened the
Ethics & Compliance organisation by allowing a reinforcementof its resources, so helping to improve the Company’ cultureof integrity. The Board also continued to closely monitor the
Serious Fraud Ofﬁce / Parquet National Financier investigations.
In addition, the Board received advice from the “Independent
Compliance Review Panel”, which is composed of renowned
international experts, with respect to its compliance activities inorder to build a state of the art Ethics & Compliance programmeand organisation.
Following the departure of some members of the Executive
Committee in early 2018 and the announcement that thecurrent CEO and Chief Financial Ofﬁcer (“CFO”) would leave
the Company at the next AGM, the Board dedicated a largepart of its work in 2018 to the search and nomination of a newgeneration of leaders to prepare the Company for the challengesof the next decade. The RNGC has run, for each of the positions
to be ﬁlled, a thorough process in which internal and external
candidates have been identiﬁed and assessed. The shortlisted
candidates were then proposed to the Board and interviewed by
Board Members. Already in the course of 2018, the vacancy for a
Chief Technical Ofﬁcer (“CTO”) was ﬁlled by Grazia Vittadini, whobecame the ﬁrst female member of the Executive Committee.
By the end of 2018, successors for key positions had been
selected and announced – in particular for the CEO, the CFO
and the Chief Operating Ofﬁcer (“COO”).

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Board Evaluation 2018
As a matter of principle, the Board of Directors has decided thata formal evaluation of the functioning of the Board of Directors
and its Committees with the assistance of a third-party expert is
conducted every three years. In the year succeeding the outside
evaluation, the Board of Directors performs a self-evaluation andfocuses on the implementation of the improvement action plan
resulting from the third-party assessment. In the intervening
second year, the General Counsel, being also the Secretaryof the Board, issues a questionnaire and consults with Board
Members to establish an internal evaluation which is thendiscussed with Board Members.

The year 2018 was the intervening second year of theabovementioned three-year cycle. In October 2018, the Boardof Directors therefore performed a self-evaluation based on aquestionnaire issued by the General Counsel and circulated toeach Board Member.
The questionnaire primarily covered governance and Board
agenda, Board and Board Committees functioning, interactions
are dynamic amongst Board members and between Board andManagement, Board composition and renewal process, Board
and Board Committees fees, Board Committees contributions
and involvement of Remuneration, Nomination and GovernanceCommittee in succession planning. With respect to theRemuneration policy, the Board Members were provided theopportunity to express their views on their own remuneration.

4

In the 2018 self-evaluation, the Board Members conﬁrmed
overall satisfaction with the progress made in the implementationof the Board’s “Improvement Action Plan” recommended byHeidrick & Struggles as its third-party expert, following theformal evaluation conducted in 2017.
The Board Members also conﬁrmed overall satisfaction with the
dynamics of the Company’s governance and its performance. The
outcome of the questionnaire notably highlighted the improved
balance of powers and constructive interactions amongst
Board Members and between the Board and Management,
as well as open debates between the Board Members. The
efﬁcient decision-making process of the Board is supportedby the adequate preparation of Board meetings, suitable time
allocated to agenda items and valuable contributions of theBoard Committees.
Following the last Board review, one-to-one sessions between
Board Members took place to improve connections between
them. Top Management team members have been regularly
invited to participate to Board meetings to discuss speciﬁc
topics; and Board Members expect the frequency of thisparticipation to be improved in 2019.
In addition, the Board has dedicated more time to risk andperformance management, succession planning and talentdevelopment, as well as to other important matters for which
discussions need to be still further enhanced, such as strategy,
digital transformation, Responsibility & Sustainability, employee
engagement and anticipation of signiﬁcant potential issues.
Finally, the Board Members expressed their overall satisfaction
with regards to the Board composition and renewal process.
They highlighted the necessity to continue with the principle ofstaggering Board appointments in order to further develop its
diversity of expertise and gender.

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Board Committeesa) The Audit Committee
The Audit Committee has ﬁve (5) Members and is chaired by
an Independent Director who is not the Chair of the Boardof Directors or a current or former Executive Director of theCompany. The Chair of the Audit Committee shall be, andthe other members of the Audit Committee may be, ﬁnancial
experts with relevant knowledge and experience of ﬁnancial
administration and accounting for listed companies or otherlarge legal entities.
Pursuant to the Board Rules, the Audit Committee, whichis required to meet at least four times a year, makes
recommendations to the Board of Directors on the approvalof the annual ﬁnancial statements and the interim accounts(Q1, H1, Q3), as well as the appointment of external auditors
and the determination of their remuneration. Moreover, theAudit Committee has responsibility for verifying and making
recommendations to the effect that the internal and external
audit activities are correctly directed, that internal controls are
duly exercised and that these matters are given due importanceat meetings of the Board of Directors. Thus, it discusses withthe auditors their audit programme and the results of the auditof the ﬁnancial statements, and it monitors the adequacy ofAirbus’ internal controls, accounting policies and ﬁnancial
reporting. It also oversees the operation of the Company’s ERM
system and keeps a strong link to the Ethics and Compliance
Committee. For further details in this regard, see “— 4.1.3
Enterprise Risk Management System”. Please refer to Annex Eof the Board Rules for a complete list of responsibilities of the
Audit Committee.
The Chairman of the Board of Directors and the CEO are invited
to attend meetings of the Audit Committee. The CFO and theHead Accounting Record to Report are requested to attend
meetings to present management proposals and to answer
questions. Furthermore, the Head of Corporate Audit & Forensic
and the Chief Ethics and Compliance Ofﬁcer are requested toreport to the Audit Committee on a regular basis.
In 2018, it met ﬁve times with an average attendance rate of
88%, it discussed all of the items described above during themeetings and it fully performed all of the duties described.
b) The Ethics and Compliance Committee
To reinforce oversight of ethics and compliance matters at theBoard of Directors level, a dedicated Ethics and Compliance
Committee (“E&C Committee” or “ECC”) was established in2017 and the Board Rules have been amended accordingly.
Pursuant to the Board Rules the main mission of the E&C
Committee is to assist the Board in monitoring Airbus’
culture and commitment to ethical business and integrity.
This committee is empowered to oversee Airbus’ ethics andcompliance programme, organisation and framework in orderto make sure that Airbus ethics and compliance governance iseffective (including all associated internal policies, procedures
and controls). This includes the areas of money laundering andterrorist ﬁnancing, fraud, bribery and corruption, trade sanctions
and export control, data privacy, procurement and supply chain
compliance and anti-competitive practices.

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The E&C Committee has ﬁve (5) Members and is chaired byany of its members. Each member should be an Independent
Director. Both the chairman of the Audit Committee and thechair of the RNGC is a member of the E&C Committee.
The E&C Committee makes recommendations to the Boardof Directors and its Committees on all ethics and compliancerelated matters and is responsible for providing to the Audit
Committee any necessary disclosures on issues or alleged
ethical and compliance breaches that are financial andaccounting-related. The E&C Committee maintains a reporting
line with the Chief Ethics and Compliance Ofﬁcer, who isrequested to provide periodic reports on its activities.
The Chairman of the Audit Committee and the Chair of the
RNGC are members of the E&C Committee. Unless otherwise
decided by the E&C Committee, the CEO is invited to attend
the meetings. From time to time, independent external experts
and the Independent Compliance Review Panel are also invited
to attend E&C Committee meetings.
The E&C Committee is required to meet at least four times ayear. In 2018, the E&C Committee met in total 11 times with anaverage attendance rate of 93%. All of the above described items
were discussed during the meetings and the E&C Committee
fully performed all the above-described duties.
c) The Remuneration, Nomination and GovernanceCommittee
The RNGC has four (4) Members, with geographic diversity.
Each Member of the RNGC is an Independent Director. One
Member of the RNGC is a Director who is appointed to theBoard of Directors on the basis of the French State Security
Agreement. One Member of the RNGC is a Director who isappointed to the Board of Directors on the basis of the German
State Security Agreement. The Board of Directors, by a Simple
Majority (deﬁned below), appoints the chair of the RNGC, who
may not be any of the following:
Chairman of the Board of Directors;- theor former Executive Director of the Company;- aa current- Non-Executive Director who is an Executive Director withanother listed company; or- a Director appointed to the Board of Directors on the basisof the French State Security Agreement or the German State
Security Agreement.
Pursuant to the Board Rules, besides its role described in
section 4.1.1 above, the RNGC consults with the CEO withrespect to proposals for the appointment of the members of
the Executive Committee, and makes recommendations to theBoard of Directors regarding the appointment of the Secretary to
the Board of Directors. The RNGC also makes recommendations
to the Board of Directors regarding succession planning (atBoard, Executive Committee and Senior Management levels),remuneration strategies and long-term remuneration plans.
Furthermore the Committee decides on the service contracts
and other contractual matters in relation to the Members of theBoard of Directors and the Executive Committee. The rules andresponsibilities of the RNGC have been set out in the Board
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The Chair of the Board of Directors and the CEO are invited toattend meetings of the RNGC. The Chief Human Resources
Ofﬁcer (“CHRO”) is requested to attend meetings to present
management proposals and to answer questions.
In addition, the RNGC reviews the Company’s top talent,
discusses measures to improve engagement and to promote
diversity, reviews the remuneration of the Executive Committee
Members, the Long-Term Incentive Plans (“LTIP”), and thevariable pay for the previous year.
Finally, the RNGC performs regular evaluations of the Company’s
corporate governance and makes proposals for changes to theBoard Rules or the Articles of Association.
The guiding principle governing management appointments
within Airbus is that the best candidate should be appointed tothe position (“best person for the job”), while at the same timeseeking to achieve a balanced composition with respect togender, experience, national origin, etc. The implementation ofthese principles should, however, not create any restrictions on
the diversity within the Company’s executive management team.
The RNGC is required to meet at least four times a year. In 2018,
it met nine times with an attendance rate of 89%, it discussed
all of the above described items during the meetings and it fully
performed all of the above described duties.

4.1.1.3

The Executive Committeea) Nomination and Composition
The Executive Committee of Airbus (the “Executive Committee”)
is chaired by the Chief Executive Ofﬁcer and its members areappointed on the basis of their performance of their individual
responsibilities as well as their respective contribution to theoverall interest of Airbus.
The CEO proposes all of the Members of the Executive Committee
for approval by the Board of Directors, after consultation with(i) the Chairman of the RNGC and (ii) the Chairman of the Boardof Directors, applying the following principles:the preference for the best candidate for the position;
the maintenance, in respect of the number of Members of
the Executive Committee, of the observed balance among
the nationalities of the candidates in respect of the location of
the main industrial centres of Airbus (in particular among thenationals of France, Germany, Spain and the United Kingdom,
where these main industrial centres are located); andat least 2/3 of the Members of the Executive Committee,
including the CEO and the CFO, being EU nationals andresidents.

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b) Role of the Executive Committee
The CEO is responsible for executing the strategy, as approvedby the Board of Directors, and for managing the day-to-day
operations of Airbus’ business and he shall be accountable forits proper execution. For this purpose, the CEO regularly seeks
advice from his core executive management team (“EMT”),
which comprises some of the Executive Committee Members,on Airbus-wide topics such as corporate matters or major
ongoing projects as well as on business development andperformance improvement opportunities.
The Executive Committee further supports the CEO in performing
these tasks, ensuring proper alignment of the Company’s
management beyond the EMT. The Executive Committee
Members shall jointly contribute to the overall interests of theCompany, in addition to each Member’s individual operationalor functional responsibility within Airbus. The CEO endeavours
to reach consensus among the Members of the Executive
Committee. In the event a consensus is not reached, the CEO
is entitled to decide the matter.
c) The Executive Committee in 2018

4

The Executive Committee comprises the heads of the Divisions
and key functions of the Company, and is dedicated to exchange
and align on important matters such as:
appointment by the heads of the Airbus Divisions and functionsof their management teams;
major investments/divestments;
setting up and control of the implementation of the strategy
for Airbus’ businesses;
Airbus policy matters and management and organisational
structure of the business;
definition of the Company’s financial performance andbusiness performance strategy and targets;business issues, including the operational plan of the Company
and its Divisions.

-

It is also the forum where the information or requests for approvaldestined for the Board are discussed and approved. The CEO
is the only Executive Director within the Board of Directors andrepresents the Company on the Board. But, depending on therespective topic, he usually asks the responsible Executive
Committee Member to join him in the Board for presenting theﬁnancials (CFO), programme/product topics (Division head),HR matters (CHRO) or any other topic where a specialist isneeded. This approach allows Board Members to get to know
the Executive Committee Members and equips them to makejudgements when it comes to decisions about key positions.
The Executive Committee met four times during 2018.

The Board of Directors determines, by simple majority vote,whether to approve all of the Members of the Executive
Committee as proposed by the CEO.

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COMPOSITION OF THE EXECUTIVE COMMITTEE AT THE END OF 2018
Name

Start of term

Principal Occupation

Tom Enders

2012

Chief Executive Officer Airbus

Guillaume Faury

2018

President Airbus Commercial Aircraft

Dirk Hoke2016

Chief Executive Officer Airbus Defence and Space

Bruno Even

2018

Chief Executive Officer Airbus Helicopters

Harald Wilhelm

2012

Chief Financial Officer Airbus

Thierry Baril2012

Chief Human Resources Officer Airbus & Airbus Commercial AircraftJohn Harrison

2015

General Counsel Airbus

Grazia Vittadini

2018

Chief Technology Officer Airbus

Philippe Mhun

2019

Chief Programmes and Services Officer Airbus Commercial AircraftKlaus Richter2015

Chief Procurement Officer Airbus

Note: Status as per 1 January 2019. The professional address of all Members of the Executive Committee for any matter relating to Airbus is Mendelweg 30, 2333 CS Leiden,
the Netherlands.

Tom Enders – Chief Executive Officer Airbus(see above under “— 4.1.1.1 Board of Directors”)
Guillaume Faury – President Airbus Commercial Aircraft
Guillaume Faury, President of Airbus Commercial Aircraft wasappointed to the role in February 2018. Previously he was
President and CEO of Airbus Helicopters, since May 2013. He
is a member of the Executive Committee.
On 8 October 2018, Guillaume was chosen to become Airbus’
next Chief Executive Ofﬁcer (CEO) by the company’s Board of
Directors. He is due take up his new position on 10 April 2019,
when his appointment will be submitted to shareholders fortheir approval at Airbus’s Annual General Meeting. Until then,
Tom Enders will remain as the Company’s CEO.
A licensed ﬂight test engineer, Guillaume Faury joined Airbus
Helicopters from Peugeot SA, where he served as Executive
Vice-President for Research and Development and as memberof the Managing Board.
Between 1998 and 2008, he held several executive positions
in Eurocopter operations and commercial domains. In addition,
Faury was a member of the Eurocopter Executive Committee.
He started his professional career with the French Defense
Procurement Agency DGA, where he was in charge of the Tiger
helicopter ﬂight test activities at the Istres Flight Test Centre.

