ANNUAL REPORT

2016

ﬂying
as

one
team
one
path
one
futureone

Contents

1. oneteam
ONE UNIFIED WAY FORWARD
Integrated structure
P 6-7
MOVING FURTHER AHEAD
Letter from the Chairman of the Board
P 8-9
DEVELOPING OUR FULL POTENTIAL
Interview with the Chief Executive Officer
P 10-12Interview with the Chief Operating Officer
P 13
FLYING TOGETHERGroup Executive Committee
P 14-15

3. onefuture2. onepath
ON THE RIGHT TRACKInterview with the Chief Financial Officer
P 18-192016 KEY FIGURESP 20-21
COMMERCIAL AIRCRAFT
P 22-23
HELICOPTERS
P 24-25
DEFENCE AND SPACE
P 26-27

STAYING ONE STEP AHEAD
Future ambitions
P 30-33
INNOVATION HIGHLIGHTS
P 34-35
CORPORATE SOCIALRESPONSIBILITY
P 36-37SHARE INFORMATIONP 38

Registration
Document
Financial
Statements

For its full-year 2016 financial reporting, Airbus has implemented the European Securities and Markets Authority’s guidelines on Alternative
Performance Measures. As a result, certain items will no longer be labelled as “one-offs”. Such items will instead be labelled as “Adjustments”.
Airbus will no longer measure and communicate its performance on the basis of “EBIT*” (i.e. EBIT pre-goodwill impairment and exceptionals)
but on the basis of “EBIT” (reported). Terminology will change such that “EBIT* before one-offs” will be replaced by “EBIT Adjusted” and“EPS* before one-offs” will be replaced by “EPS Adjusted”.

Annual Report 2016 - AIRBUS

Airbus employees work
as one to deliver much
more than just products.
They deliver solutions.
Everyday, Airbus strives
for excellence in engineeringand manufacturing,
constantly innovating todeliver game-changing
state-of-the-art solutions.
Everything the company
does is designed
to further improvecustomers’ experiences.
Flying together,
Flying as one.

001

002

2016
Key facts

one year:so many
journeys

07
ARIANE 5

Total launches

688
COMMERCIAL AIRCRAFT

Total deliveries

2016

2016

418
HELICOPTERS

33

MILITARY AIRCRAFT*

Total deliveries

2016* Comprises A400M, A330 MRTT and Light & Medium Aircraft.

Total deliveries

2016Annual Report 2016 - AIRBUS

003

10,000TH
DELIVERY OF
AN AIRBUS AIRCRAFT – A350 XWB
TO SINGAPORE AIRLINES
14 OCTOBER 2016

545
A320 FAMILY

17
A400M

Total deliveries

Total deliveries

2016

2016

49
A350 XWB28
A380

Total deliveries

2016

Total deliveries

2016

004

CHAPTER01

One unified
way forward
Integrated structure

Moving further
ahead
Letter from
Denis Ranque,
Chairman of the Board

Developing
our full potential
Interview withTom Enders,
Chief Executive Officer

FlyingtogetherGroup Executive
Committee

Annual Report 2016 - AIRBUS

005

A350-1000 First
Flight Test Crew

006

Integrated structureone
unified 2016

Annual Report 2016 - AIRBUS

way
2017 forward

AIRBUS IS A COMMERCIAL
AIRCRAFT MAKER WITH TWO DIVISIONS,‘HELICOPTERS’ AND ‘DEFENCE AND SPACE’

007

008

Letter from Denis Ranque,
Chairman of the Board

movingfurtherahead
Denis Ranque
Chairman of the BoardD

ear Shareholders,Dear Stakeholders,2016 was a significant
year for your Company.
To create a simpler, morestreamlined organisation
we decided to integrate the Group corporate structure and functions with thoseof Commercial Aircraft, our largest Division.
This was the year’s biggest strategic development, alongside with portfolio reshaping, as the annual report’s title “flying asone” suggests.
The new entity will combine corporate andoperational functions and support services.
Importantly, this will reduce bureaucracy,
quicken decision-making and reinforce
Company-wide collaboration.
In terms of orders and deliveries, Airbus
made good progress. Commercial Aircraft
delivered a record number of aircraft, despite some operational challenges. The
competitiveness of its aircraft portfolio lifted

the order backlog to a new industry record.
Despite a challenging market, Helicopters
reported a small increase in deliveries andnet orders, strengthening its lead in the civil
and parapublic sector. Defence and Space
booked healthy orders in Military Aircraft
and Space Systems, although the A400M
programme experienced further technicalissues and charges. The Board supported Airbus’ digitalisation initiative, which
will help to capitalise on innovative andtransformational technologies and business models. At the same time, thetechnology function is being reorganised
and refocused to enhance the direction
and coordination of Airbus’ overall researchand technology activities.
Turning to compliance, we are determined
to ensure compliance standards and processes reach a “best in class” benchmark
across the Company. Staff underwent
comprehensive training to raise awareness,
reduce risks and, more generally, to reinforce the culture of integrity.

Annual Report 2016 - AIRBUS

009

BOARD OF DIRECTORSAS OF 1 JANUARY 2017
Similarly, we supported the Corporate
Social Responsibility strategy, which is beingaligned with applicable UN Sustainable
Development Goals. Our environmental
and social goals include the philanthropic
work of the Airbus Foundation and efforts
to promote diversity at all levels.
The Board proposed a 2016 dividend of€ 1.35 per share. We intend to honour ourcommitment of increasing dividend pershare on a sustainable basis by proposing
this payment, which is about four percent
higher than in 2015. The value is outside therange of the dividend policy exceptionally.
It is based on our 2016 underlying performance and it demonstrates our confidence
in our future operational cash generation.
In terms of governance, we introduced‘staggered’ Board terms with one third of
the Directors being reappointed or replaced
every year. The extension of the mandatesof three Directors and the nominationof one new Director at the 2017 Annual
General Meeting follow this principle.

Denis Ranque
Chairman of the Boardof Directors of Airbus

Tom Enders
Chief Executive Officer
of Airbus

Ralph D. Crosby
Former Member of theManagement Boards of EADS
and of Northrop Grumman

Catherine Guillouard
Deputy Chief Executive
Officer of Rexel SA

Hans-Peter Keitel
Vice President of the Federationof German Industries (BDI)

Hermann-Josef Lamberti

Lakshmi N. Mittal
Chairman and Chief Executive
Officer of ArcelorMittal

Amparo Moraleda
Former General Manager
of IBM South Region

Claudia Nemat
Member of the Boardof Management of
Deutsche Telekom AG

Sir John Parker

Carlos Tavares
Chairman of the Managing
Board of Peugeot SA

Jean-Claude Trichet
Honorary Governor of Banquede France and former Presidentof the European Central BankCHAIRMAN OF AUDIT COMMITTEEFormer Member of the Management
Board of Deutsche Bank

“Airbus again madesolid progress”
Denis Ranque
Chairman of the Board

We welcome Lord Drayson (Paul) to theBoard, subject to the AGM’s approval. Asan engineer and entrepreneur, he brings theright expertise for our innovation focus anddigital journey. We would also like to thanklongstanding Board Member Lakshmi
Mittal for 10 years of valuable counsel. Hisinternational outlook has helped Airbus tobecome a truly global company.
In summary, Airbus again made solid progress. I thank you for your support of the
management and the Board. We are committed to continuing on this successful path
– as one team governing an increasingly
dynamic company.

Denis Ranque

AUDIT COMMITTEECHAIRMAN OF REMUNERATION,NOMINATION AND GOVERNANCE
COMMITTEE

Chairman of the Boardof Anglo American plc

REMUNERATION, NOMINATION AND GOVERNANCE COMMITTEE

010

Interview with Tom Enders,
Chief Executive Officer

developing
our fullpotential
Tom Enders
Chief Executive OfficerW

as 2016 a goodyear for Airbus?

Broadly speaking,ye s! We f a c e dsome challenges
but made considerable progress in building the Company’s
resilience to succeed in an increasinglycompetitive world. We achieved the fullyear guidance and met all of our operational
objectives with one exception, the A400M,
where we had to take another significant
charge. The losses we have accumulatedon this programme have reached unacceptable levels, compelling us to re-engage
with our customers to seek mitigation.
We delivered more commercial aircraft
than ever before in 2016. Although airlinesordered fewer aircraft across the industry,
our net book-to-bill ratio was again above

one. The order book reached almost
6,900 aircraft at year-end, which is thehighest level ever. This represents a solid
foundation for our production ramp-up in
the coming years.
Our Helicopters business delivered morerotorcraft than in 2015 and performed wellcommercially despite some very challenging market conditions, particularly on thecivil and parapublic side. Net orders roseby six percent which was a pretty good
performance in the circumstances.
And putting the A400M to one side for a
moment, Defence and Space also had asuccessful and pivotal year. The Divisionachieved a book-to-bill of above one andmade significant progress in reshaping
and strengthening the business. Orders
for military aircraft and satellites wereparticularly buoyant, including an important

Annual Report 2016 - AIRBUS

011

contract win for search and rescue planes
in Canada.
Ultimately, we delivered steady underlying profits, or EBIT Adjusted, as intended,although our reported profitability was hit
by programme charges. We have nonetheless proposed a higher dividend of€ 1.35 a share which shows our ongoing
confidence in the underlying growth potential.
What were the main operational
developments?
Our industrial performance was very strong,with commercial aircraft deliveries rising to
688 after a very busy fourth quarter. This
would not have been possible without thestrong commitment of all employees concerned. I am proud of and grateful for their
hard work!
We successfully managed the ramp-up of
the single aisle and A350 programmes,
while at the same time transitioning to themore efficient NEO version of the A320.
Importantly, A350 deliveries rose to 49 aircraft, putting us well on track to meet our
production target of 10 aircraft a month by
the end of 2018. And the larger A350-1000
made its maiden flight.

“Our industrial
performance
was very strong”
Tom Enders
Chief Executive Officer

Defence and Space’s portfolio reshaping
gained momentum. The space launcher
Joint Venture with Safran became fully operational and is now forging ahead with thedevelopment of the more efficient Ariane 6
launcher. Meanwhile, the reliable Ariane 5completed its 76th consecutive successful
launch in the year. What a stunning record!
We also reached an agreement to sell the
Defence Electronics business and this divestment was finalised in February 2017.
For the A400M, despite the financial
charge, 2016 was also a year of progress.
We increased the number of deliveries, addressed the propeller gearbox crisis andstepped up on the aircraft’s capabilities
which allow customer nations to take theA400M into harm’s way. Still, we cannot besatisfied. We encountered fresh difficulties
on certain military capability enhancements
and had to reassess the industrial cost of
the programme including an estimation of
the commercial exposure. Ultimately wetook a full year charge of € 2.2 billion.

012

Interview with Tom Enders,
Chief Executive Officer

What progress did you make inreshaping the Company?
We decided to integrate the Group corporate functions with the key commercial
aircraft division, which generates the bulkof our business. This was a major step tofurther increase our efficiency. We also
took the opportunity to switch to the single‘Airbus’ brand. These incremental changes
will enable less bureaucracy, faster decision-making and better company-wide
collaboration.
We’re also reinforcing Airbus’ agility in otherways. We moved forward with our digitaltransformation, leveraging technology toapply smart solutions to immediate challenges while also building a digital backbone for future operations. During the year
we revamped our CTO organisation and appointed our first ever Digital Transformation
Officer to oversee our group-wide digitalprogramme. And in 2016 we opened
the Toulouse campus of our Leadership
University. In short, we focused on efficiency, entrepreneurship and innovation!

“We willcontinue ourtransformation
journey”
Tom Enders
Chief Executive Officer

What are your key priorities
going forward?
Our first and most important priority is to
successfully manage the ramp-up in commercial aircraft. We showed last year that
we are capable of it but the NEO transition
is no walk in the park. With our engine andother partners we are working towards hitting our higher production targets, whileremaining focused on delivering to our customers’ expectations.
Secondly, there’s the A400M. We needto achieve a win-win outcome with ourcustomers that gives them a step change
in capabilities without further unacceptable
losses. This will not be simple but we owe it
to all the stakeholders involved.
Thirdly, we will finalise the implementationof our restructuring programme, not justto optimise costs but mainly to simplify theorganisation and decision-making processes in view of digitalisation.
Fourthly, we will continue to invest in the
future through digitalisation and innovation
for increased levels of competitiveness.
Finally, Ethics and Compliance remains
a key priority and focus for us. We havebeen working hard in recent years todevelop and implement a state-of-theart compliance system which includes
regular training for employees on this important topic.
Looking to the future, we will continue ourtransformation journey to deliver on ourearnings and cash flow growth potential.
Team Airbus made considerable progressin 2016 but this is just the beginning of an
arduous but exciting journey!

Annual Report 2016 - AIRBUS

013

INTERVIEW

with Fabrice Brégier,Airbus Chief Operating Officer andPresident Airbus Commercial AircraftW

hat are yourmain priorities
as COO?

Firstly, I’m pleased
to be given thisexciting new opportunity which spans all of Airbus. I believe
my experience in commercial aircraft andpreviously within helicopters and defence
will stand me in good stead for this role.
I see two key priorities initially – sharpening
our operational effectiveness and furthering the use of digital technologies acrossthe Company.
How do you improve Airbus’
operational performance?

“Our use ofdigital tools andprocesses must
become more
systematic”
Fabrice Brégier
Airbus Chief Operating Officer andPresident Airbus Commercial Aircraft

This is all about performance improvement. While we have made tremendous
progress over the past decade or so, thereality is that we still face significant operational challenges on too many of our programmes. We need to become faster andsmarter in everything we do to prepare andprotect our future. A key way of doing thisis by furthering the adoption of digital technologies throughout the business to better
capitalise on what we do best and create
an even higher level of competitiveness.
Yes we’re on the right track but there arestill plenty of opportunities out there.
So, digitalisation is key for you?
Absolutely! Our use of digital tools andprocesses must become more systematic if we’re to realise their full potential. It’s
amazing what benefits new technologies,
especially in digital, can bring to our operations. In design, we can develop products
faster and get it right the first time while
manufacturing operations will benefit from
more digitalised processes – getting things
done faster, increasing quality and identifying cost reduction opportunities. We can
now also capture more real-time data fromaircraft in service with our customers. This
information can, among other things, help
to improve aircraft maintenance. I will beworking closely with our digital transformation teams and look forward to somemajor breakthroughs in this area!

014Group Executive Committee

flyingtogether
GROUP EXECUTIVECOMMITTEEAS OF 1 JANUARY 2017

THE WINGS CAMPUS:
This photo was taken at‘The Wings Campus’in Toulouse, which was
inaugurated in June 2016
and includes Airbus’ new
Headquarters.

08

03

02

05

11

04

12

Annual Report 2016 - AIRBUS

015

01

TOM ENDERS
Chief Executive Officer, Airbus

02

03

FERNANDO ALONSO
Head of Military Aircraft,
Airbus Defence and Space

THIERRY BARIL
Chief Human Resources Officer, Airbus

FABRICE BRÉGIER
04 Airbus Chief Operating
Officer and President Airbus
Commercial Aircraft
05

GUILLAUME FAURY
Chief Executive Officer, Airbus Helicopters

06

07

DIRK HOKE
Chief Executive Officer,
Airbus Defence and Space

08

09

01

07

09

10

13

06

ALLAN McARTOR
Chairman, Airbus Americas

KLAUS RICHTER
Chief Procurement Officer, Airbus

1213

MARWAN LAHOUD*EVP International, Strategy
and Public Affairs, Airbus

JOHN LEAHY
Chief Operating Officer - Customers,
Airbus Commercial Aircraft

10

11

JOHN HARRISON
General Counsel, Airbus

HARALD WILHELM
Chief Financial Officer, Airbus

TOM WILLIAMS
Chief Operating Officer,
Airbus Commercial Aircraft*Marwan Lahoud left Airbus on 28 February 2017.

016

CHAPTER02

On the right
track
Interview with
Harald Wilhelm,
Chief Financial
Officer2016
Key figures

Commercial
AircraftHelicopters

Defenceand SpaceAnnual Report 2016 - AIRBUS

017

A330 MRTT

018

Interview with Harald Wilhelm,
Chief Financial Officer

on theright track“We again
delivered on ourcommitments”
Harald Wilhelm
Chief Financial OfficerW

hat are your key
takeaways from2016?

First and foremost
we again deliveredon our commitments. We achieved all the Key Performance Indicators, or KPIs, that we set out
in the guidance given at the beginning of
the year. This was a great result and camedespite a number of operational challenges. As a reminder, we guided for over
650 commercial aircraft deliveries in 2016
with stable underlying earnings and free
cash flow (FCF) based on a constant perimeter. In the end, we achieved a net bookto-bill ratio of above one and delivered arecord 688 aircraft, with the backlog rising
to 6,874 aircraft. This really demonstrates
the continued demand for our competitive
products and also our programme ramp-up
capability. We delivered against our EBIT
Adjusted and FCF objectives which gives
us confidence that the building blocks arein place for our future earnings and FCF
growth as expected. Finally, the cash wegenerated in 2016 and the confidence wehave in our future cash generation potential
led the Board to propose a higher dividend
per share to our shareholders.
What drove the financial
performance?
The higher deliveries and stronger dollar
helped lift revenues by three percent to€ 67 billion and this was despite the perimeter change in Defence and Space which
had a negative impact of about € 1 billion.
EBIT Adjusted, which reflects our underlying performance, was stable on a constantperimeter as committed. This might notsound very ambitious but achieving it waspretty challenging. Why is that? On thepositive side we had higher A320 volumes
and reduced research and development expenses due to the planned R&D ramp-downon the A350 programme. Conversely, we
had lower A330 volumes, transition pricing

Annual Report 2016 - AIRBUS

to the new engine versions of the A320 andA330 and a higher dilution from the A350.
On top, the performance in helicopters was
lower compared to last year, reflecting thesofter market situation, an unfavourable delivery mix and lower commercial flight hours
in services as well as the H225 accident
and some campaign costs. Some underlying improvement in Defence and Space
was reduced by the perimeter change fromthe portfolio reshaping. We also began toprepare the future with a step up in investment for innovation.
Looking at the bottom line, our Reported
EBIT decreased to € 2.3 billion which includes net negative Adjustments of about€ 1.7 billion. This reflects the total A400M
programme charge of € 2.2 billion, the€ 385 million charge booked on the A350
in the first half of 2016 and some € 182 million in restructuring costs. However, thesuccessful execution of our portfolio
rationalisation mitigated some of thesecharges with roughly € 2 billion in capitalgains from Phase 2 of the space launchers Joint Venture and the divestment ofDassault Aviation shares.
What drove the cash performance?
We saw quite a turnaround in the final
quarter to end the year with FCF before
mergers and acquisitions and customer financing of € 1.4 billion after being
strongly negative at the end of September.
This was broadly in line with 2015 as we

committed. This reflected both the aircraft
delivery performance and healthy inflows
from pre-delivery payments and demonstrates the strong underlying potential of
the business to generate cash. It’s also
worth noting that the aircraft financing
market remains healthy with a high levelof liquidity available in the market for our
product portfolio. We finished the yearwith only around a negative € 250 million incustomer financing and this was despite
the temporary unavailability of Export
Credit Agency support in Europe.
What’s the guidance for 2017 andhow do you achieve this?

1.5

1.20

5.9%(1)1.30

1.35(2)

1.2

1.2

3

3

0.9

0.9

2

2

0.6

0.6

1

1

0.3

0

0

38%
4.11

3.96

2014

2015

2016

(1) In % of Revenues.

2.99
3

3

2

2

1.29
1

1

0

2015

2016

(3) FY2016 Average number of shares = 773,798,837
compared to 785,621,099 in FY2015

What payment can shareholders
expect this year?
The proposed dividend of € 1.35 is up aboutfour percent from 2015 and is outside therange of our dividend policy on an exceptional basis. This is based on the positive
evolution in the 2016 performance and cash
generation. It shows our confidence in future cash generation and commitment toincreasing shareholder returns.
Overall, we’re on the right track!

1.5

4

4.02

4

3.43

2014

4

0

4

DIVIDEND PER SHARE(in €)

5

6.4%(1)EARNINGS PER SHARE(3)(in €)

0Firstly, we expect to better the record performance in 2016 and deliver more than
700 commercial aircraft. From this, before
M&A we expect mid-single-digit percentage
growth in EBIT Adjusted and EPS Adjustedwith stable free cash flow before M&A andcustomer financing, all based on a constantperimeter. To achieve this guidance we haveto deliver, deliver and deliver! We will retain
our strong focus on programme execution
as we ramp-up further on the A320 andA350 and transition to the NEO models.
Alongside this we need to implement our
restructuring programme with the integrationof the headquarter structure and commercial
aircraft and continue to invest in our future for
improved efficiency. Delivering on these key
priorities in 2017 should pave the way for us
to deliver our EPS and FCF growth potential.

EBIT ADJUSTED(in € bn)

6.6%(1)

019

0.3

0

2014

2015

2016

(2) To be proposed to the Annual General Meeting 2017

For more detailed information,please refer to theRegistration Document
and Financial Statements

020

2016
Key figures

2016
key figures

ORDER INTAKE(1)€ 134.5 bn
2015€159.0 bn- 15%

ORDER BOOK(1)€ 1,0602015€ 1,006 bn

bn

+ 5%

REVENUES€ 66.6 bn
2015€ 64.5 bn+ 3%EBIT (reported)€ 4.1 bn

€ 1.292015€ 3.43€ 1.35

- 44%

2015

€ 1.30ETHICS AND COMPLIANCE

11,85927,946

Total: 39,805
Number of online training sessions
Number of face to face/classroom training sessions
The background image illustrates the LISA
Pathfinder gravitational wave detection spacecraft
which was handed over to the European Space
Agency in 2016.

- 62%

DIVIDEND PER SHARE(3)€ 2.3 bn
2015

EARNINGS PER SHARE(2)+ 4%

Annual Report 2016 - AIRBUS

NET CASH POSITIONEMPLOYEES€ 11.1 bn
2015€ 10.0 bn(4)133,782
2015

+ 11%

NET INCOME(2)€ 2.7 bn

136,574- 2%

R&D EXPENSES€ 995 mn
2015021

€ 3.0 bn
2015

- 63%

€ 3.5 bn

- 14%2016 RESULTSPROFITABILITY

Airbus reported 2016 financial resultswith its guidance achieved for all key
performance indicators. A total of 731
net commercial aircraft orders werereceived with 688 deliveries.

While revenues rose 3%, EBIT
Adjusted declined 4% to €4.0 billion
with EBIT (reported) of €2.3 billion.
Net income and earnings per sharedeclined by 63% and 62%
respectively.

ORDER BOOK BY REGION(1)Europe21%

Asia-Pacific33%

North America

18%

Middle East

13%(1) Contributions from commercial aircraft activities to Order Intake and Order Book based on list prices.
(2) Airbus continues to use the term Net Income. It is identical to Profit for the period attributable to equity owners of the parent as defined by IFRS Rules.
(3) To be proposed to the Annual General Meeting 2017.
(4) Excluding the reclassification of certain securities.

Latin America andOther Countries

15%

022

Commercial
AircraftCommercial
Aircraft

FABRICE BRÉGIER
Airbus Chief Operating
Officer and President Airbus
Commercial Aircraft

Airbus Commercial Aircraft met its key
targets for 2016, increasing deliveries toa new high and achieving a net book-to-billorder ratio of above one.
The A350 XWB programme successfully
progressed on its industrial production
ramp-up while deliveries of the A320neo
gained momentum at the end of the year.

Keyachievements
2016

Key
priorities
2017

10,000th Airbus aircraft
delivered with record
688 deliveries in 2016.

Deliver on operational
commitments, including delivery
targets and achieve industrial
ramp-up on A320 Family andA350 XWB Family.

49 A350 XWBs deliveredin the year, up from 14 in2015.
Backlog reaches
6,874 aircraft, representing
about 10 years of
production at current rates.
The Pratt & Whitney
powered A321neo wascertified and the first
US assembled aircraft,an A321, was deliveredfrom Mobile.
First flight of longer
fuselage A350-1000
conducted in November.

Deliver improvement
in financial KPIs.
Deliver key development
milestones on A350-1000,
A330neo, A319/A321neo
and BelugaXL.
Deliver customer value
through improved operational
performance and efficiency.
Boost competitiveness, including
delivering recurring costconvergence plans with focus
on A350 XWB and improved
productivity and quality in plants
and Final Assembly Lines.
Prepare the future andaccelerate digital transformationand innovations.
Engage and develop people
worldwide.

J

etliner deliveries increased forthe 14th year in a row, reaching a new company record of
688 aircraft to 82 customers.
In 2016, 545 A320 Family
aircraft, 66 A330s, 49 A350
XWBs and 28 A380s weredelivered to airlines and leasing companies.
Revenues increased by 7% to € 49.2 billion(2015: € 45.9 billion), reflecting the higherdeliveries and favourable currency environment. EBIT Adjusted increased slightly to€ 2.81 billion (2015: € 2.77 billion), reflecting
higher A320 volumes and a 21% decline inresearch and development expenses due
mainly to the planned R&D ramp-downon the A350. It was weighed down by

Annual Report 2016 - AIRBUS

023

KEY FINANCIAL FIGURES
2016€ million

114,938

139,062-17.3%

952,450+6.1%

49,23745,854+7.4%

R&D Expenses

2,147

2,702

-20.5%EBIT Adjusted

2,811

2,766

+1.6%

Order Book
Revenues

6,874

688

ORDERS NET(UNITS)ORDER BOOK
(UNITS)DELIVERIES(UNITS)

Change1,010,200

Order Intake (net)

731

2015

EXTERNAL REVENUES BY ACTIVITY

5%
95%

services

platforms

DELIVERIES BY PROGRAMME (UNITS)
4%
7%
79%

10%

A320 Family

A330

A350

A380

A320neothe lower A330 rate, higher A350 dilution,transition pricing and ramp-up costs.
Orders booked exceeded deliveries witha total of 731 net orders received (2015:
1,080 net orders) from 51 customers,
eight of which were new. These included
607 single aisle (A320 Family) aircraft and
124 wide-body aircraft. At the end of 2016,
Airbus’ backlog stood at an industry recordof 6,874 aircraft.
A350, A320 programmes progress
The A350 programme made good progress on the production ramp-up with 49
aircraft delivered up from 14 in 2015. This
achievement provides confidence to manage the further ramp-up towards the A350

production target of 10 aircraft a month by
the end of 2018. Passing an important milestone, the A350-1000 variant completed its
maiden flight and the flight test programmeis ongoing.
A total of 68 A320neos were delivered,including both engine variants, GTF from
Pratt & Whitney and LEAP from CFM.
The ramp-up of single-aisle production
is ongoing and production rates will be
increased progressively to a rate of 60 amonth in 2019.
Other milestones
The 10,000th Airbus aircraft – an A350 XWB
for Singapore Airlines – was delivered in
October 2016. Other milestones included

the entry-into-service of the first A330
regional aircraft and the start of construction of the China A330 completion anddelivery centre. The ‘Airspace by Airbus’
cabin brand was launched as the newstandard in passenger experience for the
A330neo and A350 programmes.

024

Helicopters

Helicopters

GUILLAUME FAURY
Chief Executive Officer,
Airbus Helicopters

Airbus Helicopters reported a higher
level of deliveries and strengthened its
leading position despite a challenging
market. Products continued to beenhanced and key military campaigns
were successful.

Keyachievements
2016

Key
priorities
2017

Strengthened leadershipin civil & parapublic in asoft market environment.

Execute and deliver onsafety commitments.

Adapted to market
challenges throughtransformation measures.
Achieved key operationaland development
milestones.
Secured key military
campaigns andstrengthened international
partnerships.
Selected as aircraft service
provider for UK’s Military
Flying Training System.

Focus on increasing
quality and customer
satisfaction.
Deliver on operational
commitments anddevelopment programme
milestones.
Enhance operational andcost competitiveness,
implement ADAPT
restructuring programmeand deliver improvement
in financial KPIs.

D

emonstrating its well positioned product line-up,
the Division strengthened its lead in the civil
and parapublic helicopter
market while maintaining
its position on the militaryside. It delivered 418 helicopters, a 5.8%
increase from the previous year (2015:395), with a 47% market share of civil andparapublic industry deliveries.
Helicopters’ net order intake increased to
353 units (2015: 333), including a high proportion of light-single engine helicopters andH135/H145 light-twin models. The order intake value declined 1.8% to € 6.06 billion,

Annual Report 2016 - AIRBUS

025

KEY FINANCIAL FIGURES
2016€ million

418

353

766

UNITS DELIVEREDNET ORDERS

ORDER BOOK
(UNITS)

2015

ChangeOrder Intake (net)

6,057

6,168

-1.8%

Order Book

11,26911,769-4.2%

Revenues

6,652

6,786

-2.0%

R&D Expenses

327

325

+0.6%

EBIT Adjusted

350

427

-18.0%

EXTERNAL REVENUES BY ACTIVITY

47%

53%

services

platforms

EXTERNAL REVENUES BY SECTOR

43%

57%

civil

defence

H225M

reflecting the product mix, and at the endof 2016 the order backlog amounted to€ 11.3 billion (2015: €11.8 billion). The overall
backlog by units was 766 at the end of
the year.
Despite increased deliveries, the Division’s
revenues declined 2.0% to € 6.7 billion(2015: € 6.8 billion), reflecting the unfavourable mix and lower commercial
flight hours in services. Civil and militaryactivities represented 43% and 57% ofrevenues respectively. Platforms made up
53% and services 47%.
EBIT Adjusted fell to € 350 million (2015:€ 427 million), burdened by the same

factors as revenues, as well as the H225
accident in Norway and some sales
campaign costs. However, the underlying
profit at Helicopters was supported by ongoing transformation measures and strong
efforts to adapt to market challenges.
Product and services development
Products and services continued to be enhanced, with several new initiatives. The
H160 passed key milestones in its flighttest campaign and the first H175 VIP variant was delivered. The first flight of the
NH90 Sea Lion for the German Navy also
occurred. In China, a consortium signed anagreement for 100 H135 helicopters withplans to develop a Final Assembly Line.

Military campaigns
Military campaigns were successful, with
Singapore announcing a contract for the
H225M as its next-generation medium-lift
helicopter. In the Middle East, Kuwait
signed an agreement for 30 H225Ms. In
Europe, Airbus was selected as the aircraft
service provider for the UK’s Military Flying
Training System contract with the H135
and H145.

026

Defenceand Space

Defenceand Space

DIRK HOKE
Chief Executive Officer,
Airbus Defence and Space

Airbus Defence and Space achieved
another year of book-to-bill above 1,
with strong order momentum in
Military Aircraft and Space Systems
and made substantial progress inreshaping its business portfolio.

Keyachievements
2016

Key
priorities
2017

Finalisation of Airbus
Safran Launchers
Joint Venture, now fully
operational.

Deliver, as committed,
on all programmes withfocus on A400M.

Divestment of non-corebusiness.
Strong restructuring
effort to improve
competitiveness andprofitability.
The A400M fleet
completed around 14,000
flight hours.

Enhance product andservice offerings basedon current platforms anddevelop new ones basedon data driven services.
Adapt organisation towards
growth and improved
efficiency.
Improve financial KPIs
including cash generationand conversion.
Promote value basedleadership to drive culturalchange.

T

he Division booked healthyorders in Military Aircraft
and Space Systems witha book-to-bill ratio ofabove 1. Telecom and Earth
Observation, Navigationand Science satellites, Light& Medium aircraft and Combat Air Systems
were particularly successful. The European
Space Agency ordered two Sentinel-2
Earth observation satellites, Eutelsat appointed Defence and Space co-prime contractor for its latest video satellite and the
UK ordered three solar-powered ZephyrHigh Altitude Pseudo-Satellite aircraft.
Additionally, an agreement was signedwith the Netherlands and Luxembourg for
two A330 Multi-Role Tanker Transport aircraft, while Canada selected the C295W
turboprop aircraft for search and rescue
missions. NETMA (the NATO Eurofighter

Annual Report 2016 - AIRBUS

027

KEY FINANCIAL FIGURES
2016€ million

76th

7

17

CONSECUTIVE
SUCCESSFULARIANE 5 LAUNCHTOTAL ARIANE 5
LAUNCHES IN YEAR

A400Ms DELIVERED2015

ChangeOrder Intake (net)15,393

14,440+6.6%

Order Book

41,49942,861-3.2%

Revenues

11,85413,080-9.4%

R&D Expenses

332

344

-3.5%

EBIT Adjusted

1,002

1,051

-4.7%

EXTERNAL REVENUES BY ACTIVITY

31%

69%

services

platforms

EXTERNAL REVENUES BY
BUSINESS LINES

27%

31%

42%
Space Systems

C295W& Tornado Management Agency) signed
two main contracts for the support of their
Eurofighter Typhoon fleet (C1+C3).
The Division’s order intake amounted to€ 15.4 billion (2015: € 14.4 billion) whileat the year end, the order book stood at€ 41.5 billion (2015: € 42.9 billion).
Including a negative impact from the perimeter change due to portfolio reshapingof approximately € 1 billion, revenues declined to € 11.9 billion (2015: € 13.1 billion)
but were broadly stable on a comparable
basis. EBIT Adjusted was € 1,002 million(2015: € 1,051 million) with the good underlying performance partially mitigating theperimeter change effect. It was supported
by a strong contract mix and risk reduction
as well as benefits materialised from restructuring efforts.

Portfolio reshaping
The Airbus Safran Launchers (ASL) 50:50
Joint Venture became fully operational on
30 June, continuing the strong executionof the Ariane 5 launcher, which conducted
its 76th successful consecutive launch during the year. ASL and the European Space
Agency signed an important confirmationagreement for the development of the
future Ariane 6 launcher. Airbus also soldits Commercial Satellite Communication
business and reached an agreement to sell
its Defence Electronics business with thetransaction concluded in early 2017.
A400M
The A400M fleet completed around 14,000
flight hours during the year. Deliveries increased to 17 aircraft (2015: 11 aircraft). The
propeller gearbox crisis was addressed in
the second half of the year with the interim

Military Aircraft

CIS(1) & Others(1) Communications, Intelligence & Security

fix to increase the time between inspection
intervals. Capability was stepped up withthe aircraft now being delivered including
some tactical capability. In the second halfof 2016, further challenges were encountered to meet military capability enhancements and management reassessed theindustrial cost of the programme, now including an estimation of the commercial exposure. As a result of these reviews a total
charge of € 2.2 billion was recorded in 2016
including € 1.2 billion in the fourth quarter.
Challenges remain on meeting contractual
capabilities, securing sufficient export orders in time, cost reduction and commercial exposure, which could be significant.

028

CHAPTER

03

Staying one
step ahead
FutureambitionsInnovation
highlights

Corporate
SocialResponsibility

Share
information

Annual Report 2016 - AIRBUS

029

SpaceDataHighway
satellite image

030

Futureambitions

staying
one stepahead

Several significant production
and operational milestones werepassed in the commercial aircraftbusiness, preparing for continued
growth. Airbus is now primed forrising production from a broader
geographical base.

1 establishing
the way
forward2016 was an important year of preparation
for the future. Good progress was made on
the production and development of major
new aircraft and variants, paving the way
for future growth.
The A350’s production ramp-up proceeded, with good progress made during theyear in terms of risk management and reduction of the outstanding work in the Final
Assembly Line. Furthermore, the larger
A350-1000 model completed its first flightthereby kicking-off a three-aircraft flighttest and certification programme.
The A320neo programme also establishedstronger foundations. Not only did aircraft deliveries begin and gain momentum
through the year for both engine versions,but the Pratt & Whitney powered A321neo
was also certified. Progress was made, too,on the A330neo. Final assembly started on
this more efficient version of the successful
A330 twin-aisle airliner.
Preparing the way for increasing production, the BelugaXL oversize cargo airlifter

BelugaXL

A330neo.
twin-aisle.
airliner.
A320neo
ramp-up

A350.
ramp-up.

A350-1000
first-flight

BelugaXL

reached its Final Assembly Line. From mid2019, this bigger version of the whalefaced transporter will carry complete sections of aircraft from sites around Europe to
the Final Assembly Lines in Hamburg andToulouse.
Global industrial production passed its
own milestone during the year, when thefirst US-assembled aircraft, an A321, wasdelivered from Mobile, Alabama.

Annual Report 2016 - AIRBUS

031

2 shapingtomorrow’s
leaders
Leadership University in Toulouse

32,000After launching its
Leadership University
the previous year, Airbus
opened the university’s
flagship Toulouse campus
in 2016. It aims to become
the worldwide reference forleadership development.
Leadership University in Toulouse

EMPLOYEES REACHEDIn September 2016, Airbus opened the
Toulouse flagship campus of its Leadership
University. The university plays a key role in
the transformation of the Company by accelerating the development of current and future
leaders to better meet business targets.
After the opening of the Toulouse campus, Airbus now has six campuses – theothers being Marignane (France), Madrid,
Hamburg, Munich and Beijing. More than
32,000 employees benefitted from thedevelopment, evaluation and transformation solutions proposed by the Leadership
University in 2016.

4
5
1 2
3
6

1

2

3

Toulouse

Marignane

Madrid4

5

6

Hamburg

MunichBeijing

Leadership University campuses

The university aims to bring out the leadership potential in all employees. They willlearn through experiential developmentwith practical experience. By connectingwith people from outside Airbus, such as
entrepreneurs, they will also become moreinnovative. And, through an experimental laboratory they will develop different
ways of working, especially linked to digitaltransformation.
The Leadership University’s ambition is tochange the culture at Airbus and in doing
so the Company aims to become a worldwide reference for leadership development.

032

Futureambitions

3 keepingthelead
The formation of the Airbus
Safran Launchers 50:50 Joint
Venture creates an even morecompetitive European champion
in the space launcher business. It
has boosted industrial efficiency
and operational flexibility.

Ariane 5

ARIANE 5:

76th
SUCCESSFULCONSECUTIVELAUNCH

INDUSTRIAL
NETWORK:MORE THAN

550
12COMPANIES IN

Ariane 5 launch

EUROPEAN
COUNTRIESWith the completion of the Airbus Safran
Launchers Joint Venture, the Company
sharpened its competitive edge in spacelaunchers. Formed from the merger of
Airbus and Safran’s launcher activities,
this Joint Venture is well-positioned
to meet the market’s needs – fromlauncher design and construction tocommercialisation.
At a time of mounting competition, theJoint Venture bolsters industrial efficiency
and operational flexibility, for the benefitof its customers and shareholders.
Airbus Safran Launchers is the leadcontractor for the Ariane 5 launcher, coordinating an industrial network of morethan 550 companies in 12 European
countries. In 2016, Ariane 5 broke newrecords, completing its 76 th successfulconsecutive launch and lifting a 10.7-tonne
payload, the heaviest ever.
The company is also the industrial lead contractor for the launcher’s successor, theAriane 6. Scheduled for a first flight in 2020,
it will replace the Ariane 5 in about 2023.

Annual Report 2016 - AIRBUS

033

OVER

500
PROJECTSThe Digital Transformation Office is leading
the operational deployment of digital projects Company-wide. A community of morethan 9,000 members is working on over
500 projects as part of this transformation
programme. Projects are taking place indesign and manufacturing, as well as support services and new product ideas.

Airbus is embracing Virtual Reality

4 preparingfor a
new eraNew digital avenues include: the ‘datalake’ project for commercial aircraft which
involves building a reservoir of data foreach aircraft in-service that provides customers with capabilities to enhance theiroperations and increase the availability of
their fleet; the use of Augmented Reality
and Virtual Reality devices for employees
to improve their methods of working; theuse of the Internet of Things for logistics
equipment in Final Assembly Lines; the useof Cobots (collaborative robots) as part of
the Industry 4.0 initiative to increase theefficiency of workers with improved ergonomics; and iflyA380.com, a unique booking service that allows passengers to bookwith all A380 operators, selecting flights
by destination and on-board services. In
addition, all Airbus employees are now
connected seamlessly through an intranet
platform known as The Hub. Data is the key
to digital transformation.

Airbus is transforming its culture, tools
and processes to prepare for a digitalworld. More than 9,000 people are working
on over 500 projects, ranging from design
and manufacturing, to support services
and new product ideas.

Airbus is embarking on a digital transformation, focusing on its culture, processes
and tools. By leveraging technology to
be smarter and more productive, theCompany aims to lay the foundations for
greater competitiveness in a digital world.
Augmented Reality systems canimprove working methods

034

Innovation highlights

innovation
highlights
Significant restructuring of the Corporate Technology
Office (“CTO”) took place in 2016 and will continue
into 2017. The CTO is undergoing a transformation
programme to become more agile, innovative andaligned with the needs of Airbus. The new CTO
organisation is responsible for guiding all R&T of theCompany and ensures Airbus-wide integration oftechnology. The CTO is also in charge of developing
the Airbus-wide R&T Roadmaps and executing
Demonstrator projects together with the divisions.
This organisation applies a lean, project-based
approach, will encourage collaboration with external
research communities and develop partnerships,
especially through open innovation with technical andscientific experts. Four technology thrusts ensure thatroad mapping, group demonstrators and R&T projects
form a coherent portfolio of activities to advance rapidly
strategic priorities. These are: Electrification; Urban
Air Mobility; Digital Product Development Process andFactory; and Connected Fleet.

Transpose

Transpose, launched in December 2016 by A3, is a clean-sheet
rethinking of aircraft cabin architecture and passenger
experience possibilities. Besides new revenue streams,
Transpose enables significant savings for airlines. A modular
cabin architecture eliminates aircraft downtime due tocustomisation operations, which can currently take up to a month
to complete. Add to this the increased flexibility in cabin design
options, and there is potential for vastly improved passenger
experiences, offering a compelling way for airlines to differentiate
and offer more choice to their customers.

Aircraft inspection by drone

Airbus demonstrated how a commercial aircraft can be visuallyinspected using a drone at the 2016 Farnborough Airshow.
The drone, equipped with a high definition camera, performs avisual inspection for the upper part of the aircraft. It is flown using
an automatic flight control system supervised by a human pilot.
The drone follows a predetermined flight path and takes a seriesof pictures automatically. All these images, and especially thoseshowing any potential non-quality such as scratches, dents andpainting defects, are compiled in a 3D digital model, recorded ina database and then analysed. The benefits of this innovative tooland process are significant. Aircraft downtime for inspection is
reduced. Data acquisition by drone only takes 10 to 15 minutes,
instead of two hours using conventional methods.

VahanaProject Vahana started in early 2016 as one of the first projects
at A³, the advanced projects and partnerships outpost of Airbus
in Silicon Valley. Designed to carry a single passenger or cargo,
A³ is aiming to make it the first certified passenger aircraft without
a pilot. The aim is to fly a full-size prototype before the end of
2017, and to have a product-ready demonstrator by 2020.

Annual Report 2016 - AIRBUS

Vertical Tail Plane Direct Printing

Engineers from Airbus’ A320 Family paint shop, in co-operation
with the R&T department in Hamburg, Germany, have developed
a new “direct printing” method to apply large and complex liveries
on aircraft vertical tail planes (VTPs). The new process uses
industrial inkjet printers which can decorate VTPs faster, more
efficiently and with finer detail than traditional methods.
The economic and environmental benefits of the new method
compared to traditional aircraft painting or adhesive foils include
the reduction of man-hours/lead-times (up to one day) and amajor weight reduction (up to 5 kg on an A320 VTP).

Helicopters advances Clean Sky 2
demonstrator

In 2016, Airbus Helicopters passed an important milestone in
the development of a high-speed, compound helicopter
demonstrator being developed as part of the Clean Sky 2
European research programme. A mock-up of the breakthroughairframe design went through wind tunnel testing. The tests
proved the viability of the chosen design in terms of efficiency,
sustainability and performance. Building upon the achievementsof the company-funded and record-breaking X3 technology
demonstrator, the Airbus Helicopters Clean Sky-demonstrator will
help refine the compound aerodynamic configuration and bring it
closer to an operational design, with the objective of meeting
future requirements for increased speed, better cost-efficiency,
as well as dramatic reductions of emission and acoustic footprints.
Flight-testing of the prototype is expected to start in 2019.

SpaceDataHighway

Airbus Defence and Space started the initial service of theSpaceDataHighway in 2016. This represents a step change in the
speed of communications in space. Thanks to laser technology
developed by Tesat Spacecom, high-volume data can betransferred from Earth observation satellites, airborne platforms,
or even the International Space Station, at a data rate of
1.8 gigabits per second and can transmit up to 40 terabytes a day.
This provides a unique, secure, near real time data transfer
service, making data latency a thing of the past. EDRS-A, the firstrelay satellite for the SpaceDataHighway programme, waslaunched in January 2016.

Cleaning up space

Airbus Defence and Space is leading a project team for the TeSeR(Technology for Self-Removal of Spacecraft) initiative which willdevelop technology to reduce the risk of spacecraft colliding withdebris in space. Together with its ten European partners, Airbus willdevelop a prototype for a cost-efficient and highly reliable module
to ensure that future spacecraft don’t present a collision risk once
they reach the end of their nominal operational lifetimes or suffer
an in-service failure. The module may also function as a removal
back-up in the case of a loss of control over a spacecraft. Orbital
space is becoming increasingly congested. Space debris threatens
space-based infrastructures which are vital for life on Earth.
Disused spacecraft are a potentially dangerous source of spacedebris. The TeSeR project develops technologies that will ensurea sustainable space environment for future generations.

035

036

Corporate Social Responsibility

Corporate
SocialResponsibility
THE GLOBAL GOALS

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

1 No poverty
2 Zero hunger
3 Good health and well-being
4 Quality education
5 Gender equality
6 Clean water and sanitation
7 Affordable and clean energy
8 Decent work and economic
growthYEAR OVERVIEW

2016
IN 2016, AIRBUS ADOPTED THE
UNITED NATIONS SUSTAINABLE
DEVELOPMENT GOALS (SDGs)
AS A FRAMEWORK TO ALIGNITS CORPORATE SOCIALRESPONSIBILITY (CSR) GOALS.
AT LEAST EIGHT OF THE UN’S
17 SDG GOALS ARE DIRECTLYRELEVANT TO AIRBUS’
BUSINESSES AND IT HAS
INITIATIVES CONTRIBUTING TO
29 OF THE UN’S 169 TARGETS.
STAKEHOLDER FEEDBACK
SHOWED THAT THE INDUSTRYIS MOST CONCERNED ABOUTTHE FOLLOWING SDGs:

MILLENNIAL EMPLOYEES,FOR THEIR PART, ARE MOST
CONCERNED ABOUT:
8

DECENT WORK AND
ECONOMIC GROWTH

9INDUSTRY, INNOVATION
AND INFRASTRUCTURE

9 Industry, innovation andinfrastructure
10 Reduced inequalities
11 Sustainable cities andcommunities

8

DECENT WORK AND
ECONOMIC GROWTHRESPONSIBLE
CONSUMPTION AND
PRODUCTION

9INDUSTRY, INNOVATION
AND INFRASTRUCTURE

CLIMATE ACTION

12 Responsible consumption
and production
13 Climate action
14 Life below water
15 Life on land
16 Peace and justicestrong institutions
17 Partnerships for the goals

13

CLIMATE ACTION

The examples on the following page show how Airbus is approaching three of these goals.

17

PARTNERSHIPSFOR THE GOALSAnnual Report 2016 - AIRBUS

1. Airbus

17

Foundationworldwide

On 4 October 2016, Hurricane Matthew, an
extremely destructive category 5 Atlantic
hurricane, passed over the southwest of Haiti
in the Caribbean Sea, causing widespread
damage and many deaths. In the immediate
aftermath, the Airbus Foundation marshalled its
resources from across the Company’s Divisions
to help bring relief. Aircraft transported relief
personnel, medical equipment and watersupplies, while high-resolution satellite imagery
provided insight into the situation on the ground.
An Airbus A330 test aircraft transported
approximately 20 tonnes of humanitarian aid

collected by Action Against Hunger toPort-au-Prince in Haiti. The goods included
water sanitation equipment, stocks of drinking
water, household kits and family hygiene packs.

2. CombatingclimatechangeThrough aviation and Earth observation, Airbus
is playing an important role in mitigatingclimate change. Airbus welcomed and fully
supported two historic International Civil
Aviation Organisation agreements made in
2016. Firstly, a carbon dioxide emissions
certification standard was established toencourage the integration of fuel efficienttechnologies into aircraft design anddevelopment. Secondly, the first-ever global
carbon offsetting and reduction scheme forinternational aviation, known as CORSIA, wasagreed. Airbus is committed to supporting all

3. Moreefficientfacilities

037

SDG 17: Strengthen the meansof implementation and revitalize
the global partnership forsustainable development

In the immediate aftermath, the Airbus
Helicopters Foundation was able to provide
two H125s belonging to an operator from the
Dominican Republic for humanitarian purposes.
A larger helicopter (AS365) was also available
when required. The first flight occurred on
5 October as soon as the weather permitted.
Helicopter flights were intense during the firsttwo weeks after the catastrophe and were used
for emergency aid missions, the transport of
doctors and to assess the scope of the damage.
The assistance of helicopters was also crucial
for helping to restore access to drinking water.
The Airbus Foundation and Airbus Helicopters
Foundation have partnered with several NGOs
and airlines to provide products and services
to help disaster relief.

13

SDG 13: Take urgent action
to combat climate change
and its impacts

pillars of aviation’s climate action plan bydelivering the most fuel efficient aircraft thanks
to technology improvements, supporting
improved air traffic management and enhanced
aircraft operations, and facilitating the wider
adoption of sustainable alternative fuels.
2016 also saw a breakthrough in the use ofsatellites to monitor deforestation. Working withThe Forest Trust and SarVision, Defence andSpace has jointly developed a service enablingcompanies to provide evidence of how they are
implementing their ‘no deforestation’commitments. The service is called Starling anduses a combination of high-resolution opticalsatellite and radar imagery to provide unbiased
monitoring of forest cover change.

12

SDG 12: Ensure sustainableconsumption and production
patterns

The buildings are heated and air-conditioned
by geothermal systems, which are the largestof their kind in Europe.
Eco-efficiency at Airbus aims at maximising
the benefits of products and services, while
minimising the environmental impact of theirproduction and operation. The Company’s‘Wings Campus’ headquarters in Toulouse,
inaugurated on 28 June 2016, meets one of
the most modern environmental standards
set by the Building Research Establishment
Environmental Assessment Method(BREEAM – ‘very good’ rating certification), a
global reference for sustainable construction.

Other successful initiatives looked at thelocation of sites to find the most appropriate
solutions for saving both emissions and costs.
This was the case for Helicopters’ facility
in Marignane, southern France, where
12,000 photovoltaic panels were installed overa surface area of 16,000 square metres.
This has helped to produce 2.95 gigawatt hoursof electricity per year, which is equivalent to adrop of 360 tonnes of carbon dioxide annually.