In 1994, Dirk Hoke began his professional career as R&D Engineer
for process and software analysis in the automotive industry
at Renault in Paris. In 1996, he joined Siemens through aninternational trainee programme with assignments in Germany,
Argentina and Austria. He then held various management postsin the Transportation Systems Division based in Germany. He
relocated to Sacramento, USA, as Head of the Transportation
Systems restructuring team in 2001.
Dirk Hoke continued his professional career at Siemens as
General Manager for the Transrapid Propulsion and Power
Supply Subdivision from 2002 to 2005 including the Shanghai“Maglev” project. He was then promoted to President ofSiemens Transportation Systems China and made Siemens
the largest foreign railway supplier in the country.
In 2008, Dirk Hoke moved to Morocco to lead Siemens’ Africa
activities. He returned to Germany in 2011 to become theDivision CEO of Industrial Solutions with the special task to build
up the services business for the Industry Sector. Afterwards, he
was called upon to restructure the Large Drives Business Unit.
Dirk Hoke holds a degree in mechanical engineering from theTechnical University of Brunswick, Germany. In 2010, Dirk Hokebecame a member of the Young Global Leader Class of theWorld Economic Forum and in 2013, member of the Baden
Baden Entrepreneur Talks.

Guillaume Faury holds an engineering degree from the École
Polytechnique in Paris as well as an aeronautics and engineering
degree from the École Nationale Supérieure de l’Aéronautiqueet de l’Espace in Toulouse.

Born on 2 April 1969, Dirk Hoke is married with two children.

Dirk Hoke – Chief Executive Officer - Airbus Defence andSpace

Bruno Even was appointed Chief Executive Ofﬁcer (CEO) of
Airbus Helicopters as of 1 April 2018. He is a member of the
Airbus Executive Committee.

Dirk Hoke is the designated Chief Executive Ofﬁcer (CEO) of
Airbus Defence and Space as of 1 April 2016. He started on
1 January 2016 as Deputy CEO. He is a member of the Executive
Committee.
Dirk Hoke joined Airbus from Siemens, where he had been
CEO of the Large Drives Business Unit since 2014. He has held
various executive-level positions at Siemens since becoming132

CEO of the Cluster Western & Central Africa in 2008. His careerspans 21 years and ﬁve continents.

Airbus / Information Document 2018

Bruno Even – Chief Executive Officer – Airbus Helicopters

He joined the company from Safran, where he held various
management positions at the Helicopter Engines and Electronic& Defence businesses. Since 2015, he served as Chief Executive
Ofﬁcer of Safran Helicopter Engines (ex-Turbomeca). Prior tothat position, he was CEO of Safran Electronics & Defence(exSagem).

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Bruno Even graduated from the École Polytechnique and began
his professional career in 1992 at the French Ministry of Defence,
where he was in charge of developing the space component
for the Helios II satellite.

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From 1995, Thierry Baril held roles as Human Resources
Director of the Alstom Energy Belfort site and Vice Presidentof Human Resources of the Alstom Energy Group.

In 1997, he transferred to the Ministry of Foreign Affairs to
become technical advisor for the Director of Strategic Affairs,
Security and Disarmament. He moved to the private sector andjoined Safran in 1999.

Following on from his experience at Alstom Energy, in 1998
Thierry Baril became Managing Director of Human Resources
for Europe for GE (General Electric) at their Belfort Headquarters,
followed by Vice President of Human Resources at Alcatel
Space’s Headquarters in Toulouse from 2000.

Harald Wilhelm – Chief Financial Officer Airbus

John Harrison – General Counsel Airbus

Harald Wilhelm has been Chief Financial Ofﬁcer of Airbus andAirbus Commercial Aircraft since 1 June 2012 and is a memberof the Executive Committee.

John Harrison has been General Counsel since June 2015.
Solicitor of the Supreme Court of England & Wales, John
Harrison completed his academic studies at the University of
McGill, Montréal, Canada. He holds a Bachelor LLB (Hons) and
Masters LLM of Laws degree.

He has held the role of Airbus Commercial Aircraft CFO since
1 February 2008. Previously, he was Airbus Commercial Aircraft
Chief Controlling Ofﬁcer and deputy to the Chief Financial
Ofﬁcer, a position to which he was appointed on 1 January 2007.
Prior to this, he was Senior Vice President, Airbus Commercial
Aircraft Financial Control, a role he held from 2003 to 2006.
Wilhelm joined Airbus Commercial Aircraft in 2000 as SeniorVice President, Accounting, Tax and Financial Services.

John Harrison began his career in 1991 at the international law
ﬁrm Clifford Chance, working consecutively in their London,
New York and Paris ofﬁces.
He joined Airbus then Technip S.A. where he served as Group
General Counsel and Member of the Executive Committee from2007-2015.

Before joining Airbus, Wilhelm had been Vice President M&A(mergers and acquisitions) at DaimlerChrysler Aerospace from1998, where he worked on projects including the integration of
Airbus into a single company. Prior to this, he had been Senior
Manager M&A at Daimler-Benz Aerospace from 1995 to 1998
and M&A Manager for the Company between 1992 and 1993.

Prior to joining Technip, Mr Harrison fulﬁlled various senior legal
positions in Airbus companies over a 10 year period culminating
his tenure from 2003-2007 as General Counsel of the EADSDefence Division.

Born in April 1966 in Munich, Wilhelm has a degree in BusinessStudies from Ludwig Maximilians University in Munich.

Grazia Vittadini – Chief Technology Officer Airbus

Thierry Baril – Chief Human Resources Officer Airbus
Thierry Baril was appointed Chief Human Resources Ofﬁcer of
Airbus on 1 June 2012. In addition, Baril continues to serve as
Airbus Commercial Aircraft Chief Human Resources Ofﬁcer.
Thierry Baril joined Airbus Commercial Aircraft in 2007 as
Executive Vice President, Human Resources, and Memberof the Airbus Commercial Aircraft Executive Committee, withresponsibility for deﬁning and implementing a company-wide
Human Resources strategy, enhancing integration and employee
engagement. He oversaw the development of key skills andcompetences to support business growth and greater internal
mobility. One of his main achievements was the transformationof the Company in the areas of leadership culture and diversity,
having played a key role in the implementation of “Power8” andAirbus’ internationalisation strategy.
Prior to this, Thierry Baril was Executive Vice President Human
Resources at Eurocopter – now Airbus Helicopters – and memberof the Eurocopter Executive Committee from January 2003. In
this position, Baril managed the Company’s Human Resources
activities globally, including the implementation of Human
Resources policies across Eurocopter’s European sites andits 15 subsidiaries worldwide. He was instrumental in theimplementation of “Vital”, a programme which transformed
Eurocopter as a business.
Thierry Baril started his career in 1988 as Deputy Human
Resources Director at Boccard SA, and transferred to Laborde& Kupfer-Repelec, a subsidiary of GEC ALSTHOM, as Human
Resources Manager in 1991.

4

John Harrison was born on 12 July 1967 in the United Kingdom.

Grazia Vittadini has been appointed Chief Technology Ofﬁcer(CTO) of Airbus and a member of the Airbus Executive
Committee, effective 1 May 2018.
Furthermore, she serves as Director of the Airbus Foundation
Board and as a member of the Inclusion and Diversity Steering
Committee.
Previously, Vittadini was Executive Vice President Head ofEngineering since January 2017 and member of Executive
Committee of Airbus Defence and Space.
Prior to this position, she had been Senior Vice President Headof Corporate Audit & Forensic, responsible for Airbus Groupaudit activities worldwide.
Since January 2013 and for one year and a half, Grazia wasVice President Head of Airframe Design and Technical Authority
for all Airbus aircraft.
Always leading transnational teams in multiple locations, she also
served as Chief Engineer on the Wing High Lift Devices of the
A380 in Bremen from First Flight to In-Service (2005-2009) andthen contributed to securing First Flight and Type Certiﬁcationof the A350 XWB aircraft as Head of Major Structural Tests in
Hamburg. The Major Tests for A320 Extended Service Goal,
A380 and A400M were also in her scope.
Vittadini began her professional career on the Italian side of
the Euroﬁghter Consortium, before joining Airbus Operationsin Germany in 2002 and setting on her path towards senior
management positions.
Grazia Vittadini graduated in Aeronautical Engineering and she
specialized in Aerodynamics from the Politecnico di Milano.

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Philippe Mhun - Chief Programmes and Services Officer Airbus Commercial Aircraft
Philippe Mhun was appointed as Chief Programmes & Services
Ofﬁcer for Airbus Commercial Aircraft, effective 1 January 2019,
and a member of the company’s Executive Committee.
In his previous role as Head of Customer Services since
October 2016, Philippe Mhun was responsible for all Airbus
support and services activities for airline customers, lessors,
MROs and operators, ranging from maintenance andengineering to training, upgrades and ﬂight operations but
also material management and logistical support. This included
the supervision of the Services Business Unit and afﬁliatedsubsidiaries, such as Satair, Navblue, Airbus Interiors Services
and Sepang. For the past two years, Philippe has initiated andimplemented a major transformation programme focusing
on Customer Satisfaction, Services development and digital
enablers such as Skywise applications.
Prior to this assignment, Philippe was Senior Vice President
Procurement for Equipment, Systems and support, a position
he held since 2013.
Philippe joined Airbus in November 2004 as Vice President A380
Programme within Customer Services to prepare and support
the A380 entry-into-service. He then became Vice President
Programmes in Airbus Customer Services leading Single Aisle,Long Range, Widebody, A380 and A350 Programmes together
with e-operations and supplier support activities.
Before joining Airbus, Philippe held various positions within UTA
and, following the merger in 1993, within Air France, starting
as a Structure Engineer for Boeing 747 at UTA all the way up
to becoming the Head of Long-Haul Fleet Engineering and
Maintenance in Air France. From 1986 to 2004, Philippe wasinvolved in new programmes’ entry-into-service, engineeringand maintenance at all levels of the company.
Klaus Richter – Chief Procurement Officer Airbus
Klaus Richter became Chief Procurement Ofﬁcer for Airbus SE
on 1 January 2015. In this function, he is a member of the
Executive Committee and the Airbus Executive Committee.

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In addition, he serves as the Chairman of the Board of Airbus
in Germany and leads the supervisory board of Premium
AEROTEC Group.
He is in charge of procurement across the entire Airbus
Commercial Aircraft organisation, having responsibility fordeveloping strong partnerships with suppliers and ensuring
timely delivery of all purchased goods on cost and with theproper quality.
In addition, Richter leads the General Procurement Organisationof Airbus. He coordinates strategic procurement topics, as wellas the development and application of procurement processes
and tools across the Group. Richter is also responsible for the
Airbus Regional Sourcing Ofﬁces in the U.S., India and China.
In January 2017, Klaus Richter also assumed the role of thepresident of the German Aerospace Industries Association(BDLI).
Richter joined Airbus in November 2007 as Executive Vice
President Procurement for Airbus. Before joining the Group,
Richter was Senior Vice President Materials Purchasing for
BMW, based in Munich, Germany. In this position, he washeading all supplier relations for direct materials and equipment
across the entire company.
Klaus Richter began his professional career with McKinsey& Company in 1993 as a management consultant for
automotive, electronics and aerospace businesses and productdevelopment, a role which he retained until he joined the BMW
Group in 2003 as Head of Purchasing Strategy for production
materials.
Richter graduated from the Technical University of Munich where
he obtained a doctorate in mechanical engineering in 1991. After
graduation he received a Humboldt scholarship and spent two
years as a researcher and teacher at the University of California
at Berkeley.
Born in Munich on 29 September 1964, Klaus Richter is married
with two children.

4.1.2 Dutch Corporate Governance Code, “Comply or Explain”
In accordance with Dutch law and with the provisions of the
Dutch Code as amended in 2016, which includes a number of
non-mandatory recommendations, the Company either applies
the provisions of the Dutch Code or, if applicable, explainsand gives sound reasons for their non-application. While theCompany, in its continuous efforts to adhere to the highest
standards, applies most of the current recommendations of
the Dutch Code, it must, in accordance with the “comply or
explain” principle, provide the explanations below.
On 8 December 2016, the Dutch Code was revised; its updated
recommendations apply to ﬁnancial years starting on or after
1 January 2017.
Airbus welcomed the updates to the Dutch Code and continues
supporting the emphasis of the revised Dutch Code on topics
such as long-term value creation and the importance of culture.

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For the full text of the Dutch Code as well as the New Code,please refer to www.commissiecorporategovernance.nl.
For the ﬁnancial year 2018 and in respect of compliance with
the Dutch Code, the Company states the following:
1. Vice-Chairmanship
Provision 2.3.6 (ii) of the Dutch Code recommends the election ofa vice-chairman, to, among other things, deal with the situation
when vacancies occur.
The Board of Directors is headed by the Chairman of the Boardof Directors and no vice chairman is appointed. In case of
dismissal or resignation of the Chairman, the Board of Directors
shall immediately designate a new Chairman. In Airbus’ view
there is no need for the appointment of a vice-chairman to deal
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2. Termination Indemnity
Provision 3.2.3 of the Dutch Code recommends that the
maximum remuneration in the event of dismissal of an Executive
Board Member be one year’s salary. Under this provision of the
Dutch Code, severance pay should not be awarded if the Board
membership is terminated early at the initiative of the Executive
Board Member, or in the event of seriously culpable or negligent
behaviour on the part of the Executive Board Member.
The Company foresees a termination indemnity for the sole
Executive Board Member, the CEO, equal to one and a halftimes the annual total target salary in the event that the Boardof Directors has concluded that the CEO can no longer fulﬁlhis position as a result of change of the Company’s strategy or
policies or as a result of a change in control of the Company.
The termination indemnity would be paid only provided that theperformance conditions assessed by the Board of Directors had
been fulﬁlled by the CEO.
3. Securities in the Company as Long-Term Investment
Provision 3.3.3 of the Dutch Code recommends that nonExecutive Directors who hold securities in the Company should
keep them as a long-term investment.
The Company does not encourage non-Executive Directors
to own shares, but also does not require its non-Executive
Directors who hold shares in its share capital, to keep suchshares as a long-term investment. Although non-Executive
Directors are welcome to own shares of the Company, theCompany considers it is altogether unclear whether shareownership by non-Executive Directors constitutes a factor of
virtuous alignment with stakeholder interest or may be a sourceof bias against objective decisions.
4. Dealings with Analysts
Provision 4.2.3 of the Dutch Code recommends meetings withanalysts, presentations to analysts, presentations to investors
and institutional investors and press conferences shall beannounced in advance on the Company’s website and by meansof press releases. In addition, it recommends that provisions
shall be made for all shareholders to follow these meetingsand presentations in real time and that after the meetings thepresentations shall be posted on the Company’s website.

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The Company does not always allow shareholders to follow
meetings with analysts in real time. However, the Company
ensures that all shareholders and other parties in the ﬁnancial
markets are provided with equal and simultaneous information
about matters that may inﬂuence the share price.
5. Gender Diversity
The Company strives to comply with the composition guidelines
regarding gender diversity under Dutch law pursuant to which
the Board of Directors would be regarded as being composedin a balanced way if it contained at least 30% women and at
least 30% men. The proportion of the female representation on
the Board of Directors is currently at 25% (against 0% six yearsago). The Company will continue to promote gender diversity
within its Board of Directors in accordance with the principles
mentioned in section 4.1.1.1 above. In addition, the Company
will continue to give due consideration to any applicable gendertargets in its search to ﬁnd suitable candidates and to actively
seek female candidates. However, the Company believes thatcandidates should not be recruited based on gender alone; thecapabilities and skills of potential candidates are most importantin this respect.

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Furthermore, the Company is committed to supporting, valuing
and leveraging the value of diversity. That being said, theimportance of diversity, in and of itself, should not set aside
the overriding principle that someone should be recommended,nominated and appointed for being “the right person for the job”.
Although the Company has not set speciﬁc targets with respect
to particular elements of diversity, except for the principles
described in 4.1.1.1 above and those targets which apply bylaw, the Company is committed to seeking broad diversity inthe composition of the Board of Directors and its Executive
Committee and will consider attributes such as personal
background, age, gender, experience, capabilities and skills
when evaluating new candidates in the best interests of theCompany and its stakeholders.
The Company believes that the composition of its Board of
Directors and its Executive Committee is consistent with thesediversity objectives.

4.1.3 Enterprise Risk Management System
Airbus’ long-term development and production lifecycle makeERM a crucial mechanism for both mitigating the risks faced by
the Company and identifying future opportunities.

Functions. The key risks and their mitigations are reported to theBoard of Directors through a reporting synthesis, consolidated
on a quarterly basis.

Applied across the Company and its main subsidiaries, ERM
is a permanent top-down and bottom-up process, which is
executed across Divisions at each level of the organisation. It
is designed to identify and manage risks and opportunities. A
strong focus is put on the operational dimension due to theimportance of Programmes and Operations for Airbus.

The ERM system is articulated along four axes:
Anticipation: early risk reduction and attention to emerging
risks;
Speak-up and early warnings;
Robust risk mitigations; andOpportunities.

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ERM Process

The objectives and principles for the ERM system as endorsedby the Board of Directors are set forth in the Company’s ERM
Policy and communicated throughout the Company. The
Company’s ERM Policy is supplemented by directives, manuals,
guidelines, handbooks, etc. External standards which contributeto the Company’s ERM system include the standards as deﬁned
by the International Organisation for Standardisation (“ISO”).
The ERM process consists of four elements:23

4.1.3.2

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3

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5

ERM Governance and Responsibility

The governance structure and related responsibilities for the
ERM system are as follows:
the Board of Directors supervises with support of the Audit
Committee the strategy and business risk and opportunities
as well as design and effectiveness of the ERM system;
the CEO, with the top management, is responsible for aneffective ERM system. He is supported by the CFO, who
supervises the Head of ERM, and the ERM system design
and process implementation;
the Head of ERM has primary responsibility for the ERM
strategy, priorities, system design, culture development andreporting tool. He supervises the operation of the ERM system
and is backed by a dedicated risk management organisationin the Company focusing on the operational dimension,
early warning and anticipation culture development while
actively seeking to reduce overall risk criticality. The risk
management organisation is structured as a cross-divisional
Centre of Competence (“CoC”) and pushes for a proactive
risk management;
the management at executive levels has the responsibility
for the operation and monitoring of the ERM system in its
respective areas of responsibility and for the implementationof appropriate response activities to reduce risk and seize
opportunities, considering the recommendations of theinternal and external auditors.

-- a strong operational process, derived from ISO 31000 – to enhance operational risk and opportunity management;- a reporting process, which contains procedures for the status
reporting of the ERM system and the risk/opportunity situation;- a ERM compliance process, which comprises procedures toassess the effectiveness of the ERM system; and- a support process, which includes procedures to maintainand increase the quality of the ERM system.

The ERM process applies to all relevant sources of risks andopportunities that potentially affect the Company’s activities,
its businesses and its organisation in the short-, mid- and longterm. The ERM process is part of the management process andinter-related with the other processes.
All the Company’s organisations, including Divisions, subsidiaries
and controlled participations, commit to and confirm theeffective implementation of the ERM system. The annual ERM
Conﬁrmation Letter issued by each organisation is the formal
acknowledgement about the effectiveness of the ERM system.
For a discussion of the main risks to which the Company is
exposed, see “— Risk Factors”.

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4.1.3.3

ERM Effectiveness

The ERM effectiveness is analysed by ERM centre ofcompetence (“CoC”), based on ERM reports, conﬁrmation
letters, in situ sessions (e.g., risk reviews), participation to key
controls (e.g., major Programme Maturity Gate Reviews) andCorporate Audit, based on internal corporate audit reports.

The combination of the following controls is designed to achieve reasonable assurance about ERM effectiveness:

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Organisation

Explanations

Board of Directors /Audit Committee

Regular monitoring
The Board of Directors and the Audit Committee review, monitor and supervise the ERM system. Any material
failings in, material changes to, and/or material improvements of the ERM system which are observed, madeand/or planned are discussed with the Board and the Audit Committee.

Top Management

ERM as part of the regular divisional business reviews
Results of the operational risk and opportunity management process, self-assessments and confirmation
procedures are presented by the Divisions or other Airbus’ organisations to top management.

Management

ERM confirmation letter procedure
Entities and department heads that participate in the annual ERM compliance procedures must sign ERM
Confirmation Letters.

ERM CoC

ERM effectiveness measurement
Assess ERM effectiveness by consideration of ERM reports, ERM confirmations, in situ sessions(risk reviews etc.), participation to key controls (e.g., major Programme Maturity Gate Reviews).

Corporate Audit

Continuous monitoring and audits on ERM
Provide independent assurance to the Audit Committee on the effectiveness of the ERM system.

E&C

Alert System
Detect deficiencies regarding conformity to applicable laws and regulations as well as to ethical business principles.

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Board Declaration

Based on the Company’s current state of affairs, the reports
made directly available to the Board of Directors, coming fromdifferent processes, audits and controls and the information it
received from management, the Board of Directors believes tothe best of its knowledge that:the internal risk management and control system provides
reasonable assurance that the ﬁnancial reporting does notcontain any material inaccuracies;
this report provides sufﬁcient insight into any material failings in
the effectiveness of the internal risk management and control
systems.
it is justiﬁed that the ﬁnancial statements have been preparedon a going concern basis; and-- this report states the material risks and uncertainties that are
relevant to the expectation of the Company’s continuity forthe period of 12 months after the preparation of the report.

It should be noted that no matter how well designed, the internalrisk management and control system has inherent limitations,such as vulnerability to circumvention or overrides of thecontrols in place. Consequently, no assurance can be giventhat the Company’s internal risk management and system andprocedures are or will be, despite all care and effort, entirely
effective.

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4.1.4 Internal Audit
In accordance with Principle 1.3 of the Dutch Code, Airbus
Corporate Audit and Forensic assesses and provides objective
assurance on the design and effectiveness of the Company’srisk management, internal controls and governance systems. Its
mandate is set out in the Airbus Corporate Audit and Forensic
Charter.
Corporate Audit & Forensic engages in the independent andobjective corporate assurance activities of internal auditing andforensic investigations. It supports the Company in improving
its operations and accomplishing its objectives by bringing asystematic and disciplined approach to evaluate and improvethe effectiveness of the organisation’s governance, risk
management and internal controls. The function includes ateam of forensic specialists who assist Airbus and the Legal andCompliance function by leading and supporting investigationsof compliance allegations.

The department’s independence is established by direct
reporting to the Audit Committee and CEO. Corporate Audit &Forensic adheres to the Institute of Internal Auditor’s Deﬁnition ofInternal Auditing, Code of Ethics and International Standards for
the Professional Practice of Internal Auditing as well as relevant
policies and procedures of the Company. The department
was recertiﬁed by the Institut français de l’audit et du contrôleinternes (IFACI) in 2018.

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4.2 Interests of Directors and Principal
Executive Ofﬁcers
4.2.1 Remuneration Policy
The Remuneration Policy covers all Members of the Board of
Directors: the CEO (who is the only Executive Director) andthe other Members of the Board (who are the Non-Executive
Directors).
It should be noted that although the policy relating to Executives
remuneration only refers to the CEO, these principles are also
applied to the other Members of the Executive Committee, who
do not serve on the Board of Directors, and to a large extent to
all Executives across Airbus. Upon proposal by the CEO, the
RNGC analyses and recommends, and the Board of Directors
decides, the remuneration of the Members of the Executive
Committee.
An amendment to the Remuneration Policy (as adopted at theAGM held on 28 April 2016) will be proposed for adoption by theshareholders at the AGM to be held in 2019. The application of
the Remuneration Policy in 2018 will be included as a separate
agenda item for discussion at the AGM to be held in 2019.
To see how the Remuneration Policy was applied in 2018 inrespect of the CEO (the only Executive Member of the Boardof Directors, see “— 4.2.1.5 Implementation of the remuneration
policy: CEO”. The cumulated remuneration of all Executive
Committee Members is presented in the “Notes to the IFRS
Consolidated Financial Statements — Note 31: Remuneration”.
To see how the Remuneration Policy was applied in 2018 inrespect of the non-Executive Members of the Board of Directors,
see “— 4.2.1.6 Implementation of the remuneration policy: NonExecutive Directors”.

4.2.1.1

Executive Remuneration – Applicableto the CEO

Except with respect to the amendments proposed in
Section 4.2.1.4 “Proposed amendments to the remuneration
policy”, related to contracts and severance provisions, there will
be no change in the remuneration policy in connection with theproposed appointment of a future CEO at the 2019 AGM; thepolicy as presented below will continue to apply.
a) Remuneration Philosophy
The Company’s remuneration philosophy aims to provide
remuneration that will attract, retain and motivate high-calibre
executives, whose contribution will ensure that the Company

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achieves its strategic and operational objectives, thereby
delivering long-term sustainable returns for all shareholders
and other stakeholders.
The Board of Directors and the RNGC are committed to making
sure that the executive remuneration structure is transparent
and comprehensive for all stakeholders, and to ensure that
Executive rewards are consistent and aligned with the interestsof long-term shareholders also taking into consideration salaryevolution of employees across the group.
Before setting the targets to be proposed for adoption by the
Board of Directors, the RNGC considers the ﬁnancial outcome
scenarios of meeting performance targets, including achieving
maximum performance thresholds, and how these may affectthe level and structure of the Executive remuneration.
b) Total Direct Compensation and Peer GroupThe CEO’s total direct compensation (“Total Direct
Compensation”) comprises a Base Salary (“Base Salary”), an
annual variable remuneration (“Annual Variable Remuneration”
or “VR”) and a Long-Term Incentive Plan (“LTIP”). The threeelements of the Total Direct Compensation are each intended
to comprise one-third of the total, assuming the achievementof performance conditions is 100% of target.
The level of Total Direct Compensation for the CEO (Base Salary,VR and LTIP) is set at the median of an extensive peer groupand takes into account the scope of the role of the CEO andthe level and structure of executive rewards within Airbus. The
benchmark is regularly reviewed by the RNGC and is based ona peer group which comprises:
global companies in Airbus’ main markets (France, Germany,
UK and US); andcompanies operating in the same industries asAirbus worldwide.

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The latest benchmark performed in November 2018 was basedon the relevant peer group composed of 76 companies selectedfrom CAC 40 in France, DAX 30 in Germany, FTSE 100 in the UK
and DJ 30 in the US as well as large European companies having
comparable economic indicators such as revenues, number of
employees and market capitalisation. Financial institutions were
excluded from the peer group.

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The elements of the Total Direct Compensation are described below:
Remuneration Element

Main Drivers

Performance Measures

Target and Maximum

Base Salary

Reflects market valueof position.

Not applicable.

1/3 of Total Direct Compensation(when performance achievement
is 100% of target).

VR

Rewards annual
performance basedon achievement ofCompany performancemeasures and individual
objectives.

LTIP

Rewards long-term
commitment andCompany performance,and engagement
on financial targets
subject to cumulative
performance over athree-year period.

Collective (50% of VR): divided
between EBIT(1) (45%); Free CashFlow(2) (45%) and RoCE (10%).
Individual (50% of VR): Achievementof annual individual objectives,
divided between Outcomes
and Behaviour.

The VR is targeted at 100%of the Base Salary for the CEO and,depending on the performance assessment,
ranges from 0% to 200% of target.
The VR is capped at 200% of the Base Salary.

The original allocation to the CEO is capped
at 100% of the Base Salary at the time of grant.

Vesting ranges from 0% to 150%
of initial grant, subject toperformance over a three-year
period. In principle, no vesting
if cumulative negative EBIT.
If cumulative EBIT is positive,
vesting from 50% to 150%
of grant based on EPS (75%)
and Free Cash Flow (25%).

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Since 2012, the following caps apply to
Performance Units only:
overall pay-out is capped at a maximum of
250% of the original value at the dateof grant.
The value that could result from shareprice increases is capped at 200% of thereference share price at the date of grant.

4(1) The Company continues to use the term EBIT (earnings before interest and taxes). It is identical to Profit before finance cost and income taxes as defined by IFRS Rules.
(2) Airbus defines the alternative performance measure free cash flow as the sum of (i) cash provided by operating activities and (ii) cash used for investing activities, minus (iii) changeof securities, (iv) contribution to plan assets of pension schemes, (v) realised treasury swaps and (vi) bank activities (“Free Cash Flow” or “FCF”). It is a key indicator which allows theCompany to measure the amount of cash flow generated from operations after cash used in investing activities.