038

Share
information

share
information
SHARE PRICE EVOLUTION

Base 100 as of 2 January 20142014

Airbus share price in €

2015

2016

130 %
120 %
110 %
100 %
90 %
80 %
70 %
J F M A M J J A S O N D
AirbusEurostoxx 600

In 2016, Airbus’ share price closed
at € 62.84, slightly above the prioryear closing share price, despite ahigh level of intra year volatility andoperational challenges.
After opening at € 61.15 on 1 January,
the share price fell below € 50 within thefirst two months of the year, in line withwider markets. This was driven by lower
oil prices, strengthening of the EUR versus the USD and fears around economic
growth in China as well as contagion into
global markets. After February’s FY2015
disclosure, where Airbus met its guidance, the shares moved higher again
supported by reassuring messages on
the Company’s confidence in the aero
cycle, its capacity to manage macroeconomic developments, to executeramp-up plans and to deliver significant
earnings and Free Cash Flow before theend of the decade.
Following the Q1 results, shares were
pulled down by increasing risks on operational execution and supply chain
performance. A more favourable USD/
EUR rate as well as rebounding oil prices

CAC 40MSCI World Aerospace & Defence

CAPITAL STRUCTURE
As of 31 December 2016global markets. Despite aero cycle
fears, airline overcapacity concerns andexecution issues, the shares reboundedon solid Farnborough Airshow orders.
Better than expected Q2 results andconfirmed guidance further helped theshares.
After a stable period in September, theshares performed positively after the
9M release mainly due to the maintained2016 guidance and sizing of the customer financing risk. The outcome of
the US presidential election, which led
to more positive sentiment for defence
spending, a further strengthening of the
USD versus EUR, a higher oil priceand positive expectations of strong
Q4 aircraft deliveries lifted the sharesback to € 62.84 by year-end.
With an annual increase of 1.4%, Airbus
shares outperformed the EuroStoxx 600(-1.2%). In the same period, the CAC40
rose 4.9%.

INVESTOR RELATIONSAND FINANCIAL
COMMUNICATION

4%11%

E-mail: ir@airbus.com

11%

website: www.airbusgroup.com
74%

FINANCIAL CALENDARFree Float (1)
SOGEPA (French State)
GZBV (German State)
SEPI (Spanish State)(1) Including treasury shares without economic
or voting rights (0.02%)

lifted shares in May before they declined
again, driven by negative news flow on
A320neo engine supply issues.
Pre-Brexit volatility in June moved theshares higher. However, the Brexit voteresult led to a sharp decline in line with

FULL-YEAR 2016 RESULTS RELEASE
22 February 2017
ANNUAL GENERAL MEETING 201712 April 2017
FIRST QUARTER 2017 RESULTSRELEASE
27 April 2017
HALF-YEAR 2017 RESULTS RELEASE
27 July 2017

Airbus_RA_2015_2016 web_IPEDIS.indd 31

11/05/2016 10:26

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p. 8-9© Airbus/A. Pohlmann© R. Mérigneux© Falco Peters Photography© Groupe PSA, Direction de la communication/
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p. 24-25© Airbus Helicopters/Lorette Fabre© Airbus/A. Pecchi

p. 26-27© Airbus

p. 28-29© Airbus/P. Cabellos del Sol© ESA 2016p. 30-31© Airbus/A. Doumenjou, P. Masclet,

p. 32-33© Airbus/D. Eskenazi© 2005 ESA-CNES-ARIANESPACE/
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p. 34-35© GettyImages/Adventure_Photo© Airbus/R. Gnecco-aircam© Airbus/Transpose/A³ by Airbus Group© Airbus/Vahana/A³ by Airbus© Airbus/Christian Brinkmann H© ESA 2016
© Airbus Helicopters© Airbus Defence and Space

p. 36-37

p. 10-11© Airbus/ A. Pohlmann, P. Pigeyre

p. 12-13© Airbus/J. Hartley

p. 14-15© Airbus/A. Pohlmann

p. 16-17© Airbus/W. Schroll© Airbus Defence and Space

p. 18-19© Airbus/A. Pohlmann

p. 20-21© ESA/ATG medialab© GettyImages/Bjorn Holland© Airbus/A. Doumenjou, A. Tchaikovski© Airbus Defence and Space GmbH/Juergen Dannenberg

p. 22-23© Airbus/A. Pecchi, P. Pigeyre,

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Contact Airbus
2 rond-point Dewoitine
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FranceAirbus Group SE
Mendelweg 302333 CS Leiden
The Netherlands

Registration
Document

2016

Registration
Document

Airbus Group SE (the “Company”) is a European p ubliccompany (Societas Europaea), with its seat in Amsterdam, The
Netherlands, which is listed in France, Germany and Spain. The
applicable regulations with respect to public information andprotection of investors, as well as the commitments made by
the Company to securities and market authorities, are describedin this Registration Document (the “Registration Document”).
In 2017, the Company continues to further integrate by merging
its Group structure with the commercial aircraft activities ofAirbus, with associated restructuring measures. The merger
is contemplated to take place mid-2017. In this new set-up,
the Company will retain Airbus Defence and Space and Airbus
Helicopters as Divisions. See “— Information on Airbus Activities— 1.1.1 Overview”.
In 2016, there are no changes to the segment reporting.
Nevertheless as a result of the relabelling to a single Airbus
brand, the Company together with its subsidiaries will bereferred to as “Airbus” and no longer the Group. Consequently,
the segment formerly known as Airbus is referred to as “Airbus
Commercial Aircraft” for the purpose of 2016 f inancial
reporting. See “— Management’s Discussion and Analysisof Financial Condition and Results of Operations — 2.1.1.2
Reportable Business Segments”.
The Company will change its name to Airbus SE; the legal namechange from Airbus Group SE to Airbus SE is still subject tothe approval of the Annual General Meeting (“AGM”) due to beheld on 12 April 2017.
In addition to historical information, this Registration 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”,“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 basedon analyses or forecasts of future results and estimatesof amounts not yet determinable. These forward-looking
statements represent the view of the Company only as ofthe dates they are made, and the Company disclaims any
obligation to update forward-looking statements, except
as may be otherwise required by law. The forward-looking
statements in this Registration Document involve known andunknown risks, uncertainties and other factors that could
cause the Company’s actual future results, performance andachievements to differ materially from those forecasted orsuggested herein. These include changes in general economic
and business conditions, as well as the factors describedunder “Risk Factors” below.
This Registration Document was prepared in accordancewith Annex 1 of EC Regulation No. 809 / 2004, filed in
English with, and approved by, the Autoriteit Financiële
Markten (the “AFM”) on 4 April 2017 in its capacity ascompetent authority under the Wet op het financieeltoezicht (as amended) pursuant to Directive 2003 / 71 / EC.
This Registration Document may be used in support ofa financial transaction as a document forming part of aprospectus in accordance with Directive 2003 / 71 / EC only
if it is supplemented by a securities note and a summary
approved by the AFM. This Registration Document is dated
4 April 2017.

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Document
Risk Factors

1

Information on Airbus Activities

2

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

3

General Description of the Company
and its Share Capital4

Corporate Governance5

Entity Responsible for the Registration
Document

2016
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Financial Statements 2015

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02
Management’s Discussion
and Analysis of Financial Condition
and Results of Operations
57

Risk Factors

07

1.

Financial Market Risks

08

2.

Business-Related Risks

12

3.

Legal Risks

19

2.1

21

2.1.1 Overview

59

2.1.2 Signiﬁcant Accounting Considerations,
Policies and Estimates

61

2.1.3 Performance Measures

62

2.1.4 Results of Operations

67

2.1.5 Changes in Consolidated Total Equity(Including Non-Controlling Interests)

70

23

2.1.6 Liquidity and Capital Resources72

2.1.7 Hedging Activities

75

Financial Statements

76

4.

Industrial and Environmental Risks

01
Information on Airbus Activities

Operating and Financial Review

58

1.1

Presentation of the Company

24

2.2

1.1.1

Overview

24

2.3

Statutory Auditors’ Fees

76

1.1.2 Commercial Aircraft

28

2.4

1.1.3 Helicopters

36

Information Regarding
the Statutory Auditors

77

1.1.4 Defence and Space39

1.1.5 Investments

47

1.1.6 Insurance

47

1.1.7 Legal and Arbitration Proceedings

47

1.1.8 Research and Technology, Intellectual Property

50

1.1.9 Corporate Social Responsibility

52

1.1.10 Employees

54

1.2

55

Recent Developments

03
General Description of
the Company and its Share Capital

79

3.1

80

General Description of the Company

3.1.1 Commercial and Corporate Names,
Seat and Registered Ofﬁce

80

3.1.2 Legal Form

80

3.1.3 Governing Laws and Disclosures80

3.1.4 Date of Incorporation and Durationof the Company

82

3.1.5 Objects of the Company

82

3.1.6 Commercial and Companies Registry82

3.1.7 Inspection of Corporate Documents

82

3.1.8 Financial Year82

3.1.9 Allocation and Distribution of Income

83

3.1.10 General Meetings

83

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04
3.1.11 Disclosure of Holdings

84

3.1.12 Mandatory Disposal

86

3.1.13 Mandatory Offers

87

3.2

General Descriptionof the Share Capital

87

3.2.1 Issued Share Capital87

3.2.2 Authorised Share Capital

87

3.2.3 Modiﬁcation of Share Capitalor Rights Attached to the Shares88

3.2.4 Securities Granting Accessto the Company’s Share Capital

89

3.2.5 Changes in the Issued Share Capital

89

3.3

90

Shareholdings and Voting Rights

3.3.1 Shareholding Structure at the end of 2016

90

3.3.2 Relationships with Principal Shareholders

91

3.3.3 Form of Shares

94

3.3.4 Changes in the Shareholding of the Company

Corporate Governance

103

4.1

Management and Control

104

4.1.1 Corporate Governance Arrangements

104

4.1.2 Dutch Corporate Governance Code,“Comply or Explain”

124

4.1.3 Enterprise Risk Management System

125

4.1.4 Ethics and Compliance Organisation

129

4.2

Interests of Directors and Principal
Executive Ofﬁcers

4.2.1 Remuneration Policy

131
131

4.2.2 Long-Term Incentives Granted to the Chief
Executive Ofﬁcer

141

4.2.3 Related Party Transactions

142

Employee Proﬁt Sharing
and Incentive Plans

142

94

4.3.1 Employee Proﬁt Sharing and Incentive
Agreements

142

3.3.5 Persons Exercising Control over the Company

95

4.3.2 Employee Share Ownership Plans

142

3.3.6 Simpliﬁed Group Structure Chart

95

4.3.3 Long-Term Incentive Plans

144

3.3.7 Purchase by the Company of its Own Shares

97

3.4

99

Dividends

3.4.1 Dividends and Cash Distributions Paid

99

3.4.2 Dividend Policy of the Company

99

3.4.3 Unclaimed Dividends

99

3.4.4 Taxation

99

4.3

05
Entity Responsible
for the Registration Document
5.1

149

Entity Responsible
for the Registration Document

150

Statement of the Entity Responsible
for the Registration Document

150

5.3

Information Policy

151

5.4

Undertakings of the Company
regarding Information

151

5.5

Signiﬁcant Changes

151

5.2

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Financial Market Risks

08

2.

Business-Related Risks

12

3.

Legal Risks

19

4.

Industrial and Environmental Risks

21

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1 Financial Market Risks

The Company is subject to many risks and uncertainties that may affectits ﬁnancial performance. The business, results of operation 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. Additionalrisks and uncertainties not presently known to the Company 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 andperformance 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 ordefaults, or adverse geopolitical events (including the impactof 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 and have a negative
effect on the Company’s ﬁ nancial condition and results ofoperations.
Two geopolitical events in 2016 in particular could cause
potential disruptions to and create uncertainty surrounding theCompany’s business, including affecting our relationships with
our existing and future customers, suppliers and employees:(i) the public referendum in June 2016 where a majority of UK
voters voted in favour of leaving the European Union (commonlyreferred to as “Brexit”) and (ii) the US Presidential election in
November 2016.
Although the terms of the UK’s post-Brexit relationship with
the EU are still unknown, the Company may be affected bypotentially divergent national laws and regulations between
the EU and the UK. This may include greater restrictions on
the importing and exporting of goods and services between
the UK and EU countries in which the Company operates
along with costly new tariffs and increased regulatory and legal
complexities. The free movement of people and skilled labour
may also be limited by new border controls.

The results of the US Presidential election have introduced
greater uncertainty with respect to US tax and trade policies,
tariffs and government regulations affecting trade between the
US and other countries.
Although it is too early for the impact of these geopolitical events
to be reasonably 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;■further reductions in public spending for defence, homeland
security and space activities, which go beyond those budget
consolidation measures already proposed by governments
around the world;■
ﬁnancial instability, inability to obtain credit or insolvency on thepart of key suppliers and subcontractors, thereby impacting■

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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; and■decreased performance of Airbus’ cash investments due tolow and partly negative interest rates.

The Company’s financial results could also be negatively
affected depending on gains or losses realised on the saleor exchange of ﬁ nancial 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
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

A signiﬁcant portion of the Company’s revenues is denominatedin US dollars, while a major portion of its costs is incurred ineuro, and to a lesser extent, in pounds sterling. Consequently, tothe extent that the Company does not use ﬁnancial instruments
to hedge its exposure resulting from this foreign currency
mismatch, its proﬁts will be affected by market changes in theexchange rate of the US dollar against these currencies. The
Company has therefore implemented a long-term hedging
portfolio to help secure the rates at which a portion of its future
US dollar-denominated revenues (arising primarily at Airbus) areconverted into euro or pound sterling, in order to manage andminimise this foreign currency exposure.
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 result, assets and liabilities.
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.

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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 ﬁ nancing 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.
Due to the suspension of Export Credit Agency ﬁ nancing,
there is a risk that additional customer ﬁnancing will need to
be provided, which could increase the customer ﬁ nancing
exposure. See “— Legal Risks” and “— Information on Airbus
Activities — Section 1.1.7 Legal and Arbitration Proceedings”.
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 have anegative effect on its ﬁnancial condition and results of operations.

Counterparty Credit
In addition to the credit risk relating to sales ﬁ nancing as
discussed above, the Company is exposed to credit risk to theextent of non-performance by its counterparties for ﬁnancial
instruments, such as hedging instruments and cash investments.
However, Airbus has policies in place to avoid concentrationsof 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, Moody’s and Fitch
Ratings. 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 theCompany is reviewed on a regular basis and the respective limits
are regularly monitored and updated. The Company also seeks
to maintain a certain level of diversiﬁcation in its portfolio between
individual counterparties as well as between ﬁnancial institutions,
corporates and 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

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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 ﬁnancial
regulations (Basel III, EMIR, CRD4, Bank Restructuring
Resolution Directive, Dodd Frank Act, Volcker Rules, etc.) will
have an impact on the business model of banks (for example,
the split between investment banking and commercial banking

activities) and on the capital structure and cost of such banks’
activities in relation to over-the-counter derivatives, andtherefore on the funding consequences of central clearing andcollateralisation of over-the-counter derivatives for corporations
like the Company. This may ultimately increase the cost andreduce the liquidity of the Company’s long-term hedges, forexample, as banks seek to either pass-on the additional costs
to their corporate counterparties or withdraw from low-proﬁt
businesses altogether.

Equity Investment Portfolio
The Company holds several equity investments for industrial
or strategic reasons, the business rationale for which may varyover the life of the investment. Equity investments are either
accounted for using the equity method (joint ventures andassociated companies), if the Company has the ability to exercise
joint control or signiﬁcant inﬂuence, or at fair value. If fair value
is not readily determinable, the investment is measured at cost.

As of 31 December 2016, the Company’s remaining
investment in Dassault Aviation’s share capital is classiﬁed asother investments and measured at fair value, amounting to€ 0.9 billion at year-end 2016. For equity investments whichmake up only a fraction of the Company’s total assets, theCompany regards the risk of negative changes in fair value or
impairments on these investments as non-signiﬁcant.

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 B enefits —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 ofthe 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 from time to timeto the pension assets. The Company has taken measures toreduce 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 a negative effect on
the Company’s total equity (net of deferred taxes), which couldin turn have a negative effect on its future ﬁnancial condition.

Tax Exposure
As a multinational group with operations and sales invarious jurisdictions, the Company is subject to a number ofdifferent tax laws. It is the Company’s objective to adhere to
the relevant tax regulations in the different countries and toensure tax compliance while structuring its operations andtransactions in a tax-efﬁ cient manner. The structure of theCompany’s organisation and of the transactions it enters into
are based on its own interpretations of applicable tax laws andregulations, generally relying on opinions received from internal

or independent tax counsel, and, to the extent necessary, on
rulings or speciﬁc guidance from competent tax authorities.
There can be no assurance that the tax authorities will not seek
to challenge such interpretations, in which case the Company or
its afﬁliates could become subject to tax claims. Moreover, thetax laws and regulations that apply to the Company’s businessmay be amended by the tax authorities, which could affect theoverall tax efﬁciency of the Company.

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2. 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
ﬁ nancial health and the availability of outside ﬁ nancing foraircraft purchases, (vi) evolution of fuel price, (vii) regulatoryenvironment, (viii) environmental constraints imposed uponaircraft operations and (ix) market evolutionary factors such as
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.
The commercial helicopter market could also be inﬂuenced
by a number of factors listed above and in particular with thesigniﬁcant drop of the price of oil since 2015, the Company isimpacted by a postponement of investments in the acquisitionof new platforms by offshore helicopter players and a reductionof ﬂight hours. The uncertainty on the lead time of the market
recovery and the low oil price may have an impact on Airbus
Helicopters ﬁnancial results and could lead to cancellations orloss of bookings.

Physical Security, Terrorism, Pandemics and Other Catastrophic Events
Past terrorist attacks and the spread of pandemics (such as
H1N1 ﬂu or Ebola) have demonstrated 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 the willingness of the public to travel by air.
Furthermore, major aircraft accidents may have a negative
effect on the public’s or regulators’ perception of the safetyof 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 andsafety measures. The Company may therefore suffer from adecline in demand for all or certain types of its aircraft or otherproducts, and the Company’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 and personnel physicalsecurity, terrorism, natural disasters, damaging weather, andother crises. Any resulting impact on the Company’s production
and services could have a signiﬁcant adverse effect on the
Company’s ﬁnancial condition and results of operations as wellas on its reputation and 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 typesof potential security risks, arising from actions that may beintentional and hostile, or negligent. Industrial espionage,

cyber-attacks such as Advanced Persistent Threat (“APT”),
including systems sabotage, data breaches (conﬁdential data,
personal data and Intellectual property), and data corruption
and availability are the main risks that the Company may face.
Risks related to our industrial control systems, manufacturing
processes and products are growing, with the increase ofRegistration Document 2016 - AIRBUS ° 12 °

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interconnectivity and digitalisation, and with a growing gap
developing between the defences of older, relatively insecureindustrial systems and the capabilities of potential attackers.
All of the above mentioned risks are heightened in the context
of greater use of cloud services, integration with extended
enterprise, growing use of sophisticated mobile devices andthe “internet of things” to access the Company’s IT systems.
Moreover, the extended use of social media may expose theCompany to reputational damage from the growing volume offalse and malicious information injected.

While the Company continues to undertake signiﬁcant efforts
to prevent such events from happening, no assurance can begiven that these efforts will successfully prevent them or theirconsequences.
The occurrence of one or several of such risks could lead tosevere damage including but not limited to signiﬁcant ﬁnancial(including through additional investment required), contractual or
reputation performance degradation as well as loss of Intellectual
property data and information, operational business degradation
or disruptions, and product or services malfunctions.

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 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, there 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 is applied by the Company
to monitor such exposures and to ensure that appropriate
mitigation plans or fall-back solutions are available for deliveries
from zones considered to be at risk. Despite these measures,
the Company remains exposed to interrupted deliveries fromsuppliers impacted by such events, which could have a negative
effect on the ﬁnancial condition and results of operations 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 intends to accelerate
its production in order to meet the agreed upon delivery
schedules for such new aircraft. The Company’s ability tofurther 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
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suppliers and subcontractors (particularly suppliers of buyerfurnished equipment) who may experience resource or ﬁnancial
constraints due to ramp-up. Management of such factors is also
complicated by the development of new aircraft programmesin parallel, across the three Divisions, which carry their own
resource demands. Therefore, f ailures relating to any or allof these factors could lead to missed delivery commitments,

and depending on the length of delay in meeting delivery
commitments, could lead to additional costs and customers’
rescheduling or terminating their orders. This risk increases
as the Company and its competitors announce even higher
production rates. Good progress has been made in 2015 and the
supply chain is in general more stable. Speciﬁc areas of risk with
suppliers of cabin equipment continue to be carefully managed.

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 andrequire substantial integration and coordination along the
supply chain. In addition, most of the Company’s products
must function under demanding operating conditions. 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 Airbus’ contracts require it to forfeit part of its
expected proﬁ t, 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 2014, 2015
and 2016”. 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 signiﬁ cant ﬂ uctuations from year to year andcountry to country. Due to the overall economic environmentand competing budget priorities, several countries have reduced
their level of public spending, especially with respect to defence
and security budgets. Any termination or reduction of future
funding or cancellations or delays impacting existing contracts
may have a negative effect on the Company’s ﬁnancial condition
and results 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.

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Availability of Government and Other Sources of Financing
Since 1992, the EU and the US have 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 sought to unilaterally withdraw
from this agreement, which eventually led to the US and theEU making formal claims against each other before the World
Trade Organization (“WTO”). While both sides have expresseda preference for a negotiated settlement that provides for alevel playing ﬁeld when funding future aircraft developments,
they have thus far failed to reach agreement on key issues.
The terms and conditions of any new agreement, or the ﬁnal
outcome of the formal WTO 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 European Commission
and the involved governments to analyse possibilities for achange in the commercial terms of 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
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
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
favourable terms, or at all, which may limit the Company’s future
ability to make capital expenditures, fully carry out its researchand 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 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 thesecustomers/suppliers marketing their own products or services
and competing directly with the Company for sales of theseproducts or services, all of which could signiﬁcantly reduce
the Company’s revenues. Further, new players are operating
or seeking to operate in the Company’s existing markets which
may impact the structure and proﬁtability of these markets.
In addition, enterprises with different business models could
substitute some of the Company’s products and services. Therecan be no assurance that the Company will be able to compete
successfully against its current or future competitors or thatthe competitive pressures it faces in all business areas will not
result in reduced revenues, market share or 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.

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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.

Digital Transformation, Integration, Continuous Improvement
and Competitiveness Programmes
In order to improve current operational performance while
preparing for the future and building resilience, the Company
has launched the integration of its headquarters and corporate
functions with the largest Division, Airbus Commercial Aircraft,and has initiated a wide-reaching digital transformation
programme, Quantum. In parallel, the traditional continuous
improvement and competitiveness programmes running in all
businesses are pursued.

Integration
The merger of the Group structure with its largest Division,
Airbus Commercial Aircraft, to form one single entity to becalled, simply, Airbus, is contemplated to be completed in mid2017. This next level of integration aims to improve performanceand efﬁ ciency across the g roup, ensuring clear focus on
operational business imperatives. The new organisation withleaner functions should ease collaboration, reduce bureaucracy
and allow for faster decision making at all levels and acrossDivisions thus laying solid foundations for digital transformationand catalysing all group transformation initiatives alreadyunderway in support functions. The streamlined set-up also
brings consolidation and cost reduction opportunities at the
top of the organisation, which should beneﬁt Helicopters andDefence and Space. Some 1,100 positions will be reduced in
the functions concerned, while around 230 new positions areto be created mainly in the Digital Transformation O fﬁce (DTO)
and new Corporate Technology O fﬁce (CTO) organisations.
The net impact would lead to an overall headcount reductionof around 9%.

Digital transformation
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 DTO and CTO organisations andeach key streams is led by a Division head.

Traditional cost-saving and competitivenessprogrammes in each Division
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.

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.

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Acquisitions, Divestments, Joint Ventures and Strategic Alliances
As part of its business strategy, the Company may acquire ordivest businesses and form joint ventures or strategic alliances.
Acquisitions and divestments are inherently risky becauseof difﬁculties that may arise when integrating or carving out
people, operations, technologies and products. There can be
no assurance that any of the businesses that the Company
acquires can be integrated or carved out successfully and astimely as originally planned or that they will perform well anddeliver the expected synergies once integrated or separated.
In addition, the Company may incur signiﬁcant acquisition ordivestment, administrative and other costs in connection withthese transactions, including costs related to integration or
separation of acquired businesses. While the Company believes
that it has established appropriate and adequate proceduresand processes to mitigate these risks, there is no assurance
that these transactions will be successful.

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 ﬁ nance 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; and■provisions allowing for the service provider to seek additionalcustomers for unused capacity.
■

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 lifetimeof 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 on-going 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.

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):
A320neo programme. In connection with the A320neo
programme, the Company faces the following main challenges:
the transition from A320ceo (current engine option) to A320neothat started in 2016 with 68 deliveries and will ﬁnish in 2019;
management of stress in the internal and external supply chain
as a result of the industrial ramp-up; ensuring maturity andhigh quality service support for 17 operators of A320neo (newengine option). The main focus will be with the further ramp-up
for Airbus and both engine partners. For the Pratt & Whitneyengine, challenges are to (i) meet the delivery commitments inline with agreed schedule; (ii) ﬁx in-service maturity issues inline with Airbus and customer expectations.
A400M programme. Progress has been made in 2016 in
implementing industrial recovery measures and management
is focused on delivery, but the Company continues to face thefollowing signiﬁcant challenges: meeting contractual technicaland military capabilities; commercial exposure; the revisedengine programme and its associated recovery plan, including
the Propeller Gear Box quality issues; technical issues related
to the aluminium alloy used for some parts within the aircraft;recurring cost convergence issues; some delays, escalation andcost overruns in the development programme; and securing
sufﬁcient export orders in time.

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The key capabilities to be achieved remain cargo management
and aerial load delivery, self-defence and protection, paratrooper
aerial delivery and air to air refuelling. In addition, the A400M
programme continues to face challenges in production
ramp-up; management of the retroﬁ t campaign as well as
providing support to enable high levels of in-service availability.
Management continues to work closely with the customers tohave a cohesive schedule for military capability enhancement
and aircraft delivery.
Management will look to enter into negotiations with customers
to cap some of the capability risks and limit additional commercial
exposure.
For further information, please refer to the “— Notes to the IFRS
Consolidated Financial Statements — Note 10: Revenues, Costof Sales and Gross Margin”.
A350 XWB programme. In connection with the A350 XWB
programme, after 49 successful deliveries to 10 airlines in
2016, 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; managing recurringcosts during the ongoing ramp-up; maintaining customisation
and ramp-up of Heads of Version; and maintaining thedevelopment schedule in line with learning curve assumptions
beyond the initial ramp up phase of A350-1000 XWB to ensure
entry in service as planned in agreement with ﬁrst customer.
A380 programme. In connection with the A380 programme,
the Company faces the following main challenges: secure
future order ﬂow to mitigate the risk of a decreasing backlog;
ramp down the yearly production rate towards rate 12 in 2018
and reduce ﬁxed costs to the new production plan to protect
break even at lower volumes; make continued improvements tolower the resources and costs associated with designing eachcustomised Head of Version aircraft for new customers; 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 to put the ﬂeet back into ﬂight operations;providing assistance to the investigation team and the authorities
ahead of the publication of the ﬁnal accident report; working
with the relevant stakeholders to allow the return to service of
aircraft that are still under temporary ﬂight suspensions thatremain in place in the UK and Norway, following-up with retroﬁts
and dealing with customer claims.
A330 programme. The A330 programme has successfully
been transitioned to rate 6 per month from rate 10 per month
both commercially and industrially. The A330neo development
progresses aiming at ﬁrst ﬂight in 2017 with attention on theengine development.
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 Company is mastering thematurity plan of the aircraft and the certiﬁcation of the Searchand Rescue mission planned for 2017 and is proceeding with
the industrial ramp-up.
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.
Border security. In connection with border security projects,
the Company faces the following main challenges: meeting theschedule and cost objectives taking into account the complexityof the local infrastructures to be delivered and the integration ofcommercial-off-the-shelf products (radars, cameras and othersensors) interfaced into complex system networks; assuring
efﬁcient project and stafﬁng; managing the rollout including
subcontractors and customers. Negotiations on change
requests and schedule re-alignments remain ongoing.

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3. 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: MBDA, ATR, Airbus Safran
Launchers and Atlas Elek tronik.

The formation of partnerships and alliances with other market
players is an integral strategy of the Company, and the proportionof sales generated from consortia, joint ventures and equity
holdings may rise in future years. This strategy may from time totime 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 of control
in the consortia, joint ventures and equity holdings in which

it participates. While the Company seeks to participate onlyin ventures in which its interests are aligned with those of its
partners, the risk of disagreement or deadlock is inherent in ajointly controlled entity, particularly in those entities that require
the unanimous consent of all members with regard to majordecisions and specify limited exit rights. The other parties inthese entities may also be competitors of the Company, andthus may have interests that differ from those of the Company.
In addition, in those holdings in which the Company is a minority
partner or shareholder, the Company’s access to the entity’sbooks and records, and as a consequence, the Company’s
knowledge of the entity’s operations and results, is generally
limited as compared to entities in which the Company is amajority 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.

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.

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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 controls, notably
by the UK, France, Germany and Spain, where the Company
carries out its principal activities relating to military products andservices as well as by other countries where suppliers comefrom, notably, the US. There can be no assurance (i) that theexport controls to which the Company is subject will not become
more restrictive, (ii) that new generations of the Company’s
products will not also be subject to similar or more stringent
controls or (iii) that geopolitical factors or changing 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 business ﬁnancial condition and resultsof 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 programmes may be set up
or the scope 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 ﬁ nancing 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. See “— Information on Airbus Activities — 1.1.7 Legaland 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. In addition
to the temporary suspension of export credit ﬁnancing, theCompany 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 to modify its business practices and complianceprogramme and/or have a compliance monitor imposed on
it. Any one or more of the foregoing could have a signiﬁcant
adverse effect on the Company’s reputation and its business,ﬁnancial condition and results of operations.

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Risk Factors
4 Industrial and Environmental Risks

Legal and Regulatory Proceedings

The Company is currently engaged in a number of active legal andregulatory proceedings. See “— Information on Airbus Activities— 1.1.7 Legal and Arbitration Proceedings”. The Company
expects to continue to incur time and expenses associatedwith its defence, regardless of the outcome, and this may divert
the efforts and attention of management from normal business
operations. Although the Company is unable to predict theoutcome of these proceedings, it is possible that they will resultin 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 price and reputation.

In addition, the Company is from time to time subject togovernment inquiries and investigations of its business andcompetitive environment due, among other things, to theheavily regulated nature of its industry. In addition to the riskof an unfavourable ruling against the Company, any suchinquiry or investigation could negatively affect the Company’s
reputation and its ability to attract and retain customers andinvestors, which could have a negative effect on its business,ﬁnancial condition and results of operations. See “— Corporate
Governance — 4.1.4 Ethics and Compliance Organisation”.

4. Industrial and Environmental 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 someenvironmental laws relating to contaminated sites can be
imposed retrospectively, on a joint and several basis, andwithout 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.

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1.1 Presentation of the Company

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1.1.1 Overview

24

1.1.2 Commercial Aircraft

28

1.1.3 Helicopters

36

1.1.4 Defence and Space39

1.1.5 Investments

47

1.1.6 Insurance

47

1.1.7 Legal and Arbitration Proceedings

47

1.1.8 Research and Technology, Intellectual Property

50

1.1.9 Corporate Social Responsibility

52

1.1.10 Employees

54

1.2 Recent Developments

55

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1.1 Presentation of the Company
1.1.1

Overview

Due to the nature of the markets in which the Company operates andthe 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 € 66.6 billion in 2016, Airbus is a
global leader in aeronautics, space and related services. Airbus
offers the most comprehensive range of passenger airliners from100 to more than 600 seats. Airbus is also a European leader
providing tanker, combat, transport and mission aircraft, as
well as Europe’s number one space enterprise and the world’s
second largest space business. In helicopters, Airbus provides
the most efﬁcient civil and military rotorcraft solutions worldwide.
In 2016, it generated 83% of its total revenues in the civil sector(compared to 82% in 2015) and 17% in the defence sector(compared to 18% in 2015). As of 31 December 2016, Airbus’
active headcount was 133,782 employees.

Strategy
In 2016, the Company has further pushed forward its
restructuring, in accordance with the strategy introduced in2013 and summed up in the statement “we make it fly”.
Airbus Defence and Space continued to revisit 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 Airbus Safran Launchers (“ASL”) joint venture,sold its business communications entities and entered into
agreements to sell its defence electronics business and Atlas
Elektronik.
The Company also announced that it will further integrate bymerging its Group structure with its largest Division Airbus
Commercial Aircraft. The merger of Airbus Group and Airbus
paves the way for an overhaul of our corporate set-up, simpliﬁes
our company’s governance, eliminates redundancies andsupports further efﬁciencies, while at the same time driving
further integration of the entire group. The other two Divisions,“Defence and Space” and “Helicopters” remain integral partsof Airbus and will derive considerable beneﬁt from the merger
through more focused business support and reduced costs.

The 8 strategic paths of the Company’s strategy are as follows:
1. Remain a leader in commercial aerospace, strengthenmarket position and profitability
The commercial aircraft business aims to be largely selfsufficient going forward, rather than attempting to rely on abalanced group portfolio. Focus upon on-time, on-cost andon-quality deliveries is paramount given the huge backlog
execution challenge. Therefore, the proven management ofcycles and shocks needs to be continued and the efforts tosoften adverse impacts from cycles and shocks has to beeven further strengthened through focusing on innovation,
services and a more global approach.
2. Preserve leading position in European defence, spaceand government markets by focusing on military
aircraft, missiles, space and related services
Defence can no longer be a tool to manage and hedge
against commercial cycles, but the Company seeks toremain strong and actively shape its defence, space andgovernmental business. The focus will involve (i) developing
high-performing, low-equity businesses such as missiles,
launchers, combat and transport aircraft, entering into new
growth areas when they are backed by government funding,and (ii) focusing on productivity improvements both throughinternal means and in the context of European optimisation
to enable efficiencies and improve Airbus’ positioning onexport markets. In Space, Airbus has strengthened its
position increasing its stake in Arianespace and reachedfurther key milestones related to Ariane 6 development,
and was able to conclude the creation of Airbus Safran
Launchers in its full scope.

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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
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, Airbus raised its ambitions to pioneer and disrupt
the aerospace industry in areas that will shape the market
and our future and made a substantial effort in breakthroughinnovation.
4. Exploit digitalisation to enhance our current businessas well as pursue disruptive business models
Digitalisation will support Airbus’ transformation by focusing
on 5 main axes: (i) enabling high employee engagement,(ii) achieving 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.
5. Adapt to a more global world as well as attract andretain global talents
With over 75% of our backlog and 70% of our revenues
coming from outside Europe, Airbus is, more than ever,a global company. The constant effort to globalise ourbusinesses, especially in countries with substantial growth,has paid off. This global footprint is also reflected in thediversity of our staff and skills. Locally, products mayneed to be adapted and will have to be serviced, but themain logic going forward is that the industry will retain its“global products for local markets” dynamic. Greenfieldapproaches have proven to give Airbus a controlled entry
and real citizenship, whilst partnerships and acquisitions
are complementary tools.

6. Focus services on and around the Company’s platforms
The strategy going forward is to focus on services where
Airbus can differentiate and add value for its customers
according to the motto “no one knows our products better
than we”, aiming at developing long-term customer intimacy
and bringing competitive advantage to its customers. As
services are executed locally, the portfolio will be adapted
to the increasingly global customer base. Cooperation withmilitary customers is set to increase substantially throughmaintenance and support services thanks to the newplatforms to be delivered in the coming years, including
over 250 Eurofighters, over 150 A400M aircraft, around
250 NH90s and 50 Tiger helicopters. In Commercial Aircraft,the installed base is expanding rapidly, and new innovative
services (power by the hour, maintenance, training) are being
offered successfully.
7. Strengthen the value chain position
Airbus’ core capability is to master programme management
and architect / integrator capabilities in order to market,
design, develop, manufacture and service large-scale
aeronautics / space platforms and integrated systems. As
Airbus is based on a strong platform prime role, managing
the supplier base towards delivering to the final customer iskey. We aim to strengthen and optimise selected strategic
value chain areas to protect our Intellectual property, manage
risks, increase profit, access services and differentiate ourofferings. Airbus’ suppliers provide a large proportion of thevalue in our products, necessitating a robust supply-chain
governance framework. This is supported by processes
and tools that foster partnership, risk mitigation and supplierperformance development.
8. Focus on profitability and value creation; no need tochase growth at any cost; actively manage portfolio
Thanks to strong organic growth potential, mainly in thecommercial airplane business, Airbus is going through aseries of production ramp-ups with associated financial
needs. On top of that, targeted investments are expected tohelp to position Airbus for the future. The financial strengthof the Company is vital for mastering these challenges, andto ensure that we have enough room for manoeuvre forfurther strategic moves. As a prerequisite, the Company
must remain attractive for investors, notably compared toits peers.

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Organisation of Airbus’ Businesses
In 2016, the Company organised its businesses into the following
three operating Divisions: (i) Commercial Aircraft, (ii) Helicoptersand (iii) Defence and Space. However, as a continuation of anumber of integration and normalisation steps that took placein 2012, 2013 and 2015, the Company is now merging its Groupstructure with its largest Division Commercial Aircraft. The
merger is contemplated to take place mid-2017 and provides theopportunity to introduce a single Airbus brand for the Company
and all its entities, effective since January 2017. The chart set out
in “General Description of the Company and its Share Capital —3.3.6 Simpliﬁed Group Structure Chart” illustrates the allocationof activities.

Commercial Aircraft
Airbus Commercial Aircraft is one of the world’s leading aircraft
manufacturers of passenger airliners, ranging in capacity from100 to more than 600 seats. Across all its aircraft families Airbus
Commercial Aircraft’s unique approach ensures that aircraft
share the highest commonality in airframes, on-board systems,
cockpits and handling characteristics. This signiﬁcantly reduces
operating costs for airlines.
Since it was founded in 1970 and up to the end of 2016, Airbus
Commercial Aircraft has received orders for 17,080 commercial
aircraft from 394 customers around the world. In 2016,
Airbus Commercial Aircraft delivered 688 aircraft (compared
to 635 deliveries in 2015) and received 949 gross orders(compared to 1,190 gross orders in 2015), or 54% of the grossworldwide market share (in value terms) of aircraft with morethan 100 seats (compared to 55% in 2015). After accounting
for cancellations, net order intake for 2016 was 731 aircraft(compared to 1,080 aircraft in 2015). As of 31 December 2016,
Airbus Commercial Aircraft’s backlog of commercial orders was
6,874 aircraft (compared to 6,831 aircraft in 2015).
In 2016, Airbus Commercial Aircraft recorded total revenuesof € 49.23 billion – representing 73% of Airbus’ revenues. See“— 1.1.2 Commercial Aircraft”.

Helicopters
Airbus Helicopters (formerly Eurocopter) is a global leader
in the civil and military rotorcraft market, offering one of themost complete and modern ranges of helicopters and related
services. This product range currently includes light singleengine, light twin-engine, medium and medium-heavy rotorcraft,which are adaptable to all kinds of mission types based on
customer needs.
Airbus Helicopters delivered 418 helicopters in 2016 (395 in2015) and received 353 net orders in 2016 (compared to 333 netorders in 2015). Order intake amounted to € 6.05 billion (2015:€ 6.2 billion). Civil contracts accounted for 55% of this ordervolume, with military sales representing the remaining 45%.
At the end of 2016, Airbus Helicopters order book stood at
766 helicopters (2015: 831 helicopters).
In 2016, Airbus Helicopters recorded total revenues of€ 6.65 billion, representing 9% of Airbus’ revenues. See “— 1.1.3
Helicopters”.

Defence and Space
Airbus Defence and Space is Europe’s number one defence andspace enterprise, the second largest space business worldwide
and among the top ten global defence enterprises. Airbus
Defence and Space puts a strong focus on core businesses:
Space, Military Aircraft, Missiles and related systems andservices.
Airbus Defence and Space in 2016 comprised the three
Business Lines: Military Aircraft; Space Systems; andCommunications, Intelligence & Security (CIS). It develops
and engineers cutting-edge products in the ﬁeld of defence
and space, enabling governments, institutions and commercial
customers alike to protect resources and people while staying
connected to the world. Airbus Defence and Space solutions
guarantee sovereignty in foreign affairs and defence matters.
In 2016, Airbus Defence and Space recorded total revenuesof € 11.85 billion, representing 18% of Airbus’ revenues. See“— 1.1.4 Defence and Space”.

Investments
In 2016, the Company monetised its remaining 23.6% stake in
Dassault Aviation further to the disposal of 18.75% that occurredin 2015. See “— 1.1.5 Investments”.

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Summary Financial and Operating Data

1

The following tables provide summary ﬁnancial and operating data for Airbus for the past three years.
CONSOLIDATED REVENUES BY DIVISION FOR THE YEARS ENDED 31 DECEMBER 2016, 2015 AND 2014

Year ended
31 December 2016

Year ended
31 December 2015

Year ended
31 December 2014

Airbus Commercial Aircraft

49,23745,85442,280Airbus Helicopters

6,652

6,786

6,524

Airbus Defence and Space

11,85413,08013,025

Total Divisional revenues

67,74365,72061,829Other / HQ / Consolidation(1)(1,162)(1,270)(1,116)

Total

66,58164,45060,713(in €m)(1) “Other / HQ / Consolidation” comprises the holding function of Airbus, the Airbus Group Bank and other activities not allocable to the reportable segments, combined together
with consolidation effects.

CONSOLIDATED REVENUES BY GEOGRAPHICAL AREA FOR THE YEARS ENDED 31 DECEMBER 2016, 2015 AND 2014

Year ended 31 December 2016

Year ended 31 December 2015

Year ended 31 December 2014

Amount in €bn

In percentage(1)Amount in €bn

In percentage(1)Amount in €bn

In percentage(1)Europe

21.4

32.1%

20.1

31.1%

20.3

33.4%

North America

8.9

13.4%

10.2

15.9%

9.7

16.0%

Asia / Pacific

21.3

32.0%

18.8

29.1%

19.4

31.9%

Rest of the World

(2)

Total

15.0

22.5%

15.4

23.9%

11.3

18.7%

66.6

100%

64.5

100%

60.7

100%

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

CONSOLIDATED ORDERS BOOKED FOR THE YEARS ENDED 31 DECEMBER 2016, 2015 AND 2014

Year ended 31 December 2016

Year ended 31 December 2015 Year ended 31 December 2014

Amount in €bn

In percentage(1)

Amount in €bn

In percentage(1)Amount in €bn

In percentage(1)

114.9

84.3%

139.1

87.1%

150.1

89.4%

6.1

4.4%

6.2

3.9%

5.5

3.3%

Airbus Defence
and Space

15.4

11.3%

14.4

9.0%

12.2

7.3%

Total Divisional orders

136.4

100%

159.7

100%

167.8

100%

Orders booked(2)

Airbus Commercial Aircraft(3)Airbus Helicopters

Other / HQ / Consolidation

Total

(1.9)

(0.7)

(1.4)

134.5

159.0

166.4

(1) Before “Other / HQ / Consolidation”.
(2) Without options.
(3) Based on catalogue prices for commercial aircraft activities.

CONSOLIDATED BACKLOG FOR THE YEARS ENDED 31 DECEMBER 2016, 2015 AND 2014(1)Year ended 31 December 2016
Airbus Commercial Aircraft(3)

Airbus Helicopters
Airbus Defence
and Space
Total Divisional backlog
Other / HQ / Consolidation
Total

Year ended 31 December 2015

Year ended 31 December 2014

Amount in €bn

In percentage(2)Amount in €bn

In percentage(2)Amount in €bn

In percentage(2)1,010.2

95.0%

952.4

94.6%

803.6

93.6%

11.3

1.1%

11.8

1.2%

12.2

1.4%

41.5

3.9%

42.9

4.2%

43.1

5.0%

1,063.0100%

1,007.1

100%

858.9

100%

(2.6)

(1.2)

(1.4)

1,060.4

1,005.9

857.5(1) Without options.
(2) Before “Other / HQ / Consolidation”.
(3) Based on catalogue prices for commercial aircraft activities.

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

1.1.2

management service agreements have been put in place withthe subsidiaries and services are invoiced on a cost plus basis.
For management purposes, Airbus Group SE acts through its
Board of Directors, Group Executive Committee, and Chief
Executive Ofﬁcer in accordance with its corporate rules andprocedures as described below under “Corporate Governance”.
Within the framework deﬁned by Airbus Group SE, each Division,
Business Unit and subsidiary is vested with full entrepreneurial
responsibility.

Commercial Aircraft

Airbus Commercial Aircraft is one of the world’s leading aircraft
manufacturers of passenger airliners. Airbus Commercial
Aircraft helps to shape the future of air transportation and drive
steady growth around the world. Airbus Commercial Aircraft
seeks incremental innovative technological solutions and themost efﬁcient sourcing and manufacturing possible – so airlines
can grow and people can connect. Airbus Commercial Aircraft’s
comprehensive product line comprises successful families ofjetliners ranging in capacity from 100 to more than 600 seats:
the single-aisle A320 family, which is civil aviation’s best-selling
product line; the A330 family; the new-generation widebody
A350 XWB; and the ﬂagship double-deck A380. Across all its
aircraft families Airbus Commercial Aircraft’s unique approachensures that aircraft share high commonality in airframes,
on-board systems, cockpits and handling characteristics.
This signiﬁ cantly reduces operating costs for airlines. See“— 1.1.1 Overview” for an introduction to Airbus Commercial
Aircraft.
Airbus Commercial Aircraft’s 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, Dubaï and Singapore. Airbus Commercial
Aircraft also has engineering and training centres in Toulouse,
Miami, Mexico, Wichita, Hamburg, Bangalore, Beijing andSingapore, as well as an engineering centre in Russia. There
are also more than 150 ﬁeld service ofﬁces around the world.
Airbus Commercial Aircraft also relies on industrial co-operationand partnerships with major companies and a wide network ofsuppliers around the world.

Strategy
Airbus Commercial Aircraft’s primary goal is to deliver strong
results in a sustained manner, while commanding a further
increased share of the worldwide commercial aircraft market

over the long-term and expanding its customer services offering.
To achieve these goals, Airbus Commercial Aircraft is actively:

Developing the Most Comprehensive Lineof Products in Response to Customer Needs
Airbus Commercial Aircraft continuously seeks to develop
and deliver new products to meet customers’ evolving needs,
while also improving its existing product line. The A330neo (newengine option) is one of the evolutions to the A330 family and theA320neo (new engine option) is one of many product upgrades
to the A320 Single-Aisle family to maintain its position as themost advanced and fuel-efﬁcient single-aisle aircraft family.
Airbus Commercial Aircraft is also currently pursuing(i) development and production on the A350 XWB programme,and (ii) research on the development of new aircraft in the shortrange, medium-range and long-haul segments.
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.

Expanding its Customer Services Offering
Airbus Commercial Aircraft seeks to remain at the forefront of
the industry by expanding its customer services offering to meetcustomers’ evolving needs. As a result, Airbus Commercial
Aircraft has developed a wide range of value-added andcustomised services which customers can select based on
their own make or buy policy and needs. This approach provides
Airbus operators with solutions to signiﬁ cantly reduce theiroperating costs, increase aircraft availability and enhance thequality of their operations.

Building a Leaner, More Fully Integrated Company
In order to build a leaner, more fully integrated company andthereby bolster its competitiveness, Airbus Commercial Aircraft
is adapting its organisation to foster an entrepreneurial spirit

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and empower more teams, while maintaining harmonised
processes across all sites. For series programmes, additional
responsibilities and means have been delegated to plants fordelivery 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 andplanning with the 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.
In recent years, China and India have emerged as signiﬁcant
new aircraft markets. According to internal estimates, they
are expected to constitute the ﬁrst and ﬁfth most important
markets by aircraft delivery value, respectively, in the next twenty
years. As a result, Airbus Commercial Aircraft has sought tostrengthen its commercial and industrial ties in these countries.
New aircraft demand from airlines in the Middle East has also
become increasingly important, as they have rapidly executed
strategies to establish a global presence and to leverage thebeneﬁts the region can deliver.
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 Commercial Aircraft’s range of twinaisle 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 isitself 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 averageannual growth rate of 7.9% for the period. Demand for airtransportation 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.
More recently, the ﬁnancial crisis and global economic difﬁculties
witnessed at the end of 2008 and into 2009 resulted in only thethird period of negative trafﬁc growth during the jet age, and acyclical downturn for airlines in terms of trafﬁc (both passenger
and cargo), yields and proﬁtability. Preliminary ﬁgures released at
the end of 2016, by the International Civil Aviation Organisation(ICAO), conﬁrmed that some 3.7 billion passengers made use of
the global air transport network for their business, tourism needs
or for simply visiting friends and relatives (VFR) in 2016. The
annual passenger total is up 6.0% compared to 2015 and thenumber of departures rose to approximately 35 million globally.
World passenger trafﬁc, expressed in terms of total scheduled
revenue passenger-kilometres (RPKs), posted an increaseof 6.3% with approximately 7,015 billion revenue passenger
kilometres being performed.
In the long-term, Airbus Commercial Aircraft believes that air
travel remains a growth business. Based on internal estimates,
Airbus Commercial Aircraft anticipates a growth rate of 4.5%
annually during the period 2016-2035. If the actual growth rateequals or exceeds this level, Airbus Commercial Aircraft expects
that passenger trafﬁ c, as measured in revenue passenger
kilometres, would more than double over the forecast period.
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 proﬁ tability,
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. In the last seven years, order totals exceeded record
Airbus Commercial Aircraft deliveries thus strengthening bothorder book and backlog totals.
Despite some cyclicality in airline demand, Airbus Commercial
Aircraft aims to secure stable delivery rates from year to year,
supported by a strong backlog of orders and a regionallydiverse customer base. At the end of 2016, the backlog stood
at 6,874 aircraft, representing around ten years of production
at current rates. Through careful backlog management, closemonitoring of the customer base and a prudent approachto production increases, Airbus Commercial Aircraft has
successfully increased annual deliveries for 15 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
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creation and growth of new airlines or new airline models, as
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 insufﬁ cient, 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 ﬂ eet 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 inorder to implement such strategies (although the trend has
been towards larger-sized aircraft within each market segment
as discussed below).
Airbus Commercial Aircraft, 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 newroutes, which will largely be typiﬁed by having a major hub city
at least at one end of the route. These new route markets are
expected to be well served by the latest product offering, theA350 XWB. In addition, the A380 has been designed primarily
to meet the signiﬁcant demand between the major hub cities,
which are often among the world’s largest urban centres (suchas London, Paris, New York and Beijing). Airbus Commercial
Aircraft has identiﬁed 47 major hub cities in its current market
analysis, with this number expected to grow to over 92 by 2034.
Airbus Commercial Aircraft 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, just over one-third of the world’s jetliner
seats being ﬂown today are operated by just 14 airlines as ofJanuary 2017. In the 1990s, the major airlines began to enter
into alliances that gave each alliance member access to theother alliance members’ hubs and routings, allowing airlines toconcentrate their hub investments while extending their productoffering and market access.