As illustrated in the table below, the structure of the CEO’s Total
Direct Compensation will remain unchanged in 2019. This will
apply in the same way to a future CEO. Indeed, the on-target

levels of VR and LTIP will each amount to 100% of the CEO’s
Base Salary.

SCENARIOS CURRENT CEO TOTAL DIRECT COMPENSATION

Indications are based on the current CEO’s
remuneration and are in million euros.

Below Threshold
Target“Below Threshold” includes annual Base
Salary; VR at 0%; LTIP not vesting.

Maximum
0Base Salary

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3

Variable Remuneration (VR)4

5

LTI paid in cash

6

7

8

LTI paid in shares“Target” includes Base Salary, VR at target
and LTIP grant face value in cash and inshares.
“Maximum” includes Base Salary; maximum
VR value (200% of VR at target); maximum
LTIP cash grant projected at vestingdate (250% of grant value); maximum
performance applicable to the number ofshares granted (150%). The share pricedevelopment is unpredictable. The ﬁnal
value of Performance Shares cannot becapped.

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c) Base Salary
The CEO’s Base Salary is determined by the Board of Directors, taking into account the peer group analysis mentioned above.
d) Annual Variable Remuneration
The Variable Remuneration is a cash payment that is paid
following the end of each ﬁ nancial year, depending on theachievement of speciﬁc and challenging performance targets
as determined at the beginning of each ﬁnancial year. The levelof the CEO’s Variable Remuneration is targeted at 100% of theBase Salary; it is capped at a maximum level of 200% of theBase Salary. The entire Variable Remuneration is at-risk, andtherefore if performance targets are not achieved as per thedeﬁned objectives agreed by the Board of Directors, no Variable
Remuneration is paid.
The performance measures that are considered when awarding
the Variable Remuneration to the CEO are split equally between
common collective performance measures and individual
performance measures.

Common Collective Component
The common collective component is based on EBIT (45%), Free Cash Flow (45%) and return on capital employed (“RoCE)” (10%)
objectives (“Common Collectve Component”). At the beginning of each year, the Board of Directors sets the targets for thesekey value drivers at Group and Division levels. The common collective ﬁnancial targets relate closely to internal planning and to
guidance given to the capital markets (although there may be variations from these).
To calculate the common collective annual achievement levels, actual EBIT, Free Cash Flow and RoCE performance is comparedagainst the targets that were set for the year. This comparison forms the basis to computing achievement levels, noting thatthe actual EBIT, Free Cash Flow and RoCE levels are occasionally normalised for a limited number of factors which are outside
management control (such as certain foreign exchange impacts or unplanned merger and acquisition activities). The RNGC’s
intention is to ensure ambitious ﬁnancial targets and to incentivise the CEO’s commitment to meeting these targets.

FCF (Free Cash Flow)
Annual, M€ (45%)

EBIT (Earnings before Interest & Tax)
Annual, M€ (45%)
Measures operational proﬁtability
Driven by revenues and operating
expenses

Measures cash generation
Driven by cash provided by/used for operating
and investment activities

AirbusExecutives
commoncollective
ﬁnancialtargets

RoCE
Annual, % (10%)
Measures how much proﬁt is generated by
the capital invested in the business
Driven by operational and capital efﬁciency

In order to reinforce the alignment between the Company’s strategy, values and remuneration structure, the Company iscontemplating including in the Common Collective Component a speciﬁc R&S-related performance criterion in the future. The
RNGC will seek to ensure alignment of the chosen R&S criteria with the 2018 Company’s Priorities that are shared with all
employees, while also making sure that the criteria can be measured.

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FINANCIAL STATEMENTS 2018

1

2

3

4

5

Individual Component
The individual element (“Individual Component”) focuses on Outcomes and Behaviour (as deﬁned below). Individual performanceis assessed in these two important dimensions:- Outcomes encompass various aspects of what the CEO - Behaviour refers to the way results have been achieved,
can do to contribute to the success of the business: speciﬁcbusiness results he helps achieve, projects he drives andprocesses he helps improve. The individual targets of the
CEO are comprehensive and shared with all employees via
the 2018 Company Priorities;

which is also critical for long-term success: how the CEO
and the Board of Directors work as a team, how the CEOleads the Executive Committee, quality of communication,encouragement of innovation, etc. A speciﬁ c part of the
behaviour assessment relates to ethics, R&S and quality
issues.

e) Long-Term Incentive Plan
There are two types of Long-Term Incentive Plans (“Long-Term Incentive Plans” or “LTIP”): until 2015, LTIP was made up of
Performance Units (“Performance Units” or “Units”) only. Since 2016, following the approval of amendments by shareholders at 2016
AGM, the LTIP has been composed of a mix of Performance Units and Performance Shares (“Performance Shares” or “Shares”).
The value of the CEO’s LTIP allocation is capped as a percentage of the Base Salary at the date of grant and subject to performance
conditions.
The achievement of the performance criteria is assessed over a three-year period based on relevant ﬁnancial criteria with stringent
targets set in advance and agreed by the Board of Directors, as demonstrated by past Company practices.

4

Both Performance Units and Performance Shares that vest can vary between 0% and 150% of the Units and Shares granted,
subject to cumulative performance over a three-year period. The level of vesting is subject to the following performance measures:
0-50% of the allocation: In principle, this element of the Performance Unit/Share award will not vest if the Company reports
negative cumulated EBIT results. Nonetheless, in case the Company’s EBIT results are impacted by exceptional and unpredictable
circumstances, the Board of Directors, upon recommendation of the RNGC, may decide that a maximum portion of 50% of
the allocation will vest;
50-150% of the allocation: This element of the Performance Unit/Shares vests based on the two following performance criteria:
average earnings per share (75%) (“Earnings Per Share” or “EPS”) and cumulative Free Cash Flow (25%). Before the 2013 plan,
it used to vest according to one performance criteria only: average Earnings Per Share.

-

Earnings per Share
Average over 3 years
Measures proﬁtability
Driven by net income and number of shares

Free cash Flow
Cumulated over 3 years, M€
Measures cash generation
Driven by cash provided by/used for
operating and investment activities

For reasons of conﬁdentiality, the precise targets set for the average EPS and cumulative Free Cash Flow, even though they havebeen properly established in a precise manner, cannot be publicly disclosed as these objectives are in part linked to the Company’s
strategy. Nonetheless, for the sake of transparency and to ensure compliance with best market practices, retrospective information
demonstrating the stringency of the targets set by the Board of Directors is provided for the previous Long-Term Incentive Plans.
The vesting of Performance Units and Shares is subject to the following maximum cap:the maximum level of vesting is 150% of the number of Units/Shares granted.

-

The vesting of Performance Units is subject to the following maximum caps:
the value that could result from share price increases is capped at 200% of the reference share price at the date of grant;
the overall pay-out is capped at 250% of the value at the date of grant-

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FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

Performance Units plan characteristics(until and including 2015 plan)
Performance Units are the long-term equity-related incentive
awards that were granted to the CEO until 2015. LTIP awards
were granted each year. Each grant was subject to a threeyear cumulative performance objective. At the end of thethree-year period, the grant was subjected to a performance
calculation to determine whether and to what extent it shouldvest. Depending on continued employment, grants attributed
until 2013 vested in four tranches, the payment of which took
place approximately 6, 12, 18 and 24 months following theend of the performance period. Depending on continuous
employment, grants attributed in 2014 and 2015 would vest
in two tranches, the payment of which would take placeapproximately 6 and 18 months following the end of theperformance period.

At the date of grant, the CEO had to what portion of theallocation (subject to the performance calculation) was tobe released as cash payments and what portion was to beconverted into shares. At least 25% (and up to 75%) of theaward had to be deferred into shares, and would be releasedon the last vesting date. For the conversion into shares, one
Unit corresponds to one Airbus share.
For each payment in cash, one Unit is equal to the value of
one Airbus share at the time of vesting. The Airbus share value
is the average of the opening share price, on the Paris Stock
Exchange, during the 20 trading days preceding and including
the respective vesting dates.

LTIP-SCHEME 2014 AND 2015
Grants VEST in 2 tranches= 2 payment dates

GRANT DATE
Face value at grant date
Allocation policy

Y

Y+1

Y+2

Y+3

Performance period 3 years

Y+4

Y+5

Performance calculation
determines the number of Units
that may vest

Performance Units and Performance Shares characteristics(since 2016)
Since the 2016 plan, the CEO’s LTIP is comprised of a mix of
Performance Units and Performance Shares in order to increase
the alignment with shareholders’ interests. For each payment
in cash, one Unit is equal to the value of one Airbus share at
the time of vesting. The Airbus share value is the average ofthe opening share price, on the Paris Stock Exchange, during
the 20 trading days preceding and including the respective
vesting dates.
For the CEO, the value of the Performance Unit and Shareallocation is capped, at the time of grant, at 100% of the Base
Salary.

142

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At the end of the three-year period, the grant is subject to a
performance calculation to determine whether and to what
extent it should vest.
Depending on continued employment, Performance Units
attributed since 2016 will vest in two tranches, the paymentof which takes place approximately 6 and 18 months following
the end of the performance period. Performance Shares would
vest in one tranche, approximately 6 months following the endof the performance period.

ANNUAL REPORT 2018

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1

2

3

4

5

LTIP-SCHEME SINCE 2016

Performance calculation
determines the number of Unitsand shares that may vest

GRANT DATE
Face value at grant date
Allocation policy

Y

Y+1

Y+2

Y+3

Y+4

Y+5

x
x

x

Performance period 3 years
Vesting in CASH
Vesting in SHARES

4f) Share Ownership Guidelinek) Contracts and Severance

The Board of Directors has established a share ownershipguideline pursuant to which the CEO is expected to acquire
Airbus shares with a value equal to 200% of the Base Salaryand to hold them throughout his tenure.

In the case of contract termination, the CEO is currently
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 CEO mandate is
terminated for cause, in case of dismissal, if he resigns or if
the CEO has reached retirement age.

g) Benefits
The beneﬁts offered to the CEO comprise a company car andaccident insurance. Travel cost reimbursements are based on
the Company travel policy as applicable to all employees.
h) Retirement
The CEO is entitled to a retirement beneﬁt. The Company’s
policy is to provide a pension at retirement age that equals 50%of the Base Salary, once the CEO has served on the Executive
Committee for ﬁve years. This pension can increase graduallyto 60% of the Base Salary, for Executives who have served on
the Executive Committee for over ten years, and have been
employed for at least 12 years.
i) Clawback
Recent changes to Dutch law introduced the possibility for theCompany to deduct or claw back part of the CEO’s variable cash
remuneration (i.e. VR) or equity-related remuneration (excluding
the LTIP element settled in cash) served by the Company if
certain circumstances arise.
Any revision, claw back, or amounts deducted from the CEO’s
remuneration will be reported in the notes of the relevant
ﬁnancial statements.
j) Loans
The Company does not provide loans or advances to the CEO.

The CEO’s contract currently includes a non-competeclause which applies for a minimum of one year and can beextended at the Company’s initiative for a further year. The
Board of Directors has the discretion to invoke the extensionof the non-compete clause. The compensation under the
non-compete clause is equal to 50% of the last Total Annual
Remuneration (deﬁned as Base Salary and VR most recentlypaid) with respect to applicable local legal requirements if any
and paid in monthly instalments.
Past LTIP awards may be maintained, in such cases as in
the case of retirement or if a mandate is not renewed by theCompany without cause. The vesting of past LTIP awards
follows the plans’ rules and regulations including performance
conditions and is not accelerated in any case. LTIP awards
are forfeited for Executives who leave the Company on theirown initiative, but this is subject to review by the Board of
Directors.
Proposal of Policy from 2019 AGM onwards applicable toa future CEO
In order to comply with the recommendation of provision 3.2.3 ofthe Dutch Code relating to the maximum remuneration payablein the event of departure of an Executive Board Member and inline with market practices, the Board conﬁrmed on 13 February
2019 a proposal from the RNGC that the amount of the indemnity
to be paid to the CEO in case of contract termination should be
reduced to one year’s salary. Consequently, the CEO will beentitled to an indemnity equal to one times the last Total Annual
Remuneration (deﬁned as Base Salary and VR most recentlypaid), subject to applicable local legal requirements if any.

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INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

The other terms and conditions applicable to the payment ofsuch indemnity, as per the remuneration policy currently in force,
will remain unchanged. In particular such indemnity will not
apply if the CEO’s mandate is terminated for a speciﬁc cause,in case of dismissal, if he resigns or if the CEO has reachedretirement age.
In addition, the Board conﬁrmed on 13 February 2019 therecommendation of the RNGC to limit the non-competecompensation payable to the CEO in case of contract
termination to a maximum of one year. The other terms andconditions applicable to the non-compete compensation,as per the remuneration policy currently in force, will remainunchanged. In particular, the compensation will remain equal
to 50% of the last Total Annual Remuneration (deﬁned as Base
Salary and VR most recently paid), subject to applicable local
legal requirements if any.
All other components of the remuneration policy will remainunchanged.

4.2.1.2 Non-Executive Remuneration –Applicable to Non-Executive Membersof the Board of Directors
The Company’s Remuneration Policy with regard to NonExecutive Members of the Board of Directors is aimed atensuring fair compensation and protecting the independenceof the Board’s Members.
Fees and Entitlements
Non-Executive Members of the Board are currently entitled to
the following:a base fee for membership or chair of the Board;a Committee fee for membership or chair on each of theBoard’s Committees; andan attendance fee for the attendance to Board meetings.

-

Each of these fees is a ﬁxed amount. Non-Executive Membersof the Board do not receive any performance or equity-relatedcompensation, and do not accrue pension rights with theCompany in the frame of their mandate, except what they would
receive in the frame of a current or past Executive mandate.
These measures are designed to ensure the independence ofBoard Members and strengthen the overall effectiveness of theCompany’s corporate governance.
The Company does not encourage Non-Executive Directors topurchase Company shares.
Under the current policy, and since 2016, the fees havebeen reviewed to recognise the increase in Board Members’
responsibilities, their greater time commitment and Airbus’
continuous need to attract and retain highly competent Directors.
To incentivise Board attendance, the attendance fees havedoubled. Members of the Board are entitled to the following fees:
Fixed fee for membership of the Board (€ / year):
Chairman of the Board: € 210,000
Member of the Board: € 80,000-

144

Airbus / Information Document 2018

2

3

4

5

2

3

4

5

Fixed fee for membership of a Committee (€ / year):
Chairman of a Committee: € 30,000
Member of a Committee: € 20,000-

Attendance fees (€ / Board meeting):
Chairman: € 15,000
Member: € 10,000-

Attendance fees shall decrease by 50% in case of an attendanceby phone or a Board meeting held by phone.
Committee chairmanship and Committee membership fees are
cumulative if the concerned Non-Executive Director belongs
to two different Committees. Fees are paid twice a year at
the end of each semester (as close as possible to the Board
meeting dates).
Proposal of Policy from 1 January 2019 onwards
applicable to Non-Executive Directors
In order to ensure continuous commitment of the Membersof the Board and Airbus’ ability to retain highly competent
members, regular reviews of the Board remuneration policy
are undertaken by the Company. Following the benchmark
performed in 2015, a comprehensive review of the remuneration
policy applicable to the Non-Executive Members of the Board
was undertaken in 2018.
In September 2018, the independent consultant Willis Towers
Watson completed a compensation benchmark for the NonExecutive Directors (incl. the Chairman of the Board) against
an extensive peer group.
This analysis encompassed approximately 50 comparable
companies in various indices from five countries (France,
Germany, Netherlands, Spain and the UK) and other large
companies from the aerospace and defence sector (including
BAE Systems, Boeing, Dassault Aviation, Honey wellInternational Inc., Lockheed Martin Corp., Northrop Grumman
Corp., Raytheon, Rolls Royce, Safran, Textron, Thales, United
Technologies Corp). Financial institutions were excluded fromthe peer group.
From the analysis, it appeared that the total target remuneration
for the non-Executive Board members (i) for membership ofthe Board of Directors (ﬁxed and attendance fees) and (ii) for
membership of a Committee (ﬁxed fee) are positioned within
the market spectrum of the Company’s peer group.
The remuneration policy for membership of a Committee has
been applicable since 2008 and only provides for a ﬁxed fee
calculated on the basis of four regular meetings per Committee
per year.
However, since 2016, due to exceptional circumstances, theCommittees’ workload has signiﬁcantly increased. The current
remuneration policy does not take into account directors’
attendance to a greater number of Committee meetings when
the workload substantially intensifies. Further, the current
remuneration policy does not take into account such temporary
increased intensity in the workload.

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Corporate Governance /4.2 Interests of Directors and Principal Executive Ofﬁcers

Therefore, in order to allow for a temporary increase in the
remuneration of the non-Executive Members of the Boardof Directors for their membership of a Committee when theworkload increases), the Board approved in October 2018
the recommendation of the RNGC to allocate the following
attendance fees per Committee above four Committee meetings
per year (whether these meetings are held physically or byphone):
in case of physical attendance: € 3,000 per additional meetingfor Members based in Europe and € 6,000 per additional
meeting for Members based outside Europe;in case of attendance by phone (whether the meeting is held
physically or by phone): € 1,500 per additional meeting.

-

Such attendance fee will be identical for both the Chair andMembers of a Committee.
As the ﬁxed fees for membership of a Committee will remainunchanged (€ 30,000 for chair and € 20,000 for member), theallocation of an attendance fee per Committee above a certain
number of meetings per year will ensure automatic return to thecurrent level of remuneration when exceptional circumstances
end and workload decreases.
The contemplated total remuneration for membership ofa Committee (based on the average number of additional
Committee meetings effectively attended physically or by phoneby the Company’s directors in 2017 and 2018) will remain within
the market spectrum of the Company’s peer group (between
the median and Q3, as per the ﬁndings of the above-mentioned
benchmark).
Fixed fee for membership of the Board and attendance fees forattendance of Board meetings will remain unchanged.
Under the new policy, and in greater details, non-Executive
Members of the Board would be entitled to the following fees
for their membership of a Committee:
The proposal is to add an attendance fee per Committee
meeting above four meetings per year (whether these meetings
were held physically or by phone). The ﬁxed fee would remainunchanged.
Fixed fee for membership of a Committee (€ / year):
Chairman: 30,000
Member of a Committee: 20,000-

Attendance fee for membership of a Committee applicable tochair and members (€ / additional meeting above four meetings
per Committee per year, whether these meetings were held
physically or by phone):physical participation: 3,000 if the chair or member is basedin Europe and double attendance fee amount, i.e. 6,000 if thechair or member is based outside Europe;
participation by phone (whether the meeting is held physicallyor by phone): 1,500.

-

4.2.1.3

FINANCIAL STATEMENTS 2018

1

2

3

4

5

Proposed amendments
to the Remuneration Policy

At the 2019 AGM, the Board of Directors is proposing thatshareholders adopt the following amendments to the Airbus
Remuneration Policy:
Proposal of Policy from AGM 2019 onwards applicable to afuture CEO:In order to comply with the Dutch Code and in line with market
practices, the Board proposes, as described in details above,that the termination indemnity will be equal to one times the last
Total Annual Remuneration (deﬁned as Base Salary and VR mostrecently paid) subject to applicable local legal requirements if
any, and that the non-compete clause will apply for a maximumof one year.
The other terms and conditions applicable to the terminationindemnity and the non-compete compensation as per the
remuneration policy currently in force will remain unchanged.
In particular the termination indemnity will not apply if the CEO’s
mandate is terminated for a speciﬁc cause, in case of dismissal,
if he resigns or if the CEO has reached retirement age and thenon-compete compensation will remain equal to 50% of thelast Total Annual Remuneration (deﬁned as Base Salary andVR most recently paid).

4

Proposal of Policy from 1 January 2019 onwards applicable
to non executive directors:
In order to ensure continuous commitment of the Members of theBoard and Airbus’ ability to retain highly competent members,
the Company regularly reviews Board remuneration policy.
As described in detail above, in order to increase the remunerationof Non-Executive Directors who are Members of a Committee
when the workload of that Committee increases, the Company
proposes to allocate an attendance fee per Committee if and whensuch Committee would have more than four Committee meetings
per year (whether these meetings are held physically or by phone).
Such an attendance fee is identical for chair and membershipbut differs depending on whether attendance of the meetingis physical or by phone and, in case of physical attendance,
where the Committee Members are based.
As the ﬁxed fees for membership of a Committee remain unchanged,
the proposed amendment will ensure the automatic return to thecurrent level of remuneration when workload decreases.
While incentivising attendance to the meetings and recognising
the key role of the Committees for the Board of Directors, thecontemplated total target remuneration (ﬁxed and proposed
attendance fees) for membership of a Committee remains within
the market spectrum of the Company’s peer group, as per theﬁndings of the above-mentioned benchmark.
The other components of the remuneration policy will remainunchanged.

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4.2.1.4

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

Implementation of the Remuneration Policy: CEOa) Benchmarkingb) Base Salary

Based on a review the RNGC performed in 2018 with theassistance of an independent consultant, Willis Towers Watson,
it was concluded that the CEO’s Total Direct Compensation
was at the median level of the peer group as deﬁ ned in
Section 4.2.1.1 a).

For 2018, the Base Salary of the current CEO remained at€ 1,500,000. The CEO’s Base Salary level was reviewed in 2015
and approved by shareholders at the 2016 AGM.
The Base Salary of the future CEO is € 1,350,000 on a full year
basis. Any increase of the future CEO’s Base Salary will also
take into consideration salary increases of employees acrossthe group.

c) Annual Variable Remuneration
As stipulated in the Company’s Remuneration Policy, the CEO’s VR is targeted at 100% of the Base Salary and capped at 200%of the Base Salary. It is subject to the fulﬁlment of collective and individual performance targets. This applies for both the current
and the future CEO.
For 2018, the VR of the current CEO amounted to an aggregate € 2,317,500 composed of € 967,500 (129%) for the Common
Collective Component and € 1,350,000 (180%) for the Individual Component.

Common Collective
Component:€ 967,500
Achievement:
129 %

Total
Variable
Remuneration:€ 2,317,500

Individual part:€ 1,350,000
Achievement:
180%

At the end of the ﬁnancial year 2018, the Common Collective Component results from a composite 129% achievement of
EBIT (45%), Free Cash Flow (45%) and RoCE (10%) objectives.

PERFORMANCE ACHIEVEMENT – COMMON COLLECTIVE COMPONENT 2018

EBIT

99%

FCF

156%

RoCE

146%

MinimumAchievement

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Airbus / Information Document 2018

= 129%

MaximumAchievement

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This achievement mainly reﬂects a solid EBIT and strong Free
Cash Flow generation against the budgeted targets. The main
drivers of that success were the strong operational performanceand programme execution in all our businesses, in particular
record deliveries in Airbus, healthy pre-delivery payments
inﬂows, ongoing efforts to control working capital including
payment terms to suppliers and sound CapEx spending.

The Individual part results from an excellent achievement levelof 180% out of 200%, assessed by the RNGC and approved by
the Board on the basis of the CEO’s performance and behaviour,mostly with respect to the four Airbus priorities agreed at thestart of the year. For each of these outcomes, leadership,
personal performance and contributions were examined.
The factors determining the assessment in 2018 were among
other achievements:
solid ﬁnancial ﬁgures achieving the envisaged targets;record delivery achievements despite industrial challenges
especially on A320. Largest number of deliveries in Airbus
history, +11% vs. 2017;
good progress in industrial milestones of key development
programmes including ﬁrst deliveries of Airbus A350-1000
and ULR;remarkable successful closing of the acquisition of Bombardier
C Series programme (A220 family) complementing the Airbus
product portfolio and integration into Airbus organisation as
C-SALP;strong sales performance in Airbus Helicopters with book-tobill above 1 and satisfactory delivery performance with 357
units within a high competitive market;

-

-

-

1

2

3

4

5

- solid result in Airbus Defence and Space, stabilisation of

Finally, RoCE was below the target.
Normalisations were made to exclude exceptional events suchas currency exchange differences or those arising from phasing
mismatches.

FINANCIAL STATEMENTS 2018-

the A400M programme with good progress on capability
development, retrofit campaign and solid contractual
rebaselining. Record number of military aircraft deliveries andsatellite launches. Notable progress on future programmeswith key decisions on political level for UAS and FCAS;
strong key advancement in the Company’s further integration
through successful closure of the “Gemini” project bymerging Airbus and Airbus Group for a leaner and more
efﬁcient management, helping to prepare the future of theCompany;
excellent progress on digital roadmap for product andservices offerings with Skywise and internal processes
with DDMS;
strong progress on innovation and R&T activities, growthin activities of Airbus ventures, establishing of innovation
centres with opening of Shenzhen innovation centre. Strongly
evolved Airbus role on UAM, exploration of new businessmodels and smart partnering for future trends;
strong and very successful steering of management transition
with selection, on-boarding and up-skilling of new C-level
leaders. Including the new CEO;strong and solid emphasis of ethics & compliance andresponsibility & sustainability as key pillars for future
developments. High momentum on values journey ensured
CEO and leadership team consistently demonstrate values
and behaviours and that E&C and R&S are interconnected
drivers of culture change;
reinforced efforts on diversity in all its forms.

4

Due to the current CEO’s departure in 2019, the VR for 2019
amounts to an aggregate € 416,096 composed of € 208,048
for the Common Collective Component (100%) and € 208,048
for the Individual Component (100%).

d) Long-Term Incentive Plan
Granting 2018 and 2019
Due to the announcement of his departure, the current CEO has been granted neither Performance Units nor Performance
Shares for 2018 and 2019.
In 2019, the future CEO will be granted LTIPs in accordance with the applicable policy.
Vesting Values in 2018 for the current CEO
In 2018, the CEO received both cash payments and vested shares in connection with the vesting of 2013 and 2014 LTIP awards:

the total cash payment to the CEO amounted to € 1,364,541 in 2018 versus € 1,372,048 in 2017.
- Cash:- Shares:- in connection with the 2013 LTIP award, the CEO had elected that 50% of his grant should be deferred into shares. Therefore, theCEO received 11,360 vested shares (11,192 vested shares in 2017) on the fourth vesting date for LTIP 2013 (5 November 2018);- in connection with the 2014 LTIP award, the CEO had elected that 25% of his grant should be deferred into shares. Therefore,
the vesting of 2,950 Performance Units for the LTIP 2014 will be released in the form of shares on the second vesting date forthe 2014 LTIP (which will take place in 2019).

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FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

LTIP Overview: Granting and Vesting

Date ofgrants

Grant
Type Number

Shareprice at
grant
date

Value atgrant date(Un)
conditional

Performanceachievement

Units withperformanceachievement

Dates ofvesting

Share value atvesting dates*
1st vesting –3 May 2017:€ 72.12

2013

Units

30,300€ 46.17€ 1,398,951

Conditional

75%

22,7244 vestings in
2017-2018

2nd vesting–
3 November 2017:€ 81.92
3rd vesting –3 May 2018:€ 92.34
4th vesting–
5 November 2018:€ 92.34

2014

Units

29,500€ 47.45€ 1,399,775

Conditional

80%

23,6002 vestings in
2018-2019

1st vesting –3 May 2018:€ 94.40

2015

Units

24,862€ 56.31€ 1,399,979

Conditional

75%

18,6482 vestings in
2019-2020

Not yet known

2016

Units

14,240€ 52.67€ 750,021

Conditional

Not yet known

Not yet known

2 vestings in
2020-2021

Not yet known2016

Shares

14,240€ 52.67€ 750,021

Conditional

Not yet known

Not yet known

1 vesting in
2020

Not yet known

2017

Units

10,162€ 73.81€ 750,057

Conditional

Not yet known

Not yet known

2 vestings in
2021-2022

Not yet known2017

Shares

10,162€ 73.81€ 750,057

Conditional

Not yet known

Not yet known

1 vesting in
2021

Not yet known

Calculations may involve rounding to the nearest unit.
* LTIP 2013 and 2014 cap was applied to the share price.
Vesting will occur according to the respective rules and regulations of each plan. There will be no accelerated vesting due to the current CEO’s departure in 2019.

Performance Conditions of LTIP 2015
The performance conditions for LTIP 2015 were determined as follows:- if Airbus reports negative cumulated EBIT results, the Board of Directors can decide in its sole discretion to review the vestingof the Performance Units, including the 50% portion which is not subject to performance conditions;- 50% to 150% of the allocation would be granted depending on the compounded achievement of the two following performance
criteria:- 75% of average Earnings Per Share (“Ave EPS”): determined on a linear basis depending on three-year Ave EPS for the 2016,2017 and 2018 ﬁscal years, with the three-year Ave EPS target for an allocation of 100% equal to € 4.02,- and 25% of cumulative FCF (“Cum FCF”): determined on a linear basis depending on three-year Cum FCF for the 2016, 2017and 2018 ﬁscal years, with the three year Cum FCF target for an allocation of 100% equal to € 8,281m.