Market Structure and Competition
Market segments. According to a study conducted by Airbus
Commercial Aircraft, just over 18,000 passenger aircraft withmore than 100 seats were in service with airlines worldwide at
the beginning of 2016. Currently, Airbus Commercial Aircraftcompetes in each of the three principal market segments foraircraft with more than 100 seats.
“Single-aisle” aircraft, such as the A320 family, have 100 to morethan 200 seats, typically conﬁgured with two triple seats per row
divided by one aisle, and are used principally for short-range
and medium-range routes.
“Wide-body” aircraft, such as the A330 / A350 XWB families,
have a wider fuselage with more than 210 seats, typicallyconﬁgured with eight seats per row and with two aisles. The
A330 / A350 XWB families are capable of serving all short- tolong-range markets.
“Very large aircraft”, such as the A380 family, are designed tocarry more than 400 passengers, non-stop, over very long-range
routes with superior comfort standards and with signiﬁcantcost-per-seat beneﬁts to airlines, although such aircraft canalso be used over shorter ranges in high-density (including
domestic) markets.
Freight aircraft, which form a fourth, related segment, are often
converted ex-passenger aircraft. See “— Regional Aircraft,
Aerostructures, Seats and Aircraft Conversion — EFW”.
Airbus Commercial Aircraft also competes in the corporate, VIP
business jet market with the ACJ, an A319-based Corporate
Jetliner, and the A318 Elite. As well as these, other members of
the Airbus family can serve the business jet market in private,
corporate shuttle and in government / VIP roles.
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, particularly in North America due to the development ofhubs following deregulation. In comparison with North America
and Europe, 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 Commercial Aircraft 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-costcarriers continue to develop in the region. Aircraft economics
will also help to drive aircraft size, with airlines looking to reducethe cost per seat through higher density aircraft cabins and theuse of larger aircraft types and variants where possible.

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Competition. Airbus Commercial Aircraft has been operating
in a duopoly since Lockheed’s withdrawal from the market in1986 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 Commercial Aircraft
and Boeing. According to the manufacturers’ published ﬁguresfor 2016, Airbus Commercial Aircraft and Boeing, respectively,
accounted for 48% and 52% of total commercial aircraft
deliveries, 52% and 48% of total net orders (in units), and
55% and 45% of the total year-end backlog (in units). Airbus
Commercial Aircraft’s deliveries (688 in 2016) were the 14th year
in a row of increased production.
Nevertheless, the high technology and high value nature of thebusiness makes aircraft manufacturing an attractive industry inwhich to participate, and besides Boeing, Airbus Commercial
Aircraft faces aggressive international competitors who areintent on increasing their market share. Regional jet makers
Embraer and Bombardier, coming from the less than 100seat commercial aircraft market, continue to develop larger
airplanes (such as the new 100- to 149-seat C-Series launchedby Bombardier). Additionally, other competitors 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.

Customers
As of 31 December 2016, Airbus Commercial Aircraft had
394 customers and a total of 17,082 Airbus aircraft had beenordered, of which 10,208 aircraft had been delivered to operators
worldwide. The table below shows Airbus Commercial Aircraft’s
largest commitments in terms of total gross ﬁ rm orders bycustomer for the year 2016.
Customer

Firm orders(1)

Air Asia

100

Iran Air98

Flynas80

Go Air72

Synergy Aerospace Corporation

62(1) Options are not included in orders booked or year-end backlog.

Products and Services
The Family Concept — Commonality acrossthe Fleet
Airbus Commercial Aircraft’s aircraft families promote ﬂ eet
commonality. This philosophy takes a central aircraft andtailors it to create derivatives to meet the needs of speciﬁcmarket segments, meaning that all new-generation aircraft
share the same cockpit design, ﬂy-by-wire controls and handlingcharacteristics. Pilots can transfer among any aircraft within
the Airbus Commercial Aircraft family with minimal additional
training. Cross-crew qualiﬁ cation across families of aircraft
provides airlines with signiﬁcant operational ﬂexibility. In addition,

the emphasis on ﬂeet commonality permits aircraft operators
to realise signiﬁcant cost savings in crew training, spare parts,
maintenance and aircraft scheduling. The extent of cockpit
commonality within and across families of aircraft is a uniquefeature of Airbus Commercial Aircraft that, in management’s
opinion, constitutes a sustainable competitive advantage.
In addition, technological innovation has been at the core of
Airbus’ strategy since its creation. Each product in the Airbus
Commercial Aircraft family is intended to set new standards inareas crucial to airlines’ success, such as cabin comfort, cargocapacity performance, economic performance, environmental
impact and operational commonality. Airbus Commercial Aircraft
innovations often provide distinct competitive advantages, withmany becoming standard in the aircraft industry.
A320 family. With more than 13,000 aircraft sold, of which
5,069 A320neo (new engine option) family, and more than
7,400 delivered (of which 68 A320neo), Airbus’ family of singleaisle aircraft, based on the A320, includes the A319 and A321
derivatives, as well as the corporate jets family (ACJ318, ACJ319,
ACJ320 and ACJ321). Each aircraft in the A320 family shares
the same systems, cockpit, operating procedures and crosssection.
At 3.95 metres diameter, the A320 family has the widest
fuselage cross-section of any competing single-aisle aircraft.
This provides a roomy passenger cabin, a high comfort level
and a spacious under ﬂ oor cargo volume. The A320 family
incorporates digital ﬂy-by-wire controls, an ergonomic cockpit
and a lightweight carbon ﬁbre composite horizontal stabiliser.
The use of composite material has also been extended to
the vertical stabiliser. The A320 family’s competitor is the
Boeing 737 series.
To ensure this market leader keeps its competitive edge, Airbus
Commercial Aircraft continues to invest in improvements acrossthe product line, including development of the A320neo family.
The A320neo incorporates many innovations including latest
generation engines, Sharklet wing-tip devices and cabin
improvements, which together will deliver up to 20% in fuelsavings by 2020. The A320neo received joint Type Certiﬁcationfrom the European Aviation Safety Agency (EASA) and theFederal 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 certiﬁ ed in May 2016. The A321neo with
Pratt & Whitney engines received Joint Type Certiﬁcation in
December 2016. Type Certiﬁcations for the A321neo with CFM
engines and the A319neo in both engine variants will follow.
The A320neo family versions have over 95% airframe
commonality with the A320ceo (current engine option) versions,enabling it to ﬁt seamlessly into existing A320 family ﬂeets – a key
factor for Airbus Commercial Aircraft customers and operators
who have taken delivery of more than 7,300 A320 family aircraft
so far.

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1.1 Presentation of the Company.In 2016, 68 A320neo were delivered with both engine variants.
This new engine option will be available for the A321 andA319 aircraft models. With 5,069 ﬁrm orders received from
92 customers since its launch in December 2010, the A320neo
family has captured 58.4% of the market.In October 2015, Airbus
Commercial Aircraft announced the decision to further increase
the production rate of the single-aisle family to 60 aircraft amonth in mid-2019, in response to strong customer demand andfollowing thorough studies on production ramp-up readiness inthe supply chain and in Airbus Commercial Aircraft’s facilities.
To enable the ramp-up, an additional production line is being
built in Hamburg and will be operational in 2017. In parallel

Airbus Commercial Aircraft integrated cabin furnishing activities
for A320 aircraft produced in Toulouse into the ﬁnal assemblyline in Toulouse, thereby harmonising the production processacross all A320 family production sites worldwide. The ﬁrst A320
with a cabin installed in Toulouse was delivered to Volaris on
24 October 24,2016.
In April 2016, Airbus Commercial Aircraft delivered the ﬁrst USassembled aircraft from Mobile, Alabama, an A321, to JetBlue.
In 2016, Airbus Commercial Aircraft received 790 gross orders
for the A320 family of aircraft (607 net orders), and delivered
545 aircraft.

A320 FAMILY TECHNICAL FEATURES (CURRENT VERSION)

Model

Entry-into-service

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

A318

2003

107

5,750

31.4

Wingspan (metres)
34.1

A319

1996

124

6,950(2)

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

165

6,500

37.6

35.8

206

7,400

44.5

35.8

A319neo
A320neo2016

A321neo(1) Two-class layout.
(2) Range with sharklets.
(3) Wingspan with sharklets.

A330 family. With 1,686 aircraft sold (of which 214 A330neo)
and 1,323 delivered, the A330 family covers all market segmentswith one twin-engine aircraft type and is designed to carry
between 247 and 277 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.
The newest evolution to the A330 family is the A330neo (newengine option), comprising the A330-800neo and A330900neo versions. These aircraft incorporate latest generation
Rolls-Royce Trent 7000 engines. Airbus Commercial Aircraft
commenced ﬁnal assembly for the ﬁrst A330neo, an A330900, in 2016. The ﬁrst ﬂight is scheduled for the ﬁrst half of2017 and both Type Certiﬁcation and ﬁrst delivery is plannedfor 2018.
In 2016, Airbus Commercial Aircraft received 42 net orders for
the A330neo.

The platform for developing the Neo is the 242-tonne maximum
take-off weight A330 variant. This upgrade was ﬁrst applied
to the A330-300 with the ﬁ rst enhanced A330-300 variant
delivered to Delta Airlines in May 2015 and subsequently for
the A330-200.
Airbus Commercial Aircraft is also adapting the A330-300 to
rapidly growing markets, where the aviation infrastructure is
struggling to keep us with surging demand. The A330 Regional,
the lower-weight variant will carry up to 400 passengers on
shorter haul missions resulting in significant cost savings.
Saudi Arabian Airlines became the A330-300 Regional launchcustomer with an order announced in June 2015 and the ﬁrst
delivery in August 2016.
Airbus Commercial Aircraft is continuously developing the A330
family to keep the aircraft at the leading edge of innovations.
In 2016, Airbus Commercial Aircraft received 106 gross orders(83 net) for the A330 family of aircraft including 42 for the
A330neo, and delivered 66 aircraft to customers.

A330 FAMILY TECHNICAL FEATURES (CURRENT VERSION)

Model

Entry-into-service

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

Wingspan (metres)

A330-200

1998

247

13,45059.0

60.3

A330-300

1994

277

11,75064.0

60.3(1) Three-class configuration.

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A380. The double-deck A380 is the world’s largest commercial
aircraft ﬂ ying today. Its cross-section provides ﬂ exible andinnovative cabin space, allowing passengers to beneﬁt fromwider seats, wider aisles and more ﬂoor space, tailored to theneeds of each airline. Carrying 544 passengers in a comfortablefour-class configuration and with a range of 8,200 nm /15,200 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 2016, Airbus Commercial Aircraft delivered 28 aircraft.

A380 TECHNICAL FEATURES

Model

Entry-into-service

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

Wingspan (metres)

2007

544

15,20073.0

79.8

A380-800(1) Four-class layout.

Following an agreement reached between Emirates Airline andRolls-Royce and a subsequent agreement between Emirates
Airline and Airbus Commercial Aircraft, Airbus is to adapt theA380 delivery stream with six aircraft deliveries shifted from2017 to 2018 and six others from 2018 to 2019.
Airbus Commercial Aircraft re-conﬁrms the target to deliveraround 12 A380s per year from 2018 as announced in July 2016.
Airbus Commercial Aircraft launched the iﬂyA380.com website
enabling passengers to identify if the A380 is operated on aparticular route and to book ﬂights directly with the airlines
ﬂying A380s.
A350 XWB family. The A350 XWB is an all-new family of widebody aircraft, designed to accommodate between 280 and
366 passengers. The A350 XWB features A380 technology, awider fuselage than that of competing new generation aircraft,

and a greater use of composite material. The A350 XWB’s maincompetitors are the Boeing 787 and 777 aircraft series.
With the Ultra-Long Range version of the A350-900 launchedin 2015, the A350 XWB demonstrates its versatility by offering
the capability to perform ﬂights of up to 19 hours.
Airbus Commercial Aircraft also continues to develop the A3501000, with an entry-into-service scheduled for the second halfof 2017 following the ﬁnal assembly line start in February 2016
and a successful ﬁrst ﬂight in November 2016. The ﬂight test
campaign is underway.
In 2016, Airbus Commercial Aircraft received 51 gross orders
for the A350 XWB family (41 net), and delivered 49 aircraft.
In October 2016, Airbus Commercial Aircraft celebrated thedelivery of its 10,000 th aircraft – an A350-900 for Singapore
Airlines.

A350 XWB FAMILY TECHNICAL FEATURES

Model

Entry-into-service

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

Wingspan (metres)

A350-900

2014

325

14,35066.8

64.7

A350-1000

2017

366

14,80073.7

64.7(1) Two-class layout.

Customer Services
Customer Services’ prime role is to support its customers
in operating their Airbus ﬂ eet safely and proﬁ tably and to
the satisfaction of passengers all around the world. As aresult of its continued growth, Airbus Commercial Aircraft’s
customer base has increased consistently over the past years
reaching 9,289 aircraft in-service by the end of 2016 operated
by 429 customers. The fleet is maintained by more than
100 Maintenance and Repair Organisations and partially owned
by 100 leasing companies.
A worldwide network of more than 5,000 people cover all areasof support from technical engineering / operational assistanceand spare parts supply, to crew and maintenance training.
Hundreds of technical specialists provide Airbus Commercial
Aircraft customers with advice and assistance 24 hours a day,
7 days a week. There are 144 ﬁeld service stations available

worldwide for on-site assistance to our operators, covering
219 operators. 210 operators are covered by 18 Hubs. Ourworldwide support is also based on an international networkof support centres, training centres and spares’ warehouses.
Beyond the core customer support activities, Airbus Commercial
Aircraft has developed a comprehensive services portfolio
including a wide range of modular and customised services
driven by the unique added value that an aircraft manufacturer
can bring.
The services portfolio is clustered around four pillars:
Maintenance & Engineering Solutions consisting of Flight Hour
Services & Material Services, Training, Upgrades and Flight
Operations.

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Asset Management

A recent major step in the development of Customer Services
is the creation of Navblue out of the Navtech acquisition in
2016. With its comprehensive product suite of solutions forelectronic ﬂight bags (EFBs), aeronautical charts, navigation
data, performance-based navigation (PBN), ﬂ ight planning,
aircraft performance and crew planning, Navblue further
strengthens Airbus Commercial Aircraft’s provision of endto-end ﬂight operations services. At the 2016 FarnboroughInternational Airshow, the launch of two new services has
been announced as well: Airline Operating Control Centre andAeronautical Data solutions.

The Asset Management Division was established in 1994
to manage and re-market used aircraft acquired by Airbus
Commercial Aircraft, originally as a result of customer
bankruptcies, and subsequently in the context of certain buyback commitments. The Division operates with a dedicated staff
and manages a ﬂeet comprised of used aircraft across a wide
range of models. Through its activities, the Asset Management
Division helps Airbus Commercial Aircraft to respond more
efﬁciently to the medium- and long-term ﬂeet requirements of
its customers.

In addition, three new training centres have been opened in
Singapore, Mexico and Sao Paulo, and the Services digitalroadmap is progressing well with the launch of new e-solutions
on Predictive Maintenance notably.

Its key roles comprise commercial, technical and ﬁ nancial
risk management of its used aircraft portfolio, as well as theenhancement of all Airbus Commercial Aircraft products’
residual value.

Customer Finance

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 Commercial Aircraft
Asset Management team aims at eventually selling down
the aircraft with lease attached to further reduce its portfolio
exposure.

Airbus Commercial Aircraft favours cash sales, and does
not envisage customer financing as an area of businessdevelopment. However, Airbus Commercial Aircraft recognises
the commercial need for manufacturers to assist customers inarranging 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 Commercial Aircraft’s
dedicated customer ﬁnance team has accumulated decadesof expertise in aircraft ﬁnance. When Airbus Commercial Aircraft
ﬁnances a customer, the ﬁnanced aircraft generally serves as
collateral, with the engine manufacturer participating in theﬁnancing. These elements assist in reducing the risk borne by
Airbus Commercial Aircraft. The difference between the gross
exposure resulting from the ﬁnancing and the collateral value isfully provisioned for (for further information, please please referto the “— Notes to the IFRS Consolidated Financial Statements— Note 25: Sales Financing Transactions”). Airbus Commercial
Aircraft’s customer ﬁ nancing transactions are designed tofacilitate subsequent sell-down of the exposure to the ﬁnancial
markets, third-party lenders or lessors.
In 2016, Airbus Commercial Aircraft continued to beneﬁt frommarket appetite for both aircraft ﬁnancing and sale and leaseback
lessor opportunities, supported by plentiful liquidity. Despite atemporary suspension of Export Credit Agency support, Airbus
Commercial Aircraft customer ﬁnancing exposure remained
limited in 2016. Airbus Commercial Aircraft will continue toprovide direct aircraft ﬁnancing support as it deems necessary.
Management believes, in light of its experience, that the level ofprovisioning protecting Airbus Commercial Aircraft from default
costs is adequate and consistent with standards and practice inthe aircraft ﬁnancing industry. See “— Risk Factors – Financial
Market Risks – Sales Financing Arrangements”.

At the end of 2016, the Asset Management portfolio contained
37 aircraft, representing a 22% net portfolio reduction from2015.

Production
Industrial Organisation
Each task in the building of Airbus aircraft (from design toproduction) is allocated to a designated plant. The Airbus
Commercial Aircraft plants are typically organised arounddifferent aircraft components and sections, in component
delivery teams. Each component delivery team is either in chargeof one aircraft programme, or organised by manufacturing
technology clusters depending on the optimum solution for eachplant. Every plant is organised 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 incharge of ensuring that harmonised and standardised processes,
methods and tools are developed and implemented across theplants, in order to increase efﬁciency, based on best practices.
Another transversal “Manufacturing technologies” Centre ofCompetences is in charge of disseminating new technologies
and innovation in manufacturing across the plants and preparing
manufacturing solutions for future product evolutions.
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,

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such as the “Beluga” Super Transporters. To support the A380
production ﬂow, Airbus Commercial Aircraft has also integrated
road, river and sea transport. Programme management is thenresponsible for the ﬁnal assembly line activities. The programmemanagement works closely with the plants to secure deliveryof aircraft sections to the ﬁnal assembly lines on time, costand quality.
Following the commencement of aircraft assembly at the A320
family ﬁnal assembly line in Mobile, Alabama (US) in July 2015,
the ﬁrst delivery of a Mobile-assembled aircraft took place inApril 2016. At the time of publication, Airbus Commercial Aircraft
anticipates delivering four aircraft per month from the Mobile
plant. The vast majority of the aircraft produced in Mobile will
be delivered to North American customers.

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.
In 2016, Research & Technology activities delivered 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.

Regional Aircraft, Aerostructures,
Seats and Aircraft Conversion
ATR
ATR (Avions de Transport Régional) is a world leader in the
30 to 78seat regional turboprop aircraft market. 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
Commercial Aircraft. Headquartered in Toulouse, ATR employs
more than 1,300 people. Since the start of the programme
in 1981, ATR has registered net orders for 1,570 aircraft(464 ATR 42s and 1,106 ATR 72s).

In 2016, ATR delivered 80 new aircraft (compared to 88 in2015) and recorded ﬁrm orders for 36 new aircraft (comparedto 76 in 2015), including the ﬁrst ever order from an Argentinian
operator, Avian Lineas Aeras. As of 31 December 2016, ATR had
a backlog of 212 aircraft (compared to 260 in 2015).

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
Commercial Aircraft, the ATR range is based on the family
concept, which provides for savings in training, maintenance
operations, spare parts supply and cross-crew qualiﬁcation. By
the end of 2016, ATR had delivered 1358 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,
and Johannesburg. ATR worldwide presence also includes arepresentative ofﬁce in Beijing.
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 Commercial Aircraft, such as
wing design and manufacturing, ﬂight-testing and information
technology.

STELIA Aerospace
STELIA Aerospace is a wholly-owned subsidiar y of
Airbus Commercial Aircraft. After the merger of Sogerma andAerolia in 2015, it now offers global solutions for aeronauticalmanufacturers and airlines, as well as designs and produces
aerostructures, business and ﬁrst class passenger seats andpilot seats. With more than 6,500 employees worldwide, STELIA
Aerospace supports the major aeronautical players, such as
Airbus Commercial Aircraft, ATR, Bombardier or Boeing andEtihad Airways, Singapore Airlines or Thaï Airways for the cabininterior business line.
STELIA Aerospace is present worldwide, with 11 Centres of
Excellence mainly based in France, and also in Canada, Morocco
and Tunisia. It designs and produces large equipped fuselage
sections and wings for civil and military aircraft manufacturers.
STELIA Aerospace has a signiﬁcant Tubes & Pipes production

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activity that is designing and building solutions covering all ATA
systems, ranging from fuel to hydraulics and ﬁre suppression.
It also designs and manufactures luxury First Class and Business
Seats for key partners in the world. In the pilot seats segment,
STELIA Aerospace is the joint world leader and offers support
from design to production, including after-sales service.

Premium AEROTEC
Premium AEROTEC is a wholly owned subsidiary of theCompany (consolidated within Airbus Commercial Aircraft), is
one of the world’s leading tier-1 suppliers of commercial andmilitary aircraft 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 aluminium, titanium and carbon ﬁber
composites (CFRP). Premium AEROTEC is Europe’s no.1 in thissegment with its roughly 9,000 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. The Company isalso striving to expand its maintenance, repair and spare parts
business.

1.1.3

In order to contribute successfully to the shaping of the future ofaviation, the engineers and developers at Premium AEROTEC
are continuously working on the new and further developmentof lightweight and highly durable aircraft structures. They
cooperate closely with universities and research institutes in
the process. Premium AEROTEC plays a signiﬁcant role in thedesign of new concepts in such ﬁelds as carbon composite
technologies, 3D-printing of aircraft components made oftitanium or ﬁber metal laminate (FML).

Elbe Flugzeugwerke GmbH — EFW
EFW combines various aviation and technology activities undera single roof: development and manufacturing of ﬂ at ﬁ brereinforced composite components for structures and interiors,
the conversion of passenger aircraft into freighter conﬁguration,
maintenance and repair of Airbus Commercial Aircraft aircraft
as well as engineering services in the context of certiﬁcation
and approval.
On 17 June 2015, Airbus Commercial Aircraft signed anagreement with Singapore-based ST Aerospace Ltd. (STA) tooffer passenger-to-freighter (P2F) conversion solutions for its
A320 and A321 aircraft. STA acquired an additional 20% of theshares of EFW, Dresden (Germany) by way of a contribution
in kind and a capital increase to EFW. The transaction closed
on 4 January 2016. Consequently, 45% of the shares of EFW
were retained and Airbus effectively lost its control over EFW(previously reported in Airbus Commercial Aircraft).

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 transformation plan, whichplaces customer satisfaction and quality at the core of its
operations, along with increasing industrial competitiveness –all while ensuring the highest levels of aircraft safety.

A Commitment to Innovation
Development of the next-generation H160 medium helicopter– the ﬁrst of the “H Generation” – is ongoing at a steady pace.
Flight-test activities were carried out throughout 2016 with two
prototypes, allowing to freeze the aeromechanical conﬁgurationof the aircraft in the summer. Work is also ongoing on the nextgeneration heavy-lift X6 helicopter, which will aim at capturing
new opportunities in the civil market starting in the mid-2020s.
Launched in 2015, the X6 concept phase is still ongoing.
In the frame of the European Clean Sky 2 research programme,
Airbus Helicopters is currently leading the development of a new
high-speed helicopter demonstrator, building on the lessons
learned from the Company-funded X3 compound helicopter
demonstrator.
In the frame of the partnership with DCNS, Airbus Helicopters
aims to explore joint opportunities in the ﬁeld of unmanned
vertical take-off and landing system. Airbus Helicopters iscurrently working on the design and development of the VSR700
unmanned aerial vehicle.
In 2016, continuous upgrades of the in-service product range
also continued with the EASA certiﬁcation of the H135 lighttwin helicopter equipped with the Helionix digital avionics suite,
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Public Services variant of the super-medium H175 helicopter
started in 2016, along with the ﬁrst deliveries of the VIP version.
On Support & Services, the new “HCare” service presented in2015 has been very well received by customers with 39 contracts
signed covering 327 helicopters. As part of HCare Connected
Services, Fleet Keeper is a new web and mobile application
enabling pilots and technicians to log discrepancies and sharein real-time ﬂeet airworthiness status

Focusing on Customers
Airbus Helicopters continued to progress with its transformation
plan in 2016 by further enhancing customer support andservices, with safety as the top priority. This was underscoredby indicators of increasing ﬂeet availability for customers andoperators, and time delivery of planned spare parts ordered.

Delivering Safety
Following the tragic accident of a H225 helicopter during an
offshore mission off the coast of Norway, which cost the lives of
13 passengers, an investigation an investigation was launched
and is currently ongoing with a ﬁnal report expected in 2017.
Safety remains Airbus Helicopters’ top priority and the Company
is increasing its efforts to address the topic company-wide andacross its product range. In 2016, the Flight Crew Operating
Manual (FCOM) – a document outlining best practices andrecommendations for oil and gas missions – for the H175 wasintroduced. Other similar workstreams are ongoing to propose
and promote changes to enhance airworthiness, increasesurvivability and promote standardisation of operator ﬂ eet
safety-related capabilities.

driven by large replacement needs from advanced economies
and by growth from emerging economies. Airbus Helicopters’market data indicates that in 2016, worldwide deliveries of civil
and parapublic turbine helicopters over a 1.3t MAUW stood at~540 units.
Demand for military helicopters and related services is mainly
driven by budgetary and strategic considerations, and theneed to replace ageing ﬂeets. Airbus Helicopters believes thatthe advanced age of current ﬂeets, the emergence of a newgeneration of helicopters equipped with integrated systems
and the on-going introduction of combat helicopters into manynational armed forces will contribute to increased militaryhelicopter procurement over the next few years. Recent largescale military programmes, such as those conducted by the
US, Russia, China, India, South Korea, Saudi Arabia, Brazil andmost western European countries have conﬁrmed this trend.
Nevertheless, demand from the military sector has historically
been subject to large year-to-year variations due to evolving
strategic considerations, and short-term growth potential may
be limited due to increasing budgetary constraints on public
spending in some regions like Western Europe and Middle
East, while other regions like Asia Paciﬁc or Eastern Europe
are expected to continue to grow. The geopolitical tensions
especially in Africa, Middle-East, Eastern Europe and Asia, andthe threat from the Islamic State have recently led to a major
reassessment of defence spendings and military strategies.
This situation could lead to additional helicopter acquisitions.
According to Airbus Helicopters’ market data, worldwide
deliveries of military turbine helicopters stood at ~870 units
in 2016.

Competition

MarketMarket Drivers
According to market forecasts produced by Airbus Helicopters,
the Teal Group and Honeywell, between 8,500 to 9,500 civil
helicopters and 5,500 (Teal Group excluding China and Russia)
to 8,500 military helicopters are expected to be built globallyover the next 10 years (all turbine helicopters). This forecast,particularly with respect to the military sector, relies to a large
extent on large US development programmes.
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 Segment, Oil & Gas (invalue), continues to experience challenging conditions. Airbus
Helicopters does not expect market recovery in the short term
but believes that the demand over the next 10 years will be

Airbus Helicopters’ primary competitors in the civil andparapublic sector are Leonardo, Sikorsky and Bell Helicopter.
The civil and parapublic sector has grown more competitive inrecent years. Airbus Helicopters increased its market share, ina decreasing market, from 45% in 2015 to 47% in unit in 2016,
followed by Leonardo with ~21%.
The military sector is highly competitive and is characterisedby competitive restrictions on foreign manufacturers’ accessto the domestic defence bidding process, sometimes to thevirtual exclusion of imports. Airbus Helicopters increased its
share of the global market for military helicopters in unit andvalue (from 9% in unit in 2015 to 14% in 2016), and will continue
to focus on campaigns in 2017 as it successfully did in 2016
with the UK’s Military ﬂying training contract and the contract
with Singapore for H225M.
Airbus Helicopters’ main competitors in the military sector are
Leonardo in Europe, Sikorsky, Boeing and Bell Helicopter in
the US. Military sales accounted for 57% of Airbus Helicopters’revenues in 2016.

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Customers
More than 3,000 operators currently ﬂ y 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 47% of the worldwide market share-based on deliveries,
the versatility and reliability of Airbus Helicopters products havemade them the preferred choice of the most prominent civil andparapublic customers (turbine helicopters over a 1.3t MAUW).

Products and Services
Airbus Helicopters offers a complete range of helicopters that covers nearly the entire civil and military market spectrum, which it
continuously improves with leading-edge technologies. This product range includes light 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

Light Single Engine
H120 “Colibri”

Corporate / Private, Commercial Pax Transport & Multipurpose, Civil & Military Training

Single Engine (“Ecureuil” family)
Public Services(1), Military Utility(2) & Armed Reconnaissance,
Corporate / Private, Commercial Pax Transport & Aerial Work

H125 “Ecureuil” /H125M “Fennec”
H130

Commercial Pax Transport & Multipurpose, Emergency Medical, Tourism, Corporate / Private

Light Twin Engine
H135 / H135M

VIP, Military Utility & Armed Reconnaissance, Emergency Medical, Public Services(1)H145 / LUH (UH-72) / H145M

VIP, Military Utility(2), Emergency Medical, Public Services(1)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)H175

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

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

Civil Utility, Military Transport / SAR, Oil & Gas

H225 / H225M

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

Military Range

Airbus Helicopters’ civil range includes light single-engine, lighttwin-engine, medium and medium-heavy helicopters, which areadaptable to all mission types based on customer needs. To
maintain and strengthen its competitive edge in the civil sector,
Airbus Helicopters is pursuing a fast-paced product range
renewal. This entails upgrades of existing platforms with the
H135 and H145 as well as development for the next generationof helicopters with the H175.

Airbus Helicopters’ military range comprises platforms derived
from its commercial range (such as the H225M derived from theH225) as well as purely military platforms developed for armed
forces (the NH90 and the Tiger).

In the civil market, Airbus Helicopters is preparing the future – the
H Generation – embodied by the all-new, medium-weight H160
civil helicopter which was unveiled and started ﬂight testing, andlaunched the two-year concept phase of the next-generation
heavy-lift X6 helicopter, tailored for the civil market.

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

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commitments. Airbus Helicopters’ share of NHI is 62.5%.
There were 38 NH90 deliveries in 2016, for a cumulative totalof 305 deliveries as of the end of 2016. The NH90 ﬂeet has
accumulated ~120,000 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), 40 of which have been ordered
by France and 6 by Spain; the UHT (antitank missile, air-toair missile, axial gun and rockets), 80 of which have beenordered by Germany; the ARH (antitank missile, turreted gun
and rockets), 22 of which have been ordered by Australia;
and the HAD (antitank missile, air-to-air missile, turreted gun,rockets and upgraded avionics and engines), 24 and 40 of
which have been ordered by Spain and France, respectively.
During 2015, in the frame of French “loi de programmation
militaire” (law of military programmes management), Airbus
Helicopters has been notiﬁed a decrease by 16 Tiger HAP and
asked to perform the retroﬁt of 19 Tiger HAP already delivered
in HAD variant. 7 additional Tiger HAD have been ordered by
France in December. France ﬁnally ordered 66 Tiger HAD. On
UHT, Germany decreased its number of Tiger UHT by 12 H/C
to 68 H/C in the frame of the German deal.
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 2017, 395 aircraft had been delivered to the
US Defense Department for operation by US Army and Army
National Guard units, the Navy and foreign military sales buyers.
Overall in 2016, 19 Tigers were delivered, for a cumulative totalof 154 deliveries by year-end. The Tiger ﬂeet has accumulated
more than 82,800 ﬂight hours.

Customer Services
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

1.1.4

this large ﬂeet generated 48% of Airbus Helicopters’ revenues
for 2016.
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 areconducted in four primary locations, two in France, one inGermany and one in Spain. The French sites are Marignane,in 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.
In Australia, Australian Aerospace assembles, upgrades andmaintains NH90 and Tiger for the country’s armed forces;
while a rotary-wing centre of excellence in Helibras — Itajuba,
Brazil produces, assembles and maintains H225M helicopters
acquired by the Brazilian armed forces and Romania willassemble H215 helicopters.
The heavyweight H215 was introduced along with a new
industrial model and an expanded strategic partnership with
Romania aiming at providing a modern and cost-effective
solution for markets such as utility, peacekeeping operations
and logistic support missions.

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 alike to protect resources and people while staying
connected to the world. Airbus Defence and Space solutions
guarantee sovereignty in foreign affairs and defence matters.
See “— 1.1.1 Overview” for an introduction to Airbus Defence
and Space.
Airbus Defence and Space in 2016 comprised the three BusinessLines Military Aircraft, Space Systems and Communications,Intelligence & Security (CIS), the broad scope of which is detailed

below. Further to a strategic portfolio review conducted in 2014,
some activities from the business line CIS have been carved
out and sold during 2016. In addition, an agreement has beenfound to sell the Defence Dlectronics business to KKR. Thesechanges, together with the ﬁnal phase of the creation of Airbus
Safran Launchers joint venture in mid-2016, had an impact on
the activities of Airbus Defence and Space as described below.
■

Military Aircraft designs, develops, delivers and supports
military aircraft, and 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 MRTT

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and the C295/CN235 as well as Unmanned Aerial Systems
and their associated services.
■Space Systems covers the full range of civil and defence spacesystems. Its satellite system solutions for telecommunications,
earth observation, navigation and science include spacecraft,
ground segments and payloads. As the European prime
contractor for launchers, orbital systems and space
exploration, its key systems include Ariane launchers, theFrench deterrence force and the European participation to theInternational Space Station ISS. In 2015, a 50/50 joint venture
was launched with Safran named Airbus Safran Launchers(“ASL”), bringing together space launchers expertise from bothcompanies. From 30 June 2016, both companies contributed
their respective industrial launcher assets into the ASL joint
venture including the deterrence activities. ASL has thus
become a fully operational integrated company.
■
Communications, Intelligence & Security (CIS) manages a
portfolio of business including secure communications, cybersecurity and intelligence solutions and services (which links
earth observation services and defence solutions). In addition,
CIS houses a dedicated unit for new business development
in commercial markets, leveraging Airbus Defence and Space
innovations, products and capabilities. CIS customers range
from governments to small companies and individuals. It
is organised around three Business Clusters. The clusters
combine business with close technical proximity to ensurea coherent management across all activities. Namely, they
are Secure Communications, Intelligence and Cyber. Within
the Business Cluster Intelligence, Defence Systems answers
a key need of our Defence customers: it processes datafrom platforms, transforming that data into intelligence,
providing valuable feedback on customer needs and mission
optimisation to our Division platforms. Based on the defence
Command, Control, Communications, Computers, andIntelligence (C4I) capabilities bundled in Defence Systems,
CIS holds the know-how for defence systems design andintegration enabling connectivity of various defence platforms.
Business Clusters are run and/or develop business with a highlevel of independence taking into account the speciﬁcities ofthese businesses. The commercial satellite communication
services sale was closed in May 2016.

Military Aircraft. Airbus Defence and Space is capitalising on
its strong market position in transport, mission and combat
aircraft and related services. In heavy transport, the focus
will be on completing the development and delivery of the
A400M airlifter to its launch customers while ramping up sales
campaigns in order to address the signiﬁcant demand expected
for this aircraft worldwide. For light and medium transport,
Airbus derivatives – including the highly successful A330 MRTT
(multi-role tanker transport) – and the Euroﬁ ghter Typhoon
combat aircraft, further export opportunities will be pursued
while investing in future capability growth and innovation bothfor products and services. Airbus Defence and Space is also
aiming at establishing a substantive presence in the market for
Unmanned Aerial Systems (UAS) building up an innovative UAS
portfolio for commercial and military applications.
Space. Airbus Defence and Space has taken a major step
towards future competitiveness in space transportation withthe creation of ASL, which will be responsible for developing,producing and marketing the next-generation European launcher,
Ariane 6. These activities will now be carried out autonomously
by ASL. As a leading manufacturer of telecommunications andEarth observation, navigation and science (ENS) satellites, aswell as orbital and space exploration systems, Airbus Defence
and Space is continuously investing in innovation to ensure its
future positioning in these core segments. In addition, the ability
to provide space-related services through its Communications,Intelligence & Security (CIS) business line, as well as spaceelectronics equipment, enables Airbus Defence and Space tooffer fully integrated space solutions to its customers.
Related Systems and Services. Airbus Defence and Space
will reinforce its competitive position by building up a digital
ecosystem around our aerospace platforms and by further
developing its portfolio in fast-growing markets such as Cyberfor Governments and critical industries, end-to-end Secure
Connectivity and Intelligence.
Missiles are a growing and proﬁtable business, in which Airbus
Defence and Space already has a strong presence through its
participation in the leading European missile maker, MBDA, as
well as through its ASL joint venture.

MarketStrategy
The strategic ambition of Airbus Defence and Space is to bea strong and international leader in “Smart AeroSpace andDefence solutions for a more secure and connected world”.
The Division aims to preserve a leading position in Europe andbuild an international footprint in selected countries, delivering
benchmark ﬁnancial performance and sustainable growth.
Airbus Defence and Space is taking steps to finalise its
divestment of non-core activities and invest primarily in futureorganic growth on the core business: Space, Military Aircraft
and related Systems and Services, while strategic growth
options are also being deﬁned.

Airbus Defence and Space is mainly active in public andpara-public markets. As a general trend, defence budgets in
Europe are set to gradually increase, triggered by heightened
security risks and reinforced by recent discussions on the NATOcommitments. In addition, the implementation of the European
Defence Action Plan of November 2016 would provide new sales
opportunities through members’ collaborative procurement
mechanisms. Market access outside the home countries may besubject to restrictions or preconditions such as national content.
Nevertheless, Airbus Defence and Space, in conjunction with
Airbus, is well-placed to beneﬁt from growth potential in defence
across its platforms

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Military Aircraft
Customers

In the Unmanned Aerial Systems market segment, Israeli andUS ﬁrms are well established and other European companies
such as BAE Systems, Dassault and Thales compete for new
European projects. The market itself features strong growth withsigniﬁcant opportunities in Europe and Asia Paciﬁc.

The Military Aircraft Business Line with its products Combat
Aircraft, Military Transport Aircraft, Mission Aircraft, Unmanned
Aerial Systems and related services supplies the public sector,
mainly armed forces.

Market Trends

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.

The sale of aircraft is expected to remain sound in thetransport and special mission aircraft segments and even growconsiderably for the heavy transport segment, where the A400M
occupies a unique position.

Customers in the home countries of Airbus Defence and Space
currently face budget pressures. However, this pressure may
be progressively alleviated by national commitments to increase
defence spending over the next few years. Ageing material
leads to the need for some ongoing or upcoming procurement
decisions.

In 2016 a contract for the supply of 28 units to Kuwait was
secured for the Euroﬁghter Typhoon consortium. A number offurther sales are expected, prolonging the Euroﬁghter Typhoon
production life.

Unmanned Aerial Systems could lead to diversiﬁcation into
commercial markets. It is also a sector in which Europe has astrong need for investment, which could set the stage for newcooperation programmes. France, Germany, Italy and Spain
have signalled their intention to cooperate on a medium altitude,
long endurance Unmanned Aerial System and Airbus Defence
and Space is participating in the two-year deﬁnition study ofthe system.

Unmanned Aerial Systems have a very promising growthpotential. Market structures in this segment are not clearly set
out yet and will see some movement, including a new European
collaborative programme.
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
support.

Space Systems

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, Lockheed Martin, Leonardo, UAC, Kawasaki,
Ilyushin and AVIC.
Heavy military transport (> 14t payload) has been driven
historically by US policy and budget decisions, and therefore has
been dominated by US manufacturers. The A400M represents
the Company’s entry into this market, at a time when nations
are expected to begin replacing their existing ﬂeets.
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 Sukhoi.

Public Sector: Satellites, Space Infrastructure,
Launchers, Deterrence
In the public market for Earth observation, scientiﬁc / explorationand navigation satellites, competition in Europe is organised ona national and multinational level, primarily through the European
Space Agency (ESA), the European Commission (EC) andnational space agencies.
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 for
Earth observation systems, for which the Company is a leading
provider. The export market is expected to continue growing
over the medium-term.
For military customers, demand for telecommunication andobservation 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 NASDA

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1.1 Presentation of the Company(Japan). Such systems are usually built in cooperation withinternational partners. The International Space Station (ISS),
together with related vehicle and equipment development
programmes and services, constitutes the predominant ﬁeldof activity in this segment and Airbus Defence and Space
leads as prime contractor on industrial level the European
contribution to the international Space Station ISS. Airbus
Defence and Space is involved in NASA’s Orion project as theprime contractor for the European contribution: the missioncritical service module of the MPCV (Multi-purpose Crew
Vehicle) Orion spacecraft, which will allow astronauts to ﬂ ybeyond low Earth orbit for the ﬁrst time since the American
Apollo programme.
The joint venture ASL is prime contractor for the Ariane 5
launcher system, with responsibility for the delivery to
Arianespace of a complete and fully tested vehicle. It also
supplies all Ariane 5 stages, equipment bay, the ﬂight software
as well as numerous sub-assemblies. ASL is contracted for thedevelopment of the future Ariane 6 launcher, planned for ﬁrst
launch in 2020 and is the prime contractor responsible for thedevelopment, manufacturing and maintenance of the French
deterrence systems.

Commercial Sector: Telecommunications Satellites,
Launch Services
The commercial telecommunication satellite market is very
competitive, with customer decisions primarily based on price,technical expertise and track record. The main competitors fortelecommunications satellites are Boeing, Lockheed Martin,
MDA and Orbital in the US, Thales Alenia Space in France and
Italy, and Information Satellite Systems Reshetnev in Russia.
The market for telecommunications satellites is expected
to remain largely stable over the coming years at a level ofapproximately 20 orders per year on average.
The market for commercial launch services continues to evolve.
Competitive pressure is increasing in light of other competitors
entering or coming back into the market. ASL provides acomplete range of launch services with the Ariane, Soyuz, Vega
and Rockot launchers. Competitors for launch services include
ILS, SpaceX, ULA, Sea Launch and CGWIC. The accessible
market to Arianespace for commercial launch services forgeostationary satellites is expected to remain stable at around20 payloads per year. However, due to various factors (suchas technology advances and consolidation of customers), thisﬁgure remains volatile. This market does not include institutional
launch services for the US, Russian or Chinese military andgovernmental agencies.
In 2015 Airbus Defence and Space announced the creation of
OneWeb Satellites JV, an equally owned company with OneWeb
that will design and build 900+ satellites for the OneWeb
constellation programme. This satellite constellation aims toprovide competitive global internet access. This participationis entrepreneurial in nature and is meant to drive innovation ina new space market. In 2016, OneWeb Satellites JV selected amanufacturing site in Florida, US.

Communications, Intelligence & Security (CIS)
The business line Communications, Intelligence and Security(CIS) brings together the growing but increasingly competitivemarket for satellite and terrestrial communication, intelligence andsecurity services and solutions. CIS serves a common customer
base which includes governments, defence institutions, security
and public safety agencies, as well as commercial sectors suchas transportation (maritime, aviation, road), energy (oil, gas,
electricity), mining and agriculture.
This business line is divided into three clusters: Intelligence,
Secure Communications and Cyber Security.
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.
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 are
Ministries of Defence, Ministries of Interior and NGOs.
Airbus Defence and Space is also a leading provider ofcybersecurity products and services including consultancy
services in Europe. The market growth is driven by an
exponential increase of cyber-attacks, the increase in use ofconnected assets and global digital transformation. Customers
are governments and private companies with a high grade
security requirement.
In addition to the business clusters, CIS also houses New
Business which is a business accelerator taking existing
capabilities anywhere in 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.
Airbus Defence and Space has good market position in Europe
in all businesses areas covered by CIS.
CIS focuses on public customers such as armed forces forgovernment satellite communications, where we have long-term
relationships with our customers. Whereas budget pressureson public expenditure, are high in Europe, investment into theservices and solutions offered by CIS is likely to continue in theRegistration Document 2016 - AIRBUS ° 42 °

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face of new global security threats, a re-emphasis on defence
and security and the growth in demand for digital services. CIS
has the objective to develop and scale digital services e.g. newservices based on data generated by existing Airbus Defence
and Space products, to generate signiﬁcant proﬁtable revenues.

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), strategic(longer range missions for outsized loads), as well as tacticaltanker.
A total of 174 aircraft have been ordered so far by the sevenlaunch customer nations Belgium, France, Germany, Luxemburg,
Spain, Turkey, the UK and one export customer, Malaysia. Type
Certiﬁcate and Initial Operating Clearance have been achieved in
2013. Since then, 38 units have been delivered to six nations by
the end of 2016. 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 refuelling 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
equipped with state of the art refuelling systems, including an
Aerial Refuelling Boom System (ARBS) and under-wing refuellingpods. At the end of 2016, the A330 MRTT programme has atotal of 51 aircraft ﬁrm orders by seven nations, of which 28
already delivered and in service in four nations.
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.
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
and 19.5% for Leonardo. Airbus Defence and Space develops
and manufactures the centre fuselage, ﬂight control systems,
identiﬁcation and communication sub-systems, and the rightwing and leading edge slats for all aircraft, and is in charge ofﬁnal assembly of aircraft ordered by the German and Spanish
air forces.
Airbus Defence and Space signed long-term global sustainment
and material availability contracts for the Euroﬁghter Typhoon
weapon system with the UK, Spain, Italy and Germany. The
new agreement on Contract 1, effective 1 January 2017, runs
for ﬁve years and is the second phase of sustainment for theEuroﬁghter Typhoon weapon system for all core nations forming
the baseline for all in-service activities.
The new Contract 3, also effective from 1 January 2017, runs
as well for ﬁve years and is the ﬁrst milestone on the way to
performance based logistics securing for the ﬁrst time material
availability for the Spanish and German air forces.
At the end of 2016, a total of 599 Euroﬁghter Typhoon aircraft
had been ordered by eight customers (UK, Germany, Italy,
Spain, Austria, Saudi Arabia,Oman and Kuwait), with a totalof 495 aircraft delivered. Production of aircraft within the coreprogramme is scheduled to last at least until 2018, while further
export opportunities are being actively developed together withthe other shareholders of the Euroﬁghter consortium.
CN235, C295 — Light and Medium military transport/
mission aircraft. The Light and Medium military aircraft are
the work horses of military transport, conducting logistical andtactical missions for the transport and delivery of personnel andcargo as well as medical evacuations. The aircraft are deployed
in demanding environments (meteorological conditions,operational complexity…) such as peacekeeping on the Sinai
Peninsula. Payloads range from 6 t for the CN235 to 9 t for
the C295. The aircraft are offered in the most varied versions
and conﬁgurations beyond the traditional airlifter version, forexample maritime patrol and anti-submarine warfare, airborne
early warning and control, ﬁreﬁghting, etc. In more than 30 years
in service, this family of aircraft has proven to be robust, reliable,
high-performing, efficient, flexible, easy to operate in any
environment, and all this at very low operating costs.
More than 460 orders had been recorded for both types
together at the end of 2016. The last C295 order was jsigned
in December 2016 by the Royal Canadian Air Force (RCAF) for
16 C295Ws modiﬁed for Search and Rescue (SAR).
Unmanned Aerial Systems. In the ﬁeld of unmanned aerial
systems (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 medium-altitude long-endurance (MALE) Intelligence,
Surveillance and Reconnaissance needs in the operational

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theatre. The Harfang system, delivered to the French Air Forceand operational worldwide since 2009, is the only MALE
product in Europe certiﬁed to ﬂy over populated areas, thanks to
Airbus UAS mission and communication system. These interim
solutions, based on non-proprietary MALE systems, will be
replaced by a new generation European MALE system where
Airbus Defence and Space will be working on the Deﬁnition
Study with its European partners. Airbus Defence and Space
also provides mini-UAS to the French- and selected export
customers and the KZO UAS to the German Armed Forces.
It is developing the EuroHawk system for high-altitude longendurance (HALE) Signal Intelligence missions based on an US
platform for the German Air Force as well as the solar powered
Zephyr for the UK MoD.
Customer Services. For all the aforementioned products,
Airbus Defence and Space offers and provides various services
throughout the lifetime of the aircraft including 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 ground services to enable the Royal Air Forceto ﬂ y air-to-air refuelling and transport missions worldwide.
Customer services go beyond the ﬂeet of aircraft currently in
production at Airbus Defence and Space, conducting upgrade
programmes for aircraft such as the Tornado and P-3 Orion.
The support centres for military aircraft are strategically locatedthroughout the world, for example in Seville or Manching inEurope, in Mobile, Alabama (US) or at subsidiaries in Saudi
Arabia or Oman.

Space Systems
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, designed tocarry fuel and supplies to the ISS and to provide re-boost
capability and a waste disposal solution. The ﬁfth and last ATV
was launched in July 2014. The expertise gained on the ATV
served to become the prime contractor for the European service
module of NASA’s next generation manned capsule MPCV Orion.

Launch services. Airbus Defence and Space is active in theﬁeld of launch services through its ASL joint venture.
ASL is responsible for the coordination and programmemanagement of civil activities of the launcher business andrelevant participations that have been transferred. ASL owned
a total 39% stake in Arianespace (which increased to 74% in
December 2016 after the acquisition of the 35% stake held by
the French space agency CNES), 41% of Starsem (46% after
step-up in Arianespace shareholding) and 51% of Eurockot,
providing a complete range of launch services with the Ariane,
Soyuz, Vega and Rockot launchers.
Commercial launchers. ASL manufactures launchers andperforms research and development for the Ariane programmes.
Member States, through ESA, fund the development cost for
Ariane launchers and associated technology. Airbus Defence
and Space has been the sole prime contractor for the Ariane 5
system since 2004. In December 2014, the Ariane 6 programme
was decided by ESA ministerial conference with an approvalof the joint Airbus Defence and Space and Safran concept.
In addition a new industrial set-up was announced with thecreation of ASL 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
and military applications, such as television and radio
broadcasting, ﬁxed and mobile communication services andInternet broadband access. Current Airbus Defence and Space
geostationary telecommunication satellites are based on theEurostar family of platform, the latest version of which is theEurostar E3000, including an all-electric variant. In 2015,
Airbus Defence and Space also started the development of
the Quantum telecommunication satellite, which will be the ﬁrst
satellite that can be fully reconﬁgured in orbit through its ﬂexible
antennae and repeater. Through its contract with OneWeb in2015 to design and produce 900 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 andmilitary applications. Customers can derive signiﬁcant beneﬁts
from the 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 andforestry management, mineral, energy and water resource
management, as well as military reconnaissance andsurveillance.

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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 was highly involved in ESA’s “Rosetta”
mission, which descended a lander on a comet – a ﬁrst in space
ﬂight. Airbus Defence and Space was prime contractor for theorbiter. Additionally, Airbus Defence and Space contributed tothe scientiﬁc community with the launches of the Sentinel-1B
radar, Sentinel-2A and LISA pathﬁnder in 2015. 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 missions, manned spaceﬂight
and launchers.
French deterrence systems. ASL as prime contractor holds
the contracts with the French State for the submarine-launcheddeterrence system family.

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).
The successful launch of TerraSAR-X in 2007 – a radar-based
Earth observation satellite that provides high-quality topographic
information – enabled Airbus Defence and Space to signiﬁcantly
expand its capabilities by proposing new kinds of images basedon radar. TanDEM-X, its almost identical twin, was successfullylaunched in 2010 and achieved in 2014 WorldDEM, the ﬁrst highprecision 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 isfully operational since 2009 and extends to 2022.
In Abu Dhabi, Airbus Defence and Space together with Thales
Alenia Space built a secure satellite communication system.
Airbus Defence and Space Services is managing the programmeand supplies the space segment except for the payload, as well
as 50% of the ground segment.

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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
Security Solutions include sensor networks ranging fromIR and video cameras through radars to airborne and spacesurveillance systems, all connected to command and control
centres, mainly for border security systems. Apart fromIntelligence, Surveillance and Reconnaissance (ISR) systems
for gathering, 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.

Production
Airbus Defence and Space is headquartered in Munich. The
main engineering and production facilities of the Division
are located in France (Paris-region and South-West France),
Germany (Bavaria, Baden-Württemberg and Bremen), Spain(Madrid-region and Andalusia) and the UK (Southern Englandand Wales). In addition, Airbus Defence and Space operates
a global network of engineering centres and ofﬁces in morethan 80 countries.

MBDA
The Company’s missile business in addition to the ASL joint
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 rangeof 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.

ASL
On 20 May 2016, Airbus and Safran signed the second phaseof the Master Agreement enabling the joint venture to be
fully equipped for all design, development, production andcommercial activities related to civil and military launchers andassociated propulsion systems. During the second phase,
Safran and Airbus integrated within the joint venture all theremaining contracts, assets and industrial resources, related
to space launchers and associated propulsion systems. On
30 June 2016, Airbus contributed the second phase assets
and liabilities in exchange for shares issued by Airbus Safran
Launchers Holding, and also sold additional assets in exchangefor € 750 million in cash. Airbus participation in ASL accounted
for at-equity amounts to € 677 million. The loss of control in thebusiness resulted in a capital gain of € 1,175 million recognised inother income (reported in Airbus Defence and Space Division).
Airbus and Safran ﬁnalised the respective contribution balance
sheet in the third quarter 2016 in alignment with the provisionof the Master Agreement. On 31 December 2016, the transferof the 34.68% of CNES’s stake in Arianespace to ASL wascompleted. ASL holds 74% of the shares of Arianespace. Thischange in the shareholder mix at Arianespace ﬁ nalises thecreation of a new launcher governance in Europe.

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1.1.5

Investments

1

Dassault Aviation
As disclosed in a press release dated 10 June 2016, theCompany sold approximately 0.83 million shares in Dassault
Aviation, representing around 9.05% of the company’s sharecapital (the “Equity Placement”). As part of its share buyback
programme, Dassault Aviation purchased 502,282 sharesconcurrently with the Equity Placement (representing around
5.5% of Dassault Aviation’s share capital) (the “Buyback”).

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. A continuous task of IRM in 2016
was to further improve efﬁcient and appropriate corporate andproject-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 are inplace for all insurable risks worldwide for Airbus. A systematic
review, monitoring and reporting procedure applicable to all
Divisions is in place to assess the exposure and protection
systems applicable to all Airbus sites. The Company’s insurance
programmes cover high risk exposures related to its assets
and liabilities.

1.1.7

In addition to the Equity Placement and the Buyback, theCompany has also issued bonds due 2021 and exchangeable
into Dassault Aviation shares. Following the Equity Placement
and the Buyback, the Company holds approximately 10% of
Dassault Aviation’s share capital and 6.2% of its voting rights.
In case of exchange in full of the bonds, the Company will nolonger hold any of Dassault Aviation shares and voting rights.

Asset and liability insurance policies underwritten by IRM
for the Company cover risks such as property damage,business interruption, 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 Airbus, 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 reasonablerates, 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 signﬁciant risk exposure of Airbus.

Legal and Arbitration Proceedings

Airbus 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
than as described below, Airbus is not aware of any material
governmental, legal or arbitration proceedings (including any
such proceedings which are pending or threatened), during aperiod 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’ ﬁnancial position or proﬁtability.
Regarding Airbus’ provisions policy, Airbus recognises provisions
for litigation and claims when (i) it has a present obligation fromlegal actions, governmental investigations, proceedings andother claims resulting from past events that are pending or
may be instituted or asserted in the future against Airbus, (ii) it
is probable that an outﬂow of resources embodying economic
beneﬁ ts will be required to settle such obligation and (iii) a
reliable estimate of the amount of such obligation can be made.
Although Airbus believes that adequate provisions have been
made to cover current or contemplated general and speciﬁclitigation and regulatory risks, no assurance can be provided thatsuch provisions will be sufﬁcient. For the amount of provisions
for litigation and claims, please refer to the “— Notes to the
IFRS Consolidated Financial Statements — Note 22: Provisions,Contingent Assets and Contingent Liabilities”.

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WTO

Euroﬁghter Austria

Although Airbus is not a party, Airbus 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 EUlaunched 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 the extension until the end of2040 of subsidies originally granted by the State of Washington
to Boeing and other US aerospace ﬁrms until 2024.

In March 2012, the German public prosecutor, following arequest for assistance by the Austrian public prosecutor,
launched a criminal investigation into alleged bribery, tax evasion
and breach of trust by current and former employees of EADS
Deutschland GmbH (renamed on 1 July 2014 Airbus Defence
and Space GmbH) and Euroﬁghter Jagdﬂugzeug GmbH as well
as by third parties relating to the sale of Euroﬁghter aircraft toAustria in 2003. After having been informed of the investigationin 2012, Airbus retained the law ﬁrm Clifford Chance to conduct
a fact ﬁnding independent review. Upon concluding its review,
Clifford Chance presented its fact ﬁ nding report to Airbus
in December 2013. Airbus provided the report to the publicprosecutors in Germany. Airbus’ request for access to theprosecutor’s ﬁle is pending. Airbus Defence and Space GmbHsettled with the tax authorities in August 2016 on the questionof deductibility of payments made in connection with theEuroﬁghter Austria campaign. In February 2017, the AustrianFederal Ministry of Defence has raised criminal allegations
against Airbus Defence and Space GmbH for wilful deception
and fraud in the context of the sale of the Euroﬁghter aircraft toAustria and respective damage claims. Airbus is cooperating
fully with the authorities.

On 1 June 2011, the WTO adopted the Appellate Body’s ﬁnal
report in the case brought by the US assessing funding toAirbus Commercial Aircraft from European governments. On
1 December 2011, the EU 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 US did not agree,
the matter is now under WTO review pursuant to WTO rules.
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
Prompted by a whistleblower’s allegations, Airbus conductedinternal audits and retained PricewaterhouseCoopers (“PwC”) to
conduct an independent review relating to GPT Special ProjectManagement Ltd. (“GPT”), a subsidiary that Airbus acquired in2007. The allegations called into question a service contract
entered into by GPT prior to its acquisition by Airbus, relating toactivities conducted by GPT in Saudi Arabia. PwC’s report wasprovided by Airbus to the UK Serious Fraud Ofﬁce (“SFO”) in
March 2012. In the period under review and based on the work
it undertook, nothing came to PwC’s attention to suggest that
improper payments were made by GPT. In August 2012, the SFO
announced that it had opened a formal criminal investigation
into the matter. Airbus is in continuing engagement with theauthorities.

Investigation by the UK SFO and France’s PNF
into civil aviation businessIn the context of review and enhancement of its internal
compliance improvement programme, Airbus discovered
misstatements and omissions relating to information provided
in respect of third party consultants in certain applications forexport credit ﬁ nancing for Airbus customers. In early 2016
Airbus informed the UK, German and French Export Credit
Agencies (“ECAs”) of the irregularities discovered. Airbus
made a similar disclosure to the UK Serious Fraud Ofﬁ ce(“SFO”). In August 2016, the SFO informed Airbus that it had
opened an investigation into allegations of fraud, bribery andcorruption in the civil aviation business of Airbus relating toirregularities concerning third party consultants (business
partners). In March 2017, France’s Parquet National Financier(“PNF”) informed Airbus that it had also opened a preliminary
investigation into the same subject and that the two authorities
will act in coordination going forward. Airbus is cooperating fully
with both authorities. The SFO and PNF investigations and any
enforcement action potentially arising as a result could havenegative consequences for Airbus. The potential imposition ofany monetary penalty (and the amount thereof) arising from the
SFO and PNF investigations would depend on factual ﬁndings,
and 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. Investigations of this nature could
also result in (i) civil claims or claims by shareholders against
Airbus (ii) adverse consequences on Airbus’ ability to obtain orcontinue ﬁnancing for current or future projects (iii) limitations

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on the eligibility of group companies for certain public sector
contracts and/or (iv) damage to Airbus’ business or reputation
via negative publicity adversely affecting Airbus’ prospects inthe commercial market place.

Airbus is cooperating with a judicial investigation against
unknown persons in France related to Kazakhstan. Airbus
is cooperating with French judicial authorities pursuant to arequest for mutual legal assistance made by the governmentof Tunisia in connection with historical aircraft sales.

ECA ﬁnancing
ECA ﬁnancing continues to be suspended. Airbus is working
with the relevant ECAs to re-establish ECA financing.
See “— Financial Market Risks — Sales Financing Arrangements”.

Other investigations
In October 2014, the Romanian authorities announced aninvestigation relating to a border surveillance project in Romania.
Airbus conﬁrms that Airbus Defence and Space GmbH had
been informed that the German prosecution ofﬁ ce is also
investigating potential irregularities in relation to this project, aproject in Saudi Arabia and a project of Tesat-Spacecom GmbH& Co. KG. The public prosecutor in Germany has launchedadministrative proceedings in the contex t of thoseinvestigations against Airbus Defence and Space GmbH and
Tesat-Spacecom GmbH & Co. KG. Airbus has cooperated fully
with the authorities. In October 2016, the German authorities
announced that they were dropping their investigations into
the Romanian and Saudi projects. The tax authorities may
challenge the tax treatment of business expenses in connection
with the Romanian and Saudi projects.
In 2013, public prosecutors in Greece and Germany launchedinvestigations into a current employee and former Managing
Directors and employees of Atlas Elektronik GmbH (“Atlas”),
a joint company of ThyssenKrupp and Airbus, on suspicionof bribing foreign ofﬁcials and tax evasion in connection withprojects in Greece. The public prosecutor in Germany haslaunched an administrative proceeding for alleged organisationaland supervisory shortfalls against Atlas. The authorities in
Greece have launched civil claims against Atlas. In 2015, thepublic prosecutor in Germany launched another investigation
into current and former employees and Managing Directors ofAtlas on suspicion of bribery and tax evasion in connection withprojects in Turkey and extended the investigation in 2016 to ﬁvecurrent and former employees of Atlas’ shareholders. A further
investigation was also launched against two former Atlas
employees on suspicion of bribery in connection with projects
in Pakistan. In 2016, two further investigations were started
by the Bremen public prosecutor with regard to operations inIndonesia and Thailand. With the support of its shareholders,
Atlas is cooperating fully with the authorities and is conducting
its own internal investigation. Settlement talks with the Bremen
public prosecutor started in November 2016.

Review of business partner relationships
In light of regulatory investigations and commercial disputes,
including those discussed above, Airbus has determined toenhance certain of its policies, procedures and practices,
including Ethics and Compliance. Airbus is accordingly in theprocess of revising and implementing improved procedures,
including those with respect to its engagement of consultants
and other third parties, in particular in respect of sales support
activities and is conducting enhanced due diligence as a precondition for future or continued engagement and to inform
decisions on corresponding payments. Airbus has therefore
engaged legal, investigative, and forensic accounting expertiseof the highest calibre to undertake a comprehensive review
of all relevant third party business consultant relationships
and related subject matters. Airbus believes that theseenhancements to its controls and practices will best position it
for the future, particularly in light of advancements in regulatory
standards. Certain consultants and other third parties haveinitiated commercial litigation and arbitration against Airbus. The
comprehensive review and these enhancements of its controls
and practices may lead to additional commercial disputes orother 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.

Commercial disputes
In May 2013, Airbus has been notiﬁed of a commercial dispute
following the decision taken by Airbus to cease a partnershipfor sales support activities in some local markets abroad. Airbus
believes it has solid grounds to legally object to the alleged
breach of a commercial agreement. However, the consequencesof this dispute and the outcome of the proceedings cannot be
fully assessed at this stage. The arbitration will not be completed
until 2018 at the earliest.
In the course of another commercial dispute, Airbus received
a statement of claim alleging liability for refunding part of thepurchase price of a large contract which the customer claims
it was not obliged to pay. The dispute is currently the subjectof arbitration.

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1.1.8

Research and Technology, Intellectual Property

Positioning Airbus for the Future
Airbus’ technological expertise is essential for ensuring theCompany’s long-term market leadership and opening business
opportunities in new markets. Airbus’ research and technology(“R&T”) efforts are focused on proﬁtability, value creation, market
position and delivering competitive, integrated solutions for its
customers, along with exploring emerging concepts that will
shape its future.
Airbus’ Corporate Technology Ofﬁce (CTO), which was previously
known as the Corporate Technical Ofﬁce, is the focal point forthis activity, ensuring that business and technology strategies
are closely linked. The CTO addresses technology trends that
impact Airbus’ business, and identiﬁes key areas for R&T. It is
responsible for the Airbus Group Innovations R&T network andalso oversees information technology, cyber security, quality,
new business ventures and Intellectual property activities acrossthe Group.
Signiﬁcant restructuring of CTO was undertaken in 2016 andwill continue into 2017. The CTO is undergoing a transformation
programme to become more agile, innovative and alignedwith the needs of Airbus. The new CTO organisation is
responsible for guiding all R&T of the Company and ensures
Airbus-wide integration of technology. The CTO is also incharge of developing the Airbus-wide R&T Roadmaps andexecuting Demonstrator projects together with the Divisions.
This organisation applies a lean, project-based approach, willencourage collaboration with external research communities
and develop partnerships, especially through open innovation
with technical and scientiﬁc experts. Airbus Demonstrators
are a means to develop new products, ser vices anddesign and manufacturing methods that encompass andrepresent radical technological breakthroughs, rather thanincremental development. Airbus Demonstrators also provide
a maturation mechanism and maturity gates for Airbus’ R&T
portfolio. The Demonstrators will employ a CTO-establisheddevelopment methodology, including phasing and key
gates, lightweight project management and earned-value
management processes, and budgeting, HR and contracting
mechanisms tailored for speed of execution.
Airbus Group Innovations (AGI) will become a Central R&T
organisation to provide expertise in breakthrough technologies
in support of the Group demonstrators. The CTO nursery andAirbus BizLab will be merged into a single entity responsiblefor incubation and acceleration of internal and start-up ideasthat can be turned into viable business ventures. The CTO
organisation will serve as a pilot for the construct of an

Exponential Organisation and if successful, a proof point for
the ability to create such an organisation internally, close to thecore of the business.
Four technology thrusts ensure that road mapping, groupdemonstrators and R&T projects form a coherent portfolio ofactivities to advance rapidly strategic priorities. These thrusts
are:Electriﬁcation;
Urban Air Mobility;■
Digital Product Development Process and Factory;■
Connected Fleet.
■■

Quality
The CTO manages the Company-wide Quest quality
improvement initiative that supports the Company’s aim ofdelivering even better products and services for customers,
and reducing the cost of non-quality. Following its kick-off in2014, the Quality initiative Quest has made signiﬁcant progress.
More than € 500 million of Cost of non-Quality could be saved
since the beginning of the project by focusing on the right tools
and methodologies and supporting people in the evolution of theMindset and Behaviours, especially when it comes to making
Quality a priority.
With the decision to implement APQP (Advanced ProductQuality Planning), a methodology to become industry standard
very soon, the end-to-end focus of Quality has been and willcontinue to be signiﬁcantly increased. A dedicated learning
path has been established and the ﬁrst 50 APQP-Masters weretrained in 2016. Overall, people were in the focus of 2016 efforts,
with for example:
reaching a total of more than 15,000 employees with adedicated “Quality experience world” that travelled across
31 sites (production included);■training more than 5,000 people in dedicated train-the-trainer
and team sessions on Mindset & Behaviour;■creation of dedicated communities on the Airbus intranet HUB
with several of thousands of people connected and sharing
their expertise and best practice.
■

Furthermore, a harmonised and simple set of ﬁ ve KPIs has
been established, covering Quality from engineering, supply
chain, production and customer satisfaction at handover to theresulting measure of Cost of non-Quality.
In the frame of the Gemini project the closer integration of thequality functions has been decided, leading to a further increasein focus on Quality ﬁrst.

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Leading a Group-wide Strategy
Corporate-level R&T efforts are centered around nine key
strategic technology roadmaps that provide the frameworkon which to build Airbus’ competitiveness and capabilities.
Elaborated by the Divisions under the leadership of the CTO,
these shared roadmaps were created for faster delivery of newtechnologies by optimizing group-wide R&T efforts.
A key part of the technology roadmaps is the CTO’s global reach.
Its international presence facilitates relationships, partnerships
and collaborations that help Airbus Group develop new products,
services, business models, methods, tools and manufacturing
processes for maintaining the Company’s competitiveness andleadership into the future.

A Lean, Agile Network for Global Innovation
AGI – the Company’s global R&T network – is managed by
the CTO and driven by Airbus’ overall strategy. It leverages aclose relationship with Airbus’ three Divisions to identify newtechnologies and breakthrough concepts for eventual transfer to
Airbus’ commercial Divisions. AGI is undergoing a transformation
to become more agile, innovative and aligned with the needs of
the Company’s Divisions. Its teams have been reorganised into
ﬁve transnational Innovation Centres focused around core groupcompetencies, along with a policy and development functionthat includes all support activities. This structure ensures that
AGI creates long-term value for Airbus.
AGI employs over 1,000 people across several sites includingFrance, Germany, the UK, Spain, Singapore, and India, alongwith its operations in China, Japan, South Korea, Thailand,
Malaysia, Canada and the US. This international presence
increases Airbus’ access to diverse talent, knowledge, disruptive
technologies and new markets, which improves the Company’s
ﬂexibility, robustness and ability to innovate. It also fosters thedevelopment of partnerships with leading universities and hightech engineering schools through joint research projects, aswell as employment of thesis students, post-graduate interns
and doctorates.

Major Milestones for Electric Aviation
Development of electric and hybrid-propulsion aircraft is one of
the Company’s key priorities for the future, and the CTO is leading
this “E-aircraft Roadmap” with the long-term goal of applying
electric and hybrid-propulsion technologies to helicopters andregional airliners. Electric-powered thrust fans for aircraft willcontribute to the aviation technology environmental targets ofreductions of CO2 emissions by 75%, NOx emissions by 90%,
and noise by 65% by 2050.

In April 2016 a partnership agreement was signed between
Airbus and Siemens to research and develop hybrid-electric
propulsion systems. The collaboration objectives are todemonstrate the technical feasibility and performance of various
hybrid-electric propulsion subsystems by 2020.
This cooperation is linked with the E-Aircraft Systems Programmeand Airbus and Siemens engineers are working together in
Ottobrunn where the E-Aircraft Systems House will be located.
This development team will be made up of around 200 people(roughly a 50/50 split from Airbus and Siemens) harnessing theexpertise of their worldwide R&D network. A dedicated Airbus
team for Assembly, Test and Integration, supported by Siemens
test engineers are working in the E-Aircraft System House tointegrate the developed equipment and execute the testing.
Airbus’ E-Aircraft Systems Programme pushes electric andhybrid-electric technologies towards the required performanceof up to 20 MW, needed for electric and hybrid-electric ﬂight ofa short range passenger aircraft. The E-Aircraft Systems House
is Airbus’ research lab for future electric and hybrid-electric
technologies. It will also be the supporting ground test facility
to develop and test the propulsion technologies needed for
future ﬂying demonstrators.

Staying Ahead of Cyber Threats
The CTO’s Cyber Security Programme Directorate is responsible
for safeguarding the Company’s products, manufacturingsystems and IT infrastructure from cyber threats. This operation
combines all of the group-wide competences behind common
objectives and establishes priorities for protecting Airbus fromthe increasing threat of cyber attacks in the short- and longterms.

Intellectual Property and Open Innovation
Airbus’ policy is to establish, protect, maintain and defend its IP
rights in all commercially signiﬁcant countries and to use thoserights in responsible ways. Airbus makes select patents andexpertise available through technology transfer and licensing
agreements as part of its Open Innovation processes. Open
Innovation and technology transfer create a win-win situation
for sharing the risks of R&T with external partners, while
creating new market opportunities for Airbus. Under the CTO’s
responsibility, Airbus’ technology transfer initiative generates
revenues by licensing approved technologies and offeringengineering services, along with forming strategic technology
partnerships – such as its long-term agreement that provides
automotive manufacturer Maserati with access to a wide rangeof Airbus expertise and know-how.

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1.1.9

Corporate Social Responsibility

Airbus CSR Approach

Materiality

At Airbus, corporate social responsibility (CSR) refers to how
we are aligning the Company with the needs and expectationsof society. Airbus aims to balance its strategy for growth with
fulﬁ lling duties to all stakeholders and addressing material
sustainability issues. Underlying this is a drive to deliver thebest technology to serve mobility and security.

Airbus focuses on material issues that have signiﬁcant operationaland strategic impacts, potentially affecting Airbus’ risks andperformance. Airbus is taking into account stakeholders’ andanalysts’ questions about the materiality of CSR issues.

Stakeholders
Airbus’ businesses are characterised by long product lifecycles
and corresponding returns on investments, considerable
costs and risks in programme development, and cyclicalcivilian markets. The principal stakeholders are shareholders,customers, regulators, policymakers, employees, suppliers,
NGOs, as well as society at large.

Data and Performance
A signatory to the United Nations Global Compact since 2003,
Airbus is committed to the UN Global Compact principles andhas reached the “Advanced Level”(1).
Environmental, Social and Governance (ESG) reporting isembedded across the Group, measuring performance andprogress. Environmental and social data have been externallyaudited since 2010. Below is a selection (2) of externally reviewed
environmental indicators. For a selection of social performanceindicators, see “— 1.1.10 Employees”.

(1) Through the GC Advanced level, the Global Compact Ofﬁce recognises companies that strive to be top reporters and declare that they have adopted and reporton a broad range of best practices in sustainability governance and management.
(2) For details on Scope and Methodology, please refer to the Airbus website at www.airbusgroup.com.

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Environmental
performance

KPI

Unit

2016

2015

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

MWh3,893,111

3,872,080

MWh

1,395,192

1,398,765

MWh
MWh
MWh
MWh
MWh

1,335,263
12,170360
3,883
43,517

1,311,602
16,060150
7,237
63,715

Energy consumption from mobile sources ✔
of whichgasoline consumption
distillate fuel oil consumption (Gas oil, Diesel, FOD)
liquefied petroleum gas consumption
propane consumption
jet fuel aircraft / kerosene consumption
flight tests
Belugaaviation gasoline consumption

MWh1,045,159

934,679

MWh
MWh
MWh
MWh
MWh
MWh
MWh
MWh

2,769
27,166118
1,700
1,010,647
559,106
451,540
2,760

2,860
26,561
6615
900,375
520,012380,363
4,263

Total electricity consumption

MWh1,452,760

1,538,636

MWh
MWh
MWh
MWh

1,371,842
80,671247
01,440,722
97,494
220
199
177,359of whichnatural gas consumption
distillate fuel oil consumption (Gas oil, Diesel, FOD)
liquefied petroleum gas consumption
propane consumption
biomass consumption

Energy■■of whichpurchased electricity consumption ✔
purchased heat / steam
generated electricity from photovoltaic on-site for own use
generated electricity from other renewable source on-site for own use
Generated electricity from CHP on-site for own use ✔

Air emissions

MWh

188,144

Total CO 2 emissions ✔

tonnes CO 2

935,402927,616

Total direct CO2 emissions (Scope 1) ✔
of which
CO2 emissions from stationary sources
CO2 emissions from mobile sources
CO2 emissions from fugitive sources
CO2 emissions from processes on site

tonnes CO2

557,447

525,883

tonnes CO2
tonnes CO2
tonnes CO2
tonnes CO2

272,679
269,493
15,203
72

269,569
241,039
15,19084

Total indirect CO2 emissions (Scope 2) ✔

tonnes CO2

377,955

401,734

tonnestonnestonnes

1,539
15
241

1,450
15
248

m3

3,834,265

5,478,896

%
%
%
%
m3
m3

76.4%
20.0%
3.5%
0.1%
3,464,179
228,428

52.4%
45.2%
2.3%
0.1%
4,209,858
1,196,339

tonnes104,505

105,114

Total VOC emissions*
Total SOx emissions
Total NOx emissions
Total water consumption ✔

of which
Water

purchased water ✔
abstracted ground water
withdrawn surface water
rainwater collected used
Total water dischargeof which water discharged via an internal pre-treatment plant
Total waste production, excluding exceptional wasteof which

Waste

EMS certification

non-hazardous waste ✔

tonnes77,83578,635hazardous waste ✔
waste going to material recovery
waste going to energy recovery

tonnestonnestonnes

26,67062,344
21,954

26,47963,293
21,381

%
%
unit
%

59.7%
21.0%
61
86%

60.2%
20.3%
79
83%

Material recovery rate ✔
Energy recovery rate
Number of sites with ISO 14001 / EMAS certification**
Percentage of workforce covered by ISO 14001 & environmental reporting✔ Data audited by Ernst & Young et Associés. 2016 data covers 85% of total group employees.
***

2015 data correspond to the data validated by the external third party in 2015, without any recalcultation to take into account perimeters movements, which can explainsome of the observed variances.
2016 VOC emissions data is estimated.
Number of sites covered by the environmental reporting which are certified ISO 14001. Decrease due to perimeter change within the group Airbus.
Only 100% consolidated entities are taken into account.

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1.1.10

Employees

As of 31 December 2016, Airbus’ workforce amounted to133,782 employees (compared to 136,574 employees in 2015),
95.9% of which consisted of full time employees. These statistics
take into account consolidation effects and perimeter changes
throughout 2016. Depending on country and hierarchy level, theaverage working time is between 35 and 40 hours per week.
In 2016, 7,532 employees worldwide were welcomed into Airbus(compared to 5,266 in 2015 and 5,211 in 2014). At the sametime, 4,698 employees left Airbus including partial retirements(compared to 4,870 in 2015 and 4,478 in 2014).

Employees by Division

In terms of nationalities, 36.6% of Airbus’ employees are from
France, 33.6% from Germany, 9.3% from the UK and 9.2% arefrom Spain. US nationals account for 1.8% of employees. The
remaining 9.5% are employees coming from a total of 136 othercountries. In total, 91.2% of Airbus’ active workforce is locatedin Europe on more than 100 sites.

Workforce by Division and Geographic Area
The tables below provide a breakdown of Airbus’ employees
by Division and geographic area, as well as by age and gender,
including the percentage of part-time employees.

31 December 201631 December 201531 December 2014

Airbus Commercial Aircraft ✔

73,852

72,81673,958

Airbus Helicopters ✔

22,50722,52022,939Airbus Defence and Space ✔

34,397

38,206

38,637

Airbus Corporate Functions(1) ✔

3,026

3,032

2,989

-

-

99

133,782

136,574

138,62231 December 201631 December 201531 December 2014

France ✔

47,96350,81051,740Germany ✔

46,71347,796

48,374

Spain ✔

12,682

12,521

12,449UK ✔

12,02012,157

12,783

Other Businesses ✔

Group Total ✔

(1) “Airbus Corporate Functions” includes Headquarters, Shared Services and Innovation Works.

Employees by geographic area

US ✔

2,829

2,821

2,991

Other Countries ✔

11,575

10,46910,285

Group Total ✔

133,782

136,574

138,662

31 December 201431 December 201631 December 2015

France

4.5%

4.2%

4.1%

Germany

5.5%

5.1%

4.5%

% Part time employees

Spain

1.1%

1.2%

1.0%

UK

2.7%

2.4%

1.8%

US

0.7%

1.1%

1.6%

Other Countries

1.5%

1.4%

0.8%

Group Total

4.1%

3.9%

3.4%

31 December 201631 December 201531 December 2014

131,153

133,650

135,688

2,629

2,924

2,934

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

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31 December 2016

% Active Workforce by Age

31 December 201531 December 2014

<20 ✔

0.2%

0.2%

0.2%

20-29 ✔

10.4%

10.6%

11.4%

30-39 ✔

29.5%

29.7%

30.0%

40-49 ✔

27.9%

27.9%

27.8%

50-59 ✔

27.1%

27.1%

26.3%

60+ ✔

4.9%

4.6%

4.3%

31 December 201631 December 201531 December 2014

Women in Active Workforce ✔

17.2%

17.2%

17.1%

Women in Management Positions ✔

11.4%

10.9%

10.2%

3.6%

3.6%

3.3%

2,320,508

2,264,145

2,906,356

214,819

226,692

238,386

Employee Turnover Rate ✔
Total number of Training Hours ✔
Total number of Training Participants ✔

✔ Data audited by Ernst & Young et Associés.

The turnover rate does not include departures of the non-active workers.
The % of women in management positions only applies to the top 4% of the active workforce.

Reporting Scope
Airbus’ headcount reporting includes all consolidated companies
worldwide. The internationally comparative ﬁgures are based on
the Active Workforce, i.e. the number of permanent and shortterm employees, irrespective of their individual working times.
The headcount is calculated according to the consolidation
quota of the respective companies.
The scope for HR structure reporting covers about 97% of
Airbus’ consolidated companies, including all employees ofthese companies, irrespective of their individual consolidation

quota. This includes employees working for the Company or
its subsidiaries in France, Germany, Spain, Great Britain andinternationally. In total, about 3% of the companies belonging
to Airbus – usually recently acquired – are not included in thescope, as no detailed employee data is available at group level.
The reporting scope for training indicators is limited to Airbus
core Divisions and subsidiaries, with a coverage rate of 81%.
For more details on Scope and Methodology, please refer tothe Airbus website at www.airbusgroup.com

1.2 Recent Developments
As announced on 12 January 2017, Airbus Defence and Space
has entered into an agreement to sell its 49 percent share in
Atlas Elektronik Group to thyssenkrupp AG based in Essen,
Germany. With this acquisition, thyssenkrupp, which to datehas held a 51 percent share in the company, will become thesole owner of Atlas Elektronik. The sale of its shares in Atlas
Elektronik, a supplier of cutting-edge maritime technology, ispart of Airbus Defence and Space’s divestment programme
which will allow it to focus on its core business. Closing of thetransaction is subject to customary regulatory approvals.
As announced on 28 February 2017, Airbus has ﬁnalised the saleof its Germany-based Defence Electronics business to KKR, aleading global investment ﬁrm, following the receipt of regulatory
and other approvals, including from the German government.

The France-based portion of the business will be transferred to
KKR once the carve-out of the French entity in Elancourt, near
Paris, is completed. The closing of this part of the transaction is
subject to regulatory approval from the French government. KKR
acquires the business for an enterprise value of approximately€ 1.1 billion. Airbus has agreed to maintain a 25.1% minority stakefor a limited number of years post-closing until the full separationof the sites. This measure will facilitate a smooth transition for
employees and business stakeholders. The Defence Electronics
activity, which will be renamed Hensoldt, is a global providerof mission-critical sensors, integrated systems and services forpremium defence and security applications. Headquartered in
Ottobrunn, Germany, it has around 4,000 employees worldwide,with annual revenues of around € 1 billion.

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Condition and Resultsof Operations
2.1 Operating and Financial Review

58

2.1.1 Overview

59

2.1.2 Signiﬁcant Accounting Considerations,
Policies and Estimates

61

2.1.3 Performance Measures

62

2.1.4 Results of Operations

67

2.1.5 Changes in Consolidated Total Equity(Including Non-Controlling Interests)

70

2.1.6 Liquidity and Capital Resources72

2.1.7 Hedging Activities

75

2.2 Financial Statements

76

2.3 Statutory Auditors’ Fees76

2.4 Information Regarding the Statutory Auditors

77

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2.1 Operating and Financial Review
The following discussion and analysis is derived from and should be read
together with the audited IFRS Consolidated Financial Statements of Airbus
as of and for the years ended 31 December 2016, 2015 and 2014 incorporated
by reference herein. These ﬁnancial statements have been prepared inaccordance 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. When reference ismade 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 included in the most directly comparable measurecalculated and presented in accordance with IFRS. Speciﬁcally, Airbus makes
use of the non-GAAP measures (i.e. Alternative Performance Measures) “EBIT
Adjusted”, “net cash” and “Free Cash Flow”.
Airbus 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 Airbus ismeeting established ﬁnancial goals.
Non-GAAP ﬁnancial measures have certain limitations as analytical tools, andshould not be considered in isolation or as substitutes for analysis of Airbus’
results as reported under IFRS. Because of these limitations, they should not be
considered substitutes for the relevant IFRS measures.
For its full-year 2016 ﬁnancial reporting, Airbus has implemented the European
Securities and Markets Authority’s guidelines on Alternative Performance
Measures. As a result, certain items will no longer be labelled as “one-offs”.
Such items will instead be labelled as “Adjustments”. Airbus will no longer
measure and communicate its performance on the basis of “EBIT*” (i.e. EBIT
pre-goodwill impairment and exceptionals) but on the basis of “EBIT” (reported).
Terminology will change such that “EBIT* before one-offs” will be replaced by“EBIT Adjusted” and “EPS* before one-offs” will be replaced by “EPS Adjusted”.

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2.1.1

Overview

With consolidated revenues of € 66.6 billion in 2016, Airbus is a
global leader in aeronautics, space and related services. Airbus
offers the most comprehensive range of passenger airliners from100 to more than 600 seats. Airbus is also a European leader
providing tanker, combat, transport and mission aircraft, as
well as Europe’s number one space enterprise and the world’s

2.1.1.1

second largest space business. In helicopters, Airbus provides
the most efﬁcient civil and military rotorcraft solutions worldwide.
In 2016, it generated 83% of its total revenues in the civil sector(compared to 82% in 2015) and 17% in the defence sector(compared to 18% in 2015). As of 31 December 2016, Airbus’
active headcount was 133,782 employees.

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-end

Year ended

€/US$

€/£

€/US$

€/£

31 December 2014

1.32850.8061

1.21410.778931 December 2015

1.10950.72591.08870.734031 December 2016

1.10690.81951.05410.85622.1.1.2

Reportable Business Segments

Airbus operates in three reportable segments which reﬂect theinternal organisational and management structure according to
the nature of the products and services provided.
Airbus Commercial Aircraft (formerly Airbus): development,
manufacturing, marketing and sale of commercial jet aircraft ofmore than 100 seats; aircraft conversion and related services;development, manufacturing, marketing and sale of regional
turboprop aircraft and aircraft components;■
Airbus Helicopters: development, manufacturing, marketingand sale of civil and military helicopters; provision of helicopterrelated services; and■Airbus Defence and Space: Military combat aircraft andtraining aircraft; provision of defence electronics and of
global security market solutions such as integrated systems
for global border security and secure communications
solutions and logistics; training, testing, engineering and otherrelated services; development, manufacturing, marketingand sale of missiles systems; development, manufacturing,marketing and sale of satellites, orbital infrastructures andlaunchers; provision of space related services; development,
manufacturing, marketing and sale of military transport aircraft
and special mission aircraft and related services.

■“Other / HQ / Consolidation” comprises the holding functionof Airbus’ Headquarters, the Airbus Group Bank and otheractivities not allocable to the reportable segments, combined
together with consolidation effects.

2.1.1.3

Signiﬁcant Programme Developments,
Restructuring and Related Financial
Consequences in 2014, 2015 and 2016

A380 programme. In 2014, Airbus Commercial Aircraft
provided for costs related to in-service technical issues identiﬁed
and with solutions deﬁned, which reﬂected the latest facts andcircumstances at the time.
In 2015, Airbus Commercial Aircraft improved gross margin
per aircraft. Despite lower A380 deliveries (27 aircraft in 2015
compared to 30 aircraft in 2014), the programme achieved
breakeven for the ﬁrst time in 2015.
In 2016, Airbus Commercial Aircraft found an agreement with
Emirates and Rolls Royce to shift six deliveries from 2017 into
2018 and from 2018 into 2019, which secures the delivery proﬁleinto 2019. 12 aircraft remains the 2018 target for deliveries. Fixedcost reduction measures will be accelerated to minimise theimpact on breakeven at a lower level of deliveries.
A350 XWB programme. In 2014, the A350 XWB received
Type Certiﬁcation and entry-into-service occurred at the endof 2014, with the ﬁ rst A350 XWB being delivered to Qatar
Airways on 22 December in line with commitments. In 2014,
Airbus Commercial Aircraft applied prospectively construction
contract accounting for launch customer contracts in the civil
aircraft business where customers signiﬁ cantly inﬂ uenced
the structural design and technology of the aircraft under thecontract. Considering certain airline customers’ involvementin the development and production process of the A350 XWB
programme, Airbus Commercial Aircraft applied IAS 11
Construction Contracts accounting to a ﬁxed number of launchcustomer contracts of the A350 XWB programme. For all othercontracts, IAS 18 is applied.

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In 2015, Airbus Commercial Aircraft delivered 14 additional
aircraft. Despite the progress made, signiﬁ cant challenges
remained with the ramp-up acceleration.
In 2016, Airbus Commercial Aircraft delivered 49 A350 XWB
aircraft, including to 7 new customers. To reﬂect expected lower
revenues escalation, increased learning curve costs and delivery
phasing, Airbus Commercial Aircraft recorded a net chargeof € 385 million on A350 XWB loss making contracts in thesecond quarter 2016. The industrial ramp-up is progressing andassociated risks continue to be closely monitored in line withthe schedule, aircraft performance and overall cost envelope,as per customer’s commitment. Despite the progress made,challenges remain with the ramp-up acceleration and recurringcosts convergence.
A400M programme. Technical progress on the A400M
programme resulted in the recognition of A400M-related
revenues of € 1.6 billion in 2014, € 1.6 billion in 2015 and€ 1.7 billion in 2016.
There were eight aircraft deliveries in 2014 – four to France,
two to Turkey and one each to Germany and to the UK. In thelast quarter of 2014, management reviewed the programmeevolution mostly driven by military functionality challenges
and industrial ramp-up together with associated mitigation
actions and recorded based on management best estimate
an additional net charge of € 551 million for the period ended
31 December 2014.
An additional 11 A400M aircraft were delivered in 2015, resulting
in 21 cumulative deliveries up to 31 December 2015.
Management reviewed the programme evolution and estimatedcontract result driven to a large extent from the implicationsof the A400M accident in Seville in May 2015, as well as theimpact of low inﬂation on the price revision formulae, delays inmilitary functionality and deliveries, commercial negotiations,cost reduction targets and challenges in the industrial ramp-up,
together with associated mitigation actions. As a result of thisreview, Airbus Defence and Space recorded an additional net
charge of € 290 million in the second quarter of 2015. The
detailed review continued in the second half of 2015 however
no further net charges were deemed necessary.
17 A400M aircraft were delivered during 2016. Acceptanceactivities of one additional aircraft were ﬁnalised at the end of
December 2016, but transfer of title only took place on 1 January
2017 (corresponding revenues will be recognised in 2017). In
total, 38 aircraft have now been delivered to the customer asof 31 December 2016.
Industrial efﬁciency and military capabilities remain 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 have 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 remains 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 ﬁnallysome 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 has recorded
a charge of € 2,210 million in 2016 (thereof € 1,026 million in
the first half-year 2016). This represents the current best
management assessment. Challenges remain on meeting
contractual capabilities, securing sufﬁcient export orders intime, cost reduction and commercial exposure, which could
be signiﬁcant. Given the order of magnitude on the cumulative
programme loss, the Board of Directors has mandated the
management to re-engage with customers to cap the remaining
exposure.
The A400M contractual SOC 1, SOC 1.5 and SOC 2 milestones
remain to be achieved. SOC 1 fell due end October 2013,
SOC 1.5 fell due end December 2014, and SOC 2 end of
December 2015. 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 unlikely that any of these termination rights will be
exercised.
A320 programme. Joint European and US certiﬁcation for the
A320neo was received in the fourth quarter of 2015 with theﬁrst delivery following in January 2016. Despite some schedule
set-backs, the A320neo ramp-up preparation got underway withthe focus on maturity and service-readiness for early operations
in line with customer expectations.
In 2016, 68 aircraft on the A320neo programme were delivered
to 17 customers. Both engine suppliers are committed to deliverin line with customer expectations. Challenges remain with the
A320neo ramp-up and delivery proﬁle, which is expected to be
back-loaded in 2017. For the Pratt & Whitney engine, challenges
are to (i) meet the delivery commitments in line with agreed
schedule; (ii) ﬁx in-service maturity issues in line with Airbus
and customer expectations.

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A330 programme. In 2016, the A330neo development was
ongoing. The ﬁrst delivery is scheduled for the ﬁrst half of 2018.

UK and Spain has been communicated to the employees andthe European Works Council in November 2016.

Airbus makes estimates and provides, across the programmes,for costs related to in-service technical issues which havebeen identiﬁ ed and for which solutions have been deﬁ ned,
which reﬂ ects the latest facts and circumstances. Airbus iscontractually liable for the repair or replacement of the defective
parts but not for any other damages whether direct, indirect,
incidental or consequential (including loss of revenue, proﬁt
or use). However, in view of overall commercial relationships,
contract adjustments may occur, and be considered on acase by case basis.

In Airbus Helicopters, the business has been reassessed in 2016leading to a restructuring provision of € 42 million.

2.1.1.4

Restructuring provisions. In 2016, a net € 182 million
provision related to restructuring measures was booked by
Airbus.

Airbus expects the world economy and air trafﬁc to grow inline with prevailing independent forecasts, which assume no
major disruptions.

Following the announcement in September 2016 of the merger of
the Group structure with its largest Division Airbus Commercial
Aircraft to increase future competitiveness, a restructuringprovision of € 160 million has been recorded at year-end 2016.
Accordingly, a plan including temporary contract termination,
non-replacement of attrition, redeployment, partial and early
retirement as well as voluntary leaves in Germany, France, theAirbus’ 2017 earnings and Free Cash Flow guidance is basedon a constant perimeter: in 2017, Airbus Commercial Aircraft
expects to deliver more than 700 commercial aircraft. Before
M&A, Airbus expects mid-single-digit percentage growth in
EBIT Adjusted and EPS Adjusted compared to 2016. Free Cash
Flow is expected to be similar to 2016 before M&A and customer
ﬁnancing.

2.1.2

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 2: Signiﬁcant Accounting Policies”
and “Note 6: Acquisitions and Disposals”.

2.1.2.2

Current Trends

Signiﬁcant Accounting Considerations, Policies and Estimates

Airbus’ signiﬁ cant accounting considerations, policies andestimates are described in the Notes to the Consolidated
Financial Statements.

2.1.2.1

In 2013, a provision of € 292 million was booked related to therestructuring of the Airbus Defence and Space Division and
Headquarters. After reassessing and adjusting the provision,
releases were made of € 41 million in 2015 and € 20 million in2016, respectively.

Capitalised Development Costs

Pursuant to the application of IAS 38 “Intangible Assets”, Airbus
assesses whether product-related development costs qualify
for capitalisation as internally generated intangible assets.
Criteria for capitalisation are strictly applied. All research anddevelopment costs not meeting the IAS 38 criteria are expensed
as incurred in the consolidated income statement. Please referto the “Notes to the IFRS Consolidated Financial Statements —Note 2: Significant A ccounting Policies — Research andDevelopment E xpenses and Development Costs” and “Note 17:
Intangible Assets”.

2.1.2.3

Accounting for Hedged Foreign
Exchange Transactions in the Financial
Statements

At least 70% of Airbus’ revenues are denominated in US dollars,
whereas a major portion of its costs is incurred in euros and,to a smaller extent, in pounds sterling. Airbus uses hedging
strategies to manage and minimise the impact of exchange rate
ﬂuctuations on its proﬁts, including foreign currency derivative
contracts, interest rate and equity swaps and other nonderivative ﬁnancial assets or liabilities denominated in a foreign
currency. For further information, please refer to “2.1.7 Hedging
Activities”, “Risk Factors — 1. Financial Market Risks — Foreign
Currency Exposure” and to the “Notes to the IFRS Consolidated
Financial Statements — Note 2: Signiﬁcant Accounting Policies”
and “Note 35: Information about Financial Instruments”.

2.1.2.4

Foreign Currency Translation

For information on transactions in currencies other than thefunctional currency of Airbus and translation differences forother assets and liabilities of Airbus denominated in foreign
currencies, please refer to the “Notes to the IFRS Consolidated
Financial Statements — Note 2: Signiﬁcant Accounting Policies— Transactions in Foreign Currency”.

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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

2.1.3

Performance Measures

2.1.3.1

Divisions

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 Airbus, see “2.1.6.4 Sales Financing”.

2.1.2.6

Provisions for Loss Making Contracts

Loss making contract provisions are reviewed and reassessed
regularly. However, future changes in the assumptions used by
Airbus or a change in the underlying circumstances may lead toa revaluation of past loss making contract provisions and havea corresponding positive or negative effect on the Company’s
future ﬁnancial performance. Please refer to the “Notes to the
IFRS Consolidated Financial Statements — Note 2: SigniﬁcantAccounting Policies — Provision for Loss Making Contracts”
and “Note 22: Provisions, Contingent Assets and Contingent
Liabilities”.

Airbus will no longer measure and communicate its performance on the basis of EBIT (i.e. EBIT pre-goodwill impairment andexceptionals) but on the basis of EBIT as the difference between the two KPIs, the so called “pre-goodwill and exceptionals”,
has become less relevant. EBIT (Earnings before interest and taxes) is identical to Proﬁt before ﬁnance cost and income taxes
as deﬁned by IFRS Rules.

Airbus Commercial Aircraft
Set forth below is a summary of the measures for the activities of Airbus Commercial Aircraft for the past three years.
(in €m)Order Intake (net)Year ended
31 December 2016

Year ended
31 December 2015

Year ended
31 December 2014

114,938

139,062150,085

Order Book

1,010,200

952,450803,633

Revenues

49,23745,85442,280

EBIT

1,543

2,287

2,646

in % of revenues

3.1%

5.0%

6.3%

Airbus Helicopters
Set forth below is a summary of the measures for the activities of Airbus Helicopters for the past three years.
(in €m)Year ended
31 December 2016

Year ended
31 December 2015

Year ended
31 December 2014

Order Intake (net)

6,057

6,168

5,469

Order Book

11,26911,76912,227

Revenues

6,652

6,786

6,524

EBIT

308

427

413

in % of revenues

4.6%

6.3%

6.3%

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Airbus Defence and SpaceSet forth below is a summary of the measures for the activities of Airbus Defence and Space for the past three years.
Year ended
31 December 2016(in €m)Year ended
31 December 2015

Year ended
31 December 2014

Order Intake (net)15,393

14,44012,225

Order Book

41,49942,861

43,075

Revenues

11,85413,08013,025EBIT
in % of revenues

2.1.3.2

(93)

736

387

(0.8)%

5.6%

3.0%

Order Backlog

Year-end order backlog consists of contracts signed up tothat date. Only ﬁrm orders are included in calculating orderbacklog – for commercial aircraft, a ﬁrm order is deﬁned as
one for which Airbus receives a down payment on a deﬁnitive
contract. Defence-related orders are included in the backlog
upon signature of the related procurement contract (and thereceipt, in most cases, of an advance payment). Commitments
under defence “umbrella” or “framework” agreements bygovernmental customers are not included in backlog until
Airbus is ofﬁcially notiﬁed.

For commercial aircraft contracts, amounts of order backlog
reﬂected in the table below are derived 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 theperiod-end spot rate for the non-hedged portion of expectedcash ﬂows). The amount of defence-related order backlog isequal to the contract values of the corresponding programmes.

CONSOLIDATED BACKLOG FOR THE YEARS ENDED 31 DECEMBER 2016, 2015 AND 2014(1)Year ended 31 December 2016

Year ended 31 December 2015

Year ended 31 December 2014

Amount in €bn

In percentage(2)Amount in €bn

In percentage(2)Amount in €bn

In percentage(2)Airbus Commercial
Aircraft(3)1,010.2

95.0%

952.4

94.6%

803.6

93.6%

Airbus Helicopters

11.3

1.1%

11.8

1.2%

12.2

1.4%

Airbus Defence and Space

41.5

3.9%

42.9

4.2%

43.1

5.0%

Total Divisional backlog

1,063.0100%

1,007.1

100%

858.9

100%

Other / HQ / Consolidation

(2.6)

(1.2)

(1.4)

1,060.4

1,005.9

857.5

Total

(1) Without options.
(2) Before “Other / HQ / Consolidation”.
(3) Based on catalogue prices for commercial aircraft activities.

2016 compared to 2015. The € 54.5 billion increase in theorder backlog from 2015, to € 1,060.4 billion, primarily reﬂects
Airbus’ order intake in 2016 (€ 134 billion catalogue price),
which exceeded the reduction of the backlog from 2016deliveries. Additionally, the stronger US dollar spot rate used
for conversion of the non-hedged portion of the backlog into
euro at year-end (€ -US$ 1.05 as compared to € -US$ 1.09 at
the end of 2015) had a positive impact on order backlog ofapproximately € +31 billion.
Airbus Commercial Aircraft’s backlog increased by € 57.8 billion
from 2015, to € 1,010.2 billion in 2016, primarily reﬂecting abook-to-bill ratio of more than one (calculated using units of
new net orders). Order intake consisted of 731 net orders in2016 (as compared to 1,080 in 2015), driven mainly by the A320
family, which received 607 net ﬁrm orders (561 A320neo and
46 A320ceo). Total order backlog at Airbus Commercial Aircraft

amounted to 6,874 aircraft at the end of 2016 (as compared to
6,831 aircraft at the end of 2015).
Airbus Helicopters’ backlog decreased by € -0.5 billion from2015, to € 11.3 billion in 2016, reﬂecting a book-to-bill ratio of lessthan one with new net orders of € 6.1 billion. Airbus Helicopters
received 353 net orders in 2016 (as compared to 333 in 2015).
Total order backlog amounted to 766 helicopters at the endof 2016 (as compared to 831 helicopters at the end of 2015).
Airbus Defence and Space’s backlog decreased by € -1.4 billion
from 2015, to € 41.5 billion in 2016, reﬂecting a book-to-bill ratioof more than one with new net orders of € 15.4 billion. The
order intake is mainly driven by Military aircraft with 16 light andmedium aircraft ordered by Canada and Euroﬁghter sustainmentand support contracts as well as in Space with telecom andearth navigation and science.

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2015 compared to 2014. The € 148.4 billion increase in theorder backlog from 2014, to € 1,005.9 billion, primarily reﬂects
Airbus’ strong order intake in 2015 (€ 159 billion catalogue price),
which signiﬁcantly exceeded the revenues accounted for in thesame year (€ 64.5 billion). Additionally, the stronger US dollar
spot rate used for conversion of the non-hedged portion of
the backlog into euro at year-end (€ -US$ 1.09 as compared to€ -US$ 1.21 at the end of 2014) had a positive impact on orderbacklog of approximately € +56 billion.
Airbus Commercial Aircraft’s backlog increased by € 148.8 billion
from 2014, to € 952.4 billion, primarily reﬂ ecting a book-tobill ratio of more than one (calculated using units of new net
orders). Order intake consisted of 1,080 net orders in 2015(as compared to 1,456 in 2014), driven mainly by the A320
family, which received 945 net ﬁrm orders (887 A320neo and58 A320ceo). Total order backlog at Airbus Commercial Aircraft

amounted to 6,831 aircraft at the end of 2015 (as compared to6,386 aircraft at the end of 2014).
Airbus Helicopters’ backlog decreased by € -0.4 billion from2014, to € 11.8 billion, reﬂecting a book-to-bill ratio of less than
one with new net orders of € 6.2 billion. After 50 governmental
helicopter cancellations, Airbus Helicopters received 333 netorders in 2015 (as compared to 369 in 2014). Total order backlog
amounted to 831 helicopters at the end of 2015 (as compared
to 893 helicopters at the end of 2014).
Airbus Defence and Space’s backlog was broadly stable at€ 42.9 billion in 2015 including a book-to-bill ratio of more than
one with new net orders of € 14.4 billion. The order intake includes
14 additional orders on A330 MRTT and 5 telecommunications
satellites. During the year, an agreement was also signed with
OneWeb for 900 small telecommunications satellites.