Review of Achievement of Performance Conditions
The Board of Directors on 13 February 2019 noted the achievement of the performance conditions of the 2015 plan, i.e. for the 2016,2017 and 2018 ﬁscal years. The three year Ave EPS was € 2.95 and the three-year Cum FCF was € 10,469m, after normalisation
to align them with policies in force when setting the target (notably IFRS 15 and A220 impacts).
LTIP 2015 PERFORMANCE ACHIEVEMENT

Ave EPS

Cum FCF50%
Performance achievement: € 2.95

Performance achievement: € 10,469m

MinimumAchievement

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= 75%

150%

MaximumAchievement

ANNUAL REPORT 2018

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Governance1
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345 /4.2 Interests of Directors and Principal Executive Ofﬁcers
Corporate Governance /4.2 Interests of Directors and Principal Executive Ofﬁcers

Date ofgrants

KPI

Numberof units

Ave EPS2013

Cum FCF
before M&A

2014
2015

Ave EPS
Cum FCFAve EPS
Cum FCF

Target for
a 100%
allocation

Achieved

Performanceachievementin percentage€ 3.64€ 2.2850%€ 2,650m€ 3,440m

150%

24,862€ 3.31€ 2.8156%€ 4,298m€ 9,741m

150%€ 4.02€ 2.9550%€ 8,281m€ 10,469m

150%

1

2

3

4

5

Compounded
performanceachievementin percentage

Resultingvesting in
numberFor comparison,
average EPS for thelast 3 reported years
at the date of grant75%

22,724€ 1.15*80%

23,600€ 1.51**75%

18,646€ 2.10***30,30029,500FINANCIAL STATEMENTS 2018

* Average EPS of 2012, 2011 and 2010.
** Average EPS of 2013, 2012 and 2011.
*** Average EPS of 2014, 2013 and 2012.

e) Share Ownership
The CEO owned 76,521 Company shares on 31 December
2018, which represents more than 200% of the base salary. He
herewith respects Airbus’ share ownership policy.

in valuation is due to changes in actuarial assumptions(e.g., mortality table, expected pension increase, retirement age).

Please refer to the AFM website www.afm.nl for any further
information related to the transactions of the CEO.

For the ﬁscal year 2018, the current service and interest costs
related to the CEO’s pension promise represented an expenseof € 1,136,706. This obligation has been accrued in the 2018
Consolidated Financial Statements.

f) Employee Share Ownership Plan (ESOP)i) Clawback

In March 2018, the Company offered all eligible employees theopportunity to subscribe to a share matching plan, throughwhich the Company matches a certain number of directly
acquired shares with a grant of matching shares. This ratio
varied depending on the number of shares acquired at fairmarket value by the employees, with a maximum discountof 44%. The total offering was up to 2.2 million shares of theCompany, open to all qualifying employees. Information about
the plan can be found on the Company’s website.

The Board has not applied any clawback in 2018.

Under the umbrella of the ESOP 2018, a dedicated UK tax
advantageous Share Incentive Plan (“SIP”), was also deployedin March 2018.
Although the CEO was eligible for the plan, he did not participate
to the ESOP 2018 plan favouring the development of ashareholding among other employees of the Company.
g) Benefits
As stipulated in the Company’s Remuneration Policy the CEO’s
beneﬁts comprise a company car and accident insurance. The
monetary value of these beneﬁts for 2018 amounted to € 61,144.
h) Retirement
The deﬁned beneﬁt obligation for the current CEO’s pension
results from the Company’s pension policy as describedabove and takes into account: (i) the seniority of the CEO
in the Company and on its Executive Committee and (ii) thesigniﬁcantly lower public pension promise deriving from theGerman social security pension system, compared to a pension
resulting from membership in the French pension system. There
has been no change in the pension promise for the CEO in 2018.
The present value of the CEO’s pension obligation including
deferred compensation is estimated annually by an independentactuarial ﬁrm according to the international accounting standard
IAS19 as applied by the group for post-employment beneﬁts. Asof 31 December 2018, the deﬁned beneﬁt obligation amounts
to € 26,303,940 vs. € 21,176,042 at the end of 2017. The change

4j) Pay ratio
The Dutch Corporate Governance Code recommends that theCompany provides a ratio comparing the compensation of the
CEO and that of a “representative reference group” determinedby the Company.
The Airbus pay ratio is calculated by comparing the cash
compensation of the CEO with a median full-time permanent
employee from France, Germany, UK and Spain for Airbus,
excluding subsidiaries.
The aggregate cash compensation over the 2018 ﬁscal year wasused as a reference amount (i.e. excluding the value of equity
incentive awards and other non-cash compensation components).
To calculate the ratio, the gross sum of the Base Salary, annual
bonus, proﬁt and success sharing, overtime, premium for work
conditions and other premiums was taken in to account.
The full time equivalent headcount of this target European
population was taken into account.
Based on this methodology, the ratio between the cash
compensation of the CEO and the median full-time equivalentpermanent employee for the ﬁscal year to which this report
relates is 51 (rounded to the nearest integer). Airbus did notanalyse the ratios in comparison with the previous ﬁnancial year,
because in 2017 ratios have not been calculated.
k) Contract and severanceWith regards to his planned departure and according to the policy,
the current CEO is not entitled to any termination indemnity.
The CEO’s contract includes a non-compete clause, which
will apply for one year. It will be paid in monthly instalments of€ 266,854.
Past LTIP awards are maintained. There will be no accelerated
vesting.

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4.2.1.6

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FINANCIAL STATEMENTS 2018

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4

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Implementation of the Remuneration Policy in 2018:
Non-Executive Directors

The last review of the Board remuneration was undertaken in2015. The Board remuneration is in line with market practice,incentivises attendance and recognises the strategic role playedby the Board of Directors in Airbus’ developments. The CEO is
the only Member of the Board of Directors who is not entitledto any Board membership fee.
For personal reasons, and with regards to the implementationof remuneration policy approved at the AGM 2016, Denis
Ranque decided in 2016 and onwards to waive the portion of
his remuneration as Chairman of the Board of Directors which
exceeds € 240,000 (his total target remuneration for 2015, basedon six meetings per year and including chairmanship Board
ﬁxum and attendance fees) until further notice.

Taking into account the increased number of Board meetings in
2018, the remuneration of Denis Ranque for 2018 as Chairmanof the Board of Directors (Board chairmanship fixum andattendance fees) is € 255,000.
Therefore, the Board recommended that the remuneration
exceeding € 255,000 would be converted into an annual
contribution to the Airbus Foundation as long as Denis Ranquewaived this part of his remuneration which corresponds to€ 67,500 based on the number of Board meetings in 2018.

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)72,37655,000127,376000Carlos Tavares

80,00050,000130,000

80,00065,000145,000

Hans-Peter Keitel(4)27,90010,00037,900100,000

60,000160,000

Lakshmi N. Mittal

0

0

0

28,176

10,00038,176(4)

36,27010,00046,270135,707

65,000200,707

27,90010,00037,900100,000

80,000180,000

1,290,910

720,000

2,010,910

1,290,403

790,000

2,080,403

Former Non-Executive Board Members

Sir John Parker

Jean-Claude Trichet(4)Total(1) The fixum includes a base fee for a Board membership and a Committee fee membership within the Audit Committee, the Remuneration, Nomination and GovernanceCommittee (“RNGC”) and/or the Ethics & Compliance Committee (“E&C”). The fixum for the year 2018 was paid 50% in January 2018 and 50% in July 2018. The fixum for theyear 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.

4.2.2 Long-Term Incentives Granted to the Chief Executive Ofﬁcer
See “— 4.3.3 Long-Term Incentive Plans”.

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5 /4.3 Employee Proﬁt Sharing and Incentive Plans
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FINANCIAL STATEMENTS 2018

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5

4.2.3 Related Party Transactions
Reﬂecting Article 2:129(6) of the Dutch Civil Code, Article 18.5 of
the Articles of Association provides that “a Director shall not takepart in the deliberations or decision-making if he has a direct
or indirect personal interest which conflicts with the interestsof the Company and of the enterprise connected with it. If asa result thereof no resolution of the Board of Directors can be
adopted, the resolution is adopted by the General Meeting”.
During the years 2016, 2017 and 2018, no agreement wasentered into by the Company with one of its Directors or principal
ofﬁcers or a shareholder holding more than 5% of the voting
rights of the Company outside the ordinary course of businessand in conditions other than arm’s length conditions. For more
information, please refer to the “— Notes to the IFRS Consolidated

Financial Statements — Note 8: Related party transactions”
for the year ended 31 December 2018 and “— Notes to the
IFRS Consolidated Financial Statements — Note 8: Related
party transactions” for the year ended 31 December 2017, asincorporated by reference herein.
For a description of the relationships between the Company
and its principal shareholders, see “— General Description of
the Company and its Shareholders — 3.3.2 Relationships with
Principal Shareholders”. Other than the relationships between
the Company and its principal shareholders described therein,
there are no potential conﬂicts of interest between the duties
to the Company of the Directors and their respective privateinterests or other duties.

4.3 Employee Proﬁt Sharing and Incentive Plans

4

4.3.1 Employee Proﬁt Sharing and Incentive Agreements
The Company’s remuneration policy is strongly linked to theachievement of individual and Company objectives, both for each
Division and for the overall Company. In 2012, a Performance andRestricted Unit plan was established for the senior management of
Airbus (see “— 4.3.3 Long-Term Incentive Plans”), and employees
were offered shares at favourable conditions within the context ofa new Employee Share Ownership Plan (see “— 4.3.2 Employee
Share Ownership Plans”).

The success sharing schemes which are implemented at theCompany in France, Germany, Spain and the UK follow one setof common rules of the group, ensuring a consistent applicationin these four countries.

4.3.2 Employee Share Ownership Plans
Enabling employees to participate in the results of the Company
is a key element in the Airbus beneﬁts policy. Since its creation,
the Company has developed a philosophy based on sharing
the added value created by the Company with all employees(including the CEO). Therefore, the Company has regularly
offered qualifying employees the opportunity to purchase shareson favourable terms through the ESOP.

According to shareholders’ resolutions adopted at the AGM, thepowers to issue shares and to set aside preferential subscription
rights of existing shareholders have been granted to the Boardof Directors at the 2018 AGM. Such powers include the approvalof ESOP.

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5

The following table summarises the main terms of the ESOPs conducted over the last three years:
Year

Nominal value per share

Number of shares issued

Date of issuance€12,113,245

29 July 20132015

€ 49.70(1) /€ 51.63(2) /€ 65.59(4)€1€11,436,901
102,11321 April 2015
November 20152016

€ 54.31(1) / € 55.41(2) € /55.53(5)€1

1,366,893
107,823

14 April 201618 November 20162017

€ 64.44(1) / € 67.24(2) /€ 85.20(6)€1€11,554,611
88,582

3 May 201721 November 20172018

€ 88.65(1) / € 84.17(2) /€ 92.57(7)€1€11,739,390
72,4293 May 2018
20 November 20182013

Price per share(1)€ 42.02 / € 44.20

(2)
(3)

2014

(1) Shares purchased within context of group employee savings plan.
(2) Shares purchased directly.
(3) July 2014 the Board of Directors decided to cancel the ESOP scheme for 2014 due to volatility of the share price and the financial situation.
(4) Under the umbrella of the ESOP 2015, a dedicated UK tax advantageous Share Incentive Plan, SIP, was also deployed.
(5) Under the umbrella of the ESOP 2016, a dedicated UK tax advantageous Share Incentive Plan, SIP, was also deployed.
(6) Under the umbrella of the ESOP 2017, a dedicated UK tax advantageous Share Incentive Plan, SIP, was also deployed.
(7) Under the umbrella of the ESOP 2018, a dedicated UK tax advantageous Share Incentive Plan, SIP, was also deployed.

In 2018 and 2017, the Board of Directors approved a new
ESOP scheme. Eligible employees were able to purchasea 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). Airbus matched each ﬁxed number of shares witha number of the Company 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 Company shares have, in addition, the ability
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

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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). The Company issued andsold 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
recognised in connection with ESOP. The Company intends toimplement an ESOP in 2019, subject to approval by the Boardof Directors, open to all qualifying employees (including theCEO). With future ESOP, the Company intends to offer sharesto eligible employees through the issuance of shares or free
distribution of shares or other existing or new securities giving
access to the capital as a matching contribution. This plan would
aim at favouring the development of employee shareholding.

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FINANCIAL STATEMENTS 2018

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5

4.3.3 Long-Term Incentive Plans
In 2012, 2013, 2014, 2015, and 2016, based on the authorisation
granted to it by the shareholders’ meetings (see dates below), theBoard of Directors approved the granting of LTIP Performance
Units and Restricted Units in the Company. The grant of
so-called “units” will not physically be settled in shares but
represents a cash-settled plan in accordance with IFRS 2. Since
2017, the Board of Directors approved an LTIP Performance
Units and Performance Share Plan.

The principal characteristics of these options as well as
Performance and Restricted Units as of 31 December 2018
are set out in the “Notes to the IFRS Consolidated Financial
Statements — Note 30: Share-based payment”. They are also
summarised in the tables below:

Fifteenth tranche
Date of Board of Directors meeting (grant date)

13 November 2013
Performance and Restricted Unit plan

Number of units granted(1)Performance Units

Restricted Units

1,245,052

359,0600030,300-173,100-

Number of units outstanding

4

Units granted to:- Mr. Thomas Enders*- the 10 employees having being granted
the highest number of units during
the year 2013 (fifteenth tranche)

Total number of eligible beneficiaries

Vesting dates
Number of vested units

1,709
The Performance and Restricted Units will vest if the participant is still employedby an Airbus company at the respective vesting dates and, in the caseof Performance Units, upon achievement of mid-term business performance.
Vesting schedule is made up of 4 payments over 2 years:
25% expected in May 2017;25% expected in November 2017;25% expected in May 2018;
25% expected in November 2018.

-855,686

333,415(1) 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 Airbus) 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).
* For more information in respect of units granted to the Chief Executive Officer, please refer to the “Notes to the IFRS Consolidated Financial Statements — Note 31: Remuneration”.