The table below illustrates the proportion of civil and defence backlog at the end of each of the past three years.
Year ended 31 December 2016

Year ended 31 December 2015

Year ended 31 December 2014

Amount in €bn(1)In percentage

Amount in €bn(1)In percentage

Amount in €bn(1)In percentage

1,020.6

96%

967.5

96%

815.3

95%

39.8

4%

38.4

4%

42.2

5%

1,060.4

100%

1,005.9

100%

857.5

100%

Backlog:
Civil Sector
Defence Sector

Total(1) Including “Other / HQ / Consolidation”.

2.1.3.3

Use of EBIT Adjusted

Airbus uses an alternative performance measure EBIT Adjusted as a key indicator capturing the underlying business margin by
excluding material charges or proﬁts caused by movements in provisions related to programmes, restructurings or foreign exchange
impacts as well as capital gains/losses from the disposal and acquisition of businesses.
Set forth below is a table reconciling Airbus’ EBIT with its EBIT Adjusted.
Year ended
31 December 2016

Year ended
31 December 2015

Year ended
31 December 2014

2,258

4,062

3,991

930

635

(142)

2,210

290

551

385

0

0

(1,175)0

0

Portfolio in Airbus Defence and Spaceand Airbus Commercial Aircraft

33

(90)

(40)

Restructuring / Transformation

182

(41)

0

Dassault Aviation disposal

(868)

(748)

(343)

EBIT Adjusted

3,955

4,108

4,017

(in €m)

EBIT
PDP mismatch / BS revaluation
A400M business update
A350 XWB business update
ASL creation phase 2

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2.1.3.4

EBIT Adjusted by Division
Year ended
31 December 2016

Year ended
31 December 2015

Year ended
31 December 2014

Airbus Commercial Aircraft

2,811

2,766

2,504

Airbus Helicopters

350

427

413

Airbus Defence and Space

1,002

1,051

898

Total Divisional EBIT Adjusted

4,163

4, 244

3,815

Other / HQ / Consolidation

(208)

(136)

202

Total

3,955

4,108

4,017

Year ended
31 December 2016

Year ended
31 December 2015

Year ended
31 December 2014
2,646

(in €m)2.1.3.5

EBIT by Division(in €m)Airbus Commercial Aircraft

1,543

2,287

Airbus Helicopters

308

427

413

Airbus Defence and Space

(93)

736

387

Total Divisional EBIT

1,758

3,450

3,446

Other / HQ / Consolidation

500(2)

612(1)

545(1)

Total

2,258

4,062

3,991

(1) “Other / HQ / Consolidation” comprises results from headquarters, which mainly consist of the “share of profit from investments in associates” from Airbus’ investment in
Dassault Aviation.
(2) “Other / HQ / Consolidation” comprises the capital gain from the sale of Dassault Aviation shares and the revaluation at fair value of the remaining investment in Dassault Aviation.

2016 compared to 2015. 2016 ﬁnancials reﬂect the portfolio
reshaping in Airbus Defence and Space resulting in reduction
in revenues of about € 1 billion and related EBIT impact.
Airbus’ consolidated EBIT decreased by 44.4%, from € 4.1 billion
for 2015 to € 2.3 billion for 2016.Airbus Commercial Aircraft’s
EBIT decreased from € 2.3 billion for 2015 to € 1.5 billion for2016. A solid operational performance driven by a higher
A320 volume and R&D reduction was weighed down by thelower A330 production rate, transition pricing, ramp-up costs
and a negative revaluation impact from foreign exchange
linked to the dollar pre-delivery mismatch and balance sheet
revaluation in the amount of € -902 million. Additionally, it
was affected by a € 385 million net charge on the A350 XWB
programme. (See “2.1.1.3 Signiﬁcant Programme Developments,
Restructuring and Related Financial Consequences in 2014,2015 and 2016”).
Airbus Helicopters’ EBIT decreased from € 427 million for2015 to € 308 million for 2016, reflecting an unfavourable
mix and lower commercial ﬂight hours in services as well as
the H225 accident and some campaign costs. However, theunderlying performance continues to be supported by ongoingtransformation measures and strong efforts to adapt to market
challenges.
Airbus Defence and Space’s EBIT decreased from € 736 million
for 2015 to € -93 million for 2016. A good operational performance
partially mitigated the perimeter change effects from portfolio
reshaping. In addition, a net charge of € 2,210 million wasrecorded related to the A400M programme for the period
ended 31 December 2016 (€ 290 million for the period ended
31 December 2015). Airbus Defence and Space’s EBIT in 2016
also included a net gain of € 1,175 million from the completionof the second phase of the creation of the ASL joint venture,
an adjustment of the provision for restructuring generating a
positive impact of € 20 million and some further small disposal
impacts. (See “2.1.1.3 Signiﬁcant Programme Developments,
Restructuring and Related Financial Consequences in 2014,2015 and 2016”).
The EBIT of Other / Headquarters / Consolidation decreased
by 18.3% from € 612 million for 2015 to € 500 million for 2016.
2016 includes the capital gain from the sale of Dassault
Aviation shares and the revaluation at fair value of the remaining
investment in Dassault Aviation from ongoing divestment
started in 2015. It also includes the restructuring provisionsfor € 160 million recorded at year-end 2016 following theannouncement in September 2016 of the merger of the Groupstructure with its largest Division Airbus Commercial Aircraft
to increase future competitiveness. (See “2.1.1.3 Signiﬁ cantProgramme Developments, Restructuring and Related Financial
Consequences in 2014, 2015 and 2016”).
2015 compared to 2014. 2015 ﬁnancials reﬂect the portfolio
reshaping in Airbus Defence and Space resulting in reduction
in revenues of about € 0.5 billion and related EBIT impact.
Airbus’ consolidated EBIT increased by 1.8%, from € 4.0 billion
for 2014 to € 4.1 billion for 2015.

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Airbus Commercial Aircraft’s EBIT decreased by 13.6%, from€ 2.6 billion for 2014 to € 2.3 billion for 2015. A solid operational
performance including the A380 breakeven was weighed down
by a negative revaluation impact from foreign exchange linked tothe dollar pre-delivery mismatch in the amount of € 551 million,
partially compensated by a capital gain linked to the divestmentof a subsidiary (CIMPA SAS) (€ 72 million).
Airbus Helicopters’ EBIT increased by 3.4%, from € 413 million
for 2014 to € 427 million for 2015 as lower deliveries werecompensated by higher services activities, a favourable mix
and progress on the Division’s transformation plan.
Airbus Defence and Space’s EBIT increased by 90.2% from€ 387 million for 2014 to € 736 million for 2015 driven by strong
programme execution across the business lines and progresswith its transformation plan. In addition, a net charge of€ 290 million was recorded related to the A400M programme forthe period ended 31 December 2015 (€ 551 million for the period
ended 31 December 2014). Airbus Defence and Space’s EBIT
also included an adjustment of its provision for restructuring
generating a positive impact of € 41 million and a net gain fromthe ASL ﬁrst phase deconsolidation and some further small
disposal impacts.
The EBIT of Other / Headquarters / Consolidation increasedby 12.3% from € 545 million for 2014 to € 612 million for 2015.
This was due to the increase in the Dassault Aviation result
driven mainly by the higher capital gain from ongoing divestmentcompared to 2014. 2014 also included the gain from the saleof the Paris Headquarters building.
Foreign currency impact on EBIT . At least 70% of Airbus’
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 long-term nature of its businesscycles (evidenced by its multi-year backlog), Airbus 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 “Risk Factors — 1. Financial Market Risks — Foreign
Currency Exposure”. In addition to the impact that Hedging
Activities have on Airbus’ 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.
During 2016, cash flow hedges covering approximately
US$ 23.5 billion of Airbus’ US dollar-denominated revenues
matured excluding US$ 1.5 billion of new hedges entered into
to address intra-year shifts in Net Exposure linked to delivery
phasing. In 2016, the compounded exchange rate at which
hedged US dollar-denominated revenues were accounted forwas € -US$ 1.32, as compared to € -US$ 1.34 in 2015. Thisdifference resulted in an approximate € +0.18 billion increasein EBIT from 2015 to 2016. In addition, other currency translation
adjustments, including those related to the mismatch between
US dollar-denominated customer advances and corresponding
US dollar-denominated costs as well as the revaluation of loss
making contract provisions, had an approximate negative effectof € -0.30 billion on EBIT compared to 2015. See “2.1.2.4 Foreign
Currency Translation”.
During 2015, cash flow hedges covering approximately
US$ 25.5 billion of Airbus’ US dollar-denominated revenues
matured. In 2015, the compounded exchange rate at which
hedged US dollar-denominated revenues were accounted forwas € -US$ 1.34, as compared to € -US$ 1.35 in 2014. Thisdifference resulted in an approximate € +0.05 billion increasein EBIT from 2014 to 2015. In addition, other currency translation
adjustments, including those related to the mismatch between
US dollar-denominated customer advances and corresponding
US dollar-denominated costs as well as the revaluation of loss
making contract provisions, had an approximate negative effectof € -0.78 billion on EBIT compared to 2014.

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2.1.4

Results of Operations

Set forth below is a summary of Airbus’ Consolidated Income Statements (IFRS) for the past three years.
Year ended
31 December 2016

Year ended
31 December 2015

Year ended
31 December 2014

Revenues

66,58164,45060,713

Cost of sales(61,317)(55,599)(51,776)

Gross margin

5,264

8,851

8,937

Selling and administrative expenses(2,723)(2,651)(2,601)

Research and development expenses(2,970)(3,460)(3,391)Other income

2,689

474

330

Other expenses

(254)

(222)

(179)

(in €m, except for earnings per share)

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

252

1,070

895

2,258

4,062

3,991

Interest result

(275)

(368)

(320)

Other financial result

(692)

(319)

(458)

Income taxes

(291)

(677)

(863)

Profit for the period

1,000

2,698

2,350

995

2,696

2,343

5

2

7

Earnings per share (basic) (in €)

1.29

3.43

2.99

Earnings per share (diluted) (in €)

1.29

3.42

2.99

Profit before finance costs and income taxes

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

Set forth below are year-to-year comparisons of results of operations, based upon Airbus’ Consolidated Income Statements.

2.1.4.1

Consolidated Revenues

Set forth below is a breakdown of Airbus’ consolidated revenues by Division for the past three years.
Year ended
31 December 2016

Year ended
31 December 2015

Year ended
31 December 2014

Airbus Commercial Aircraft

49,23745,85442,280Airbus Helicopters

6,652

6,786

6,524

Airbus Defence and Space

11,85413,08013,025

Total Divisional revenues

67,74365,72061,829Other / HQ / Consolidation(1,162)(1,270)(1,116)

Total

66,58164,45060,713(in €m)For 2016, consolidated revenues increased by 3.3%, from € 64.5 billion for 2015 to € 66.6 billion for 2016. The increase wasprimarily due to higher revenues at Airbus Commercial Aircraft.
For 2015, consolidated revenues increased by 6.2%, from € 60.7 billion for 2014 to € 64.5 billion for 2015. The increase wasprimarily due to higher revenues at Airbus Commercial Aircraft.

Airbus Commercial Aircraft
Set forth below is a breakdown of deliveries of commercial aircraft by product type for the past three years.
Year ended
31 December 2016

Year ended
31 December 2015

Year ended
31 December 2014

A320 family

545

491

490

A330

66

103

108

A350 XWB

49

14

1

A380

28

27

30

Total

688

635

629

Number of aircraft

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Airbus Commercial Aircraft’s consolidated revenues increasedby 7.4%, from € 45.9 billion for 2015 to € 49.2 billion for 2016.
This was due to higher deliveries of 688 aircraft (compared
to 635 deliveries in 2015) including 49 A350 XWBs and thestrengthening US dollar.

Airbus Commercial Aircraft’s consolidated revenues increasedby 8.5%, from € 42.3 billion for 2014 to € 45.9 billion for 2015.
This was due to higher deliveries of 635 aircraft (comparedto 629 deliveries in 2014) including 14 A350 XWBs and thestrengthening US dollar.

Airbus Helicopters
Set forth below is a breakdown of deliveries of helicopters by product type for the past three years.
Year ended
31 December 2016

Year ended
31 December 2015

Year ended
31 December 2014

Light

177

178

226

Medium

165

124

132

Heavy

57

77

101

of which NH90

38

35

53

Tiger

19

16

12

Total

418

395

471

Number of aircraft

Consolidated revenues of Airbus Helicopters decreased by
2.0%, from € 6.8 billion for 2015 to € 6.7 billion in 2016, mainly
reﬂecting an unfavourable mix and lower commercial ﬂight hours
in services.

Consolidated revenues of Airbus Helicopters increased by
4.0%, from € 6.5 billion for 2014 to € 6.8 billion in 2015 mainly
reﬂ ecting a higher level of services activities, despite lower
overall deliveries of 395 units (2014: 471 units).

Airbus Defence and SpaceSet forth below is a breakdown of deliveries of Airbus Defence and Space by product type for the past three years.
Year ended
31 December 2016

Year ended
31 December 2015

Year ended
31 December 2014

A400M

17

11

8

A330 MRTT (Tanker)

2

4

5

Light & Medium aircraft

14

19

19

Number of aircraft

Telecom satellites

1

5

5

Total

34

39

37

Airbus Defence and Space’s consolidated revenues decreased
by 9.4% from € 13.1 billion for 2015 to € 11.9 billion in 2016,
reﬂecting a negative impact from portfolio reshaping of about€ 1 billion but were broadly stable on a comparable basis.
Airbus Defence and Space’s consolidated revenues werebroadly stable at € 13.1 billion (€ 13.0 billion for 2014), despite
the de-consolidation of launcher revenues with the creation of
the ASL joint venture’s ﬁrst phase.

2.1.4.2

Consolidated Cost of Sales

Consolidated cost of sales increased by 10.3% from € 55.6 billion
for 2015 to € 61.3 billion for 2016. The increase was primarily due
to business growth at Airbus Commercial Aircraft and negative
foreign exchange revaluation impacts from PDP/BS revaluation.

The charge related to the A400M programme in the amountof € 2,210 million (in 2015: € 290 million) and to the A350 XWB
programme in the amount of € 385 million (in 2015: € 0 million).
Consolidated cost of sales increased by 7.4% from € 51.8 billion
for 2014 to € 55.6 billion for 2015. The increase was primarily
due to business growth at Airbus Commercial Aircraft andnegative foreign exchange revaluation impacts from pre-delivery
payments. This was partly offset by a lower net charge related
to the A400M programme of € 290 million (in 2014: € 551 million).
Consolidated cost of sales also includes the amortisation ofcapitalised development costs pursuant to IAS 38, whichamounted to € -202 million in 2015 compared to € -137 million
in 2014. The gross margin decreased from 14.7% in 2014 to
13.7% in 2015.

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2.1.4.3

Consolidated Selling and Administrative
Expenses

Consolidated selling and administrative expenses were broadly
stable at € 2.7 billion in 2016 and 2015.
Consolidated selling and administrative expenses increased by
1.9%, from € 2.6 billion for 2014 to € 2.7 billion for 2015.

2.1.4.4

Consolidated Researchand Development Expenses

Consolidated research and development expenses decreasedby 14.2%, from € 3.5 billion for 2015 to € 3.0 billion for 2016
primarily reﬂecting a reduction of R&D activities on the A350 XWB
programme at Airbus Commercial Aircraft as committed. In
addition, an amount of € 311 million of development costs has
been capitalised, mainly related to the A350-1000, FSTA andH160 programmes. See “2.1.2.2 Capitalised development
costs”.
Consolidated research and development expenses increasedby 2.0%, from € 3.4 billion for 2014 to € 3.5 billion for 2015.
The main contribution to the expenses comes from theA350 XWB programme. In addition, an amount of € 154 million
of development costs was capitalised, mainly related to the
H160 and single-aisle NEO programmes.

2.1.4.5

Consolidated Other Income
and Other Expenses

Consolidated other income and other expenses include gains
and losses on disposals of investments, of ﬁxed assets andincome from rental properties.
For 2016, other income and other expenses was € +2,435 million
net as compared to € +252 million net for 2015. The net increaseis due mainly to the capital gain of € 1,175 million following thecompletion of the creation of the ASL joint venture, the capitalgain from the sale of Dassault Aviation shares of € 528 million
and the revaluation at fair value of the remaining investment
in Dassault Aviation of € 340 million and the capital gain of€ 146 million on the disposal of the business communications
entities.
For 2015, other income and other expenses was € +252 million
net as compared to € +151 million net for 2014. The net increase
was due to the capital gain of € 72 million related to the disposalof Cimpa SAS, the net gain of € 51 million from the partial saleof Dassault Aviation held for sale shares that occurred in thesecond quarter and the capital gain of € 49 million following thecompletion of the ﬁrst phase of the creation of ASL. This waspartly offset due to costs associated with disposals in Airbus
Defence and Space.

For 2014, other income and other expenses was € +151 million
net as compared to € +13 million net for 2013. The net increase
was partly due to the sale of the Paris Headquarters building.

2.1.4.6

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

Consolidated share of proﬁt from investments accounted forunder the equity method and other income from investments
principally includes results from companies accounted forunder the equity method and the results attributable to nonconsolidated investments.
For 2016, Airbus recorded € 252 million in consolidated shareof proﬁ t from investments accounted for under the equity
method and other income from investments as compared to€ 1,070 million for 2015. It also includes Airbus’ share in ASL’s
results. In 2015, it included the net gain from the partial saleof Dassault Aviation shares. 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 Investment Accounted for Under the Equity Method
and Other Income from Investment”.
For 2015, Airbus recorded € 1,070 million in consolidated shareof proﬁ t from investments accounted for under the equity
method and other income from investments as compared to€ 895 million for 2014. The € 175 million increase was mainly due
to higher results from joint ventures. The consolidated share of
proﬁt from investments accounted for under the equity method
included a € 748 million net gain from the sale of 18.75% stakein Dassault Aviation in the ﬁrst half of 2015.

2.1.4.7

Consolidated Interest Result

Consolidated interest result reﬂects the net of interest income
and expense arising from ﬁnancial assets and liabilities, includinginterest expense on refundable advances provided by European
governments to ﬁnance R&D activities.
For 2016, Airbus recorded a consolidated net interest expenseof € -275 million, as compared to € -368 million for 2015. The
improvement in interest result is primarily due to lower interest
expense recorded on European government refundable
advances.
For 2015, Airbus recorded a consolidated net interest expenseof € -368 million, as compared to € -320 million for 2014. The
deterioration in interest result was primarily due to higher
interest expense recorded on European government refundable
advances.

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2.1.4.8

Consolidated Other Financial Result

This line item includes, among others, the impact from therevaluation of ﬁnancial instruments, the effect of foreign exchange
valuation of 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 Finance Costs”.
Consolidated other ﬁnancial result decreased from € -319 million
for 2015 to € -692 million for 2016 reﬂecting a € -373 million
negative change from revaluation of financial instruments
together with a deterioration of the foreign exchange translationof monetary items.
Consolidated other ﬁnancial result improved from € -458 million
for 2014 to € -319 million for 2015 reﬂ ecting a € 139 million
positive change mainly from a decrease in the negative impactof revaluation of ﬁnancial instruments.

2.1.4.9

Consolidated Income Taxes

For 2016, income tax expense was € -291 million as comparedto € -677 million for 2015. The decrease was primarily due tothe lower income before tax recorded in 2016 (€ 1,291 million)
as compared to 2015 (€ 3,375 million). The effective tax rate was
23% in 2016. The effective tax rate was affected by the sale ofshares of Dassault Aviation and the creation of ASL both subject
to speciﬁc tax treatment. These effects were partially offset byadditional income tax charges including the planned reductionof the income tax rate in France from 34.43% to 28.92% enacted
in December 2016. Please refer to the “Notes to the IFRS
Consolidated Financial Statements — Note 15: Income Tax”.
For 2015, income tax expense was € -677 million as comparedto € -863 million for 2014. The decrease was primarily due to thesale of shares of Dassault Aviation which has been taxed at a
reduced rate. The effective tax rate was 20% in 2015.

2.1.5

2.1.4.10 Consolidated Non-Controlling Interests
For 2016, consolidated proﬁt for the period attributable to noncontrolling interests was € 5 million, as compared to € 2 million
for 2015.

2.1.4.11 Consolidated Proﬁt for the Period
Attributable to Equity Ownersof the Parent (Net Income)As a result of the factors discussed above, Airbus recorded
consolidated net income of € 995 million for 2016, as comparedto € 2,696 million for 2015.

2.1.4.12 Earnings per Share
Basic earnings were € 1.29 per share in 2016, as compared to€ 3.43 per share in 2015. The number of issued shares as of
31 December 2016 was 772,912,869. The denominator used to
calculate earnings per share was 773,798,837 shares (in 2015:
785,621,099), reﬂecting the weighted average number of shares
outstanding during the year. In 2014, the Company reported
basic earnings of € 2.99 per share, based on a denominatorof 782,962,385 shares. For further details, please refer tothe “Notes to the IFRS Consolidated Financial Statements —Note 32: Total Equity” and “Note 16: Earnings per Share”.
Diluted earnings were € 1.29 per share in 2016, as comparedto € 3.42 per share in 2015. The denominator used to
calculate diluted earnings per share was 779,109,634 (in 2015:
788,491,929), reﬂecting the weighted average number of shares
outstanding during the year, adjusted to assume the conversionof all potential ordinary shares. In 2014, the Company reported
diluted earnings of € 2.99 per share, based on a denominatorof 784,155,749 shares.

Changes in Consolidated Total Equity (Including Non-Controlling Interests)

The following table sets forth a summary of the changes in consolidated total equity for the period 1 January 2016 through31 December 2016.
(in €m)Balance as at 31 December 2015

5,973

Profit for the period

1,000

Other comprehensive income(1,902)

Thereof foreign currency translation adjustments
Cash distribution to shareholders / dividends paid to non-controlling interests
Capital increase(171)(1,012)60

Equity transactions (IAS 27)

15

Change in treasury shares(513)

Share-based payment (IFRS 2)

31

Balance as at 31 December 2016

3,652

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Please refer to the “Airbus Group SE IFRS Consolidated Financial
Statements — IFRS Consolidated Statements of Changes in
Equity for the Years Ended 31 December 2016 and 2015” andto the “Notes to the IFRS Consolidated Financial Statements— Note 32: Total Equity”.

31 December 2015 compared to 31 December 2014, basedon a closing rate of € -US$ 1.09. For further information on themeasurement of the fair values of ﬁnancial instruments, pleaserefer to the “Notes to the IFRS Consolidated Financial Statements— Note 35: Information about Financial Instruments”.

Set forth below is a discussion on the calculation of accumulated
other comprehensive income (“AOCI”) and the related impact
on consolidated total equity.

Positive pre-tax mark to market values of cash ﬂow hedges areincluded in other ﬁnancial assets, while negative pre-tax mark tomarket values of cash ﬂow hedges are included in other ﬁnancial
liabilities. Year-to-year changes in the mark to market value ofeffective cash ﬂow hedges are recognised as adjustments to
AOCI. These adjustments to AOCI are net of corresponding
changes to deferred tax assets (for cash ﬂ ow hedges withnegative mark to market valuations) and deferred tax liabilities(for cash ﬂow hedges with positive mark to market valuations).
Set out below is a graphic presentation of cash ﬂow hedge
related movements in AOCI over the past three years (in €m).

2.1.5.1

Cash Flow Hedge Related Impact
on AOCI

As of 31 December 2016, the notional amount of Airbus’ portfolioof outstanding cash ﬂow hedges amounted to US$ 102.4 billion,
hedged against the euro and the pound sterling. The yearend mark to market valuation of this portfolio required under
IAS 39 resulted in a negative pre-tax AOCI valuation change of€ -0.3 billion as of 31 December 2016 compared to 31 December
2015, based on a closing rate of € -US$ 1.05 as compared toa negative pre-tax AOCI valuation change of € -4.7 billion as ofNote: The mark to market of the backlog is not reﬂected in theaccounts whereas the mark to market of the hedge book is
reﬂected in AOCI.

CASH FLOW HEDGE RELATED MOVEMENTS IN AOCI IN €M (BASED ON YEAR-END EXCHANGE RATES)-4,797
OCI Net Liability-9,525-9,8101,465

Net Deferred Taxes

2,612
2,616
-3,332Net Equity OCI-6,913-7,19431 December 2014: US$ 1.21

31 December 2015: US$ 1.09

31 December 2016: US$ 1.05

As a result of the negative change in the fair market valuation of the cash ﬂow hedge portfolio in 2016, AOCI amounted to a net
liability of € -9.8 billion for 2016, as compared to a net liability of € -9.5 billion for 2015. The corresponding € 0 billion tax effect led
to a net deferred tax asset of € 2.6 billion as of 31 December 2016 as compared to a net deferred tax asset of € 2.6 billion as of
31 December 2015.
For further information, please refer to the “Notes to the IFRS Consolidated Financial Statements — Note 35.5: Derivative Financial
Instruments and Hedge Accounting Disclosure”.

2.1.5.2

Currency Translation Adjustment Impact on AOCIThe € -171 million currency translation adjustment related impact on AOCI in 2016 mainly reﬂects the effect of the variations of
the pound sterling and the US dollar.

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2.1.6

Liquidity and Capital Resources

Airbus’ 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 access to capital
markets.

programme and commercial paper programme. Please refer
to “— 2.1.6.3 Consolidated Financing Liabilities” and “Notes tothe IFRS Consolidated Financial Statements — Note 34.3: Net
Cash — Financing Liabilities”. The factors affecting Airbus’ cash
position, and consequently its liquidity risk, are discussed below.

Airbus deﬁnes its consolidated net cash position as the sumof (i) cash and cash equivalents and (ii) securities, minus(iii) ﬁ nancing liabilities (all as recorded in the C onsolidated
S tatement of F inancial Position). Net cash position is analternative performance measure and an indicator that allows
the Company to measure its ability to generate sufficientliquidity to invest in its growth and future expansion, honour its
dividend policy and maintain ﬁnancial ﬂexibility. The net cash
position as of 31 December 2016 was € 11.1 billion (€ 10.0 billion
as of 31 December 2015 excluding the reassessment andreclassiﬁcation of investments made by Airbus Group SE in
certain securities and trade liabilities amounting to € -899 million).

For information on Airbus Group SE’s credit ratings, please referto the “Notes to the IFRS Consolidated Financial Statements —Note 33: Capital Management” and to “— 2.1.6.1: Cash Flows”.

The liquidity is further supported by a € 3.0 billion syndicatedback-up facility, undrawn as of 31 December 2016 with nofinancial covenants, as well as a euro medium term note

2.1.6.1

Cash Flows

Airbus generally finances its manufacturing activities andproduct development programmes, and in particular thedevelopment of new commercial aircraft, through a combinationof ﬂows generated by operating activities, customer advances,risk-sharing partnerships with sub-contractors and European
government refundable advances. In addition, Airbus’ militaryactivities benefit from government-financed research anddevelopment contracts. If necessary, the Company may raise
funds in the capital markets.

The following table sets forth the variation of Airbus’ consolidated net cash position over the periods indicated.
(in €m)

2016

2015

2014

Consolidated net cash position at 1 January

10,003

9,092

8,454

Gross cash flow from operations(1)

3,565

4,614

5,595

346

(723)

(2,386)

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

(252)

(150)

108

Cash used for investing activities(3)(730)(1,066)(1,207)(3,060)(2,924)(2,548)

3,181

2,825

2,002

Thereof M&A transactions

2,025

1,650

893

Free Cash Flow before M&A(5)

1,156

1,175

1,109

Thereof industrial capital expenditures
Free Cash Flow(4)Cash flow from customer financing (net)

(252)

(150)

108

Free Cash Flow before customer financing

3,433

2,975

1,894

Free Cash Flow before M&A and customer financing

1,408

1,325

1,001

Cash distribution to shareholders / non-controlling interests(1,012)

(948)

(589)

Contribution to plan assets of pension schemes

(290)

(217)

(462)

Changes in capital and non-controlling interests

60

195

52

(736)

(264)

102

Share buyback / Change in treasury shares
OthersConsolidated net cash position as of 31 December(6)

(93)

(680)

(467)

11,113

10,003

9,092(1) Represents cash provided by 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 (€ -187 million in 2014; € -74 million in 2015, € -151 million in 2016). It is an alternative performance measure
and an indicator used to measure its operating cash performance before changes in working capital.
(2) Excluding reclassification of certain trade liabilities.
(3) Does not reflect change of securities (net investment of € -2,016 million for 2014 and of € -2,361 million for 2015; net disposal of € 337 million for 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, contribution to plan assets of pension schemes and realised foreign exchange results on Treasury swaps and reclassification of certain
trade liabilities. 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 thatreflects Free Cash Flow excluding those cash flows from the disposal and acquisition of businesses.
(6) Excluding the reassessment and reclassification of investments made by Airbus Group SE in certain securities and trade liabilities amounting to € -899 million in 2015.

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The net cash position as of 31 December 2016 was € 11.1 billion,
a 11.1% increase from 31 December 2015. The increase primarily
reﬂ ects the gross cash ﬂ ow from operations (€ 3.6 billion),
partially offset by the cash distribution to shareholders / noncontrolling interests (€ -1.0 billion), the cash used for investing
activities (€ -0.7 billion) and the share buyback (€ -0.7 billion).

Gross Cash Flow from Operations
Gross cash ﬂow from operations is an alternative performancemeasure and an indicator used by Airbus to measure its operating
cash performance before changes in working capital. Gross
cash ﬂow from operations decreased by 22.7% to € 3.6 billion
for 2016, primarily a consequence of the lower A330 production
rate, transition pricing and ramp-up costs, partly mitigated byhigher A320 volume.

expenditures in 2016 related to programmes at Airbus
Commercial Aircraft of € -2.3 billion (mainly for the ramp-up
phase of A350 XWB and A320 family and for the A330 neo
development) and additional projects in the other Divisionsof € -0.8 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 2016, the € 2.0 billion ﬁgure principally
reﬂects the sale of Dassault Aviation shares and the ﬁnalisationof the creation of ASL in the ﬁrst half of 2016. Please refer to the“Notes to the IFRS Consolidated Financial Statements — Note 6:
Acquisitions and Disposals”.
In 2015, the € 1.7 billion ﬁgure principally reﬂects the sale ofDassault Aviation shares in the ﬁrst half of 2015.

Changes in Other Operating Assets and Liabilities

Free Cash Flow

Changes in other operating assets and liabilities is comprisedof inventories, trade receivables, other assets and prepaid
expenses netted against trade liabilities, other liabilities(including customer advances), deferred income and customer
ﬁnancing. They resulted in a € +0.3 billion positive impact on the
net cash position for 2016, as compared to a negative impactof € -0.7 billion for 2015.

Airbus 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 to plan assetsof pension schemes and (v) realised foreign exchange resultson treasury swaps. It is an alternative performance measureand key indicator that is important in order to measure theamount of cash ﬂow generated from operations after cash used
in investing activities. As a result of the factors discussed above,
Free Cash Flow amounted to € 3.2 billion for 2016 as comparedto € 2.8 billion for 2015 and € 2.0 billion for 2014. Free Cash
Flow before customer ﬁnancing was € 3.4 billion for 2016 ascompared to € 3.0 billion for 2015 and € 1.9 billion for 2014.

In 2016, the main net contributor to the positive working
capital variation was the pre-delivery payment from customers(€ 4.6 billion) and an increase in trade liabilities (€ 1.5 billion).
This was partly offset by the change in inventory (€ -3.5 billion)
reﬂecting increased work in progress mainly associated with
the A350 XWB at Airbus Commercial Aircraft and increased
activity on A400M at Airbus Defence and Space. Additionally,
trade receivables (€ -1.2 billion) and other assets and liabilities(€ -0.8 billion) contributed negatively.
European government refundable advances. As of
31 December 2016, total European government refundable
advances liabilities, recorded on the statement of ﬁ nancial
position in the line items “non-current other ﬁnancial liabilities”
and “current other ﬁnancial liabilities” due to their speciﬁc nature,amounted to € 7.1 billion, including accrued interest.
European government refundable advances (net ofreimbursements) decreased in 2016, due primarily to repayment
made under the A380 and the A350 XWB programmes. Pleaserefer to the “Notes to the IFRS Consolidated Financial Statements— 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.
Industrial capital expenditures. Industrial capital expenditures(investments in property, plant and equipment and intangible
assets) amounted to € -3.1 billion for 2016 as comparedto € -2.9 billion for 2015 and € -2.5 billion for 2014. CapitalFree 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.

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 Airbus in its ﬁnancial guidance, especially when there
is higher uncertainty around customer ﬁnancing activities, suchas during the suspension of ECA ﬁnancing support.

Change in Treasury Shares
Change in treasury shares for 2016 amounted to € -0.7 billion,
which is mostly related to the share buyback. In 2015, theCompany undertook a share buyback for a maximum amountof € 1 billion. The total cumulative amount of shares boughtback and cancelled in 2015 and 2016 under the programme
was 17,016,374 shares. The buyback programme took place

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between 2 November 2015 and 30 June 2016 and has been
completed. All shares purchased under the share buyback
programme have been cancelled. As of 31 December 2016,
the Company held 184,170 treasury shares.

Contribution to Plan Assets of Pension Schemes
The cash outﬂows of € -0.3 billion, € -0.2 billion and € -0.5 billion
in 2016, 2015 and 2014, 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”. In 2017, Airbus intends to makeapproximately € 400 million contributions to plan assets in orderto reduce the provision for retirement plans on its statement ofﬁnancial position.

OthersIn 2016, the negative amount of € -93 million mainly resulted
from the bank activities, partly compensated by changes in
consolidated ﬁnancing liabilities and changes in securities.
In 2015, the negative change of € -680 million mainly resulted
from ﬁnance lease liabilities and from a ﬁnancing liability of€ -223 million recognised for the Company’s irrevocable sharebuyback commitment as at 31 December 2015; recognition of
the ﬁnancial liability led to a corresponding reduction of equity.

2.1.6.2

Consolidated Cash and Cash
Equivalents and Securities

The cash and cash equivalents and securities portfolio of Airbus
is invested mainly in non-speculative ﬁ nancial 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”.
Airbus has a partially automated cross-border and domestic cash
pooling system in all countries with major group presence andwhenever country regulations allow such practice (among others
this includes mainly France, Germany, Spain, the Netherlands,
the UK and the US). The cash pooling system enhances
Management’s ability to assess reliably and instantaneously

the cash position of each subsidiary within Airbus and enables
Management to allocate cash optimally within Airbus depending
upon shifting short-term needs.

2.1.6.3

Consolidated Financing Liabilities

The outstanding balance of Airbus’ consolidated ﬁ nancing
liabilities increased from € 9.1 billion as of 31 December 2015
to € 10.5 billion as of 31 December 2016. The increase in bonds
corresponds to a bond issued on 13 May 2016, for a total of€ 1.5 billion, with a 10 year-maturity tranche of € 600 million at a0.875% coupon, and a 15 year-maturity tranche of € 900 million
at a 1.375% coupon. Additionally, exchangeable bonds tobe convertible into Dassault Aviation shares were issued for€ 1,078 million on 14 June 2016, with a 5 year-maturity. Thesebonds bear a coupon of 0% and were issued at 103.75% ofpar. Their effective interest rate, after separation of the equity
conversion option, is 0.6415%. This was partly reduced by thematuring of a bond and lower commercial paper programmes(€ -1.5 billion). For further information, please refer to the “Notes
to the IFRS Consolidated Financial Statements — Note 34.3:
Net Cash — Financing Liabilities”.

2.1.6.4

Sales Financing

Airbus favours cash sales and encourages independentﬁnancing by customers, in order to avoid retaining credit orasset risk in relation to delivered products. However, in order tosupport product sales, primarily at Airbus Commercial Aircraft
and Airbus Helicopters, Airbus 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
Airbus to increase its future outlays in connection with customer
ﬁnancing of commercial aircraft and helicopters, mostly throughﬁnance leases and secured loans and if deemed necessary
through operating lease structures. Nevertheless, it intends tokeep the amount as low as possible.
Dedicated and experienced teams structure such ﬁnancing
transactions and closely monitor total ﬁnance and asset value
exposure of Airbus and its evolution in terms of quality, volume
and intensity of cash requirements. Airbus aims to structure all
ﬁnancing it provides to customers in line with market-standard
contractual terms so as to facilitate any subsequent sale or
reduction of such exposure.

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EVOLUTION OF AIRBUS COMMERCIAL AIRCRAFT GROSS EXPOSURE DURING 2016 (IN US$ MILLIONS)

1,487

31 December 2015

859

Additions

Disposals-511

Amortisation-178

31 December 2016

1,657

Airbus Commercial Aircraft Gross Customer Financing Exposure
as of 31 December 2016 is distributed over 61 aircraft, operated
at any time by approximately 15 airlines. In addition, the levelof exposure may include other aircraft-related assets, such as
spare parts. More than 90% of Airbus Commercial Aircraft Gross
Customer Financing Exposure is distributed over 9 countries(this excludes backstop commitments).
Over the last three years (2014 to 2016), the average number ofaircraft delivered in respect of which ﬁnancing support has been
provided by Airbus Commercial Aircraft amounted to 1% of the

2.1.7

average number of deliveries over the same period, i.e. 9 aircraft
ﬁnanced per year out of 651 deliveries per year on average.
Airbus Helicopters’ Gross Customer Financing Exposureamounted to € 119 million as of 31 December 2016. This
exposure is distributed over 62 helicopters, operated byapproximately 2 companies.
For further information, please refer to the “Notes to the IFRS
Consolidated Financial Statements — Note 25: Sales Financing
Transactions”.

Hedging Activities

At least 70% of Airbus’ revenues are denominated in US dollars,with approximately 60% of such currency exposure “naturally
hedged” by US dollar-denominated costs. The remainder ofcosts is incurred primarily in euros, and to a lesser extent, inpounds sterling. Consequently, to the extent that Airbus does
not use ﬁnancial instruments to hedge its net current and futureexchange rate exposure from the time of a customer order to thetime 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, by market changes in the exchange rateof pound sterling against the euro.
As Airbus intends to generate proﬁts only from its operations
and not through speculation on foreign currency exchange rate
movements, Airbus uses hedging strategies solely to mitigate
the impact of exchange rate ﬂuctuations on its EBIT.

The table below sets forth the notional amount of foreign exchange hedges in place as of 31 December 2016, and the average
US dollar rates applicable to corresponding EBIT.

Total Hedges (in US$bn)

2017

2018

2019

2020

2021+

Total

24.9

25.1

24.9

17.8

9.7

102.4

Forward Rates (in US$)
€-US$

1.29

1.25

1.24

1.23

1.22

£-US$

1.55

1.55

1.47

1.39

1.37

For further information on Airbus’ 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.”

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2.2 Financial Statements

2.2 Financial Statements
The IFRS Consolidated Financial Statements and the Company
Financial Statements of Airbus Group SE for the year ended
31 December 2016, together with the related notes, appendicesand independent auditors’ report, shall be deemed to beincorporated in and form part of this Registration Document.
In addition, the English versions of the following documents
shall be deemed to be incorporated in and form part of this
Registration Document:
the IFRS Consolidated Financial Statements and theCompany Financial Statements of Airbus Group N.V. for theyear ended 31 December 2014, together with the related
notes, appendices and Auditors’ reports, as incorporated
by reference in the Registration Document ﬁled in English
with, and approved by, the AFM on 16 April 2015 and ﬁled in
English with the Chamber of Commerce of The Hague; and■the IFRS Consolidated Financial Statements and theCompany Financial Statements of Airbus Group SE for theyear ended 31 December 2015, together with the related
notes, appendices and Auditors’ reports, as incorporated byreference in the Registration Document ﬁled in English with,■and approved by, the AFM on 5 April 2016 and ﬁled in English
with the Chamber of Commerce of The Hague.
Copies of the above-mentioned documents are available freeof charge upon request in English at the registered ofﬁce of
the Company and on www.airbusgroup.com (Investors &Shareholders > Annual Reports and Registration Documents).
Copies of the above-mentioned Registration Documents
are also available in English on the website of the AFM on
www.afm.nl (Professionals > Registers > Approved
prospectuses). The above-mentioned ﬁ nancial statements
are also available in English for inspection at the Chamber ofCommerce of The Hague.
The Company confirms that the reports of the auditors
incorporated by reference herein have been accurately
reproduced and that as far as the Company is aware and isable to ascertain from the information provided by the auditors,
no facts have been omitted which would render such reports
inaccurate or misleading.

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

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2.4 Information Regarding the Statutory Auditors

2.4 Information Regarding the Statutory Auditors

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 201612 April 2017

(1) A resolution will be submitted to the Annual General Meeting of Shareholders in 2017, in order to appoint Ernst & Young Accountants LLP as the Company’s auditors for the 2017financial year.

Ernst & Young Accountants LLP has a licence from the AFM to perform statutory audits for Public Interest Entities and its
representative is a member of the Royal NBA (Koninklijke Nederlandse Beroepsorganisatie van Accountants).

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

80

3.1.1 Commercial and Corporate Names, Seat and Registered Ofﬁce

80

3.1.2 Legal Form

80

3.1.3 Governing Laws and Disclosures80

3.1.4 Date of Incorporation and Duration of the Company

82

3.1.5 Objects of the Company

82

3.1.6 Commercial and Companies Registry82

3.1.7 Inspection of Corporate Documents

82

3.1.8 Financial Year82

3.1.9 Allocation and Distribution of Income

83

3.1.10 General Meetings83

3.1.11 Disclosure of Holdings

84

3.1.12 Mandatory Disposal

86

3.1.13 Mandatory Offers

87

3.2 General Description of the Share Capital

87

3.2.1 Issued Share Capital87

3.2.2 Authorised Share Capital

87

3.2.3 Modiﬁcation of Share Capital or Rights Attached to the Shares88

3.2.4 Securities Granting Access to the Company’s Share Capital

89

3.2.5 Changes in the Issued Share Capital89

3.3 Shareholdings and Voting Rights

90

3.3.1 Shareholding Structure at the end of 2016

90

3.3.2 Relationships with Principal Shareholders

91

3.3.3 Form of Shares

94

3.3.4 Changes in the Shareholding of the Company

94

3.3.5 Persons Exercising Control over the Company

95

3.3.6 Simpliﬁed Group Structure Chart

95

3.3.7 Purchase by the Company of its Own Shares97

3.4 Dividends

99

3.4.1 Dividends and Cash Distributions Paid

99

3.4.2 Dividend Policy of the Company

99

3.4.3 Unclaimed Dividends

99

3.4.4 Taxation

99

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3.1 General Description of the Company

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 Group 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 seat in Amsterdam, The Netherlands and registeredwith 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 by its Articles
of Association (the “Articles of Association”).

with the relevant competent market authority. The Company
must then ensure that Regulated Information remains publicly
available for at least ten years.

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.

Finally, Regulated Information must be made available for central
storage by a mechanism that is ofﬁcially designated by theCompany’s home Member State.

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 on-going
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 time

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; and■publishing 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.

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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.

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.

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 quarterly reports which may be prepared in English only.
In addition, pursuant to the Exchange Rules, the Company
is required to publish a ﬁnancial calendar at the beginning ofeach ﬁnancial year in German and English. The Company isalso required to hold an analysts’ meeting at least once per
year in addition to the press conference regarding the annual
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.

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
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
In accordance with the requirement set forth in the Transparency
Directive to disseminate Regulated Information throughout theEuropean Community, any inside information as deﬁned above
will be disclosed simultaneously in Spain by ﬁling the relevant
regulatory announcement (hecho relevante) with the CNMV.
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.

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3.1.4

Date of Incorporation and Duration of the Company

The Company was incorporated on 29 December 1998 for an unlimited duration.

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:

3.1.6

the aeronautic, defence, space and/or communicationindustry; or■
activities that are complementary, supportive or ancillary
thereto.
■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 Airbus (2, rond-point Emile
Dewoitine, 31700 Blagnac, France, Tel.: +33 5 81 31 75 00).

3.1.8

In Germany, the Articles of Association are available at theMunich ofﬁce of Airbus (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 Airbus (Avenida de Aragón 404,
28022 Madrid, Spain, Tel.: +34 91,585 70 00).

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

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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.

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.

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.airbusgroup.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 ten weeks before the Meeting. A matter
which one or more shareholders or other parties with meetingrights 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 shallbe announced in the same fashion, if the substantiated 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 the agenda for a General Meeting of
Shareholders, the respective shareholder or shareholders are
obliged to disclose their full economic 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.
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.

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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.
Shareholders holding their Company shares through Euroclear
France who wish to attend general meetings will have to requestfrom their ﬁnancial intermediary or accountholder an admission
card and be given a proxy to this effect from Euroclear France inaccordance with the relevant convening notice. For this purpose,a shareholder will also be able to request that its shares beregistered directly (and not through Euroclear France) in theregister of the Company. However, only shares registered in thename of Euroclear France 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 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. The use of such electronic means will
depend on the availability of the necessary technical means
and market practice.

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
is required 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.

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 interest in the capital or voting rightsof the Company must immediately give written notice to the AFM
by means of a 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 or
voting rights of the Company meets, exceeds or falls below one

or several of the above-mentioned thresholds due to a change in
the Company’s outstanding capital, or in voting rights attachedto 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 the Company. Among otherthings, 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.

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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.

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 Group Executive Committee of theCompany as well as certain other senior executives who are
not members of 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
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
beneﬁ t 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 Ofﬁcerof the Company and the competent ﬁnancial market authorities
with respect to certain transactions. The ITR Compliance Ofﬁcer
is responsible for the implementation of the Insider Trading
Rules.
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.

(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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3.1.12 Mandatory Disposal
3.1.12.1 Mandatory Disposal Threshold
Restricting Ownership to 15%
The Articles of Association prohibit any shareholder from holding
an interest of more than 15% of the share capital or voting rightsof the Company, 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 that cause 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 instanceby disposing of its Excess Shares, within two weeks. 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 theend of such two-week period, their Excess Shares would betransferred to a Dutch law foundation (“Stichting”), which can,and eventually must, dispose of them.
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);■
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; and■■no 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.

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 the datewhen the current Articles of Association entered into force (the“Exemption Date”).
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.

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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 abid, 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 inconcert (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 other available
exemptions that are provided under Dutch law, the requirement
to make a public offer does not apply to persons, who at thetime the Takeover Act came into force, already held – individuallyor acting in concert – 30% or more of the voting rights in the
Company. In the case of such a concert, a new Member ofthe concert can be exempted if it satisﬁes certain conditions.

3.2 General Description of the Share Capital
3.2.1

Issued Share Capital

As of 31 December 2016, the Company’s issued share capital amounted to € 772,912,869, consisting of 772,912,869 fully paid-up
shares of a nominal value of € 1 each.

3.2.2

Authorised Share Capital

As of 31 December 2016, the Company’s authorised share capital amounted to € 3 billion, consisting of 3 billion shares of € 1 each.

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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 thanﬁ ve years, to issue shares and to determine the terms andconditions of share issuances.
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 shares issued forconsideration other than cash and shares issued to employeesof the Company or of an Airbus company. For the contractual
position as to pre-emption rights, see “— 3.3.2 Relationships
with Principal Shareholders”.
The 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 a 75% voting
majority is required for any shareholders’ resolution to issue
shares or to grant rights to subscribe for shares if the aggregate
issue price is in excess of € 500 million per share issuance, andno preferential subscription rights exist in respect thereof. The
same voting majority requirement applies if the shareholders’meeting wishes to designate the Board of Directors to have theauthority to resolve on such share issuance or granting of rights.
Pursuant to the shareholders’ resolutions adopted at theAGM held on 28 April 2016, the powers to issue shares andto grant rights to subscribe for shares which are part of theCompany’s authorised share capital and to limit or exclude
preferential subscription rights for existing shareholders havebeen delegated to the Board of Directors for the purpose of:
1. employee share ownership plans and share-related longterm incentive plans, provided that such powers shall belimited to 0.14% of the Company’s authorised share capital;
and
2. funding the Company and its Airbus companies, 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 2017, and shall not extend to issuing shares or
granting rights to subscribe for shares (i) if 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
corporate body) and (ii) for an aggregate issue price in excessof € 500 million per share issuance.
At the AGM held on 28 April 2016, 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’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).
At the AGM held on 28 April 2016, 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.
The Company launched on 30 October 2015 € 1 billion sharebuyback that has been completed. All shares repurchased
under the share buy back programme have been cancelled(please refer to the “Notes to the IFRS Consolidated Financial
Statements — Note 32: Total Equity” for further information).

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3.2 General Description of the Share Capital

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 “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 2016
were exercised:
Numberof shares

Percentage ofdiluted capital

Number of
voting rights

Percentage ofdiluted voting
rights(1)772,912,869

99.354%

772,728,699

99.354%

5,022,990

0.646%

5,022,990

0.646%

777,935,859

100%

777,935,859

100%

Total number of Company shares issued as of 31 December 2016
Total number of Company shares which may be issued
following exercise of the convertible bonds

Total potential Company share capital(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”.

3.2.5

Changes in the Issued Share Capital

Nominal
value
per
share

Numberof shares
issued /cancelledTotal
numberof issued
shares after
Premium(1) transaction

Total issued
capital after
transaction

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-

779,719,254€ 779,719,254

29 July 2013

Issue of shares for the purpose of an employee offering€12,113,245€ 57,580,650

781,832,499€ 781,832,499

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

€1

3,099,657-

778,732,842€ 778,732,842

Cancellation of shares upon authorisation granted by
27 September 2013 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 purpose of 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(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 2016, Airbus’ employees exercised 224,500 stock options granted to them through the Stock Option Plans launched by theCompany and 1,474,716 new shares were issues in the framework of the Employee Share Ownership Plan (“ESOP”) 2016. As aresult, a total number of 1,699,216 new shares were issued in the course of 2016.
During 2016, (i) the Company repurchased in aggregate 12,938,028 shares and (ii) 14,131,131 treasury shares were cancelled. As
a result, as at 31 December 2016, the Company held 184,170 treasury shares.

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3.3 Shareholdings and Voting Rights

3.3 Shareholdings and Voting Rights
3.3.1

Shareholding Structure at the end of 2016

As of 31 December 2016, the French State held 11.11% of theoutstanding Company shares through Sogepa, the German
State held 11.09% 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
4.18% through SEPI. The public (including Airbus’ employees)

and the Company held, respectively, 73.60% and 0.02% of theCompany’s share capital.
The diagram below shows the ownership structure of theCompany as of 31 December 2016 (% 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 GROUP SE AS OF 31 DECEMBER 2016

FRENCHSTATEGERMANSTATE

SPANISHSTATEOTHER GERMAN
PUBLIC ENTITIES

15.69%PUBLIC

KfW

84.31%

SOGEPASEPIGZBV(2)

11.11%(11.11%)

4.18%(4.18%)

11.09%(11.09%)

Share subject to Shareholders’ Agreement

AIRBUS GROUP SE(1) Including shares held by the Company itself (0.02%).
(2) KfW & other German public entities.