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1

1

2

3

4

5

2

3

4

5

Sixteenth tranche
Date of Board of Directors meeting (grant date)

13 November 2014
Performance and Restricted Unit plan
Performance Units

Restricted Units

Number of units granted(1)1,114,962

291,420

Number of units outstanding

424,260

134,198

29,500-176,460-

Units granted to:- Mr. Thomas Enders*- the 10 employees having being granted
the highest number of units during
the year 2014 (sixteenth tranche)

Total number of eligible beneficiaries

1,621
The Performance and Restricted Units will vest if the participant is still employedby an Airbus company at the respective vesting dates and, in the caseof Performance Units, upon achievement of mid-term business performance.
Vesting schedule is made up of 2 payments over 2 years:
50% expected in June 2018;
50% expected in June 2019.

-

Vesting dates
Number of vested units

399,540

138,527(1) 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 Airbus) 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).
* For more information in respect of units granted to the Chief Executive Officer, please refer to the “Notes to the IFRS Consolidated Financial Statements — Note 31: Remuneration”.

Seventeenth tranche
Date of Board of Directors meeting (grant date)

29 October 2015
Performance and Restricted Unit plan
Performance Units

Number of units granted(1)

Number of units outstanding

Restricted Units

926,398

240,972

656,406

231,396

24,862-

Units granted to:- Mr. Thomas Enders*- the 10 employees having being granted
the highest number of units during
the year 2015 (seventeenth tranche)

156,446-

Total number of eligible beneficiaries

Vesting dates
Number of vested units

1,564
The Performance and Restricted Units will vest if the participant is still employedby an Airbus company at the respective vesting dates and, in the caseof Performance Units, upon achievement of mid-term business performance.
Vesting schedule is made up of 2 payments over 2 years:
50% expected in June 2019;50% expected in June 2020.

-

2,606

-

(1) 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 Airbus) 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).
* For more information in respect of units granted to the Chief Executive Officer, please refer to the “Notes to the IFRS Consolidated Financial Statements — Note 31: Remuneration”.

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FINANCIAL STATEMENTS 2018

1

2

3

4

5

Eighteenth tranche
Date of Board of Directors meeting (grant date)

25 October 2016
Performance Units and Performance Shares plan
Performance Units

Performance Shares

Number of units/shares granted(1)592,391

594,561

Number of units/shares outstanding

605,789

611,225

14,24014,24079,50485,200

Units/shares granted to:- Mr. Thomas Enders*- the 10 employees having being granted

the highest number of units/shares during
the year 2016 (eighteenth tranche)

Total number of eligible beneficiaries

1,671
The Performance Units and Shares will vest if the participant is still employedby an Airbus company at the respective vesting dates and, in the case of
Performance Units and Shares, upon achievement of mid-term business performance.
Vesting schedule is made up of 2 payments over 2 years:
Performance Units:
50% expected in May 2020;
50% expected in May 2021;
Performance Shares: 100% expected in May 2020-

Vesting dates
Number of vested units

-

4

-

(1) 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 Airbus) 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).
* For more information in respect of units granted to the Chief Executive Officer, please refer to the “Notes to the IFRS Consolidated Financial Statements — Note 31: Remuneration”.

Nineteenth tranche
Date of Board of Directors meeting (grant date)

30 October 2017
Performance Units and Performance Shares plan
Performance Units

Number of units/shares granted(1)

Performance Shares

421,638

425,702411,841

415,905

10,162

10,162

Number of units/shares outstanding
Units/shares granted to:- Mr. Thomas Enders*- the 10 employees having being granted

the highest number of units/shares during
the year 2017 (eighteenth tranche)

53,808

Total number of eligible beneficiaries

Vesting dates
Number of vested units

57,872
1,601

The Performance Units and Shares will vest if the participant is still employedby an Airbus company at the respective vesting dates and, in the case of
Performance Units and Shares, upon achievement of mid-term business performance.
Vesting schedule is made up of 2 payments over 2 years:
Performance Units:
50% expected in May 2021;
50% expected in May 2022;
Performance Shares: 100% expected in May 2021

-

-

-

(1) 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 Airbus) 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).
* For more information in respect of units granted to the Chief Executive Officer, please refer to the “Notes to the IFRS Consolidated Financial Statements — Note 31: Remuneration”.

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1

2

3

4

5

2

3

4

5

Twentieth tranche
Date of Board of Directors meeting (grant date)

30 October 2018
Performance Units and Performance Shares plan
Performance Units

Performance Shares

Number of units/shares granted(1)278,376

281,181

Number of units/shares outstanding

278,376

281,1810023,57826,383

Units/shares granted to:- Mr. Thomas Enders*- the 10 employees having being granted

the highest number of units/shares during theyear 2018 (eighteenth tranche)

Total number of eligible beneficiaries

Vesting dates
Number of vested units

1,626
The Performance Units and Shares will vest if the participant is still employedby an Airbus company at the respective vesting dates and, in the case of
Performance Units and Shares, upon achievement of mid-term business performance.
Vesting schedule is made up of 2 payments over 2 years:
Performance Units:
50% expected in May 2022;
50% expected in May 2023;
Performance Shares: 100% expected in May 2022

-

-

-

(1) 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 Airbus) 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).
* For more information in respect of units granted to the Chief Executive Officer, please refer to the “Notes to the IFRS Consolidated Financial Statements — Note 31: Remuneration”.

The information in respect of stock options and performance and restricted shares cancelled and exercised during the year are
set out in “Notes to the IFRS Consolidated Financial Statements — Note 30: Share-based payment”.
SHAREHOLDING IN THE COMPANY OF THE MEMBERS OF THE BOARD OF DIRECTORS AT THE END OF 2018
Member of the Board of Directors- Mr. Thomas Enders- Mr. Denis Ranque- Ms. Catherine Guillouard- Mr. Ralph Dozier Crosby, Jr.
No other Member of the Board of Directors holds shares or other securities in the Company.

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Shareholding
76,521 ordinary shares
2,000 ordinary shares
185 ordinary shares
12 ordinary shares

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Corporate
Governance
3
4
5 /

2

3

4

5

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Chapter

5

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5

Entity Responsible
for the Information
Document
5.1

Entity Responsible
for the Information Document

160

Statement of the Entity Responsible
for the Information Document

160

5.3

Information Policy

161

5.4

Undertakings of the Company
regarding Information

161

Signiﬁcant Changes

161

5.2

5.5

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Entity Responsible for the Information Document /5.1 Entity Responsible for the Information Document

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

5.1 Entity Responsible for the Information Document
Airbus SE

5.2 Statement of the Entity Responsible
for the Information Document
The Company declares that, having taken all reasonable care to ensure that such is the case, the information contained in
the document is, to the best of the Company’s knowledge, in accordance with the facts and contains no omission likely to affectits import.
Airbus SE represented by:Thomas Enders
Chief Executive Ofﬁcer

160

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ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

Entity Responsible
1 for2the Information
3
4Document
5 /5.5 Signiﬁcant Changes
Entity Responsible for the Information Document /5.5 Signiﬁcant Changes

FINANCIAL STATEMENTS 2018

1

2

3

4

5

5.3 Information Policy- Contact details for information:

Ms Julie Kitcher
Head of Investor Relations and Financial Communication,
Airbus SE
2 rond-point Émilie Dewoitine
BP 9011231703 Blagnac France
Telephone: +33 5 82 05 53 01
E-mail: ir@airbus.com- Special toll-free hotlines are available to shareholders inFrance (0 800 01 2001), Germany (00 800 00 02 2002) andSpain (00 800 00 02 2002). An international number is alsoavailable for the rest of the world (+33 800 01 2001)

e-mail box is dedicated to shareholders’ messages:- An
ir@airbus.com
A website, www.airbus.com, provides a wide range of
information on the Company, including the Board of Directors’
report.

5.4 Undertakings of the Company regarding
Information
Given the fact that the shares of the Company are listed onEuronext Paris, on the regulierter Markt (in the sub-segment
Prime Standard) of the Frankfurt Stock Exchange and on the
Madrid, Bilbao, Barcelona and Valencia Stock Exchanges, theCompany is subject to certain laws and regulations applicablein France, Germany and Spain in relation to information, themain ones of which are summarised in “General Description of
the Company and its Share Capital — 3.1.3 Governing Laws
and Disclosures”.

5

5.5 Signiﬁcant Changes
As of the date of the 2018 Financial Statements, there has been no signiﬁcant change in the Company’s ﬁnancial or trading
position since 31 December 2018.

Airbus / Information Document 2018161

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INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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

ANNUAL REPORT 2018
Airbus SE – IFRS Consolidated Financial Statements /INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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)

Earnings per share€€

Basic (1)

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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

AirbusSE
Financial
Statements
4
5 – IFRS1Consolidated
2
3
4
5 /
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

ANNUAL REPORT 2018
Airbus SE – IFRS Consolidated Financial Statements /INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

AirbusSE
Financial
Statements
4
5 – IFRS1Consolidated
2
3
4
5 /
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

Deferred tax liabilities

(1)

1,318

1,002

1,104

Non-current deferred income (1)

40

42

133

(1)

44,69342,822

48,123

5,941

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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

Airbus SE – IFRS Consolidated Financial Statements /

2

3

4

5

2

3

4

5

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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

AirbusSE
Financial
Statements
4
5 – IFRS1Consolidated
2
3
4
5 /
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 interests32(1,161)Equity transaction (IAS 27)
Change in treasury shares

Balance at
31 December 2018

32

0

0

(1,161)

0

0

0

0

(1,161)

0

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

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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

Notes to the IFRS Consolidated Financial Statements /

2

3

4

5

2

3

4

5

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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.1 Basis of Preparation
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 ﬁnancial 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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.1 Basis of Preparation
Notes to the IFRS Consolidated Financial Statements /2.1 Basis of Preparation

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

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 transaction

3.

3

4

5

2

3

4

5

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
ﬂow 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.

-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 ﬁnancial
assets measured at fair value and classiﬁed 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$”), while a major portion of
its costs are incurred in euro. The Company is signiﬁcantly
exposed to the risk of changes in US$/€ 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 proﬁt 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

2

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:

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

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 deﬁned, 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

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.1 Basis of Preparation
Notes to the IFRS Consolidated Financial Statements /2.1 Basis of Preparation

due to changing market and economic conditions andtherefore result in a signiﬁcant change in post-retirement
employee beneﬁt obligations and the related future expense(see “— Note 29: Post-Employment Beneﬁts”).
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. Signiﬁcantjudgements are necessary in determining the worldwide
income tax liabilities. Although management believes that it
has made reasonable estimates about the ﬁnal outcome oftax uncertainties, no assurance can be given that the ﬁnal
tax outcome of these matters will be consistent with what
is reﬂected in the historical income tax provisions. At eachend of the reporting period, the Company assesses whether
the realisation of future tax beneﬁts 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 beneﬁts 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 beneﬁts. 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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.1 Basis of Preparation
Notes to the IFRS Consolidated Financial Statements /2.1 Basis of Preparation

4.

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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 Contracts” 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.

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.1 Basis of Preparation
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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

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

2

3

4

5

2

3

4

5

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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.1 Basis of Preparation
Notes to the IFRS Consolidated Financial Statements /2.1 Basis of Preparation

CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2017:(In € million)

Revenue

Gross margin
Selling expenses

As previously reported

IFRS 15

As restated

66,767(7,745)59,022(59,160)

7,011(52,149)

7,607

(734)

6,873

(872)

0

(872)

Administrative 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

Profit before financial result and income taxes
Interest income

189

0

189

Interest expense

(517)

0

(517)

Other financial result

1,477

12

1,489

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 classiﬁes its ﬁnancial
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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.1 Basis of Preparation
Notes to the IFRS Consolidated Financial Statements /2.1 Basis of Preparation

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 201811(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

3

4

5

2

3

4

5

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.
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 ﬂows (unless those cash ﬂows 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

2

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).

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.1 Basis of Preparation
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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.1 Basis of Preparation
Notes to the IFRS Consolidated Financial Statements /2.1 Basis of Preparation

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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 afterEndorsement 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 endorsedStandards and amendments

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 proﬁt for the period will not be signiﬁcant. 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 reclassiﬁcation fromprovisions to tax liabilities.

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.2 Airbus Structure
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 ﬁnancial 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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.2 Airbus Structure
Notes to the IFRS Consolidated Financial Statements /2.2 Airbus Structure

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

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

3

4

5

2

3

4

5

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.
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 for

26

2

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).

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.2 Airbus Structure
Notes to the IFRS Consolidated Financial Statements /2.2 Airbus Structure

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

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 ﬁnalised in 2017 with a ﬁnal
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

2

3

4

5

2

3

4

5

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 a
non-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 as 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.

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

7.

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.2 Airbus Structure
Notes to the IFRS Consolidated Financial Statements /2.2 Airbus Structure

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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

Notes to the IFRS Consolidated Financial Statements /2.2 Airbus Structure
Notes to the IFRS Consolidated Financial Statements /2.2 Airbus Structure

2

3

4

5

2

3

4

5

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)
0

(In € million)

Changes in consolidation

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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

7.2

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.2 Airbus Structure
Notes to the IFRS Consolidated Financial Statements /2.2 Airbus Structure

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

(In € million)

Share of results from continuing operations

39

37

Share of other comprehensive income

11

(7)

Dividends received during the year

(36)

(8)

1

0

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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.3 Segment Information
Notes to the IFRS Consolidated Financial Statements /2.3 Segment Information

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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:(In € million)

AirbusAirbusHelicopters

Total revenue

47,9705,934Internal revenue

(771)

(411)

47,199

Revenue

AirbusDefenceand Space

Transversal /Eliminations

Consolidated
Airbus

11,063064,967(78)

0(1,260)

5,523

10,985063,70744,175

2,917

3,080

0

50,172

23

362

4,579

0

4,964

thereof:sales of goods at a point in timesales of goods over time
services, including sales of spare parts

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)

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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.3 Segment Information
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

Airbus31 December
20182017 (2)

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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.4 Airbus Performance
Notes to the IFRS Consolidated Financial Statements /2.4 Airbus Performance

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

Segment order backlog

5

2

3

4

5

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)

459,525

10 0

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.

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.4 Airbus Performance
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 ﬁrst 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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

Notes to the IFRS Consolidated Financial Statements /2.4 Airbus Performance
Notes to the IFRS Consolidated Financial Statements /2.4 Airbus Performance

2

3

4

5

2

3

4

5

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
O ther income from investments

(1)

2018

2017

291

274

39

37

330

311

10 9

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
OthersTotal other financial result (2)
Total

(2 )

(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.

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.