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3.3 Shareholdings and Voting Rights

In 2016, the below listed entities have notiﬁed the AFM of theirsubstantial interest in the Company. For further details, pleaserefer to the website of the AFM at www.afm.nl:■

Capital Group International Inc. owns 5.04% of the voting
rights via Capital Research and Management Company and
EuroPaciﬁc Growth Fund.

As of 31 December 2016, the Company held, directly or indirectly
through another company in which the Company holds directly
or indirectly more than 50% of the share capital, 184,170 of its

3.3.2

own shares, equal to 0.02% of issued share capital. The treasury
shares owned by the Company do not carry voting rights.
For the number of shares and voting rights held by Membersof the Board of Directors and Group Executive Committee,
see “— Corporate Governance — 4.2.1 Remuneration Policy”.
Approximately 2.1% of the share capital (and voting rights) was
held by the Company’s employees as of 31 December 2016.

Relationships with Principal Shareholders

In 2013, GZBV, Sogepa and SEPI entered into a shareholders’agreement (the “Shareholder s’ Agreement ”). The
Shareholders’ Agreement, further details of which are set out
in more detail below, does not give the parties to it any rights todesignate Members of the Board of Directors or management
team or to participate in the governance of the Company. The
Company has also entered into state security agreements witheach of the French State and German State, which are also
described in more detail below.

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

3.3.2.1

Corporate Governance Arrangements

Corporate governance arrangements of the Company were
substantially changed, resulting in changes in the compositionof the Board of Directors and its internal rules, as well as
amendments to the Articles of Association of the Company.
These changes were intended to further normalise and simplify
the Company’s corporate governance, reﬂecting an emphasis
on best corporate governance practices and the absence ofa controlling shareholder group. Changes to the Company’s
corporate governance arrangements in the Articles of
Association, included (i) disclosure obligations for shareholders
that apply when their interests in the Company reach or crosscertain thresholds and (ii) ownership restrictions prohibiting any
shareholder from holding an interest of more than 15% of theshare capital or voting rights of the Company, acting alone orin concert with others. See sections 3.1.11 and 3.1.12 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.

A Party holding Individual Grandfathering Rights as well as anyof its afﬁliates who are grandfathered pursuant to Article 16.1.bin conjunction with Article 16.3 of the Articles of Association(such afﬁ liates holding “Derived Grandfathering Rights”,
and the Individual Grandfathering Rights and the Derived
Grandfathering Rights, together, the “Grandfathering Rights”)
shall all no longer be entitled to exercise their Grandfathering
Rights in the 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;■and such termination or exit is not for good cause and is notbased on material and on-going 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
the Party including its afﬁliates which were no longer entitled
to use their Grandfathering Rights shall from then on revive
and Sogepa and GZBV shall jointly notify the Company tothat effect.

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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
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 haveexclusive jurisdiction. This is binding advice for any dispute,controversy or claim arising out of or in connection with thepost-concert Grandfathering Agreement in accordance withthe 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”).

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
shall exercise 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 / havebeen terminated, KfW or Sogepa, as the case might be, shallpropose 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
on such draft resolution, the shareholders shall vote against
such draft resolution. If Sogepa and GZBV reach a mutual
agreement on such draft resolution, the shareholders shallvote in favour of 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 toreaching a common position. Should Sogepa and GZBV failto reach a common position, Sogepa and GZBV shall remain
free to exercise on a discretionary basis their votes.
Prior consultation. Sogepa and GZBV shall consult eachother on any draft resolution submitted to the shareholders’meeting other than related to Reserved Matters and the Board
Rules.

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;

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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
takeover rules except for voting rights attributable due toacting in concert with the other Parties;■
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 shallalways represent less than 30% of the voting rights of theCompany, 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 as reasonably 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 beneﬁ t 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
and any French public entity and GZBV, the German State or
any of their afﬁliates and any public entity propose together totransfer 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).

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 current convention between the French
State and the Company relating to the ballistic missiles
business of the Company (as so amended, the “French
State Security Agreement”). Under the French State Security
Agreement, certain sensitive French military assets will beheld by a Company subsidiary (the “French Defence Holding
Company”). At the Consummation, the Company contributed
certain sensitive French military assets to the French Defence
Holding Company. The French State has the right to approveor disapprove of — but not to propose or appoint — threeoutside Directors to the Board of Directors of the French
Defence Holding Company (the “French Defence Outside
Directors”), at least two of whom 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 corporate ofﬁ cers of a company
belonging to Airbus (although they may be Members of theBoard of Directors) nor (ii) have material on-going 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, withthe additional requirement that a German Defence Outside
Director may not be a civil servant.

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

Dassault Aviation

For more information about Dassault Aviation, see “— Informationof Airbus Activities — 1.1.5 Investments”.

The Company entered into an agreement with the French State
pursuant to which the Company would:

Stock Exchange Listings

grant the French State a right of ﬁrst offer in case of the saleof all or part of its shareholding in Dassault Aviation; and■commit to consult with the French State prior to making any
decision at any shareholders’ meeting of Dassault Aviation.
■

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.

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 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%

3.3.3

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 State
and MBDA are parties to a similar convention regarding theassets comprising the French nuclear airborne systems underwhich the French State has similar rights.

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.

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.

Shares shall be registered in the shareholders’ register without
the issue of a share certiﬁcate or, should the Board of Directors

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 2016
Shareholders% ofcapitalPosition as of
31 December 2015

% ofvotingrightsNumberof shares% ofcapitalPosition as of
31 December 2014

% ofvotingrightsNumberofshares% ofcapital% ofvotingrightsNumberof shares

85,835,477

SOGEPA

11.11%

11.11%

85,835,477

10.93%

10.95%

85,835,477

10.94%

10.94%GZBV(1)11.09%

11.09%

85,709,822

10.91%

10.93%

85,709,822

10.92%

10.93%

85,709,822

SEPI

4.18%

4.18%

32,330,381

4.12%

4.12%

32,330,381

4.12%

4.12%

32,330,381

-

-

-

-

-

-

-

-

-

26.38%

26.38%

203,875,680

25.96%

26.01%

203,875,680

25.98%

25.99%

203,875,680

Sub-total New
Shareholder Agt.

Foundation “SOGEPA”

0.00%

0.00%

0

0.00%

0.00%

0

0%

0%

0

Public(2)73.60%

73.62%

568,853,019

73.85%

73.99%

579,995,047

73.97%

74.01%

580,473,073

Own share buy-back(3)

0.02%

-

184,1700.19%-

1,474,057

0.06%

-

431,832

Total

100%

100%

772,912,869

100%

100%

785,344,784

100%

100%

784,780,585(1) KfW & other German public entities.
(2) Including Company employees. As of 31 December 2016, the Company’s employees held approximately 2.1% of the share capital (and voting rights).
(3) The shares owned by the Company do not carry voting rights.

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3.3 Shareholdings and 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 more than 2,000 shares
each. The study, which was completed on 31 December 2016,
resulted in the identiﬁcation of 2,255 shareholders holding a total

3.3.5

of 560,635,551 Company shares (including 3,622,357 shares
held by Iberclear on behalf of the Spanish markets and
31,396,269 shares held by Clearstream on behalf of the Germanmarket).
The shareholding structure of the Company as of 31 December
2016 is as shown in the diagram in “— 3.3.1 Shareholding
Structure at the end of 2016”.

Persons Exercising Control over the Company

See “— 3.3.1 Shareholding Structure at the end of 2016” 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 2016, comprising three Divisions
and the main Business Units. See “— Information on Airbus Activities — 1.1.1 Overview — Organisation of Airbus’ Businesses”.
For ease of presentation, certain intermediate holding companies have been omitted.

Registration Document 2016 - AIRBUS ° 95 °3

15.80 %AirbusOperations, S.L.
(Spain)Airbus Operations
Limited(UK)

Airbus Operations
GmbH(Germany)

Registration Document 2016 - AIRBUS ° 96 °Paradigm Secure
Communications
Limited(UK)

Infoterra Limited(UK)

Paradigm
Services Limited(UK)

Vector Aerospace
Holding SAS(France)

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

Airbus Helicopters
DeutschlandGmbH(Germany)

Airbus Helicopters(France)

Registration Document 2015

1

Subsidiaries held with no indication of ownership percentage are 100 % owned.
Legal forms are indicated for information purposes and are not always part of the legal name.

Airbus Safran
Launchers Group

Astrium Services
UK Limited
(UK)

5%

5

MBDA Group

MBDA Group

50 %Airbus Defence
and Space
Limited(UK)

EADS Casa
Holding(France)95 %4

Airbus Safran Launchers Group

Airbus DS SAS(France)99.99 %

Airbus DS GmbH
(Germany)

Airbus Defence
and Space Holding
France SAS(France)

4.04 %

5.06 %

97.57 %

Airbus DS
Holdings B.V.
(The Netherlands)

2.43 %

Airbus Helicopters
Holding(France)3

Airbus Group North America

Airbus Defence
and Space SAS(France)

Stelia Aerospace(France)37.5 %*

Airbus DS Holding
SAS(France)95.96 %

Airbus GroupSAS(France)

Airbus SAS(France)4.68 %EADS Casa
France(France)

CRI, S.A.
(Spain)90.26 %

Airbus Defence
and Space, S.A.
(Spain)Premium Aerotec
GmbH(Germany)

2

Airbus Helicopters

ATR GIE(France)50 %*Airbus Group, Inc.
(USA)

1

Airbus Defence and SpaceElbe
FlugzeugwerkeGmbH(Germany)

45 %Airbus Defence
and Space GmbH
(Germany)

Airbus Operations
SAS(France)

Airbus Group
Limited(UK)

Annual Report 2015

*Airbus owns indirectly 50 % of ATR GIE, 50 % of Airbus Safran Launchers Group and 37.50 % of MBDA Group.

66.08 %

18.12 %DADC Luft-und
Raumfahrt
Beteiligungs GmbH
(Germany)(The Netherlands)

AIRBUS GROUP SESIMPLIFIED GROUP STRUCTURE CHART

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3.3 Shareholdings and Voting Rights

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3.3 Shareholdings and Voting Rights

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 28 April 2016, see “— 3.2.3
Modiﬁcation of Share Capital or Rights Attached to the Shares”.

3.3.7.2

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.
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 ot 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.

3.3.7.3

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.

3.3.7.4

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

Description of the Share Repurchase
Programme to be Authorised by
the Annual General Meeting of
Shareholders to be held on 12 April 2017

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: 12 April 2017;■
intended use of the Airbus Group SE shares held by theCompany as of the date of this document: the owning ofshares for the performance of obligations related to employee
share option programmes or other allocations of shares to
employees of Airbus 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,■■Registration Document 2016 - AIRBUS ° 97 °3

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the owning of shares for the performance of obligations
related to (i) debt ﬁnancial instruments convertible into Airbus
Group 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 Group SE shares carried out pursuant to aliquidity agreement to be entered into with an independent
investment services provider in compliance with the decisionof the AMF dated 1 October 2008 (as amended) related
to approval of liquidity agreements recognised as market
practices by the AMF;■
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: 77,291,286 shares, based on an issued sharecapital of 772,912,869 shares as of 31 March 2017,
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 useof options, combinations of derivative ﬁnancial instrumentsor the issue of securities giving rights in any way to Airbus
Group 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,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 Group SE, a company listed
on Euronext 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 12 October 2018 inclusive, i.e. the date of expiry of
the authorisation requested from the AGM of Shareholders
to be held on 12 April 2017.
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.
■

■

■

■

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3.4 Dividends

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

€ 1.30(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, Airbus 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 € 1.29 and a net income of € 995 million, the Board of Directors will propose to the AGM
the payment to shareholders on 20 April 2017 of a dividend of € 1.35 per share (FY 2015: € 1.30). This value exceeds the rangeof the dividend policy on an exceptional basis, reﬂecting the positive evolution of the 2016 underlying performance and our 2016
cash generation. It demonstrates our conﬁdence in our future operational cash generation and our on-going commitment toincreasing shareholder returns.
The record date should be 19 April 2017. This proposed dividend represents year-on-year dividend per share increase of 3.8%.

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

3.4.4

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.

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, or is not treated as, a resident of theNetherlands for any Netherlands 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
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”, it refers only to the European
part of the Kingdom of the Netherlands.

Withholding Tax on Dividends
In general, a dividend distributed by the Company in respectof Shares will be subject to a withholding tax imposed by the
Netherlands at a statutory rate of 15%. Dividends include
dividends in cash or in kind, deemed and constructive
dividends, repayment of paid-in capital not recognised as

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3.4 Dividends

capital for Netherlands dividend withholding tax purposes, andliquidation proceeds in excess of the average paid-in capital
recognised as capital for Netherlands dividend withholding tax
purposes. Stock dividends paid out of the Company’s paid-inshare premium, recognised as capital for Netherlands dividend
withholding tax purposes, will not be subject to this withholdingtax.
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. The Netherlands
has concluded such conventions with the US, Canada,
Switzerland, Japan, almost all European Union Member Statesand other countries.

Withholding Tax on Sale or Other Dispositions ofSharesPayments on the sale or other dispositions of Shares will not
be subject to Netherlands withholding tax, unless the sale orother disposition is, or is deemed to be, made to the Company
or a 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 treated as a dividend andwill be subject to the rules set forth in “Withholding Tax on
Dividends” above.

■

the Non-Resident Holder is an individual and (i) the NonResident Holder has, directly or indirectly, a substantial interest(“aanmerkelijk belang”) or a deemed substantial interest in the
Company and such interest does not form part of the assetsof an enterprise, or (ii) such income or gain qualiﬁes as income
from miscellaneous activities (“belastbaar resultaat uit overigewerkzaamheden”) in the Netherlands as deﬁned in the Dutch
Income Tax Act 2001 (“Wet inkomstenbelasting 2001”).

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 and directly or indirectly,
Shares in the Company, or a right to acquire Shares in the
Company representing 5% or more of the Company’s total
issued and outstanding share capital or any class thereof.
Generally, a deemed substantial interest exists if all or partof a substantial interest has been or is deemed to have been
disposed of with application of a roll-over relief.

Gift or Inheritance Taxes
Netherlands gift or inheritance taxes will not be levied on
the transfer of Shares by way of gift, or upon 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
the time of the gift or death, is or is deemed to be resident in
the Netherlands.

Taxes on Income and Capital Gains

Value Added Tax

A Non-Resident Holder who receives dividends distributed by
the Company on Shares or who realises a gain from the sale ordisposition of Shares, will not be subject to Netherlands taxation
on income or capital gains unless:

No Netherlands value added tax is imposed on dividends on
the Shares or on the transfer of the Shares.

such income or gain is attributable to an enterprise orpart thereof which is either effectively managed in the
Netherlands or carried on through a permanent establishment(“vaste inrichting”) or permanent representative (“vaste
vertegenwoordiger”) in the Netherlands;■
the Non-Resident Holder is not an individual and the NonResident Holder has or is deemed to have, directly or indirectly,
a substantial interest (“aanmerkelijk belang”) or a deemed
substantial interest in the Company and such interest (i) does
not form part of the assets of an enterprise and (ii) is held by
the Non-Resident Holder with the main objective, or one of
the main objectives, to avoid Netherlands withholding tax on
dividends or Netherlands individual income tax at the level ofanother person or entity; orThere is no Dutch registration tax, transfer tax, capital tax,
stamp duty or any other similar tax or duty other than court fees
payable in the Netherlands in respect of or in connection withthe execution, delivery and/or enforcement by legal proceedings(including any foreign judgment in the courts of the Netherlands)
with respect to the dividends relating to the Shares or on thetransfer of the Shares.

■

Other Taxes and Duties

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.

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Corporate
Governance104

4.1.1 Corporate Governance Arrangements

104

4.1.2 Dutch Corporate Governance Code, “Comply or Explain”

124

4.1.3 Enterprise Risk Management System

125

4.1.4 Ethics and Compliance Organisation

129

4.2 Interests of Directors and Principal
Executive Officers

131

4.2.1 Remuneration Policy

131

4.2.2 Long-Term Incentives Granted to the Chief Executive Ofﬁcer

141

4.2.3 Related Party Transactions

142

4.3 Employee Profit Sharing and Incentive Plans 142
142

4.3.2 Employee Share Ownership Plans

142

4.3.3 Long-Term Incentive Plans

144

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4.1 Management and Control

4.3.1 Employee Proﬁt Sharing and Incentive Agreements

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4.1 Management and Control

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, who each retire at the closeof the AGM held three years following their appointment. Under
the Board Rules, at least a majority of the Members of theBoard of Directors (i.e., 7/12) must be European Union (“EU”)
nationals (including the Chairman of the Board of Directors) anda 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 NonExecutive Directors. While the Board of Directors appoints theChief Executive Ofﬁcer of the Company (the “CEO”), the CEO
is required to be an Executive Director and must be an EU
national and resident; therefore it is anticipated that the Boardof Directors will appoint as CEO the person appointed by theshareholders as an Executive Director. At least nine of the NonExecutive 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 and meets additional
independence standards. Specifically, where the Dutch
Corporate Governance Code would determine independence, inpart, by reference to a Director’s relationships with shareholders
who own at least 10% of the Company, the Board Rules
determine such Director’s independence, in relevant part, byreference 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”(1).
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
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 Board of
Directors, and the Board of Directors in its resolutions proposedto the shareholders’ meeting regarding proposals to appoint or
replace a resigning or incapacitated Director, are both required
to apply the following principles:■■the preference for the best candidate for the position; andthe 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 the four Member States of the EU where thesemain industrial centres are located).

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 (i) two of the Directors submitted to theshareholders for appointment should also be French Defence
Outside Directors (as deﬁned above) of the French Defence
Holding Company (as deﬁned above) who have been proposedby the Company and consented to by the French State and(1) Mr Ralph D. Crosby terminated his executive position within Airbus on 31 December 2011. He therefore qualiﬁes as an Independent Director since 1 January 2017,
i.e. after a ﬁve-year cooling-off period, according to the Board Rules and the Dutch Code.

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CorporateGovernance
4.1 Management and Control(ii) two of the Directors submitted to the shareholders forappointment should also be German Defence Outside Directors(as deﬁned above) of the German Defence Holding Company(as deﬁned above) who have been proposed by 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 such schedule, the RNGC considers the continuity ofcompany-speciﬁc knowledge and experience within the Boardof Directors while it takes into account that a Director shouldat the time of his appointment or re-appointment not be older
than 75 years and ensuring that at least one third of Directors’
positions are either renewed or replaced every year, provided
that exceptions to these rules may be agreed by the Boardof 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 of the Directors (a “Simple Majority”),
but certain decisions must be made by a 2/3 majority (i.e.
eight favourable votes) of the Directors regardless of whether
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 Boardof Directors, with no more than one Director not being present
or represented (including provisions relating to nationality andresidence requirements with respect to Members of the Boardof Directors and the Group Executive Committee). However,no individual Director or class of Directors has a veto right withrespect 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 Boardof Directors delegates the execution of the strategy as approvedby the Board of Directors and the day-to-day managementof the Company to the CEO, who, supported by the Group
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.
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 Group Executive
Committee as proposed by the CEO and their service
contracts and other contractual matters in relation to the Group
Executive Committee and deciding upon the appointment andremoval of the Secretary to the Board of Directors on the basisof the recommendation of 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; and■approving decisions in respect of other measures andbusiness of fundamental signiﬁ cance for Airbus or which
involves an abnormal level of risk.
■

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 ten 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 their duties
and avoiding any and all conﬂicts of interest.

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CorporateGovernance
4.1 Management and Controlc) The Board of Directors in 2016(i) Composition of the Board of Directors in 2016
Airbus Group SE Board of Directors
Committee attendance

Name

Denis
RANQUE

ThomasENDERS

Ralph D.
CROSBY, Jr.

Current
term
expires Director expertise

StatusPrimaryoccupation
Board& Other mandates attendance Audit

Age

Since

65

2013,
re-election
in 20162017

Chairman of
the Board of Directors
Independent of Airbus Group SE

58

2012, last
re-election
in 2016
2019

Executive

69

2013,
re-election
in 2016
2017

Remuneration
Nomination and
Governance

6/6

Chief Executive Ofﬁcerof Airbus Group SE
Member of the Board of
Directors of Serco Groupplc and former Memberof the Corporate Policy
Council of Northrop
Independent Grumman Corporation

6/6

6/6

Catherine
GUILLOUARD 52

2016

Hans-Peter
KEITEL

69

2013,
re-election
in 2016
2018

HermannJosef
LAMBERTI

61

2007, last
re-election
in 20162017

Deputy Chief Executive
Ofﬁcer of Rexel* andMember of the Board
Independent of Directors of ENGIE
Vice President of
the Federation ofGerman Industry (BDI)
and Member of theSupervisory Board of
Independent Thyssenkrupp AG
Member of theSupervisory Board of
ING Groep N.V. andformer Member ofthe Management Board
Independent of Deutsche Bank AG

Lakshmi N.
MITTAL

66

2007, last
re-election
in 20162017

Chairman andChief Executive Ofﬁcer
Independent of ArcelorMittal

6/6

2018

Member of the Board of
Directors of Solvay andformer General Manager
Independent of IBM South Region

6/6

5/5

2019

Member of the Boardof Managementof Deutsche
Independent Telekom AG

3/4
(from
AGM 2016)

2/2
(from
AGM 2016)

Chairman of the Board
Independent of Anglo American plc

6/6

Chairman of
the Managing Board
Independent of Peugeot SA

3/4
(from
AGM 2016)

Honorary Governor of
Banque de France andformer President of the
Independent European Central Bank

6/6

AmparoMORALEDAClaudia
NEMAT

Sir John
PARKER

CarlosTAVARES

52

2015

2019

48

2016

74

2007, last
re-election
in 2016
2018

58

2016

2019

2012, last
re-election
in 20162018

Jean-Claude
TRICHET
74

4/4
(from
AGM 2016)

2/2
(from
AGM 2016)

6/6

6/6

3/3

5/5

3/3

3/3

3/3
5
meetings– 95% averageattendance rate3
meetings – 100%
average
attendance rate

Status as of 21 February 2017.
* Until 20 February 2017.
The professional address of all Members of the Board of Directors for any matter relating to Airbus Group SE is Mendelweg 30, 2333 CS Leiden, The Netherlands.
ChairmanGlobalBusiness

MemberEngineering& Technology

Manufacturing& Production

AerospaceIndustry

Finance& Audit

Geopolitical
Economics

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Information& Data Management

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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 Members of the Board of
Directors in 2016

Denis RANQUE

65 years old
Director since 2013,
re-elected in 2016
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 Électroniques, 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 position in
May 2009, as a consequence of a change in shareholding. From February 2010 to June 2012 he has been
Non-Executive Chairman of Technicolor. Since October 2001, he has also been Chairman of the Boardof the École des Mines ParisTech, and since September 2002, Chairman of the Cercle de l’Industrie, anassociation which unites France’s biggest industrial companies; both mandates ended in June 2012. He
is member of the Boards of Directors of Saint-Gobain and CMA-CGM. Since October 2013, he chairs
The Haut Comité de Gouvernement d’Entreprise, the newly created independent body put in place by the
French Code of corporate governance for monitoring and encouraging progress in this ﬁeld. Since 2014
he is also co-Chairman of La Fabrique de l’industrie, a think tank dedicated to industry and a memberof the French Academy for Technologies (“Académie des Technologies”). Denis Ranque, born 1952, is a
graduate of France’s École Polytechnique and the Corps des Mines.
Current Mandates:- Chairman of the Board of Directors of Airbus Group SE;- Member of the Board of Directors of Saint Gobain;- Member of the Board of Directors of CMA-CGM;- Member of the Board of Directors of Scilab Enterprise SAS;
- President of the French Haut Comité de Gouvernement d’Entreprise;- President of the Board of Foundation de l’École Polytechnique;- Co-Chairman of the Board of Directors of La Fabrique de l’industrie.
Former mandates for the last ﬁve years:- Director of CGG (2010 to 2012);- Director of Fonds Stratégique d’Investissement (2011 to 2012);- Chairman of Technicolor (2010 to 2012).

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Ralph Dozier CROSBY, JR.

69 years old
Director since 2013,
Re-elected in 2016
Independent

Curriculum Vitae
Ralph Crosby was Member of the Executive Committee of EADS from 2009 - 2012 and served as Chairman
and CEO of EADS North America from 2002 - 2009. He presently serves as an Independent Directorof American Electric Power Company headquartered in Columbus, Ohio, where he chairs the Human
Resources Committee; and Serco Group plc, headquartered in London, United Kingdom. Furthermore,
Mr Crosby serves on the Board of Directors, and Executive Committee of the Atlantic Council of the UnitedStates. Prior to joining EADS, Mr Crosby was an Executive with Northrop Grumman Corporation, where
he had served as a Member of the Corporate Policy Council with positions including President of theIntegrated Systems Sector, Corporate Vice President and General Manager of the Company’s Commercial
Aircraft Division and Corporate Vice President and General 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 the United 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 ofGeneva, Switzerland. He is the recipient of the James Forrestal Award from the National Defense Industrial
Association, and has been awarded Chevalier of the Légion d’Honneur of France.

Current Mandates:- Member of the Board of Directors of Airbus Group SE;- Member of the Board of Directors (Supervisory Board) of American Electric Power Company;- Member of the Board of Directors (Supervisory Board) of Serco Group plc;
- Member of the Board of Directors and of the Executive Committee of the Atlantic Council of
the United States.
Former mandates for the last ﬁve years:- Executive Chairman of EADS North America (retired 31 December 2011);- Member of the Board of Directors (Supervisory Board) of Ducommun Corporation (resigned
June 2013).

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Thomas ENDERS

58 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 Group SE, on 1 June
2012, after having been CEO of 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 Group 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.
Enders was President of the BDLI (German Aerospace Industry Association) from 2005 to 2012. From2005 to 2009 he was Chairman of the Atlantik-Brücke e.V. In 2014, Enders joined the Advisory Councilof the Munich Security Conference as well as the Senate of the Max-Planck-Gesellschaft. He is patronof 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 and the Joint Advisory
Council of Allianz SE since 2013. From 2011 to 2015, Tom Enders was a member of the Business Advisory
Group of U.K. Prime Minister David Cameron.

Current Mandates:- Chief Executive Ofﬁcer of Airbus Group SE;- Member of the Board of Directors of Airbus Group SE;- Member of the Executive Committee of Airbus Group SE;- Chairman of the Shareholder Board of Airbus SAS;
- Chairman of the Supervisory Board of Airbus Helicopters SAS;
- Chairman of the Supervisory Board of Airbus DS Holding B.V.;- Chairman of the Supervisory Board of Airbus Defence and Space Deutschland GmbH;- Member of the Presidential Board of the BDI (Federation of German Industry);- Member of the Advisory Board of HSBC Trinkhaus;- Member of the International Advisory Board of Atlantic Council of the US;- Member of the Joint Advisory Council of Allianz SE;- Member of the Board of Directors of WORLDVU Satellites Ltd. (OneWeb).
Former mandates for the last ﬁve years:- President and Chief Executive Ofﬁcer of Airbus SAS (from 2007-2012);- President of the BDLI (Bundesverband der deutschen Luft- und Raumfahrtindustrie e.V.) from2005-2012;- Chairman of the Advisory Council for Aeronautics Research and Innovation in Europe (ACARE)
from 2011-2013.

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Catherine GUILLOUARD

52 years old
Director since 2016

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 Financein 2005. In September 2007, she joined Eutelsat as Chief Financial Ofﬁcer and member of the Group
Executive Committee.
Catherine joined Rexel in April 2013 as Chief Financial Ofﬁcer and Group Senior Vice President. She has
been Deputy Chief Executive Ofﬁcer of Rexel from May 2014 until February 2017. Catherine Guillouard, bornin 1965, is a graduate of the Institute of Political Studies of Paris and the École Nationale d’Administrationand she has a PhD of European laws (Pantheon-Sorbonne).

Independent
Current Mandates:- Member of the Board of Directors of Airbus Group SE;- Member of the Board of Directors of Engie.
Former mandates for the last ﬁve years:- Deputy Chief Executive Ofﬁcer of Rexel (until February 2017);- Member of the Board of Directors of Technicolor (until 2013);- Member of the Board of Directors of ADP (until 2013).

Hans-Peter KEITEL

69 years old

Curriculum Vitae
Hans-Peter Keitel held ofﬁce as President of the Federation of German Industries (BDI) from 2009 to 2012
and until 2016 as one of its Vice Presidents. Prior to this he served nearly 20 years at Hochtief – ﬁrst as
Director for International Business and Member of the Board, subsequently from 1992 to 2007 as Chief
Executive Ofﬁcer. From 1992 until 1999 he was Member of the Board of RWE, Hochtief’s then major
shareholder. He started his career in 1975 at Lahmeyer International as project manager and department
head being involved in large scale global infrastructure projects in over 20 countries. He also advised
the arranging banks of the Channel Tunnel Consortium. Mr. Keitel has graduated from the Universities of
Stuttgart and Munich in Construction Engineering and Economics and has received a PhD in Engineeringfrom the University of Munich.

Director since 2013,
re-elected in 2016
Independent
Current Mandates:- Member of the Board of Directors of Airbus Group SE;- Member of the Supervisory Board of RWE AG;- Chairman of the Supervisory Board and the Shareholders Committee of Voith GmbH;- Member of the Supervisory Board of ThyssenKrupp AG;- Deputy Chairman of the Supervisory Board of National-Bank AG.
Former mandates for the last ﬁve years:- Member of the Supervisory Board of Commerzbank AG (until May 2012);- Member of the Supervisory Board of Deutsche Messe AG (until 2013).

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Hermann-Josef LAMBERTICurriculum Vitae
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 United States, in the ﬁelds of controlling, internal application development, sales, personal
software, marketing and 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 in Frankfurt.
He studied Business Administration at the Universities of Cologne and Dublin, and graduated with a Master’s degree.
61 years old
Director since 2007,
last re-elected in 2016
Independent

Current Mandates:- Member of the Board of Directors of Airbus Group 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 Groep N.V.;- Senior Business Advisor of Advent International GmbH;- Owner / Managing Director of Frankfurt Technology Management GmbH;- Member of the Board of Stonebranch INC., Alpharetta, Georgia, USA;
- Member of the Board of LDM – Lefdal Data Mine, AS, Maloy, Norway.
Former mandates for the last five years:- Member of the Supervisory Board Open-Xchange AG (until June 2016);- Member of the Advisory Board of Barmenia Versicherungen Wuppertal (until December 2014);- Member of the Managing Committee of Institut für Wirtschaftsinformatik der HSG Universität St. Gallen(until December 2013);- Member of the Board of Trustees of Frankfurt International School e.V (until December 2013);- Member of the University Council of University of Cologne (until June 2013);- Member of the Steering Committee and of the Federal Committee Wirtschaftsrat der CDU e.V. (until June 2013);- Member of the Supervisory Board of Carl Zeiss AG (until March 2013);- Member of the Board of Trustees of Junge Deutsche Philharmonie (resigned 8 October 2012);- Member of the Board of Trustees of Hanns Martin Schleyer-Stiftung (resigned 21 June 2012);- Member of the Board of Management of Arbeitgeberverband des privaten Bankgewerbes e.V. (resigned 21 June 2012);- Deputy member of the Deposit Insurance Committee of Bundesverband deutscher Banken e.V. (resigned 21 June 2012);- Delegate of the Delegates’ Assembly of the Deposit Insurance Committee of Bundesverband deutscher Banken e.V.
(resigned 21 June 2012);- Member of the Financial Community Germany Committee of Bundesverband deutscher Banken e.V. (resigned
21 June 2012);- Member of the Board of Management of Deutsches Aktieninstitut e.V. (resigned 21 June 2012);- Member of the Program Advisory Board of LOEWE Landes-Offensive zur Entwicklung Wissenschaftlich-ökonomischer
Exzellenz des Hessischen Ministeriums für Wissenschaft und Kunst (resigned 14 June 2012);Member of the Supervisory
Board of BVV Versicherungsverein des Bankgewerbes AG und BVV Versorgungskasse des Bankgewerbes e.V.
(resigned May 2012);- Member of the Management Board of Deutsche Bank AG (resigned 31 May 2012);- Member of the Board of Trustees of e-Finance Lab Frankfurt am Main (resigned 31 May 2012);- Member of the Stock Exchange Council of Eurex Deutschland (resigned 31 May 2012);- Member of the Stock Exchange Council of Frankfurter Wertpapierbörse AG (resigned 31 May 2012);- Member of the Advisory Board of Institut für Unternehmensplanung IUP (resigned 31 May 2012);- Deputy Chairman of the Board of Trustees of the Society of Promotion of Kölner Kammerorchester e.V. (resigned
31 May 2012);- Member of the Advisory Circle of Münchner Kreis (resigned 31 May 2012);- Deputy member of the Advisory Board of Prüfungsverband deutscher Banken e.V. (resigned 31 May 2012);- Member of the Administrative Council of Universitätsgesellschaft Bonn-Freunde, Förderer, Alumni (resigned 31 May 2012);- Member of the Advisory Board in the centre for market-orientated corporate management of WHU (resigned 31 May 2012);- Member of the Commission of Börsensachverständigenkommission (Bundesﬁnanzministerium) (resigned 31 May 2012);- Member of the Management Board and of the Executive Committee of Frankfurt Main Finance e.V. (resigned 31 May 2012);- Member of the Advisory Board of Fraunhofer-IUK-Verbund (resigned 31 May 2012);- Member of the Executive Committee and of the Steering Committee of Frankfurt RheinMain e.V. (resigned 31 May 2012);- Member of the Senate of acatech – Deutsche Akademie der Technikwissenschaften e.V. (resigned 31 May 2012);- Member of the Board of Directors of Deutsche Akademie der Technikwissenschaften e.V. (resigned 31 May 2012);- Member of the Supervisory Board of Deutsche Bank Privat-und Geschäftskunden AG (resigned 24 May 2012);- Member of the Board of Directors of American Chamber of Commerce in Germany (resigned 11 May 2012);- Member of the Supervisory Board of Deutsche Börse AG (resigned 16 May 2012);- Member of the Editorial Board of the scientiﬁc journal „Wirtschaftsinformatik“ (until May 2012);- Member of the Board of Trustees of Stiftung Lebendige Stadt (until May 2012);- Member of the International Advisory Board of IESE Business School, University of Navarra (until March 2012).

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Lakshmi N. MITTAL
Curriculum Vitae
Lakshmi N. Mittal is the Chairman and CEO of Arcelor Mittal. He founded Mittal Steel Company in 1976
and led its 2006 merger with Arcelor to form ArcelorMittal, the world’s largest steelmaker. He is widely
recognised for his leading role in restructuring the global steel industry, and has over 35 years’ experience
working in steel and related industries. Among his manifold mandates, Mr. Mittal is Member of the Boardof Directors of Goldman Sachs, of the World Economic Forum’s International Business Council, and of theForeign Investment Council in Kazakhstan. Furthermore, he has been awarded numerous recognitions frominternational institutions and magazines and is closely associated with a number of non-proﬁt organisations.
66 years old
Director since 2007,
last re-elected in 2016
Independent

Current Mandates:- Member of the Board of Directors of Airbus Group SE;- Chairman of the Board of Directors and CEO of ArcelorMittal SA;- Chairman of the Board of Directors of Aperam SA;- Member of the Board of Directors of Goldman Sachs;- Member of the Executive Committee of World Steel Association;- Member of the World Economic Forum’s International Business Council;- Member of the Foreign Investment Council in Kazakhstan;- Member of the Board of Trustees of Cleveland Clinic;- Member of the Executive Board of Indian School of Business;- Governor of ArcelorMittal Foundation;- Trustee of Gita Mittal Foundation;- Trustee of Gita Mohan Mittal Foundation;- Trustee of Lakshmi and Usha Mittal Foundation;- Chairman of the Governing Council of LNM Institute of Information Technology;- Trustee of Mittal Champion Trust;- Trustee of Mittal Children’s Foundation;- Member of the Governing Board of St Xaviers College Kolkata.
Former mandates for the last ﬁve years:- Member of the Presidential Advisory Board of Mozambique;- Member of the Advisory Board of the Kellogg School of Management;- President of Ispat Inland ULC (resigned January 2013);- Member of the Prime Minister of India’s Global Advisory Council;- Member of President’s Domestic and Foreign Investors Advisory Council, Ukraine;- Gold Patron of Prince’s Trust;- Member of the Board of ONGC Mittal Energy Ltd.;- Member of the Board of ONGC Mittal Energy Services Ltd.

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María Amparo MORALEDA MARTÍNEZ

52 years old
Director since 2015
Independent

Curriculum Vitae
Amparo Moraleda graduated as an industrial engineer from the ICAI (Escuela Técnica Superior de Ingenieria
Industrial) Madrid and holds an AMP 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 and Portugal(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 from 1988 to 1995 held
various professional and management positions at IBM España. Ms. Moraleda is also a member ofvarious boards and trusts of different institutions and bodies, including the Academy of Social Sciences
and the Environment of Andalusia, the Board of Trustees of the MD Anderson Cancer Center in Madrid
and the International Advisory Board of the Instituto de Empresa Business School and member of the
Madrid Advisory Board of IESE. Since December 2005, she is a member of the Spanish Royal Academyof Economic and Financial Sciences.
Current Mandates:- Member of the Board of Directors of Airbus Group SE;- Member of the Board of Directors of Faurecia SA;- Member of the Board of Directors of Solvay SA;- Member of the Board of Directors of Caixabank;- Member of the Supervisory Board of CSIC (Consejo Superior d’Investigaciones Cientiﬁcas);- Member of the Advisory Board of KPMG Spain;- Member of the Advisory Board of SAP Spain;- Member of the Advisory Board of Spencer Stuart Spain.
Former mandates for the last ﬁve years:- Member of the Board of Directors of Meliá Hotels International SA (ended June 2015);- Member of the Board of Directors of Alstom SA (ended May 2015);- Member of the Board of Corporación Financiera Alba SA (ended October 2014).

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Claudia NEMAT

48 years old
Director since 2016
Independent

Curriculum Vitae
Born in 1968, Claudia Nemat has been a member of the Board of Management of DeutscheTelekom AG
since October 2011 and is responsible for the Board area Europe and Technology.
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 led the unit for Europe,
the Middle East and Africa.
Her main areas of expertise include large-scale strategic and operational turnaround and transformation
programmes, especially for global technology companies as well as in the software and telecommunicationsindustries. She also led McKinsey’s initiatives on Europe based global technology leadership.
Ms. Nemat has worked in numerous European countries as well as North and South America.
She was member of the Supervisory Board of Lanxess AG from 2013 to 2016.
Since May 2016, Claudia Nemat has been a member of the Board of Directors of Airbus Group SE.
Claudia Nemat studied physics at University of Cologne, where she also taught at the department of
Physics and Mathematics.

Current Mandates:- Member of the Board of Directors of Airbus Group SE;- Member of the Management Board of Deutsche Telekom AG;- Member of the Board of OTE (related to Deutsche Telekom);- Member of the Board of Buyln (related to Deutsche Telekom);- Member of the University Council of University of Cologne.
Former mandates for the last ﬁve years:- Member of the Supervisory Board of LANXESS AG (until May 2016);- Director of EE Limited (UK) (related to Deutsche Telekom) (until 2014).

Sir John PARKER
Curriculum Vitae
Sir John Parker is Chairman of Anglo American plc, Chairman of Pennon plc, Non- Executive Director ofCarnival plc and Carnival Corporation. He has completed his term 2011-2014 as President of the Royal
Academy of Engineering. He stepped down as Chairman of National Grid plc in December 2011. His career
has spanned the engineering, shipbuilding and defence industries, with some 25 years of experience as
CEO including Harland & Wolff and the Babcock International Group. He also chaired the Court of the
Bank of England between 2004 and 2009. Sir John Parker studied Naval Architecture and MechanicalEngineering at the College of Technology, Queens University, Belfast.
74 years old
Director since 2007,
last re-elected in 2016
Independent

Current Mandates:- Member of the Board of Directors of Airbus Group SE;- Director of Carnival plc and Carnival Corporation;- Chairman of Anglo American plc (2009 – Present);- Chairman of Pennon Group plc (August 2015 – Present);- Director of White Ensign Association Ltd.;- Visiting fellow of the University of Oxford.
Former mandates for the last ﬁve years:- Deputy Chairman of D.P. World (Dubai) (resigned July 2015);- President of the Royal Academy of Engineering (until September 2014);- Chairman of National Grid PLC (resigned January 2012).

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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 Peugeot SA . He was named Chairman of the Managing Board since
31 March 2014.

Current Mandates:- Member of the Board of Directors of Airbus Group SE;- Director of Banque PSA Finance;

58 years old- Director of Faurecia SA;

Director since 2016

- Chairman of the Board of Directors of Peugeot Citroën Automobiles SA.

Independent

Former mandates for the last ﬁve years:- Manager of Bed&Breakfast in Lisbon (until March 2015);Director of PCMA Holding B.V.
(until October 2014);- Member of the Managing Board of Nissan Alliance (until August 2013);- Chief Operating Ofﬁcer of Renault (until August 2013);- Director of Renault Nissan B.V. (until August 2013);- Director of AvtoVAZ (until August 2013);- Director of Alpine – Caterham (until August 2013);- Chairman of the Management Committee of Nissan Americas (until June 2011);- Executive Vice President, Planning of Nissan Motor Company (until June 2011);

Jean-Claude TRICHETCurriculum Vitae
Jean-Claude Trichet was President of the European Central Bank, of the European Systemic Risk Boardand of the Global Economy meeting of Central Bank Governors in Basel until the end of 2011. Previously,
he was in charge of the French Treasury for six years and was Governor of Banque de France for ten
years. Earlier in his career, he held positions within the French Inspection Générale des Finances, aswell as the Treasury department, and was Advisor to the French President for microeconomics, energy,
industry and research (1978-1981). Mr. Trichet graduated from the École des Mines de Nancy, the Institutd’Études Politiques de Paris and the University of Paris in Economics, is a Doctor Honoris Causa of several
universities and an alumnus of the École Nationale d’Administration.
74 years old
Director since 2012,
last re-elected in 2016
Independent

Current Mandates:- Member of the Board of Directors of Airbus Group SE;- President of JCT Conseil, Paris;- Honorary Governor of Banque de France;- Honorary Chairman of the G30, Washington D.C. (non-proﬁt organisation);- Chairman of the Board of Directors of the BRUEGEL Institute, Brussels (non-proﬁt organisation);- European Chairman of the Trilateral Commission (non-proﬁt organisation).
Former mandates for the last ﬁve years:- Chairman and CEO of the G30, Washington D.C. (non-proﬁt organisation) (until December 2016);- President of SOGEPA -Société de Gestion de Participations Aéronautiques- (from 2012 up to 2013).

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Independent Directors
The Independent Directors appointed pursuant to the criteria of
independence set out above are Denis Ranque, Ralph Crosby,
Catherine Guillouard (from AGM 2016), Hans-Peter Keitel,
Hermann-Josef Lamberti, Lakshmi N. Mittal, Michel Pébereau,
Maria Amparo Moraleda Martinez, Claudia Nemat (from AGM
2016), Sir John Parker, Carlos Tavares (from AGM 2016) andJean-Claude Trichet.

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.

(iii) Operation of the Board of Directors in 2016
Board of Directors Meetings
The Board of Directors met six times during 2016 and wasregularly informed of developments through business reports
from the Chief Executive Ofﬁ cer, including progress on thestrategic and operational plans. The average attendance rate
at these meetings was 97%.
Throughout 2016, the Board of Directors reviewed anddiscussed the technical and commercial progress of signiﬁcantprogrammes, such as the A400M, the Airbus A320neo,
A330neo and A350 XWB programmes; the different helicopter
programmes as well as the space business’s next generation
launcher Ariane 6 and OneWeb satellites constellation
programme.
The off-site Board meeting in Mobile, Alabama, was dedicatedto the review of the Division and product strategies and therelated business developments as well as the overall strategyof the Company. The Board of Directors seized the opportunity
to visit the US A320 ﬁnal assembly line and to meet with local
management and with the operative workforce as well as withlocal authorities. The second offsite Board meeting took placein the new operational headquarters – the Wings Campus - inToulouse.
In 2016, the Board of Directors continued to support thedigitalisation initiative, which was started last year to enhance
the Company’s ability to identify and capitalise on innovative
and transformational technologies and business models. As an
integral part of this initiative the Board of Directors approved thereorganisation and refocussing of the CTO department on its
fundamental tasks of guiding and coordinating overall activities,
developing group wide roadmaps / demonstrators as well as
technical expertise and blue-sky research.
The Board of Directors decided also on a further integration
by merging its Group structure with its largest Division Airbus
Commercial Aircraft. Lean structures and speedy decisionmaking are prerequisites for the success of digital transformation.
The merger of Airbus Group and Airbus paves the way for an
overhaul of the corporate set-up, simpliﬁ es the Company’s
governance, eliminates redundancies and supports further
efﬁciencies, while at the same time driving further integrationof the entire group. These latest efforts are the continuation of
a number of integration and normalisation steps, which Airbus
has taken in recent years.
Moreover, the Board of Directors engaged in Airbus’ ﬁnancial
results and forecasts and reviewed thoroughly the Enterprise
Risk Management reports and the internal audit plan andfindings. It supported the corporate social responsibility
initiatives and put emphasis on further strengthening the Airbus
compliance programme, building on the ’Business Development
Support Initiative’ which was started in 2015. A comprehensive
training programme was deployed throughout Airbus to raiseawareness, to reduce risks and more generally to improve theculture of integrity of the Company.

Board Evaluation 2016
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 2016 marked the end of this three-year cycle. In
December 2016, the Board of Directors therefore carried out
an internal evaluation based on a questionnaire issued by theGeneral Counsel and circulated to each Board Member.
The questionnaire primarily covered governance, Board of
Directors and Committees’ effectiveness, Board of Directors
and Committee composition, Board of Directors areas ofexpertise and working process, relationships between the Boardof Directors, the Management, shareholders and stakeholders,
as well as scope and composition of topics and the preparation
for the future.

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The Board of Directors was satisﬁed overall with the continuous
progress made in 2015 and 2016 in the implementation of
the improvement action plan recommended by the thirdparty expert, Spencer Stuart, following the formal evaluation
conducted in December 2014.
In the 2016 evaluation, the Board Members confirmed
satisfaction with the Company’s governance structure, Boardof Directors’ effectiveness and decision-making process. The
Board Members notably valued adequate balance of powers
and constructive interaction between the Board of Directors andthe Management, open debates within the Board of Directors
and positive contribution of the Board Committees. The Boardof Directors’ effectiveness is helped by consistent progress inthe preparation of Board meetings, as well as the quality andlevel of information provided to the Board Members prior toand in-between Board meetings. The induction programme
for new Board Members and off-site Board meetings are also
appreciated.
The Board Members also highlighted that the Board of Directors
should dedicate additional time to risk management, strategy
and other topics, such as benchmarking on competitors
and products, digital transformation, corporate and social
responsibility and employee engagement. This would help toevaluate the performance and competitiveness of the Company,
increase anticipation in a challenging environment and prepare
for the future.
The year 2016 marked a substantial improvement of gender
diversity within the Board of Directors. In addition, the Board
Members highlighted the necessity to continue with the processof the staggering board principle, decided at the 2016 AGM,
in order to maintain the diversity of expertise and nationalities
within the Board of Directors.

duly exercised and that these matters are given due importanceat meetings of the Board of Directors. Thus, it discusses withthe auditor his audit programme and the results of the audit of
the accounts, and it supervises the adequacy of Airbus’ internal
controls, accounting policies and ﬁnancial reporting and theimplementation thereof by the CEO and senior management.
It also oversees the operation of Airbus’ Enterprise Risk
Management system and the Compliance Organisation.
The Chairman of the Board of Directors and the Chief Executive
Ofﬁcer are invited to attend meetings of the Audit Committee.
The Chief Financial Officer and the Head of Accounting
Record to Report are requested to attend meetings to present
management proposals and to answer questions. Furthermore,
the Head of Corporate Audit and the Airbus Ethics & ComplianceOfﬁcer are requested to report to the Audit Committee on aregular basis.
The Audit Committee is required to meet at least four times ayear. In 2016, it met ﬁve times with an average attendance rateof 95%, it discussed all of the above described items during themeetings and it fully performed all of the above described duties.

b) 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:
the Chairman of the Board of Directors;
a current or former Executive Director of the Company;■a 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.
■

4.1.1.2■

Board Committeesa) The Audit Committee
The Audit Committee has four (4) Members and is chaired by
an Independent Director who is not the Chairman of the Boardof Directors or a current or former Executive Director of theCompany. The Chaiman 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 makes
recommendations to the Board of Directors on the approvalof the annual ﬁnancial statements and the interim (Q1, H1, Q3)
accounts, as well as the appointment of external auditor andthe determination of his remuneration. Moreover, the Audit
Committee has the responsibility for verifying and making
recommendations to the effect that the internal and external
audit activities are correctly directed, that internal controls are

Pursuant to the Board Rules, the RNGC consults with the CEO
with respect to proposals for the appointment of the Members of
the Group Executive Committee and makes recommendations
to the Board of Directors regarding the appointment of theSecretary to the Board of Directors. The RNGC also makes
recommendations to the Board of Directors regarding
succession planning (at Board, Group Executive Committee
and Senior Management levels), remuneration strategies andlong-term remuneration plans. Furthermore the Committee
decides on the service contracts and other contractual mattersin relation to the Members of the Board of Directors and theGroup Executive Committee. The rules and responsibilities of
the RNGC have been set out in the Board Rules.