36

Airbus / Financial Statements 2018

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.4 Airbus Performance
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, the 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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.4 Airbus Performance
Notes to the IFRS Consolidated Financial Statements /2.4 Airbus Performance

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

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

3

4

5

2

3

4

5

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 NOLs
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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.4 Airbus Performance
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

Deferredtax
assetsDeferredtax
liabilities

OCI /IAS 19R&D
tax
credits

Deferredtax benefit(expense)

Deferredtax
assetsDeferredtax
liabilities

Intangible 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

Prepaid expenses

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)

(94)

(67)

0

0

0

98

0

(63)

NOLs and tax credit carry forwards

Deferred income

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)

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)

1

0

0

0

0

(3)

0

Provisions for retirement plans

Prepaid expenses

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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities
Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.5 Operational Assets and Liabilities
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

11,62944324

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 (€ 1,763 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 speciﬁc 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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities
Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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 ﬂ ows 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%).

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.5 Operational Assets and Liabilities
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(2 0,144)

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
20182018 differences Additions
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
2,668

Other equipment,
factory and officeequipment
Constructionin progress

Total

2,514

(7)

1,381

11

(1,223)(8)

016,610

82

2,003

252

(119)

(113)

(1,942)

2(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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities
Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities(In € million)

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

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

5

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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.5 Operational Assets and Liabilities
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

52 9

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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities
Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

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

2

3

4

5

2

3

4

5

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)

(2 52)(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)31,891

32 ,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) reﬂecting 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): € 102 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).

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.5 Operational Assets and Liabilities
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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities
Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

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.

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.5 Operational Assets and Liabilities
Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities

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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities
Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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 management, 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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 20181

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 ﬁnancing 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

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.5 Operational Assets and Liabilities
Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities

ﬂexibility, 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 aircraft
ﬁnancing 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 ﬁnancing
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

1928

L ater than 1 year and not later than 5 years

2

16(In € million)

L ater 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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities
Notes to the IFRS Consolidated Financial Statements /2.5 Operational Assets and Liabilities

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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
O ff-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

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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.6 Employees Costs and Beneﬁts
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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.6 Employees Costs and Beneﬁts
Notes to the IFRS Consolidated Financial Statements /2.6 Employees Costs and Beneﬁts

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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.

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.6 Employees Costs and Beneﬁts
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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.6 Employees Costs and Beneﬁts
Notes to the IFRS Consolidated Financial Statements /2.6 Employees Costs and Beneﬁts

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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(5,9 41)(2 ,990)(8 ,933)

6,474

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.6 Employees Costs and Beneﬁts
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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.6 Employees Costs and Beneﬁts
Notes to the IFRS Consolidated Financial Statements /2.6 Employees Costs and Beneﬁts

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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

2017

QuotedpricesUnquoted
prices

Total

QuotedpricesUnquoted
prices

Total

1,061

0

1,061

1,157

3

1,160

Rest 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

(In € million)

Equity securities
EuropeGlobal
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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.6 Employees Costs and Beneﬁts
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)

89 0

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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.6 Employees Costs and Beneﬁts
Notes to the IFRS Consolidated Financial Statements /2.6 Employees Costs and Beneﬁts

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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

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ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.6 Employees Costs and Beneﬁts
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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

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

2

3

4

5

2

3

4

5

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

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

18.7

25.4

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

2.0

2.1

48.5

61.8

Non-Executive Board Members
Shor t-term benefits (including social charges)

Total expense recognised

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.

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ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.6 Employees Costs and Beneﬁts
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 beneﬁts 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 2018

63

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.6 Employees Costs and Beneﬁts
Notes to the IFRS Consolidated Financial Statements /2.6 Employees Costs and Beneﬁts

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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%

10 0%

10 0%

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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.6 Employees Costs and Beneﬁts
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

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

Jean-Pierre Clamadieu
Ralph D. Crosby Jr.

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)L akshmi 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 2018

2

65

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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 compliance 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.

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.7 Capital Structure and Financial Instruments
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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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 classiﬁed at fair value through OCI of € 10,662 million(2017: € 10,944 million 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).

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.7 Capital Structure and Financial Instruments
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 ﬂoating or ﬁxed 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 ﬁxed interest rate of 9.88%, andother liabilities related to sales ﬁnancing (see “— Note 25: Sales
Financing Transactions”).

Airbus / Financial Statements 201869

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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%

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.7 Capital Structure and Financial Instruments
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

Reconciliation of liabilities arising from ﬁnancing liabilities:
Non-cash 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

Foreign
Changesexchangein scope movements
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 Company’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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 20181

1

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 inﬂows
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 inﬂows and outﬂows in foreign currencies from ﬁrmly
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 ﬁrst ﬂow approach or are designated as hedges of speciﬁc
agreed milestone payments. The amount of the expected
ﬂows 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 ﬁxed and subject to potentiallysigniﬁcant delays, the Company may use rollover strategies,
usually involving foreign exchange swaps.

72

Airbus / Financial Statements 2018

2

3

4

5

2

3

4

5

For all foreign currency hedges of future cash ﬂows which
qualify for hedge accounting under IFRS 9, the Company uses
the cash ﬂow 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 proﬁt or loss when the hedged cash ﬂows
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ANNUAL REPORT 2018

INFORMATION DOCUMENT 20181

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

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.7 Capital Structure and Financial Instruments
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

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 ﬁnally 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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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.

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.7 Capital Structure and Financial Instruments
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 throughproﬁt and loss, (ii) loans and receivables and (iii) availablefor-sale ﬁnancial assets. Classiﬁcation 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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

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

3

4

5

2

3

4

5

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(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)

Derivative instruments

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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.7 Capital Structure and Financial Instruments
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

Derivative instruments (7)

66

0

3,498

0

Non-derivative instruments

0

0

0

0

0

0

0

12,5710(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

0

0

0

3,564

3,564

1,395

1,395

0

1,395

1,395

0

0

12,571

12,571

AssetsOther investments and otherlong-term financial assets

Other financial assets (6)Securities

0

6,256

0

2,085

3,675

3,675

0

12,016

12,01666

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)

Cash and cash equivalents

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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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

0

1,152

165

1,317

Securities

10,7212,073

012,794

10,995

Cash equivalents

6,576

984

0

7,560

6,256

19,075

4,209

654

23,93819,214

Derivative instruments

0(2,729)(26)(2,755)

Other financial liabilities

00(2,300)(2,300)0(2,729)(2,326)(5,055)(In € million)

Level 2

Level 3

1,963

0

0

1,963

0

3,564

0

3,564

1,576

0

12,571

2,085

0

8,341

7,225

0

26,4390(2,214)(3)(2,217)

0

0

0

0

0

(2,214)(3)(2,217)

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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

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.

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.7 Capital Structure and Financial Instruments
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

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 ﬂows 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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.7 Capital Structure and Financial Instruments
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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

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

2

3

4

5

2

3

4

5

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

A mount reclassified to profit or loss (matured hedges)(800)

Foreign exchange contracts(799)

Others(1)

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

Others0

Ta x 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

60 4

(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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.7 Capital Structure and Financial Instruments
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 allo wances — 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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments
Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments(In € million)

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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

Contract
assets

856

179

7,913

317

300

98

84

400

(175)

6,079

0

0

0

0

0

0

0

0

856

2

191

81

43

37

62

503

(204)

3,125

181

420

398

343

135

146

903

(379)

10,060

OthersTotal (1)229

(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)

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.8 Other Notes
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 ﬁnal 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

ANNUAL REPORT 2018
Notes to the IFRS Consolidated Financial Statements /2.8 Other Notes
Notes to the IFRS Consolidated Financial Statements /2.8 Other Notes

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

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

2

3

4

5

2

3

4

5

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.

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

37.

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
2.8 Other Notes
Notes to the IFRS Consolidated Financial Statements /2.8 Other Notes

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 201850%*

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

Airbus Helicopters
DeutschlandGmbH(Germany)

2

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 GroupATR GIE(France)

Airbus Group
Inc.
(USA)

4.96%*

Airbus Helicopters(France)98.04%

1

5

Ariane Group

Airbus Operations
GmbH(Germany)

Airbus Operations
Limited(UK)

AirbusOperations, S.L.
(Spain)Airbus Americas
Inc.
(USA)

Premium Aerotec
GmbH(Germany)

1
4

Airbus Helicopters

MBDA(France)

Stelia Aerospace(France)

Airbus Operations
SAS(France)50.01%*

Airbus SAS(France)

C Series Aircraft
LimitedPartnership(Canada)

4.22%*FINANCIAL STATEMENTS 20183

ArianeGroup

37.5%*

Computadoras,Redese Ingenieria, S.A.
(Spain)Airbus Defence
and Space, S.A.
(Spain)95.78%INFORMATION DOCUMENT 2018

2

50%*

Airbus Defence
and Space Holding
France SAS(France)

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%*

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

Airbus Defence and Space

Airbus Defence
and Space
Litmited(UK)(The Netherlands)

AIRBUS SE

ANNUAL REPORT 20183

2.9 Appendix “Simpliﬁed Airbus Structure”

4
5

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Notes
Financial
Statements
4 to the5 IFRS1Consolidated
2
3
4
5 /
Notes to the IFRS Consolidated Financial Statements /2

Airbus / Financial Statements 201889

Chapter

3

90

Airbus / Financial Statements 2018

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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

ANNUAL REPORT 2018
Airbus SE – IFRS Company Financial Statements /INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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)

46

614

Loss on disposal of investments

7

(369)

0

Total operating result

4

Income from investments

(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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Financial
Statements
4 Airbus
5 SE – IFRS
1 Company
2
3
4
5 /Airbus SE – IFRS Company Financial Statements /IFRS Company Statement of Financial Position
at 31 December 2018 and 2017
(In € million)

Note

2018

2017

7

16,797

16,576

AssetsNon-current assets
Investments in subsidiaries and associates
Long-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

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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

Airbus SE – IFRS Company Financial Statements /

2

3

4

5

2

3

4

5

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

(553)

525

Trade receivables

(134)

106

Trade liabilities

(425)

406

6

13

(670)

575

(270)

(260)

(532)

(327)

Change in other operating assets and liabilities:

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

(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

11,038

Effect of foreign exchange rate changes on cash and cash equivalents

Cash and cash equivalents at end of period

94

0
1,935

Airbus / Financial Statements 201812

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Financial
Statements
4 Airbus
5 SE – IFRS
1 Company
2
3
4
5 /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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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

ANNUAL REPORT 2018
Notes to the IFRS Company Financial Statements /INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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

4.4
10.

Employees
Number of Employees

107
107

4.5

4.2
4.
5.
6.

Company Performance
Total Operating Result
Total Financial Result
Income Tax

102
102
102
103

11.
12.
13.
14.
15.

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

4.3
7.

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

104

8.
9.

98

Airbus / Financial Statements 2018

104
106
107

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Financial
Statements
4 Notes5to the IFRS
1 Company
23
4
5 /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

ANNUAL REPORT 2018
Notes to the IFRS Company Financial Statements /INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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 ﬁnancial 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.

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Financial
Statements
4 Notes5to the IFRS
1 Company
23
4
5 /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

ANNUAL REPORT 2018
Notes to the IFRS Company Financial Statements /INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Financial
Statements
4 Notes5to the IFRS
1 Company
23
4
5 /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 ﬁscal 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

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ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

1

1

Notes to the IFRS Company Financial Statements /

2

3

4

5

2

3

4

5

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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Financial
Statements
4 Notes5to the IFRS
1 Company
23
4
5 /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).

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FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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

Non-current other financial assets

1,882

3,898

Positive fair values of derivative financial instruments

1,882

3,898

Long-term loans external

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

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2

3

FINANCIAL STATEMENTS 2018

Financial
Statements
4 Notes5to the IFRS
1 Company
23
4
5 /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 ﬁrst
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.

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1

1

2

3

4

5

2

3

4

5

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

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1

2

3

FINANCIAL STATEMENTS 2018

Financial
Statements
4 Notes5to the IFRS
1 Company
23
4
5 /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

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FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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

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2

3

FINANCIAL STATEMENTS 2018

Financial
Statements
4 Notes5to the IFRS
1 Company
23
4
5 /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
ﬁnancing 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 ﬂoating or ﬁxed 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 ﬂow 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.

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1

1

2

3

4

5

2

3

4

5

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

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FINANCIAL STATEMENTS 2018

Financial
Statements
4 Notes5to the IFRS
1 Company
23
4
5 /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

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FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

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
cost
value

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

0

3,794

3,794

0

5,641

5,641

Securities

Derivative instruments

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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Financial
Statements
4 Notes5to the IFRS
1 Company
23
4
5 /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
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

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

(In € million)

31 December 2018
Interest rate contracts
Interest rate future contracts

4

31 December 2017

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FINANCIAL STATEMENTS 2018

1

1

Notes to the IFRS Company Financial Statements /

2

3

4

5

2

3

4

5

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)

Financial assets at fair value through profit or Loss

(42)

0

Financial liabilities measured at amortised cost

(10)

448

Total

(39)

4

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

116

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INFORMATION DOCUMENT 2018

1

2

3

FINANCIAL STATEMENTS 2018

Financial
Statements
4 Notes5to the IFRS
1 Company
23
4
5 /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

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Chapter

5

118

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FINANCIAL STATEMENTS 2018

1

1

2

3

4

5

2

3

4

5

5

Other Supplementary
Information Including
the Independent
Auditor’s Report

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Other Supplementary Information Including the Independent
1 Auditor
2 ’s Report
3 /

4

5

FINANCIAL STATEMENTS 2018

1

2

3

4

5

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.

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INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

Other
1 Supplementary2
3 Information
4
5Including
1 the Independent
2
3 Auditor
4 ’s Report
5 /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.

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INFORMATION DOCUMENT 2018

Other Supplementary Information Including the Independent
1 Auditor
2 ’s Report
3 /

4

5

FINANCIAL STATEMENTS 2018

1

2

3

4

5

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.

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Other
1 Supplementary2
3 Information
4
5Including
1 the Independent
2
3 Auditor
4 ’s Report
5 /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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

Other Supplementary Information Including the Independent
1 Auditor
2 ’s Report
3 /

4

5

FINANCIAL STATEMENTS 2018

1

2

3

4

5

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

ANNUAL REPORT 2018

INFORMATION DOCUMENT 2018

FINANCIAL STATEMENTS 2018

Other
1 Supplementary2
3 Information
4
5Including
1 the Independent
2
3 Auditor
4 ’s Report
5 /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.

--

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 2018

125

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