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The Chairman of the Board of Directors and the Chief Executive
Ofﬁcer are invited to attend meetings of the RNGC. The Headof Airbus Human Resources is requested to attend meetings
to present management proposals and to answer questions.
In addition, the RNGC reviews top talents, discusses measures
to improve engagement and to promote diversity, reviews the
remuneration of the Group Executive Committee Members forthe current year, the Long-Term Incentive Plan (“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 not, however, create any restrictions on
the diversity within the Company’s executive management team.
The RNGC is required to meet at least twice a year. In 2016, it
met three times with an attendance rate of 100%, 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 Group Executive Committeea) Nomination and Composition
The Executive Committee of Airbus (the “Group Executive
Committee”) is chaired by the Chief Executive Ofﬁ cer andits members are appointed on the basis of their performanceof their individual responsibilities as well as their respective
contribution to the overall interest of Airbus.
The CEO proposes all of the Members of the Group Executive
Committee for approval by the Board of Directors, after
consultation with (i) the Chairman of the RNGC and (ii) the
Chairman of the Board of Directors, applying the following
principles:■the preference for the best candidate for the position;

the maintenance, in respect of the number of Members of theGroup 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 the four Member States of the EU where thesemain industrial centres are located); and■at least 2/3 of the Members of the Group Executive Committee,
including the CEO and the Chief Financial Ofﬁcer (“CFO”),
being EU nationals and residents.
■

The Board of Directors determines, by simple majority vote,whether to approve all of the Members of the Group Executive
Committee as proposed by the CEO.

b) Role of the Group 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 accountablefor its proper execution accordingly. The Group Executive
Committee supports the CEO in performing this task. The Group
Executive Committee Members shall jointly contribute to theoverall interests of the Company in addition to each Member’s
individual operational or functional responsibility within Airbus.
The CEO endeavours to reach consensus among the Membersof the Group Executive Committee. In the event a consensus is
not reached, the CEO is entitled to decide the matter.

c) The Group Executive Committee in 2016
The Group Executive Committee met four times during 2016.
Amongst others the following matters are discussed at theGroup Executive Committee meetings:
appointment by the heads of the Airbus Divisions and functionsof their management teams;■
major investments;■
setting up and control of the implementation of the strategy
for the Group’s businesses;■
Airbus policy matters and management and organisational
structure of the business;■
performance level of the Group’s businesses and support
functions; and■all business issues, including the operational plan of theCompany and its Divisions and Business Units.
■

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COMPOSITION OF THE GROUP EXECUTIVE COMMITTEE AT THE END OF 2016

Name

Start of term

Principal Occupation

Tom Enders

2012

Chief Executive Officer Airbus

Fernando Alonso

2015

Head of Military Aircraft Airbus Defence and Space

Thierry Baril2012

Chief Human Resources Officer Airbus & Airbus Commercial AircraftFabrice Brégier

2012

Chief Operating Officer Airbus and President Airbus Commercial Aircraft
Chief Executive Officer Airbus Helicopters

Guillaume Faury

2013

John Harrison

2015

Group General Counsel Airbus

Dirk Hoke*2016

Chief Executive Officer Airbus Defence and Space

Marwan Lahoud**2012

EVP International, Strategy and Public Affairs, Airbus

John Leahy

2012

Chief Operating Officer – Customers Airbus Commercial Aircraft

Allan McArtor

2014

Chief Executive Officer Airbus North America

Klaus Richter2015

Chief Procurement Officer Airbus & Airbus Commercial Aircraft

Harald Wilhelm

2012

Chief Financial Officer Airbus

Tom Williams

2015

Chief Operating Officer Airbus Commercial Aircraft

Note: Status as of 1 January 2017. The professional address of all Members of the Group Executive Committee for any matter relating to Airbus is Mendelweg 30, 2333 CS
Leiden, The Netherlands.
* On 1 April 2016 Dirk Hoke became Chief Executive Officer of Airbus Defence and Space and a member of the Airbus Group Executive Committee.
** Marwan Lahoud left Airbus on 28 February 2017 as announced in the Airbus press release of 7 February 2017.

Tom Enders – Chief Executive Officer Airbus
Dr. Thomas (“Tom”) Enders was appointed Chief Executive
Ofﬁcer (CEO) of Airbus Group 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 and2007. He was Head of the Group’s Defence Division from 2000
to 2005. He has been a member of the Executive Committeeof Airbus Group SE 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.
Enders was President of the BDLI (German Aerospace Industry
Association) from 2005 to 2012. From 2005 to 2009 he was
Chairman of the Atlantik-Brücke e.V. In 2014, Enders joined theAdvisory Council of the Munich Security Conference as well as
the Senate of the Max-Planck-Gesellschaft. He is patron of theGerman Mayday Foundation which supports airmen, womenand their families in times of need.
Tom Enders is a member of the BDI Board (German Industry
Association) since 2009 and the Joint Advisory Council of Allianz
SE since 2013. From 2011 to 2015, Tom Enders was a memberof the Business Advisory Group of U.K. Prime Minister David
Cameron.

Fernando Alonso – Head of Military Aircraft Airbus
Defence and Space
Fernando Alonso was named as Head of Military Aircraft,
Airbus Defence and Space on 29 January 2015 and took up
the position on 1 March 2015. He is a member of the Airbus
Defence and Space Executive Committee and on 1 July 2015
was appointed to the Group Executive Committee. Previously he
was Senior Vice President Flight and Integration Tests, Head of
Flight Operations since September 2007, and, before that, Vice
President Flight Test Division since February 2002.
Fernando Alonso began his professional career with McDonnell
Douglas in Long Beach, California in 1979 as a performanceengineer in the company’s ﬂight test department. Three years
later, he joined Airbus as a performance engineer in the ﬂight
division.
While remaining with Airbus, he graduated as a ﬂ ight test
engineer at l’École du Personnel Navigant d’Essais et deRéception (EPNER) in 1990, and then became a ﬂ ight test
engineer responsible for aircraft performance of the A330,
A340 and A321.
Between 1995 and 2002, Fernando was responsible for thedevelopment of ﬂight controls and handling qualities during
the ﬂight test programmes of the A319, A330-200, A340-500
and A340-600. Subsequently, he was deeply involved in theorganisation and coordination of the ﬂight test campaign of
the A380.
During a career at Airbus that has spanned more than 30 years,
Fernando has accumulated more than 4,300 hours of ﬂight tests.
He was a ﬂight test engineer on the maiden ﬂights of A340-200

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in 1992, the A319 in 1997, the A380 in April 2005 and mostrecently the A350 XWB in June 2013.

Fabrice Brégier – Chief Operating Officer Airbus andPresident Airbus Commercial Aircraft

Born in Madrid, Spain in 1956, he obtained a degree from the
Polytechnic University of Aeronautical Engineers in Madrid in
1979. He is a keen skier and tennis player. He and his family
are also actively involved in the French charity Pour un Sourired’Enfant, fundraising and organising summer camps forunderprivileged children who live in a municipal dump in Phnom
Penh, Cambodia.

Fabrice Brégier was appointed President of Airbus Commercial
Aircraft & Chief Operating Ofﬁcer Airbus on 1 January 2017.
He previously was the President and Chief Executive Ofﬁcerof the Airbus Commercial Aircraft Division since June 2012.
Mr. Brégier is a member of the Group Executive Committee.

Thierry Baril –Chief Human Resources Officer Airbus &Airbus Commercial AircraftThierry Baril was appointed Chief Human Resources Ofﬁcer of
Airbus on June 1, 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.
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.
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.

He started his career in 1983 as a test engineer at the CreysMalville nuclear power station, becoming sales manager for
Péchiney (Japan) in 1984. In 1986 he joined the DRIRE Alsace(Ministry of Industry) and was then appointed Director of
Economic and Financial Affairs with the Ministry of Agriculture
in 1989.
Having been Advisor to several French Ministers, Mr. Brégier
joined Matra Défense in 1993 as Chairman of the Apache MAW
GIE (co-operation with Dasa) and Chairman of the Eurodrone
GIE (with STN-Atlas). In 1996 he was appointed Director ofStand-Off activities (Apache, Scalp EG/Storm Shadow) in what
had become Matra BAe Dynamics.
In 1998, Mr. Brégier became CEO of Matra BAe Dynamics. He
was appointed CEO of MBDA, the leading European missile
systems company that was created in 2001 by Aerospatiale
Matra, British Aerospace and Finmeccanica. In 2003, Fabrice
Brégier became President and CEO of the Eurocopter Groupand was appointed Head of EADS’ Eurocopter Division inJune 2005.
Mr. Brégier was appointed Airbus Chief Operating Ofﬁ cer(COO) in October 2006. As a Member of the EADS Executive
Committee, he was commissioned by Louis Gallois toimprove the overall operational performance of the Group.
His responsibilities included the Company’s wide-ranging
restructuring and change programme (Power8), the Executive
Committee functions Operations, Engineering and Procurement,
and the A350 XWB programme.
Mr. Brégier graduated from the École Polytechnique in 1980 andfrom the École des Mines. He was born in 1961 in Dijon, France.

Guillaume Faury – CEO Airbus Helicopters
Guillaume Faury became Chief Executive Ofﬁcer (CEO) of Airbus
Helicopters – formerly Eurocopter – on January 1, 2014 and isa member of the Group Executive Committee.
Prior to assuming this position, he had been CEO of Eurocopter
since May 2013. He joined Eurocopter from Peugeot S.A., where
he had served as Executive Vice President for Research andDevelopment since 2010 and as a Member of the Managing
Board since 2009.
Guillaume Faury, a licensed ﬂight test engineer, served in various
senior management functions at Eurocopter from 1998 to 2008
before joining Peugeot S.A. He was Chief Engineer for theEC225/725 programme, Head of the Heavy Helicopter Flight

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Test department, Executive Vice President for Commercial
Programmes and, ultimately, Executive Vice President for
Research & Development. Guillaume Faury also was a memberof the Eurocopter Executive Committee.
He started his professional career with the French Defence
Procurement Agency DGA, where he was in charge of Tiger
helicopter ﬂight test activities at the Istres Flight Test Centre.
Guillaume Faury, born in February 1968, holds an engineering
degree from the École Polytechnique in Paris as well as anaeronautics and engineering degree from the École Nationale
Supérieure de l’Aeronautique et de l’Espace in Toulouse.

Dirk Hoke – CEO Airbus Defence and SpaceJohn Harrison – Group General Counsel Airbus
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.
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 asGroup General Counsel and Member of the Group Executive
Committee from 2007-2015.

Dirk Hoke is the designated Chief Executive Ofﬁ cer (CEO)of Airbus Defence and Space as of 1 April 2016. He started
on 1 January as Deputy CEO. He is a member of the Group
Executive Committee.

Prior to joining Technip, Mr. Harrison fulﬁlled various senior legal
positions in Airbus Group companies over a ten year period
culminating his tenure from 2003-2007 as General Counsel ofthe EADS Defence Division.

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 becoming
CEO of the Cluster Western & Central Africa in 2008. His careerspans 21 years and ﬁve continents.

John Harrison was born on 12 July 1967 in the United Kingdom.

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.
Born on 2 April 1969, Dirk Hoke is married with two children.

Marwan Lahoud – Airbus EVP International, Strategy
and Public Affairs (departed 28 February 2017)
Marwan Lahoud is Executive Vice President International,
Strategy and Public Affairs of Airbus. Prior to re-joining theGroup, he had run MBDA as Chief Executive Ofﬁcer since 2003.
Lahoud began his career at the French Defence procurement
agency DGA (Direction Générale de l’Armement) in 1989 at
the Landes test range, where he served ﬁrst as Head of thecomputation centre, and later as project manager in chargeof upgrading testing systems and coordinating investments.
In 1994, he was appointed Special Advisor to the Tactical
Missile Systems Engineering Division. Then he took on a newrole as Deputy Director, Missiles and Space Systems. Lahoudcontributed to the development of the 1995-2000 Military
Planning Act and led several joint work groups bringing together
political, military and industrial stakeholders, covering issues
such as the non-proliferation of weapons of mass destruction,
Franco-German space cooperation and expanded air defence
programmes.
In early 1995, Marwan Lahoud was appointed Special Advisor to
the French Ministry of Defence. At the end of 1995, he moved toserve as Advisor for Industrial Affairs, Research and Weapons,
where he was responsible for the industrial consolidation
programmes.
In May 1998, he joined Aerospatiale as Vice President
Development where he was responsible for negotiating
agreements with Groupe Lagardère for the Aerospatiale-Matra
Hautes Technologies merger. He also served as Secretary
General of the Aerospatiale-Matra Hautes Technologies
committee.

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In June 1999, he was appointed Senior Vice President Strategy
and Planning for Aerospatiale- Matra, where he also served
as Senior Vice President Military Affairs. After the foundationof EADS in 2000, Marwan Lahoud was appointed Senior Vice
President Mergers & Acquisitions. During his tenure, he oversaw
the creation of Airbus, MBDA and Astrium.
Marwan Lahoud, born on 6 March 1966, is a graduateof France’s École Polytechnique and the École Nationale
Supérieure de l’Aéronautique et de l’Espace. He is Chairman of
GIFAS (Groupement des Industries Françaises Aéronautiqueset Spatiales), Chairman of the Institut des Hautes Études
Scientiﬁ ques (IHÉS), a member of the Supervisory Board
and Chairman of the Audit Committee of BPCE (BanquePopulaire Caisses d’Epargne), a member of the Board of the
AX (Polytechnique alumni association) and a member of theBoard of the École Polytechnique. Marwan Lahoud is an Ofﬁcerof the French Légion d’Honneur.

John Leahy – Chief Operating Officer-Customers Airbus
Commercial AircraftJohn Leahy was appointed Chief Operating Ofﬁcer – Customersof Airbus in July 2005 and assumes the same role for Airbus
Commercial Aircraft effective from 1 January 2017. Hecontinues his responsibilities as Chief Commercial Ofﬁcer ofthe Airbus Commercial Aircraft Division, a role he had held
since August 1994. His responsibilities cover all commercial
activities including sales, marketing, contracts, business
transaction control, asset management, leasing, and businessdevelopment. Leahy is a member of the Airbus Executive
Committee.
One of Leahy’s greatest achievements was to raise Airbus’
market share from 18% in 1995 to over 50% by the turn of the
century, where it has been maintained over the last 14 years. He
also led the commercial activities that resulted in the successful
launch of Airbus next generation ﬂagship aircraft which set thestandards for large aircraft in the 21st century, the A380 and
the A350 XWB. Leahy was also a key player in the launch of
the A320neo (New Engine Option) family, which has become
the fastest selling aircraft programme in aviation history. He
was also instrumental in the launch of the A350 XWB family
as well as the A330neo.
John Leahy worked for seven years in marketing at Piper
Aircraft before joining Airbus North America in January 1985.
He became Head of Sales in 1988 and then became Presidentof Airbus North America. Leahy was responsible for the
penetration of the strategic North American market, wheremost major U.S. airlines are now Airbus customers.
John Leahy has an MBA from Syracuse University withconcentration in both Finance and Transportation Management
and a BA from Fordham University with a dual major in
Communications and Philosophy. He is also a licensed multiengine commercial pilot and a former flight instructor. In

March 2012, he received one of France’s top civilian awards
by being named an Ofﬁcer of the Légion d’Honneur, for his
services to European and French aviation.

Allan McArtor – CEO Airbus North America
Allan McArtor is Chairman of Airbus Americas, Inc. In thisleadership role, McArtor enhances relationships with Airbus’
customers, suppliers and government representatives. He
is instrumental in providing strategy and vision for Airbus
companies throughout the United States, Canada and Latin
America. McArtor has increased the Company’s commercial
aviation market share throughout the region and establishedthe A320 Aircraft Assembly Line in Mobile, Alabama.
Throughout his career, McArtor has held a series of leadershipand senior management positions in the military, civil andgovernment sectors.
Before joining Airbus, he was founder, Chairman and CEO of
Legend Airlines, a regional airline based at Dallas Love Field,
Texas.
President Ronald Reagan appointed McArtor to serve as the
Administrator of the FAA from 1987 to 1989.
McArtor served on the senior management team of Federal
Express from 1979 to 1987 and 1989 to 1994 ﬁrst as SeniorVice President Telecommunications during the developmentof FedEx’s extensive satellite-based digital network, then as
Senior Vice President Air Operations for FedEx’s global airline.
McArtor was a combat ﬁghter pilot in Vietnam from 1968 to
1969, an Associate Professor of Engineering Mechanics at
the Air Force Academy, and a pilot with the U.S. Air Force’s
Thunderbirds Aerial Demonstration Team.
He is a 1964 graduate of the U.S. Air Force Academy (BSE) andholds a master’s degree (MSE) from Arizona State University.
He holds an honorary doctorate degree from Christian Brothers
University in Memphis, Tennessee, in recognition of his role inestablishing the School of Telecommunications and Information
Systems.

Klaus Richter – Chief Procurement Officer Airbus& Airbus Commercial AircraftKlaus Richter became Chief Procurement Ofﬁcer for Airbus
Group SE on 1 January 2015. In this function, he is a memberof the Group Executive Committee and the Airbus Executive
Committee. In addition, he serves as the Chairman of theBoard of Airbus in Germany and leads the Supervisory Boardof 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.

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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 the
President 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 Munichwhere he obtained a doctorate in mechanical engineering in
1991. After graduation he received a Humboldt scholarship andspent two years as a researcher and teacher at the Universityof California at Berkeley.
Born in Munich on 29 September 1964, Klaus Richter is married
with two children.

Harald Wilhelm – Chief Financial Officer Airbus
Harald Wilhelm has been Chief Financial Ofﬁcer of Airbus andAirbus Commercial Aircraft since 1 June 2012 and is a memberof the Group Executive Committee.
He has held the role of Airbus Commercial Aircraft CFO since
1 February 2008. Previously, he was Airbus Commercial Aircraft
Chief Controlling Ofﬁ cer 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.
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.
Born in April 1966 in Munich, Wilhelm has a degree in BusinessStudies from Ludwig Maximilians University in Munich.

Tom Williams – Chief Operating Officer Airbus
Commercial Aircraft
Tom Williams was appointed Chief Operating Ofﬁcer (COO) of
Airbus Commercial Aircraft in January 2015. He is responsible
for the overall operations including Engineering, Procurement
and Supply Chain Management. Tom is a member of the
Executive Management Team of Airbus and the Airbus
Commercial Aircraft Executive Committee.
Previously Tom was Airbus Commercial Aircraft Executive Vice
President Programmes, a position he held from July 2005. Hisrole covered all Airbus aircraft families and as such, he wasin charge of ensuring the proﬁtability of the civil programmes,of leading the product policy and the development of new
products, as well as ensuring proper delivery to the customers.
Before being appointed to this position, he had been Executive
Vice President Procurement since February 2004.
After completing an apprenticeship with Rolls-Royce AeroEngines in 1972, Tom went on to carry out increasingly senior
roles in a number of UK manufacturing companies.
In 1992 he was appointed Operations Manager for Cummins
Engines, looking after all manufacturing at the company’s
1,200-strong Scottish factory. At the start of 1995 he became
Manufacturing and Business Group Director for the Sensors
activity of Pilkington Optronics – a joint venture with Thomson
CSF of France. Focusing initially on the introduction of ’leanmanufacturing’ techniques, he also became involved in
integrating Thorn EMI Electro Optics into the business.
Tom joined British Aerospace (now merged with Marconi
Electronic Systems to form BAE Systems) in 1997 as Site
Director and General Manager at the Prestwick site of thecompany’s Aerostructures division. Two years later he wasappointed Operations Director – Internal Supply, within thecompany’s Military Aircraft and Aerostructures Division, thenEurofighter Operations Director with responsibilities that
included manufacturing and other business functions at the
Warton and Salmesbury sites of BAE Systems.
In November 2000, Tom became Managing Director andGeneral Manager of Airbus UK, a position he held until hebecame Airbus’ Executive Vice President Procurement in
2004.
Tom was born in 1952 in Glasgow. During his apprenticeshiphe gained an HNC in Production Engineering and in 1988 an
MBA from Glasgow University. Married with one daughter, Tom
is a keen football supporter and occasional golfer.
Tom received a Commander of the Order of the British
Empire (CBE) in January 2011 and was awarded the rank of
Knight in the Légion d’Honneur by the Republic of France inDecember 2015.

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Last year, Tom received the Mensforth Manufacturing Medalfrom the Institute of Engineering and Technology (IET) for
his achievements as a world-class production engineer, andwas awarded the Honorary Degree of Doctor of Business

4.1.2

Administration by the University of the West of England inrecognition of his contribution to operations, manufacturing
and business.

Dutch Corporate Governance Code, “Comply or Explain”

In accordance with Dutch law and with the provisions of the
Dutch Corporate Governance Code as amended at the end of2008 (the “Dutch Code”), which includes a number of nonmandatory recommendations, the Company either applies theprovisions of the Dutch Code or, if applicable, explains and gives
sound reasons for their non-application. While the Company, 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 corporate governancecommittee published the ﬁnal version of a revision of the Dutch
Code (the “New Code”). The New Code will apply to ﬁnancial
years starting on or after 1 January 2017. The New Code isrestructured around a number of themes, as opposed to thecurrent Dutch Code which is based on a functional division ofroles and responsibilities within a company.
Airbus welcomes the updates to the Dutch Code and supports
the emphasis of the New Code on topics such as long-termvalue creation and the importance of culture. Airbus alreadycomplies with a vast majority of the provisions of the New Codeand will use the year 2017, to the extent required, to assess theneed for a further alignment of its organisational structure anddisclosures, with a view to its compliance with the New Code.
For the full text of the Dutch Code as well as the New Code,please refer to www.commissiecorporategovernance.nl.
For the ﬁnancial year 2016 and in respect of compliance with
the Dutch Code, the Company states the following:

1. Vice-Chairmanship
Provision III.4.1(f) of the Dutch Code recommends the electionof a Vice-Chairman, to, among other things, deal with thesituation when vacancies occur.
■
The Board of Directors is headed by the Chairman of theBoard of Directors and no Vice-Chairman is appointed. Incase of dismissal or resignation of the Chairman, the Boardof Directors shall immediately designate a new Chairman. In
Airbus’ view there is no need for the appointment of a ViceChairman to deal with such situations or other circumstances.

2. Termination indemnity
Provision II.2.8 of the Dutch Code recommends that the
maximum remuneration in the event of dismissal of an Executive
Board Member be one year’s salary, and that if the maximumof one year’s salary would be manifestly unreasonable for an
Executive Board Member who is dismissed during his ﬁrst
term of ofﬁce, such Board Member be eligible for severance
pay not exceeding twice the annual salary.
■
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 the performance conditions assessed by the Board of
Directors would have been fulﬁlled by the CEO.
■

3. Securities in the Company as long-term
investment
Provision III.7.2 of the Dutch Code recommends that NonExecutive Directors who hold securities in the Company
should keep them as a long-term investment. It does notencourage Non-Executive Directors to own shares.
■
The Company does not require its Non-Executive Directors
who hold shares in its share capital, to keep such shares asa long-term investment. Although Non-Executive Directors
are welcome to own shares of the Company, the Company
considers it is altogether unclear whether share ownershipby Non-Executive Directors constitutes a factor of virtuousalignment with stakeholder interest or may be a source of bias
against objective decisions.
■■

4. Dealings with analysts■

Provision IV.3.1 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 bymeans of press releases. In addition, it recommends thatprovisions shall be made for all shareholders to follow thesemeetings and presentations in real time and that after the
meetings the presentations 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 composition guidelines
whereby the Board of Directors would be composed in abalanced way if it contains at least 30% women and at least
30% men. These percentages are based on those included

4.1.3

Enterprise Risk Management System

The aerospace and defence industry’s complex programmes
are delivered over volatile market cycles, amplifying risk andopportunity. Airbus’ long-term development and production
lifecycle make Enterprise Risk Management (“ERM”) a crucial
mechanism for both mitigating the risks faced by the Company
and identifying future opportunities.
Applied across the Company and its main subsidiaries, ERM
facilitates achieving and applying common understanding,methodology, practice and language. ERM is a permanent
top-down and bottom-up process, which is executed acrossAirbus Divisions on each level of the organisation. It is designed
to identify and manage risks and opportunities focusing on
business-relevant aspects. A particular focus is put on theoperational dimension due to the importance of Programmes
and Operations for Airbus.
Required key activities in Risk and Opportunity Management
are:■anticipation of future events and conditions;■early warning;■
early risks reduction;■
seizing and capturing of opportunities.
Enterprise Risk Management is an operational processembedded into day-to-day management activities ofProgrammes, Operations and Functions. A reporting synthesis
is made and consolidated on a regular basis (quarterly andyearly).
The aim of the ERM process is to:
identify, assess, control and mitigate risks, and seize andcapture opportunities;■
monitor the ERM process and to report status and results;■
allow risk-adjusted decisions and management processes(e.g. planning; decision-making);■enhance risk-response / opportunity-capture decisions andactions;■

in a Dutch draft bill that is expected to come into force in thecourse of 2017 in continuation of previous legislation in force
stipulating the same percentages.
■
With the election of Amparo Moraleda at the AGM held on
27 May 2015 and the election of Catherine Guillouard andClaudia Nemat at the AGM held on 28 April 2016, the female
representation on the Company’s Board of Directors increased
to 25%. The Company is pleased with this development andwill continue to promote gender diversity within its Boardof Directors by striving to increase the proportion of female
Directors.

■

identify and manage cross-enterprise risks / opportunities by
understanding interrelated impacts.

Through ERM, Airbus Management enables the:■management of the risk proﬁle associated to the Company’s
strategy;■
management of the risks associated with the Company
activities;■
ERM reporting to the Board of Directors and Audit Committee(AC) respectively.
The Company’s Board of Directors supervises the:corporate strategy and the risks inherent to the businessactivities;■
design and effectiveness of the internal risk management
and control systems.
■

4.1.3.1

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 Airbus. The Company’s
ERM Policy is supplemented by directives, manuals, guidelines,
handbooks, etc. External standards that contribute to theCompany’s ERM system include the standards as deﬁned by
the International Organisation for Standardisation (“ISO”).
The ERM system comprises an integrated hierarchicalbottom-up and top-down process to enable better management
and transparency of risks and opportunities. At the top, theBoard of Directors and the Audit Committee discuss majorrisks and opportunities, related risk responses and opportunity
capture as well as the status of the ERM system, including
signiﬁcant changes and planned improvements. This is basedon systematic bottom-up information including management
judgement. The results are then fed back into the organisation.
The ERM process consists of four elements:
the operational process, derived from ISO 31000 – to enhance
operational risk and opportunity management;■

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the reporting process, which contains procedures for the
status reporting of the ERM system and the risk/opportunity
situation;■
the ERM compliance process, which comprises proceduresto assess the effectiveness of the ERM system; and■the 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, which are potentially affecting the Company
activities, its businesses as well as its organisation in the short-,
mid- and long-term. The ERM process is part of the management
process and interrelated with the other processes. The detailsof application of the ERM process vary with the risk appetiteand the size, structure and nature of the organisational unit,
programme / project, department or process. Nonetheless, thefundamental principles of the Company’s ERM Policy generally
apply.
For a discussion of the main risks to which Airbus is exposed,
see “— Risk Factors”.

4.1.3.3

4.1.3.2

ERM Governance and Responsibility

The governance structure and related responsibilities for the
ERM system are as follows:
the Board of Directors supervises the strategy and businessrisk 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 Risk and Opportunity Management,
and the ERM system design and process implementation;■
the Head of Risk and Opportunity Management has primary
responsibility for the ERM strategy, priorities, system design,culture development and reporting tool. He supervises theoperation of the ERM system and is backed by a dedicatedrisk management organisation in the Company focusing on
the operational dimension, early warning and anticipation
culture development while actively seeking to reduce overallrisk criticality. The risk management organisation is structured
as a cross-divisional Centre of Competence (“CoC”) andpushes for a proactive risk management culture;■
the management on executive levels has the responsibility
for the operation and monitoring of the ERM system in theirrespective areas of responsibility and for the implementationof appropriate response activities to reduce risk and seize
opportunities.
■

ERM Effectiveness

The ERM effectiveness is analysed by:■■

Corporate Audit, based on internal corporate audit reports;
ERM 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).

The combination of the following controls is designed to achieve reasonable assurance about ERM effectiveness:
Organisation

Explanations

Board of Directors /Audit Committee

Regular monitoring
The Board of Directors and the Audit Committee review, monitor and supervise the ERM system.

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 Business Units to top management.

Management

ERM confirmation letter procedure
Entities and department heads that participate in the annual ERM compliance procedures have to 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

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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4.1.3.4

Board Declaration

The Board of Directors believes to the best of its knowledge
that the internal risk management and control system overﬁnancial reporting has worked properly in 2016 and provides
reasonable assurance that the ﬁ nancial reporting does notcontain any errors of material importance.
No matter how well designed, all ERM systems have inherent
limitations, such as vulnerability to circumvention or overridesof the controls in place. Consequently, no assurance can begiven that the Company’s ERM system and procedures are or
will be, despite all care and effort, entirely effective.

4.1.3.5

Business Processes Coveredby the ERM System

Based on the Company’s activities, 20 high-level businessprocesses have been identiﬁed within the Company. They are
categorised into core processes (research and development,
production, sales, after-sales and programme management),
support processes (corporate sourcing, Human Resources,
accounting, ﬁ xed assets, treasury, information technology,
mergers and acquisitions, legal and insurance) and management
processes (strategy, corporate audit, controlling, compliance,risk management and management controls). These businessprocesses, together with the corresponding ERM processes,
are designed to control process risks that have signiﬁ cantpotential to affect the Company’s ﬁnancial condition and resultsof operations. Below is a description of the main businessprocesses at the respective headquarters’ level which werein place during 2016.

policies which comply with IFRS, reporting rules and ﬁnancial
guidelines in order to ensure the consistency and quality ofﬁnancial information reported by the Divisions and Business
Units. The Company’s accounting policies are set out in a
written accounting manual, which is agreed with the Company’s
external auditors. Changes to the Company’s accounting
manual require approval by the Head of Accounting, and,
where signiﬁcant changes are involved, the CFO or the Boardof Directors (based upon the advice of the Audit Committee).
Control of the ﬁnancial planning and reporting processes isachieved not only through the development of group-wideaccounting systems and policies, but also through an organised
process for providing information from the reporting units on atimely basis as an up-to-date decision-making tool to control
the operational performance of the Company. This information
includes regular cash and treasury reports, as well as otherﬁnancial information used for future strategic and operativeplanning and control and supervision of economic risks arisingfrom Airbus’ operations. The Divisional CFOs frequently meetwith the Head of Accounting and his responsible staff to discuss
the ﬁnancial information generated by the Divisions.
Prior to being disclosed to the public and subsequently
submitted for approval to the shareholders, the consolidated
year-end ﬁnancial statements are audited by the Company’s
external auditors, reviewed by the Audit Committee andsubmitted for approval by the Board of Directors. A similar
procedure is used for the semi-annual and quarterly closing.
Airbus auditors are involved before the Company’s ﬁnancial
statements are submitted to the Board of Directors.

Treasury

Accounting
At the core of the Company’s ERM system are accounting
processes and controls designed to provide reasonableassurance regarding the reliability of ﬁnancial reporting andthe preparation of ﬁ nancial statements and other ﬁ nancial
information used by management and disclosed to theCompany’s investors and other stakeholders. The integrated
approach to planning and reporting aims to improve internal
communication and transparency across departments andorganisational units within the Company.
The Company’s ﬁnancial control model deﬁnes the planningand reporting procedures that apply to all operational unitsof Airbus, as well as the responsibilities of the CFO, who ischarged with developing, implementing and monitoring theseprocedures. Among the CFO’s primary tasks is oversight of the
preparation of the Consolidated Financial Statements of Airbus
Group SE, which are prepared under the direct supervision of
the Head of Accounting. The Head of Accounting is responsible
for the operation of the Company’s consolidation systems
and rules and for the deﬁ nition of group-wide accounting

Treasury management procedures, deﬁned by the Company’s
Central Treasury department at Airbus headquarters, enhance
management’s ability to identify and assess risks relating toliquidity, foreign exchange rates and interest rates. Controlledsubsidiaries fall within the scope of the centralised treasury
management procedures, with similar monitoring procedures
existing for jointly controlled afﬁliates, such as MBDA.
Cash management. The management of liquidity to support
operations is one of the primary missions of the Company’s
Central Treasury department. Regular cash planning, inconjunction with the Planning / Reporting department, as well
as monthly cash reporting by the Central Treasury department,
provide management with the information required to oversee
Airbus’ cash proﬁle and to initiate necessary corrective actionin order to ensure overall liquidity. To maintain targeted liquidity
levels and to safeguard cash, the Company has implemented acash pooling system with daily cash sweeps from the controlledsubsidiaries to centrally managed accounts. Payment fraud
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throughout Airbus. For management of credit risks related toﬁnancial instruments, please refer to the “— Notes to the IFRS
Consolidated Financial Statements — Note 35.1: Information
about Financial Instruments — Financial Risk management”.
Hedge management. Commercial operations generatematerial foreign exchange and interest rate exposures. A
Company hedging policy is deﬁned and updated regularly by
the Board of Directors. In order to ensure that all hedging activity
is undertaken in line with the Company hedging policy, theCompany’s Central Treasury department executes all hedging
transactions, unless such centralised hedging is not allowed
by local bank regulations. The Central Treasury department
conducts on-going risk analysis and proposes appropriate
measures to the Divisions and Business Units with respect toforeign exchange and interest rate risk. Subsidiaries are required
to calculate, update and monitor their foreign exchange andinterest rate exposure with the Company’s Central Treasury
department on a monthly basis, in accordance with deﬁned
treasury procedures. See “— Management’s Discussion andAnalysis of Financial Condition and Results of Operations —2.1.7 Hedging Activities”.
Sales financing. In connection with certain commercial
contracts, the Company may agree to enter into sales ﬁnancing
arrangements. In respect of sales ﬁnancing at Airbus, an annual
sales ﬁnancing budget is deﬁned as part of the Company’s
operative planning process. Sales ﬁnancing transactions areapproved on a case-by-case basis with the involvement of top
management, in line with certain risk assessment guidelines
and managed by a group-wide integrated organisation.

Sales
Commercial contracts entered into by the Company’s operating
subsidiaries have the potential to expose the Company tosigniﬁ cant ﬁ nancial, operational and legal risks. To control
these risks, management has implemented contract proposal
review procedures that seek to ensure that the Company does
not enter into material commercial contracts that expose it tounacceptable risk or are not in line with the Company’s overall
objectives. These procedures include (i) Board of Directorsapproved thresholds and criteria for determining the risk andproﬁtability proﬁles and (ii) a mandated pre-approval process
for contracts deﬁ ned as “high-risk”. Contracts falling within
the defined threshold categories require approval by therespective Divisional Chief Financial Ofﬁ cer. Contracts thatare deemed “high-risk” and exceed certain thresholds mustbe submitted to a standing Commercial Committee (with the
CFO and the Chief Strategy and Marketing Ofﬁcer serving as
Chairmen, and a possible escalation to the CEO when needed).
This committee is responsible for reviewing the proposal andgiving recommendations when necessary, based on which theconcerned Business Unit is allowed to remit its offer. In the caseof Airbus, due to the nature and size of its business, contracts
are approved in accordance with Airbus’ own corporate
governance policy based on the Company’s guidelines which
follow the same principle, with participation of the Company.
In general, where the Company shares control of a subsidiarywith a third party, the Commercial Committee is responsible fordeveloping the Company’s position on proposed commercial
contracts.

Legal
The Company is subject to myriad legal requirements in eachjurisdiction in which it conducts business. The mission of theCompany’s Legal department, in coordination with the Division
and Business Unit Legal departments, is to actively promoteand defend the interests of the Company on all legal issues
and to ensure its legal security at all times. By carrying out thismission it is responsible for implementing and overseeing theprocedures designed to ensure that the Company’s activities
comply with all applicable laws, regulations and requirements.
It is also responsible for overseeing all major litigation affecting
the Company, including Intellectual property.
The Company’s Legal department also plays an essential rolein the design and administration of (i) the Company’s corporate
governance procedures and (ii) the legal documentation
underlying the delegation of powers and responsibilities which
deﬁ ne the Company’s management and its internal control
environment.

Corporate Audit & Forensic
The Company’s Corporate Audit & Forensic department,
reporting to the CEO, provides independent assurance
to the Group Executive Committee and Audit Committee
Members based upon a risk-oriented approved annual audit
plan. The Corporate Audit & Forensic department (i) reviews
the achievement of the Company’s strategic, financial or
operational objectives, (ii) reviews the reliability and integrityof Airbus reporting, (iii) reviews the effectiveness of the ERM
system, (iv) reviews the efﬁciency and effectiveness of selected
processes, entities or functions and (v) reviews compliance withlaws, regulations, Airbus guidelines and procedures. Corporate
Audit & Forensic also conducts ad hoc reviews, performedat the request of Group Executive Committee Members. In
2015, the Institut français de l’audit et du contrôle internes(IFACI) reviewed the Corporate Audit & Forensic department
and certiﬁed that it fulﬁlled the requirements of the International
Professional Practices Framework. Corporate Audit & Forensic
also includes a team of forensic experts in charge of conducting
investigations of compliance allegations.

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Corporate Sourcing
The performance of the Company is to a large extent determinedthrough its supply chain. Therefore, sourcing is a key lever for
the Company in its marketplace.
The Company’s size and complexity requires a common
approach to maximise market levers and to avoid inefﬁciencies
in the procurement process. To help ensure that sourcing iscarried out in the most effective, efﬁcient and ethical manner,a set of common procurement processes, which support acommon sourcing strategy and ultimately the Airbus strategy
and vision, is deﬁned by the head of Corporate Sourcing andAirbus’ Procurement Leadership Team.
The common approach and processes are then implemented
and optimised across all Divisions through the Sourcing

4.1.4

Commodity Boards and Networks. These Sourcing
Commodity Boards and Networks comprise representatives
from all Divisions. They are tasked by Airbus’ Procurement
Leadership Team to deﬁne and roll out across the Company’s
strategic sourcing topics such as Sourcing Strategy, Supplier
Relationship Management, Common Processes and Tools,
Global Sourcing, Joint Procurement, Compliance, Corporate
Social Responsibility, Procurement Academy and Procurement
Performance Management. The procurement processes are
regularly reviewed by means of performance indicators, audits
and self-assessments and thus consistently challenged andoptimised.

Ethics and Compliance
See “— 4.1.4 Ethics and Compliance Organisation” below.

Ethics and Compliance Organisation

In June 2013 the CEO described the importance of theCompany’s dedication towards Ethics and Compliance(“E&C”) in the following way: “Within the Airbus Group, it’s notjust our results that matter – it’s the way we achieve them”. The
Airbus Ethics and Compliance Programme (“the Airbus E&C
Programme”) seeks to ensure that Airbus’ business practices
conform to applicable laws and regulations as well as to ethicalbusiness principles and thus establish a culture of integrity.
There are two foundation documents in the Airbus E&C
Programme: the “Standards of Business Conduct” and“Our Integrity Principles”, which summarise Airbus’ six key
E&C commitments. These foundation documents are in turncomplemented by dedicated policies to address speciﬁ ccompliance risk areas
As announced last year, Airbus has determined to enhancecertain of its policies, procedures and practices, including
Ethics and Compliance. This started by combining the various
group-wide compliance policies dealing with Business Ethics/
Anti-Corruption into a single framework in 2016. First, we
implemented an updated policy for the vetting of consultants
engaged in sales support, to add a second layer of internal
review and strengthen payment approval procedures.
Second, we issued a new Anti-Corruption Policy thatsummarises the prohibition against bribery and corruption
for employees and other stakeholders, while providing
an overview of the main elements of our anti-corruption
compliance programme designed to mitigate this risk. Third,
we updated our policies relating to Gift & Hospitality andSponsorship & Donations. Finally, we adopted a new policy
related to Anti-Money Laundering. In each case, we will seek
to support implementation of these policies by developing
new standardised processes and IT tools, to ensure that
evaluation of compliance risk is more fully integrated intobusiness decisions by management.
The work to enhance our E&C programme will continue in2017, not only in the area of Business Ethics/Anti-Corruption
but across the Ethics and Compliance spectrum moregenerally in order to capitalise on our values.
In 2016, the E&C organisation was renewed and strengthened.
New Division E&C Ofﬁcers were appointed across the Group,and some former positions were merged into one single
position (Airbus Head of Ethics & Compliance, Business &Programme), to enhance management of Business Ethics/
Anti-Corruption risk in particular. More generally, the E&C
community was reviewed entirely and made more efﬁ cientthroughout Airbus.
These changes build on those of 2015, pursuant to which the
E&C organisation was integrated with the Legal department
under the ultimate responsibility of the Airbus GeneralCounsel. The Airbus General Counsel reports to the CEO
and is a Group Executive Committee Member and reports to
the Board. In order to maintain the necessary independence,
the Airbus Ethics and Compliance Ofﬁ cer (“ECO”) reports
to the Airbus General Counsel and has access to the Audit
Committee of the Board of Directors.

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This integration at group level is replicated at Division level. As
a result, the Divisions’ Ethics and Compliance Ofﬁcers’ reportto their respective Division General Counsel who themselvesreport to the Airbus General Counsel. The Divisions’ Ethics &Compliance Ofﬁcers also have a dotted line to the Airbus ECO.

Furthermore, in 2016 we maintained five E&C Country
Managers in the following zones: Brazil-Latin America, India,
China-Asia Paciﬁ c, Middle East-Africa and Russia. The E&C
Country Managers report to the Airbus Ethics & Complianceorganisation.

The E&C organisation is made of four pillars:

Like previous years, E&C was a top priority for the Company
in 2016 and the E&C Organisation had a set of objectives
to fulﬁ ll. Similarly, each of our Group Executive Committee
Members had E&C objectives to meet and cascade down
within their respective areas.

the Airbus Head of Ethics & Compliance, Business &Programme has overall responsibility for the Companywide development, deployment and monitoring of the E&C
programme, including all anti-corruption policies, procedures
and controls, and also has responsibility for the validationand monitoring of the relationship with the business partners
and other business development initiatives;■
the Export Compliance Ofﬁ cer has overall responsibility
for the development, deployment and monitoring of theexport control compliance programme and ensures that theactivities of the Company comply with all relevant export
control rules and with the internal “sensitive countries”
policy;■the Procurement Compliance Ofﬁcer supervises compliancein the supply chain; while■
the Data Protection Compliance Ofﬁ cer is in charge of data
privacy risk.
■

Under the responsibility of the Airbus General Counsel, each
Division has a Divisional Ethics and Compliance rrganisationthat is embedded within the business through a network of
E&C representatives. In recent years, we have enlarged ourfootprint of E&C representatives and they are now present inall functions and locations of the business.

Em p loye e s, cu sto m e r s, su p p li e r s, a nd third-pa r t yintermediaries are encouraged to freely share their E&C
concerns with the Management or with E&C Resources.
While we have a non-retaliation principle, we recognise thata conﬁ dential channel for reporting may be useful and wehave an alert system called OpenLine. Subject to local legal
restrictions, OpenLine is available to employees of controlled
entities in France, Germany, Spain, the UK, Australia, Brazil,
Canada, China, India, Mexico and Saudi Arabia. A separate
system is also available for the US. The OpenLine can be usedby employees to raise concerns in relation with Corruption
and Bribery, Accounting, Finance, Anti-Competitive practices,
Harassment, Conﬂicts of Interest, Quality or Product Safety.
The Airbus General Counsel reports quarterly to the Audit
Committee. The report contains details on group signiﬁ cantcompliance allegations, including the allegations describedabove under “— 1. Information on Airbus Activities — 1.1.7
Legal and Arbitration Proceedings”. As a matter of transparency
and to leverage on lessons learnt, this report is shared withthe top management.

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4.2 Interests of Directors and Principal Executive Ofﬁ cers

4.2 Interests of Directors and Principal
Executive Ofﬁcers
4.2.1

Remuneration Policy

The Company’s Remuneration Policy covers all Members of theBoard of Directors: the CEO (who is the only Executive Director)
and the other Members of the Board (which is comprised of
Non-Executive Directors).
It should be noted that although the Policy relating to executive
remuneration only refers to the CEO, these principles arealso applied to the other Members of the Group Executive
Committee, who do not serve on the Board of Directors, andto a large extent to all executives across Airbus. Upon proposalby the CEO, the RNGC analyses and recommends, and theBoard of Directors decides, the remuneration of the Membersof the Group Executive Committee.
No 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 2017. The application of
the Remuneration Policy in 2016 will be included as a separate
agenda item for discussion at the AGM to be held in 2017.
To see how the Remuneration Policy was applied in 2016
in respect of the CEO (the only Executive Member of theBoard of Directors)(1), see “— 4.2.1.3 — Implementation of
the R emuneration Policy in 2016: CEO”. The cumulated
remuneration of all Group Executive Committee Members ispresented in the “Notes to the IFRS Consolidated Financial
Statements — Note 31: Remuneration”.
To see how the Remuneration Policy was applied in 2016 inrespect of the non-Executive Members of the Board of Directors,
see “— 4.2.1.4 — Implementation of the Remuneration Policy
in 2016: Non-Executive Directors”.

4.2.1.1

Executive Remuneration – Applicableto the CEOa) Remuneration Philosophy
The Company’s remuneration philosophy has the objective ofproviding remuneration that will attract, retain and motivate
high-calibre executives, whose contribution will ensure that
the Company achieves its strategic and operational objectives,
thereby providing long-term sustainable returns for all
shareholders.
The Board of Directors and the RNGC are committed to making
sure that the executive remuneration structure is transparent
and comprehensible for both executives and investors, and toensure that executive rewards are consistent and aligned with
the interests of long-term shareholders.
Before setting the targets to be proposed for adoption to theBoard of Directors, the RNGC considers the ﬁnancial outcome
scenarios of meeting performance targets, as well as ofmaximum performance achievements, and how these may
affect the level and structure of the executive remuneration.

b) Total Direct Compensation and Peer GroupThe Total Direct Compensation for the CEO comprises a Base
Salary, an Annual Variable Remuneration (“VR”) and a LTIP.
The three elements of the Total Direct Compensation are eachintended to comprise 1/3 of the total, assuming the achievementof performance conditions is 100% of target.
The level of Total Direct Compensation for the CEO is set at themedian of an extensive peer group. The benchmark is regularly
reviewed by the RNGC and is based on a peer group which
comprises:
Global companies in Airbus’ main markets (France, Germany,
UK and US); and■Companies operating in the same industries asAirbus worldwide.
■(1) The cumulated remuneration of all Group Executive Committee Members is presented in the “Notes to the IFRS Consolidated Financial Statements — Note 31:
Remuneration”.

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The elements of the Total Direct Compensation are described below:
Remuneration Element

Main Drivers

Base Salary

Performance Measures

Target and Maximum

Not applicable

1/3 of Total Direct Compensation(when performance achievement
is 100% of target).

Reflects market value of position.

Collective (50% of VR): divided
between EBIT(1) (45%); Free CashFlow(2) (45%) and RoCE (10%).

Rewards annual performancebased on achievement of company
performance measures andIndividual (50% of VR): Achievement
individual objectives.
of annual individual objectives, divided
between Outcomes and Behaviour.

VR

Vesting ranges from 0% to 150%
of initial grant, subject to performanceover 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%).

Rewards long-term commitment
and company performance, andengagement on financial targets
subject to cumulative performanceover a three-year period.

LTIP

The VR is targeted at 100%of Base Salary for the CEO and,depending on the performanceassessment, ranges from 0%
to 200% of target.
The VR is capped at 200%of Base Salary.
The original allocation to the CEOis capped at 100% of Base Salaryat the time of grant.
Since 2012, the following caps
apply to Performance Units only:
overall pay-out is capped at a
maximum of 250% of the originalvalue at the date of grant.
The value that could result fromshare price increases is capped at200% of the reference share priceat the date of grant.

(1) Airbus will no longer measure and communicate its performance on the basis of “EBIT*” but on the basis of “EBIT” (reported), as the difference between the two KPIs, the socalled “pre-goodwill and exceptionals”, is immaterial. Airbus continues to use the term EBIT (Earnings before interest and taxes). It is identical to Profit before finance cost andincome 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) change of securities, (iv) contribution to plan assets of pension schemes and (v) realised foreign exchange results on treasury swaps. It is a key indicator which allows
the Company to measure the amount of cash flow generated from operations after cash used in investing activities.

Policy from 2016 (approved by 2016 AGM)
The RNGC regularly benchmarks the CEO’s Total Direct
Compensation (Base Salary, Annual Variable Remunerationand LTIP) against an extensive peer group. The relevant peergroup was composed with the assistance of an independent
consultant Willis Towers Watson, and comprised 31 companies
having comparable economic indicators such as revenues,
number of employees and market capitalisation. Financial
institutions were excluded from the peer group (for further

details, see “— 4.2.1.3 Implementation of the Remuneration
Policy in 2016: CEO”).
Following the change approved at the AGM in 2016, and as
illustrated in the table below, the structure of the CEO’s Total
Direct Compensation will remain unchanged in 2017. Indeed,
the on-target levels of VR and LTIP will each amount to 100%of the CEO’s base salary.

SCENARIOS CEO TOTAL DIRECT COMPENSATION
Indications are in million euros.
Below Threshold“Below Threshold” includes annual base Salary; VR
at 0%; LTIP not vesting.

Target“Target” includes Base Salary, VR at target andLTIP grant face value in cash and in shares.

Maximum
0Base Salary

1

2

3

4

Variable Remuneration (VR)5

6

LTI paid in cash

7

8
LTI paid in shares“Maximum” includes Base Salary; maximum VR
value (200% of VR at target); maximum LTIP cash
grant projected at vesting date (250% of grantvalue); maximum performance applicable to thenumber of shares granted (150%). The share pricedevelopment is unpredictable. The ﬁnal value of
performance shares cannot be capped.

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4.2 Interests of Directors and Principal Executive Ofﬁ cersc) Base Salary

Common Collective Component

The Base Salary of the CEO is determined by the Board of
Directors, taking into account the peer group analysis mentioned
above.

The Common Collective component is based on EBIT (45%),
Free Cash Flow (45%) and RoCE (10%) objectives. Each year,
the Board of Directors sets the goals for these key 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
therefrom).

d) Annual Variable Remuneration
The variable remuneration is a cash payment that is paid eachyear, depending on the achievement of speciﬁc and challenging
performance targets. The level of the variable remuneration for
the CEO is targeted at 100% of Base Salary; it is capped at
a maximum level of 200% of Base Salary. The entire variable
remuneration is at-risk, and therefore if performance targets
are not achieved sufﬁciently, 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.

To calculate the Common Collective annual achievementlevels, actual EBIT, Free Cash Flow and RoCE performanceare compared against the targets that were set for the year. This
comparison forms the basis to compute achievement levels,
noting that the actual EBIT, Free Cash Flow and RoCE levels areoccasionally adjusted for a limited number of factors which areoutside management control (such as certain foreign exchange
impacts or unplanned Merger and Acquisition activities). The
RNGC’s intention is to ensure ambitious ﬁnancial targets andto 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,ﬁnancing, 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

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Individual
The Individual element focuses on Outcomes and Behaviour.
Individual Performance is assessed in these two importantdimensions:
Outcomes encompass various aspects of what the CEO
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 Company Top Priorities;■
Behaviour refers to the way results have been achieved,
which is also critical for long-term success: how the CEO andthe Board of Directors work as a team, how the CEO leads
the Group Executive Committee, quality of communication,encouragement of innovation, etc. A speciﬁ c part of the
behaviour assessment relates to ethics, compliance andquality issues.
■e) Long-Term Incentive Plan
There are two types of Long-Term Incentive Plans: until 2015,
LTIP was made of Performance Units only. In 2016, following theapproval of amendments by shareholders at 2016 AGM, the LTIP
is now made of a mix of Performance Units and Performance
Shares.

The value of the CEO’s LTIP allocation is capped as a percentage
of Base Salary at the date of grant and subject to performance
conditions.
The performance conditions are assessed over a three-year
period based on relevant ﬁnancial criteria with stringent targets
set, as demonstrated by past Company practices.
Both Performance Units and Performance Shares that vest canvary 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 performancemeasures:0-50% of the allocation: The Board of Directors has thediscretion to decide that this element of the Performance Unit /Share award will not vest if the Company reports negative
cumulated EBIT results;■
50-150% of the allocation: This element of the Performance
Unit/Shares vest based on the two following performance
criteria: average Earnings Per Share (75%) 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

Free cash Flow
Cumulated over 3 years, M€

Measures proﬁtability
Driven by net income and number of shares

Measures cash generation
Driven by cash provided by/used for
operating, ﬁnancing, and investment activities

For reasons of conﬁdentiality, the precise targets set for the
cumulated FCF and average EPS, even though they have been
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 toensure 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 thefollowing 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 iscapped at 200% of the reference share price at the date of
grant;■
the overall pay-out is capped at 250% of the value at thedate of grant.
■

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Performance Units plan characteristics(until and including 2015 plan)
Performance Units are the long-term equity-related incentive
awards that are currently granted to the CEO. LTIP awards
are granted each year. Each grant is subject to a three-year
cumulative performance objective. At the end of the three-year
period, the grant is subjected to a performance calculation todetermine whether and to what extent it should vest. Depending
on continued employment, grants attributed until 2013 will vest in

four tranches, the payment of which takes place approximately
6, 12, 18 and 24 months following the end of the performance
period. Depending on continuous employment, grants attributed
from 2014 would vest in two tranches, the payment of which
would take place approximately 6 and 18 months following theend of the performance period.

GRANT DATE
Face value at grant date
Allocation policy

Grants VEST in 2 tranches= 2 payment dates

4
2015

2016

2017

2018

Performance period 3 years

At the date of grant, the CEO must decide what portion of
the allocation (subject to the performance calculation) would
be released as cash payments and what portion would be
converted into shares. At least 25% (and up to 75%) of theaward must be deferred into shares, and would only be releasedon the last vesting date. For the conversion into shares, one
Unit corresponds to one Airbus share.

2019

2020

Performance calculation
determines the number of Units
that may vest

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 20trading days preceding and including
the respective vesting dates.

LTIP-SCHEME FROM 2014 TO 2015

Grants VEST in 2 tranches= 2 payment dates

GRANT DATE
Face value at grant date
Allocation policy

Y

Y+1

Y+2

Performance period 3 years

Y+3

Y+4

Performance calculation
determines the number of Units
that may vest

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Performance Units & Performance Shares characteristics(since 2016)
For the CEO and since the 2016 plan, the Company’s current LTIP
is comprised of a mix of Performance Units and Performance
Shares.
Previously, the LTIP was only comprised of Performance
Units. The proposed change was designed to increase thealignment with shareholders’ interests and to ensure that both
the Company’s and the beneﬁciaries’ beneﬁt from new tax andsocial regimes (offered by the Macron Act in France in favour ofFrench tax resident employees).
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.
For the CEO, the value of the Performance Unit and Shareallocation is capped, at the time of grant, at 100% of Base
Salary. At the end of the three-year period, the grant issubject to a performance calculation to determine whether
and to what extent it should vest. Depending on continued
employment, Performance Units attributed in 2016 will vest in
two tranches, the payment of which takes place approximately
six and 18 months following the end of the performance period.
Performance Shares would vest in one tranche, approximately
six months following the end of the performance period.

LTIP-SCHEME SINCE 2016

Performance calculation
determines the number of Units
that may vest

GRANT DATE
Face value at grant date
Allocation policy

2016

2017

2018

2019

Performance period

2020

2021

Planned in May

Planned in Mayxx

x

Vesting in CASH
Vesting in SHARESf) Share Ownership Guidelinei) 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 Base Salary andto hold them throughout his tenure.

In the case of contract termination, the CEO is entitled to anindemnity 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 Base Salary, once the CEO has served on the Group
Executive Committee for ﬁve years. This pension can increase
gradually to 60% of Base Salary, for executives who have servedon the Group Executive Committee for over ten years, and havebeen employed for at least 12 years.

The CEO’s contract includes a non-compete clause whichapplies 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 invoke the extension of the noncompete clause. The compensation for each year that the noncompete clause applies 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.
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

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follows the plans’ rules and regulations and is not accelerated
in any case. LTIP awards are forfeited for executives who leave
the Company on their own initiative, but this is subject to review
by the Board of Directors.

Board attendance, the attendance fees have doubled. Membersof 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: € 80,000j) 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.

Fixed fee for membership of a Committee (€ / year):■■

Attendance fees (€ / Board meeting):■

Any revision, claw back, or amounts deducted from the CEO’s
remuneration will be reported in the notes of the relevant
ﬁnancial statements.

k) Loans
The Company does not provide loans or advances to the CEO.

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;■an 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 were reviewed
to recognise the increase in Board Members’ responsibilities,
their greater time commitment and Airbus’ continuous need to
attract and retain highly competent Members. To incentivise

Chairman of a Committee: € 30,000
Member of a Committee: € 20,000■

Chairman: € 15,000
Member: € 10,000

Attendance fees shall decrease by 50% in case of an attendanceby 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).
For personal reasons, Denis Ranque decided in 2016 to waive
the portion of his remuneration as Chairman of the Board of
Directors which exceeds € 240,000 (his total target remunerationfor 2015) until further notice. The Board recommended thatthe remuneration exceeding € 240,000 would be converted
into an annual contribution to Airbus’ Foundation as long as
Denis Ranque waives this part of his remuneration which would
correspond to € 60,000 based on six meetings per year.

4.2.1.3

Implementation of the Remuneration
Policy in 2016: CEOa) Benchmarking
Based on a review the RNGC performed in 2014 with theassistance of an independent consultant, Willis Towers Watson,
it was concluded that the CEO’s Total Direct Compensation wasslightly below the median level of the peer group. It was thus
proposed to increase the remuneration of the CEO as described
below. This increase took into consideration the track recordof the CEO and was in line with the salary policy applied to
employees across Airbus over that period.

b) Base Salary
For 2016, the Base Salary was set by the Board of Directors
at € 1,500,000. The CEO’s Base Salary level was reviewed in2015 and approved by shareholders at 2016 AGM, shortly after
his appointment. Any future review of the CEO’s Base Salarywill also take into consideration salary increases of employees
across the Group.

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4.2 Interests of Directors and Principal Executive Ofﬁ cersc) 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.
For 2016, the VR amounted to an aggregate € 1,912,500
composed of € 975,000 for the Common Collective Component(130%), and € 937,500 for the Individual part (125%).
The Common Collective Component results from a composite
130% achievement of EBIT, Free Cash Flow and RoCE
objectives.
This achievement mainly reflects a significant Free Cash
Flow reported over-performance against the budgeted target.
The main drivers of that success were the solid operational
performance, healthy pre-delivery payments inflows, andon-going efforts to control working capital during programme
ramp-up phase.
EBIT, compared to the budgeted target was globally positive
despite an unplanned A400M provision. Finally, RoCE wasslightly below the target.
Normalisation adjustments of EBIT and RoCE were made to
exclude currency exchange differences or those arising fromphasing mismatches.
The Individual part results from a good achievement level of
125% 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 eight Airbus priorities agreed at
the start of the year. For each of these outcomes, leadership,
personal performance and contributions were examined.

The factors determining the good assessment were among
other achievements:
solid ﬁnancial ﬁgures achieving the envisaged targets to alarge extent despite set-backs on the A400M programme;■
excellent operational performance with a record numberof aircraft deliveries mastering the strong ramp-up of theA350 XWB and A320 programmes while starting the transition
from the CEO to the new neo version;■
continuous lead on the civil and parapublic helicopter market
against a challenging market backdrop while maintaining theposition on the military market;■
timely achievement of foreseen milestones in key development
programmes Airbus A350-1000, Airbus Helicopters H160
and Ariane 6;■
good execution of planned divestments, realising the desiredalignment of business portfolio and generating a strong
contribution to the cash generation;■
rapid implementation of the digital roadmap including theappointment of a Chief Digital Ofﬁcer and the new set-up of
the Chief Technical Ofﬁcer department and processes;■
further Group integration through the “Gemini” project callingfor a merger of Airbus and Airbus Group for a leaner and more
efﬁcient management of the Company;■
strong focus on enhancement of group wide Compliancestandards and processes as well as coordinated Corporate
Social Responsibility activities;■
reinforced efforts on gender and international diversity as wellas implementation of new HR transformation and management
development programmes.
■

PERFORMANCE AGAINST TARGET 2016
TargetThresholdMaximum

Common Collective
Component (50%)

130%
125%

Individual (50%)
Overall Performance
Achievement

127.5%
0%

20%

40%

60%

80%

100%

120%

140%

160%

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4.2 Interests of Directors and Principal Executive Ofﬁ cersd) Long-Term Incentive Plan
Granting 2016
As stipulated in the Company’s Remuneration Policy the CEO is eligible for a Performance Unit and Performance Shares award
under the Company’s LTIP 2016. The value of the Performance Unit and Share award is capped at 100% of Base Salary at thedate of grant. During 2016, the CEO was granted in total of both 28,480 Performance Units and Performance Shares.
The table below gives an overview of the Performance Units and Performance Shares granted to the CEO in 2016 pursuant to
the LTIP*:
Unit plan: number of Performance Units
Granted in 2016

Vesting dates

14,240

Vesting schedule is made up of 2 tranches over 2 years:(i) 50% expected in May 2020;(ii) 50% expected in May 2021.

Thomas Enders* There is no obligation under the WFT to notify the cash units under the LTIP to the AFM. The CEO’s cash units are therefore no longer reflected in the AFM register.

4

Share plan: number of Performance Shares
Granted in 2016

Vesting dates

14,240

Vesting schedule is made up of 1 tranche:(i) 100% expected in May 2020.

Thomas Enders

Vesting Values in 2016
In 2016, the CEO received both cash payments and vested shares in connection with the vesting of 2011 and 2012 LTIP awards:■■

Cash: the total cash payment to the CEO amounted to € 2,279,709 in 2016 versus € 3,148,629 in 2015;
Shares: in connection with the 2011 LTIP award, the CEO had elected that 25% of his grant should be deferred into shares.
Therefore the CEO received 16,448 versus 18,496 vested shares in 2016 on the fourth vesting date for the 2011 LTIP (31 October2016).In connection with the 2012 LTIP award, the CEO had elected that 25% of his grant should be deferred into shares.
Therefore, the vesting of 5,596 Performance Units versus 8,224 for the LTOP 2011 was delayed and these will be released in
the form of shares on the fourth vesting date for the 2011 LTIP (which will take place in 2017).

LTIP OVERVIEW: GRANTING AND VESTING

Date
of
grants

2011

Grant
Type

Units

Share
price atNumber grant date

51,400€ 21.41

Value atgrant date

€ 1,100,474(Un)
conditional

Conditional

Performanceachievement

128%

Units withperformanceachievement

Dates ofvesting

Share value atvesting dates

65,792

1st vesting –6 May 2015: € 62.17
2nd vesting –4 November 2015:€ 57.97
3rd vesting –3 May 2016: € 56.57
4th vesting –4 vestings in
31 October 2016:2015-2016€ 53.77

2012

Units

50,300€ 27.83€ 1,399,849

Conditional

89%

44,7684 vestings in
2016-2017

1st vesting – 3 May
2016: € 55.66*
2nd vesting –31 October 2016:€ 53.77

2013

Units

30,300€ 46.17€ 1,398,951

Conditional

75%

22,7254 vestings in
2017-2018

Not yet known

Not yet known

2 vestings in
2018-2019

Not yet known

Not yet known

2 vestings in
2019-2020

Not yet known
Not yet known
Not yet known

2014
2015

Units
Units

29,50024,862€ 47.45€ 56.31€ 1,399,775€ 1,399,979

Conditional
Conditional

Not yet known
Not yet known

2016

Units

14,240€ 52.67€ 750,021

Conditional

Not yet known

Not yet known

2 vestings in
2020-2021

2016

Shares

14,240€ 52.67€ 750,021

Conditional

Not yet known

Nor yet known

1 vesting in 2020

Calculations may involve rounding to the nearest unit.
* For the first vesting 2012 the cap applicable to the share price was applied.

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4.2 Interests of Directors and Principal Executive Ofﬁ cers

Performance Conditions of 2012 LTIP
The performance conditions were determined as follows:■■

if Airbus reports negative cumulated EBIT results, the deﬁnitive grant shall be 0%;50% to 150% of the allocation would be granted on a linear basis depending on three year average EPS for the 2013, 2014 and2015 ﬁscal years, with the three year average EPS target for an allocation of 100% equal to € 2.75.

Review of Achievement of Performance Conditions
The Board of Directors on 23 February 2016 noted the achievement of the performance conditions of the 2012 plan, i.e. for the2013, 2014 and 2015 ﬁscal years: the three year average EPS was € 2.63, after normalisation to align it with policies in force whensetting the target (notably IAS 11).
Furthermore the Board of Directors on 21 February 2017 noted the achievement of the performance conditions of the 2013 plan,i.e. for the 2014, 2015 and 2016 ﬁscal years. The three year average EPS (“Ave EPS”) was € 2.28 after normalisation to align it with
policies in force when setting the target (notably IAS 11). The three year cumulative FCF (“Cum FCF”) before M&A was € 3,440 million.
Target for
Number of
a 100%
KPI
units allocation

Date ofgrantsPerformance Compounded
achievement performance Resultinginachievement vesting in
Achieved percentage in percentage
numberFor comparison, average
EPS for the last 3 reported
years at the date of grant2011

Ave EPS

51,400€ 1.55€ 2.10128%

N/A

65,792€ 0.56(1)2012

Ave EPS

50,300€ 2.75€ 2.6389%

N/A

44,768€ 0.34(2)€ 3.64€ 2.2850%
75%

22,725

Ave EPS2013

Cum FCF
before M&A

30,300€ 2,650m€ 3,440m€ 1.15(3)150%(1) Average EPS of 2010, 2009 and 2008.
(2) Average EPS of 2011, 2010 and 2009.
(3) Average EPS of 2012, 2011 and 2010.

e) Share Ownershiph) Retirement

The CEO owned 80,969 Company shares on 31 December
2016, which represents more than 200% base salary. He
herewith respects Airbus’ share ownership policy.

As of 31 December 2016, the present value of the CEO’s pension
deﬁ ned beneﬁ t obligation including deferred compensation
amounted to € 21,251,788 versus € 17,118,048 a year ago.
While the plan beneﬁts remain identical, the present value ofthe pension obligation was calculated applying a 1.7% discountrate in 2016 compared to a 2.3% discount rate in 2015, whichmainly explains the change in value. For the ﬁscal year 2016, thecurrent service and interest costs related to the CEO’s pension
promise represented an expense of € 1,075,888. This obligation
has been accrued in the Consolidated Financial Statements.

f) Employee Share Ownership Plan (ESOP)In March 2016, the Company has offered to all eligible employees
to subscribe for a share matching plan whereby the Company
matched a certain number of directly acquired shares witha grant of matching shares. This ratio varied depending on
the number of shares acquired at fair market value by theemployees, with a maximum discount of 50%. The total offering
was up to 2 million shares of the Company, open to all qualifying
employees. Information about the plan can be found on the
Company’s website.
Under the umbrella of the ESOP 2016, a dedicated UK tax
advantageous Share Incentive Plan (“SIP”), was also deployedin March 2016.
Although the CEO was eligible to the plan, he did not participate
to the ESOP 2016 plan favouring the development of ashareholding among other employees of the Company.

The deﬁned beneﬁt obligation for the CEO’s Company pension
results from the Company’s pension policy as described above
and takes into account (1) the seniority of the CEO in the
Company and on its Group Executive Committee and (2) thesigniﬁcantly lower public pension promise deriving from theGerman social security pension system, compared to a pension
resulting from membership in the French pension system.

i) Clawback
The Board has not applied any clawback in 2016.

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 2016 amounted to € 71,755.

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4.2.1.4

Implementation of the Remuneration Policy in 2016: Non-Executive Directors

In order to recognise the increase in responsibilities, greater time commitment and the continuous need to attract and retain highly
competent Board Members, a review of the Board remuneration policy was undertaken in 2015, the ﬁrst comprehensive revision
since 2007. As per the new remuneration policy approved by shareholders at 2016 AGM, the RNGC recommended and the Boardof Directors increased, the remuneration of the Chairman and that of the non-Executive Board Members to be in line with market
practice, incentivise attendance and recognise the strategic role played by the Board of Directors in Airbus’ developments. The
CEO is the only Member of the Board of Directors who is not entitled to any Board Membership fee.
Summary table of the 2016 and 2015 fees of all non-Executive Members of the Board (current and former):
NON-EXECUTIVE DIRECTORS’ REMUNERATION FY2016

Directors’ remuneration related to 2016

Directors’ remuneration related to 2015
Fixum

Attendance
Fees

Total

(in €)(in €)(in €)(in €)

240,000

180,000

70,000250,000

Fixum(1)AttendanceFees(2)Total(in €)(in €)

180,000

60,000Non-Executive Board Members
Denis Ranque
Manfred Bischoff

26,15420,00046,15480,00025,000105,000

Ralph D. Crosby Jr.

80,00050,000130,000

80,00035,000115,000

67,58240,000107,582

N/A

N/A

N/A

Hans-Peter Keitel

100,000

60,000160,000

100,000

35,000135,000

Hermann-Josef Lamberti

110,000

55,000165,000

110,000

30,000140,000

Anne Lauvergeon

32,692

10,00042,692100,000

30,000130,000

Lakshmi N. Mittal

100,000

50,000150,000

100,000

35,000135,000

María Amparo Moraleda Martínez

100,000

55,000155,000

50,00020,00070,000Catherine Guillouard

(3)

(3)

Claudia Nemat

67,58230,00097,582

N/A

N/A

N/A

Sir John Parker

110,000

60,000170,000

110,000

30,000140,000

Michel Pébereau

32,69220,00052,692100,000

25,000125,000

Carlos Tavares(4)54,06620,00074,066

N/A

N/A

N/A

Jean-Claude Trichet

100,000

60,000160,000

100,000

35,000135,000

Former Non-Executive Board
Members
Josep Piqué i Camps

Total

N/A

N/A

N/A

41,668041,6681,160,768

590,000

1,750,768

1,151,668

370,000

1,521,668(1) The Fixum related to 2015 was paid 50% in July 2015 and 50% in January 2016; the Fixum related to 2016 was paid 50% in December 2015 and 50% in July 2016.
(2) The Attendance Fees are paid at the end of each semester.
(3) Member of the Company Board of Directors and Audit Committee as of 28 April 2016.
(4) Member of the Company Board of Directors as of 28 April 2016.

4.2.2

Long-Term Incentives Granted to the Chief Executive Ofﬁcer

See “— 4.3.3 Long-Term Incentive Plans”.

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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 2014, 2015 and 2016, 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 2016 and “— Notes to the
IFRS Consolidated Financial Statements — Note 8: Related
Party Transactions” for the year ended 31 December 2015, 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
4.3.1

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 group. In 2012, a Performance andRestricted Unit plan was established for the senior managementof Airbus (see “— 4.3.3 Long-Term Incentive Plans”), andemployees were offered shares at favourable conditions within

4.3.2

the context of a 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.

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.

Pursuant 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 2016 AGM. Such powers include the approvalof ESOP.

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4.3 Employee Proﬁ t Sharing and Incentive Plans

The following table summarises the main terms of the ESOPs conducted over the last three years:
Year

Price per shareNominal value per share

Number of shares issued

Date of issuance2013€ 42.02(1) / € 44.20(2)€12,113,245

29 July 2013

2014

(3)

2015

€ 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)€11,366,893
107,823

14 April 201618 November 2016

(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.

In 2016, the Board of Directors approved a new ESOP. Eligible
employees were able to purchase a ﬁxed number of previously
unissued shares at fair market value (4, 6, 10, 19, 38 or 76 shares).
Airbus matched each ﬁxed number of shares with a numberof the Company free shares based on a determined ratio (4,5, 7, 11, 16 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 tovote at the annual shareholder meetings. The subscription price
was equal to the closing price at the Paris stock exchange on
23 February 2016 and amounted to € 55.41. Investing throughthe mutual fund led to a price which corresponds to the average

price at the Paris stock exchange during the 20 trading days
immediately preceding 23 February 2016, resulting in a price of€ 54.31. The Company issued and sold 485,048 ordinary shareswith a nominal value of € 1.00 each. Compensation expense(excluding social security contributions) of € 27 million wasrecognised in connection with ESOP.
The Company intends to implement an ESOP in 2018, subject
to approval by the Board of Directors, open to all qualifying
employees (including the CEO). With future ESOP, the Company
intends to offer shares to eligible employees through theissuance of shares or free distribution of shares or other existingor new securities giving access to the capital as a matching
contribution. This plan would aim at favouring the developmentof employee shareholding.

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4.3.3

Long-Term Incentive Plans

Based on the authorisation granted to it by the shareholders’meetings (see dates below), the Board of Directors approved
Stock Option Plans in 2006. In 2011, 2012, 2013, 2014 and2015, the Board 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.

In 2016, 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 2016
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:
Eighth tranche

Date of shareholders’ meeting

4 May 2006

Date of Board of Directors meeting (grant date)18 December 2006
Stock Option Plan

Number of options granted

1,747,500

Number of options outstanding0

Total number of eligible beneficiaries

221
50% of options may be exercised after a period of two years from the date of grant of
the options; 50% of options may be exercised as of the third anniversary of the date of grantof the options (subject to specific provisions contained in the Insider Trading Rules – see“— General description of the Company and its share capital – 3.1.11 Disclosure of holdings”)

Vesting conditions
Expiry date16 December 2016

Conversion right

One option for one share

Vested100%

Exercise price€ 25.65

Exercise price conditions

110% of fair market value of the shares at the date of grant

Number of exercised options

1,501,000

Thirteenth tranche
Date of Board of Directors meeting (grant date)

9 November 2011
Performance and Restricted Unit plan
Performance Units

Restricted Units

2,606,900

882,591

00

Mr. Louis Gallois*

51,400-the 10 employees having being granted thehighest number of units during the year 2011
(thirteenth tranche)

320,050-

Number of units granted(1)Number of units outstanding
Units granted to:■■

Total number of eligible beneficiaries

Vesting dates

1,771
The Performance and Restricted Units will vest if the participant is still employed by an
Airbus company at the respective vesting dates and, in the case of Performance Units, uponachievement of mid-term business performance.
Vesting schedule is made up of 4 payments over 2 years:
25% expected in May 2015;
25% expected in November 2015;
25% expected in May 2016;
25% expected in November 2016.
■■■■

Number of vested units

3,108,160

823,828(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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Fourteenth tranche
Date of Board of Directors meeting (grant date)

13 December 2012
Performance and Restricted Unit plan
Performance Units

Restricted Units

Number of units granted(1)2,123,892

621,980

Number of units outstanding

880,095

283,320

Mr. Thomas Enders*

50,300-the 10 employees having being granted thehighest number of units during the year 2012
(fourteenth tranche)

251,800

Units granted to:■■-

Total number of eligible beneficiaries

1,797
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 2016;
25% expected in November 2016;
25% expected in May 2017;25% expected in November 2017.

Vesting dates

■
■
■
■

Number of vested units

855,388289,135(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”.

Fifteenth tranche
Date of Board of Directors meeting (grant date)

13 November 2013
Performance and Restricted Unit plan
Performance Units

Restricted Units

1,245,052

359,060

1,159,814

346,100

Mr. Thomas Enders*

30,300-the 10 employees having being granted thehighest number of units during the year 2013
(fifteenth tranche)

173,100-

Number of units granted(1)

Number of units outstanding
Units granted to:■■

Total number of eligible beneficiaries

Vesting dates

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.
■■■■

Number of vested units

3,860

-

(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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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

1,068,502

287,442

Mr. Thomas Enders*

29,500-the 10 employees having being granted thehighest number of units during the year 2014
(sixteenth tranche)

176,460

Units granted to:■■-

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

2,500

0

(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

Restricted Units

926,398

240,972

916,246

239,674

Mr. Thomas Enders*

24,862-the 10 employees having being granted thehighest number of units during the year 2015
(seventeenth tranche)

156,446-

Number of units granted(1)

Number of units outstanding
Units granted to:■■

Total number of eligible beneficiaries

Vesting dates

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.
■■

Number of vested units

2,116

-

(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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CorporateGovernance
4.3 Employee Proﬁ t Sharing and Incentive Plans

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)615,792

621,198

Number of units/shares outstanding

615,792

621,198

Mr. Thomas Enders*

14,24014,240the 10 employees having being granted
the highest number of units/shares during
the year 2016 (eighteenth tranche)

79,50485,200

Units/shares granted to:■■

Total number of eligible beneficiaries

Vesting dates

1,671
The Performance Units and Shares will vest if the participant is still employed byan 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
■

■

■

■

Number of vested units--(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 DIRECTORSMember of the Board of Directors

Shareholding■

Mr. Thomas Enders

80,969 ordinary shares■

Mr. Denis Ranque

2,000 ordinary shares■

Mr. Manfred Bischoff

1,292 ordinary shares■

Ms. Catherine Guillouard

125 ordinary sharesNo other Member of the Board of Directors holds shares or other securities in the Company.

Registration Document 2016 - AIRBUS ° 147 °4

Chapter

5

Registration Document 2016 - AIRBUS ° 148 °Q

Annual Report 2016

Registration Document 2016

1

2

3

4

5

Financial Statements 2016

1

2

3

4

5

Entity Responsible
for the Registration
Document
5
5.1 Entity Responsible for the Registration
Document

150

5.2 Statement of the Entity Responsible
for the Registration Document150

5.3 Information Policy

151

5.4 Undertakings of the Company regarding
Information

151

5.5 Significant Changes

151

5
Registration Document 2016 - AIRBUS ° 149 °Q

Annual Report 2015

Registration Document 2015

1

2

3

4

5

Financial Statements 2015
Financial Statements 2015

1

2

3

Entity Responsible for the Registration Document
5.1 Entity Responsible for the Registration Document

5.1 Entity Responsible for the Registration
Document
Airbus Group SE

5.2 Statement of the Entity Responsible
for the Registration Document
The Company declares that, having taken all reasonable care to ensure that such is the case, the information contained in
the Registration Document is, to the best of the Company’s knowledge, in accordance with the facts and contains no omission
likely to affect its import.
Airbus Group SE represented by:Thomas Enders
Chief Executive Officer

Registration Document 2016 - AIRBUS ° 150 °

4

5

Q

Annual Report 2016

Registration Document 2016

1

2

3

4

5

Financial Statements 2016

1

2

3

4

5

Entity Responsible for the Registration Document
5.5 Signiﬁ cant Changes

5.3 Information Policy■■■

Contact details for information:
Ms. Julie Kitcher
Head of Investor Relations and Financial Communication,
Airbus Group SE
2 rond point Emilie Dewoitine – BP 90112 – 31703 Blagnac
FranceTelephone: +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)
An e-mail box is dedicated to shareholders’ messages:
ir@airbus.com

A website, www.airbusgroup.com, provides a wide range of
information on the Company, including the Board of Directors’
report. Additionally, for the life of this Registration Document,
copies of:
the Company’s Articles of Association;
the Registration Document ﬁled in English with, and approved
by, the AFM on 16 April 2015;■
the Registration Document ﬁled in English with, and approved
by, the AFM on 5 April 2016; and■the Consolidated Financial Statements (IFRS) and the Company
Financial Statements of Airbus Group SE for the years ended
31 December 2014, 2015 and 2016, together with the related
Auditors’ reports, may be inspected at the Company’s
registered ofﬁce at: Airbus Group SE, Mendelweg 30, 2333 CS
Leiden, the Netherlands, Seat (statutaire zetel) Amsterdam,
Tel.: +31 (0)71 5245 600.
■■

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 Signiﬁcant Changes
As of the date of this Registration Document, there has been no signiﬁcant change in the Company’s ﬁnancial or trading position
since 31 December 2016.

Registration Document 2016 - AIRBUS ° 151 °5

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Registration Document 2015

1

2

Registration Document 2016 - AIRBUS ° 152 °

3

4

5

Financial Statements 2015
Financial Statements 2015

1

2

3

4

5

Financial
Statements

2016

Financial
Statements

Financial Statements 2016 - AIRBUS ° 02 °

Annual Report 2016

Q

Registration Document 2016

1

2

3

4

5

Financial Statements 2016

1

2

3

Financial
Statements
1

Airbus Group SE — IFRS Consolidated
Financial Statements

2

Notes to the IFRS Consolidated
Financial Statements

3

Airbus Group SE — IFRS Company
Financial Statements

4

Notes to the IFRS Company Financial
Statements

5

Other Supplementary Information
Including the Independent
Auditor’s Report

2016
Financial Statements 2016 - AIRBUS ° 03 °4

5

Chapter

1

Financial Statements 2016 - AIRBUS ° 04 °

Q

Annual Report 2016

Registration Document 2016

1

2

3

4

5

Financial Statements 2016

1

2

3

4

5

Airbus Group SE
IFRS Consolidated
Financial Statements
Airbus Group SE — IFRS Consolidated
Income Statements for the years ended
31 December 2016 and 201506

Airbus Group SE — IFRS Consolidated
Statements of Comprehensive Income
for the years ended 31 December 2016 and 201507

Airbus Group SE — IFRS Consolidated
Statements of Financial Position
at 31 December 2016 and 201508

Airbus Group SE — IFRS Consolidated
Statements of Cash Flows for the years ended
31 December 2016 and 201510

Airbus Group SE — IFRS Consolidated
Statements of Changes in Equity
for the years ended 31 December 2016 and 2015

11

Financial Statements 2016 - AIRBUS ° 05 °1

Q

Annual Report 2015

Registration Document 2015

1

2

3

4

5

Financial Statements 2015
Financial Statements 2015

1

2

3

Airbus Group SE — IFRS Consolidated Financial Statements

Airbus Group SE — IFRS Consolidated Income Statements
for the years ended 31 December 2016 and 2015

(In € million)

Note

2016

2015

Revenues

10

66,58164,450

Cost of sales

10(61,317)(55,599)

Gross margin

10

5,264

8,851

(997)

(1,065)

Selling expenses(1,726)(1,586)

Research and development expenses

Administrative expenses
11(2,970)(3,460)

Other income

13

2,689

474

Other expenses

13

(254)

(222)

Share of profit from investments accounted for under the equity method

12

231

1,016

Other income from investments

12

21

54

2,258

4,062

Profit before finance costs and income taxes
Interest income

247

183

Interest expense

(522)

(551)

(692)

(319)

Total finance costs

Other financial result
14

(967)

(687)

Income taxes

15

(291)

(677)

1,000

2,698

995

2,696

5

2

€

€

Profit for the period
Attributable to:Equity owners of the parent (Net income)Non-controlling interests
Earnings per share
Basic

16

1.29

3.43

Diluted

16

1.29

3.42

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

Financial Statements 2016 - AIRBUS ° 06 °

4

5

Q

Annual Report 2016

Registration Document 2016

1

2

3

4

5

Financial Statements 2016

1

2

3

4

5

Airbus Group SE — IFRS Consolidated Financial Statements

Airbus Group SE — IFRS Consolidated Statements of Comprehensive Income
for the years ended 31 December 2016 and 2015

2016

2015

1,000

2,698

(1,649)

761

(102)

(36)

15

365

(235)

(174)

222

35

(247)

(4,699)Change in fair value of available-for-sale financial assets

(53)

368

Share of changes in other comprehensive income
from investments accounted for under the equity method

(35)

(142)

Note

(In € million)

Profit for the period
Other comprehensive income
Items that will not be reclassified to profit or loss:
Remeasurement of the defined benefit pension plans
Share of remeasurement of the defined benefit pension plansfrom investments accounted for under the equity method
Income tax relating to items that will not be reclassified
Items that may be reclassified to profit or loss:
Foreign currency translation differences for foreign operations
Change in fair value of cash flow hedges

Income tax relating to items that may be reclassified

(7)

1,112

Other comprehensive income, net of tax

15(1,902)(2,649)Total comprehensive income of the period

(902)

49

Attributable to:Equity owners of the parent

(917)

76

Non-controlling interests

15

(27)

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

1

Financial Statements 2016 - AIRBUS ° 07 °

Q

Annual Report 2015

Registration Document 2015

1

2

3

4

5

Financial Statements 2015
Financial Statements 2015

1

2

3

Airbus Group SE — IFRS Consolidated Financial Statements

Airbus Group SE — IFRS Consolidated Statements of Financial Position
at 31 December 2016 and 2015

Note

2016

2015

Intangible assets

17

12,06812,555

Property, plant and equipment

18

16,913

17,127

5

66(In € million)

AssetsNon-current assets

Investment property
Investments accounted for under the equity method

7

1,608

1,326

Other investments and other long-term financial assets

19

3,655

2,492
1,096

Non-current other financial assets

23

976

Non-current other assets

24

2,358

2,166

Deferred tax assets

15

7,557

6,759

Non-current securities

34

9,897

9,851

55,03753,438Current assets
Inventories

20

29,68829,051

Trade receivables

21

8,101

7,877

Current portion of other long-term financial assets

19

522

178

Current other financial assets

23

1,257

1,402

Current other assets

24

2,576

2,819

Current tax assets
Current securities

34

Cash and cash equivalents(1)34Assets and disposal group of assets classified as held for sale

6

Total assets(1)Financial Statements 2016 - AIRBUS ° 08 °

1,110

860

1,551

1,788

10,143

6,590

54,94850,565

1,148

1,779

111,133

105,78245

Q

Annual Report 2016

Registration Document 2016

1

2

3

4

5

Financial Statements 2016

1

2

3

4

5

Airbus Group SE — IFRS Consolidated Financial Statements

Note(In € million)

2016

2015

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

773

785

Share premium

2,745

3,484

Retained earnings

4,987

6,316

Accumulated other comprehensive income(4,845)(4,316)

Treasury shares

(3)

(303)

3,657

5,966

Non-controlling interests

(5)

7

32

3,652

5,973

Non-current provisions

22

10,826

9,871

Long-term financing liabilities

34

8,791

6,335

Non-current other financial liabilities

23

13,313

14,038Non-current other liabilities

24

16,27914,993

Deferred tax liabilities

15

1,292

1,200

Total equity(2)Non-current liabilities

Non-current deferred income

288

263

50,78946,700

6,143

5,209

Current liabilities
Current provisions

22

Short-term financing liabilities

34

1,687

2,790

Trade liabilities(1)21

12,532

10,864Current other financial liabilities

23

5,761

5,021

Current other liabilities

24

27,53527,037

Current tax liabilities

1,126

908

917

1,049

55,701

52,878991

231

Total liabilities(1)107,481

99,809Total equity and liabilities(1)111,133

105,782

Current deferred income
Disposal group of liabilities classified as held for sale

6(1) Investments made by Airbus Group SE in certain securities and trade liabilities have been reassessed and reclassified. Previous year figures are adjusted by € -899 million.
(2) As of 31 December 2016, the accumulated other comprehensive income, previously classified within equity relating to assets and disposal groups classified as held for sale,amounts to € -56 million.

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

Financial Statements 2016 - AIRBUS ° 09 °1

Q

Annual Report 2015

Registration Document 2015

1

2

3

4

Financial Statements 2015
Financial Statements 2015

5

1

2

3

Airbus Group SE — IFRS Consolidated Financial Statements

Airbus Group SE — IFRS Consolidated Statements of Cash Flowsfor the years ended 31 December 2016 and 2015

2016

2015

995
5

2,696
2

(247)
522
139
(378)
291
(559)
2,294
1,132
(1,870)
(231)
1,321
(290)
1,245
(3,477)(1,215)
2,398
4,628
(837)
(202)
(50)
4,369

(183)
551
131
(388)
677
(595)
2,466
487
(234)
(1,016)(54)(217)(1,432)(4,133)(1,378)
894
3,752
(417)
(193)
43
2,891

(3,060)
72
(120)
731

(2,924)
78
(13)
127

(691)

(258)

182
192

1,731
34

1,527
(2,280)
2,617
(830)
3,297
(1,725)(1,008)
(4)
60
(736)
(116)
60

127
(7,151)
4,790(3,459)
1,254
(262)
(945)
(3)
195
(264)
(25)
171

Net increase (decrease) in cash and cash equivalents(1)

3,483

(422)

Cash and cash equivalents at beginning of period

6,677

7,099

34

10,160

6,677

34
6

10,143
17

6,590
87

Note

(In € million)

Profit for the period attributable to equity owners of the parent (Net income)
Profit for the period attributable to non-controlling interests
Adjustments to reconcile profit for the period to cash provided by operating activities:
Interest income
Interest expense
Interest received
Interest paid
Income tax expense
Income tax paid
Depreciation and amortisation
Valuation adjustments
Results on disposals of non-current assets
Results of investments accounted for under the equity method
Change in current and non-current provisions
Contribution to plan assets
Change in other operating assets and liabilities:(1)Inventories
Trade receivables
Trade liabilities(1)Advance payments received
Other assets and liabilities
Customer financing assets
Customer financing liabilities
Cash provided by operating activities(1)(2)
Investments:
Purchases of intangible assets, property, plant and equipment, investment property
Proceeds from disposals of intangible assets, property, plant and equipment, 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
and other 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
Increase in financing liabilities
Repayment of financing liabilities
Cash distribution to Airbus Group SE shareholders
Dividends paid to non-controlling interests
Changes in capital and non-controlling interests
Share buyback
Cash (used for) financing activities
Effect of foreign exchange rate changes on cash and cash equivalents

9

■
■

■
■
■
■
■

■

■
■
■

6
6

■

■

■

Cash and cash equivalents at end of period

7
6

34
34
32

32

(1)

(1)

thereof presented as cash and cash equivalents(1)thereof presented as part of disposal groups classified as held for sale(1) Investments made by Airbus Group SE in certain securities and trade liabilities have been reassessed and reclassified. Previous year figures are adjusted accordingly(cash and cash equivalents at 31 December 2015: € -899 million and at 31 December 2014: € -190 million; change in trade liabilities in 2015: € -709 million).
(2) The 2016 cash provided by operating activities has been positively impacted by certain agreements reached with Airbus’ suppliers relating to the settlement of claims andnegotiation on payment terms.

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

Financial Statements 2016 - AIRBUS ° 10 °4

5

Annual Report 2016

Q

Registration Document 2016

1

2

3

4

Financial Statements 2016

5

1

2

3

4

5

Airbus Group SE — IFRS Consolidated Financial Statements

Airbus Group SE — IFRS Consolidated Statements of Changes in Equity
for the years ended 31 December 2016 and 2015

Equity attributable to equity holders of the parent
Accumulated othercomprehensive income(In € million)

CapitalShare
Note stock premium

Availablefor-sale
CashRetained financial
flow
earnings
assets hedges

Foreigncurrencytranslation Treasury
sharesadjustments

Noncontrolling Total
Total interests equity

Balance at
1 January 2015

785

4,500

2,989

670

(3,310)

1,435

(8)

7,061

18

7,079

Profit for the period

0

0

2,696

0

0

0

0

2,696

2

2,698

Other comprehensive
income

0

0

491

165

(3,554)278

0 (2,620)(29)(2,649)Total comprehensive
income of the period

0

0

3,187

165

(3,554)

278

0

76

(27)

49

Capital increase

32

3

115

0

0

0

0

0

118

24

142

Share-based payment(IFRS 2)

30

0

0

29

0

0

0

0

29

0

29

Cash distribution
to Airbus Group SE
shareholders / dividends
paid to non-controllinginterests

32

Equity transaction (IAS 27)

0

(945)

0

0

0

0

0

(945)

(3)

(948)

0

0

61

0

0

0

0

61

(5)

56

Equity component
convertible bond

32

0

0

53

0

0

0

0

53

0

53

Change in treasury shares

32

0

0

(3)

0

0

0

(484)

(487)

0

(487)

Cancellation of treasury
shares

(3)

(186)

0

0

0

0

189

0

0

0

Balance at
31 December 2015

785

3,484

6,316

835

(6,864)

1,713

(303)

5,966

7

5,973

Profit for the period

0

0

995

0

0

0

0

995

5

1,000

Other comprehensive
income00(1,383)

(65)

(289)

(175)

0 (1,912)

10(1,902)

Total comprehensive
income of the period

0

0

(388)

(65)

(289)

(175)

0

(917)

15

(902)

Capital increase

32

2

58

0

0

0

0

0

60

0

60

Share-based payment(IFRS 2)

30

0

0

31

0

0

0

0

31

0

31

Cash distribution
to Airbus Group SE
shareholders / dividends
paid to non-controllinginterests

32(1,012)00(1,008)0000 (1,008)

(4)

0

0

38

0

0

0

0

38

(23)

15

0

0

(2)

0

0

0

(511)

(513)

0

(513)

Cancellation of treasury
shares

(14)

(797)

0

0

0

0

811

0

0

0

Balance at
31 December 2016

773

2,745

4,987

770 (7,153)

1,538(3) 3,657

(5)

3,652

Equity transaction (IAS 27)
Change in treasury shares

32

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

Financial Statements 2016 - AIRBUS ° 11 °1

Chapter

2

Financial Statements 2016 - AIRBUS ° 12 °

Q

Annual Report 2016

Registration Document 2016

1

2

3

4

5

Financial Statements 2016

1

2

3

4

5

Notes to the IFRS
Consolidated Financial
Statements
2.1 Basis of Presentation

15

2.2 Airbus Structure20

2.3 Segment Information

26

2.4 Airbus Performance29

2.5 Operational Assets and Liabilities

35

2.6 Employees Costs and Benefits48

2.7 Capital Structure and Financial Instruments

61

2.8 Other Notes

79

2.9 Appendix “Simplified Airbus Structure Chart” 83

Financial Statements 2016 - AIRBUS ° 13 °2

QAnnual Report 2015

Registration Document 2015

1

2

3

4

5

Financial Statements 2015
Financial Statements 2015

1

2

3

Notes to the IFRS Consolidated Financial Statements

CONTENTS
2.1 Basis of Presentation

15

20.

Inventories

40

1.

The Company

15

21.

Trade Receivables and Trade Liabilities

40

2.

Signiﬁcant Accounting Policies

15

22.

3.

Key Estimates and Judgements

17

Provisions, Contingent Assets
and Contingent Liabilities

41

4.

Change in Accounting Policies
and Disclosures

23.

18

Other Financial Assets andOther Financial Liabilities

43

2.2 Airbus Structure

20

5.

Scope of Consolidation

20

6.

Acquisitions and Disposals

20

7.

Investments Accounted for under
the Equity Method

8.

24.

Other Assets and Other Liabilities

44

25.

Sales Financing Transactions

44

2.6 Employees Costs and Benefits

48

26.

Number of Employees

48

23

27.

Personnel Expenses

48

Related Party Transactions

26

28.

Personnel-Related Provisions

48

29.

Post-Employment Beneﬁts

48

2.3 Segment Information

26

30.

Share-Based Payment

54

9.

Segment Information

27

31.

Remuneration

57

2.4 Airbus Performance

29

10.

Revenues, Cost of Sales and Gross Margin29

2.7 Capital Structure and Financial
Instruments

11.

Research and Development Expenses

30

32.

Total Equity

61

12.

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

33.

Capital Management

62

30

34.

Net Cash63

13.

Other Income and Other Expenses

30

35.

Information about Financial Instruments

66

14.

Total Finance Costs

31

15.

Income Tax

31

16.

Earnings per Share34

2.5 Operational Assets and Liabilities 35
17.

Intangible Assets

35

18.

Property, Plant and Equipment

37

19.

Other Investments and Other LongTerm Financial Assets

3961

2.8 Other Notes

79

36.

Litigation and Claims

79

37.

Auditor Fees

82

38.

Events after the Reporting Date82

2.9 Appendix “Simplified Airbus
Structure Chart”

83

Financial Statements 2016 - AIRBUS ° 14 °

4

5

Q

Annual Report 2016

Registration Document 2016

1

2

3

4

5

Financial Statements 2016

1

2

3

4

5

Notes to the IFRS Consolidated Financial Statements
2.1 Basis of Presentation

2.1 Basis of Presentation
1.

The Company

The accompanying IFRS Consolidated Financial Statements
present the ﬁ nancial position and the results of operationsof Airbus Group SE (the “Company”) and its subsidiaries, aEuropean Company (Societas Europaea (“SE”)) legally seatedin Amsterdam (current registered ofﬁ ce at Mendelweg 30,2333 CS Leiden, The Netherlands, under number 24288945).
On 1 January 2017, the Company has been further integrated
by merging its Group structure with the commercial aircraft
activities of Airbus, with associated restructuring measures. In
this new set-up, the Company will retain Airbus Defence andSpace and Airbus Helicopters as Divisions. Airbus Group SE
will change its name to Airbus SE; the legal name change from
Airbus Group SE to Airbus SE is still subject to the approval of2.

the Annual General Meeting due to be held on 12 April 2017.
Therefore, the Company together with its subsidiaries will bereferred to as “Airbus” and no longer as “the Group”. As aconsequence, the segment formerly known as Airbus will now
be referred to as “Airbus Commercial Aircraft”; there are nochanges to the segment reporting in 2016. 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 21 February 2017.
They are prepared and reported in euro (“€”) and all values arerounded to the nearest million appropriately.

Signiﬁcant Accounting Policies

Basis of preparation — Airbus’ Consolidated Financial
Statements are prepared in accordance with International
Financial Reporting Standards (“IFRS”), issued by theInternational Accounting Standards Board (“IASB”) as endorsedby the European Union (“EU”) and with Part 9 of Book 2 of theNetherlands Civil Code. When reference is made to IFRS, thisintends to be EU-IFRS. The Consolidated Financial Statements
have been prepared on a historical cost basis, unless otherwise
indicated.
Airbus describes the accounting policies applied in each of theindividual notes to the ﬁnancial statements and avoids repeating
the text of the standard, unless this is considered relevant tothe understanding of the note’s content. The most signiﬁcantaccounting policies are set out below:
Revenue recognition — Revenue is recognised to the extent
that it is probable that the economic beneﬁt arising from theordinary activities of Airbus will ﬂow to Airbus, that revenue
can be measured reliably and that the recognition criteria, foreach type of revenue-generating activity (sales of goods andservices and construction contracts), have been met. Revenue
is measured at the fair value of the consideration received or
receivable.
Revenues from the sale of commercial aircraft arerecognised when the aircraft is delivered, risks and rewards ofownership have been transferred to the customer and revenues
can be measured reliably except for launch customer contracts(see “Revenue from construction contracts”). Revenues fromsales of aircraft (and related cost of sales) always include theengine component. Customers will generally beneﬁ t from a
concession from the engine manufacturer, negotiated directly
between the customer and the engine manufacturer. Whenreliable information exists, the engine prices considered in ourrevenues (and cost of sales) reﬂect the effect of the concessions.
Revenue from construction contracts — Construction
contract accounting is applied for military programmes, space
projects as well as for launch customer contracts in the civil
aircraft business if customers have signiﬁcantly inﬂuenced thestructural design and technology of the aircraft type under thecontract. As a result of certain airline customers’ increasing
involvement in the development and production process of theA350 XWB programme, Airbus applies IAS 11 “Construction
contracts” to a ﬁxed number of launch customer contracts of theA350 XWB programme. When the outcome can be estimatedreliably, revenues and contract costs are recognised as revenue
and expensed respectively by reference to the percentage ofcompletion of the contract activity at the end of the reporting
period (“PoC method”). Contract revenues include the purchaseprice agreed with the customer considering escalation formulas,contract amendments and claims and penalties when assessed
as probable. The PoC method used depends on the contract.
The method is based either on inputs (i.e. costs incurred fordevelopment contracts) or outputs (i.e. contractually agreed
technical milestones, delivered units).

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Whenever the outcome of a construction contract cannot be
estimated reliably – for example during the early stages of acontract or during the course of a contract’s completion –all related contract costs that are incurred are immediately
expensed and revenues are recognised only to the extent of
those costs being recoverable (the “early stage”, also called“zero proﬁt margin” method of accounting) (see “– Note 3: Key
Estimates and Judgements”).
Provision for loss making contracts — Airbus records
provisions for loss making contracts when it becomes probablethat the total contract costs will exceed total contract revenues.
Before a provision for loss making contracts is recorded, therelated assets under construction are written-off. Loss making
sales contracts are identiﬁed by monitoring the progress of thecontract as well as the underlying programme and updating
the estimate of contract costs, which requires signiﬁcant andcomplex assumptions, judgements and estimates related toachieving certain performance standards as well as estimates
involving warranty costs (see “– Note 3: Key Estimates andJudgements”, “– Note 10: Revenues, Cost of Sales and Gross
Margin” and “– Note 22: “Provisions, Contingent Assets andContingent Liabilities”).
Research and development expenses — Research anddevelopment activities can be either contracted or self-initiated.
The costs for contracted research and development activities,
carried out in the scope of externally ﬁnanced research anddevelopment contracts, are expensed when the related
revenues are recorded.
The costs for self-initiated research are expensed whenincurred. The costs for self-initiated development arecapitalised 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;■
Airbus intends to produce and market or use the developed
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.
Development costs which are capitalised, 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 testing of prototypes and models, as property, plant andequipment. Capitalised development costs are generally
amortised over the estimated number of units produced. If
the number of units produced cannot be estimated reliably,
capitalised development costs are amortised over theestimated useful life of the internally generated intangible asset.
Amortisation of capitalised development costs is recognisedin 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 thatare directly attributable to the manufacturing process, such as
direct material and labour, and production related overheads(based on normal operating capacity and normal consumptionof material, labour and other production costs), including
depreciation charges. Net realisable value is the estimatedselling price in the ordinary course of the business less theestimated costs to complete the sale. Inventories include workin progress arising under construction contracts for whichrevenues are recognised based on output methods.
Transactions in foreign currency, i.e. transactions incurrencies other than the functional currency of an Airbus
entity, are translated into the functional currency at the foreignexchange rate prevailing at the transaction date. Monetary
assets and liabilities denominated in foreign currencies at theend of the reporting period are remeasured into the functional
currency at the exchange rate in effect at that 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 arerecognised, in line with the underlying item:in the proﬁ t before ﬁ nance costs and income taxes if thesubstance of the transaction is commercial (including sales
ﬁnancing transactions); and■in the 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 ineffect at the date of the transaction. Translation differenceson non- monetary financial assets and liabilities that aremeasured at fair value are reported as part of the fair value
gain or loss. However, translation differences of non-monetaryfinancial assets measured at fair value and classified
as available-for- sale are included in Accumulated othercomprehensive income (“AOCI”).
Hedge accounting — Most of Airbus’ revenues aredenominated in US dollar (“US$”), while a major portion of its
costs are incurred in euro. Airbus is signiﬁcantly exposed to therisk of changes in US$/€ exchange rates. Furthermore, Airbus is
exposed, though to a much lesser 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, Airbus enters into
derivative contracts. Airbus applies cash ﬂow hedge accounting
to its derivative contracts whenever the relevant IFRS criteria
can be met. Hedge accounting ensures that derivative gains

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or losses are recognised in proﬁ t or loss (mainly as part of
the revenue) in the same period that the hedged items ortransactions affect proﬁt or loss.

which do not qualify for hedge accounting are accounted forat fair value through proﬁt and loss, any related gains or losses
being recognised in ﬁnancial result.

The major portion of Airbus’ derivative contracts is accounted forunder the cash ﬂow hedge model. The fair value hedge model isused only for certain interest rate derivatives. Derivative contracts

Airbus’ hedging strategies and hedge accounting policies
are described in more detail in “– Note 35: Information about
Financial Instruments”.

3.

Key Estimates and Judgements

The preparation of Airbus’ Consolidated Financial Statements
requires the use of estimates and assumptions. In preparing
these ﬁ nancial statements, management exercises its best
judgement based upon its experience and the circumstancesprevailing at that time. The estimates and assumptions are
based on available information and conditions at the end of
the ﬁnancial period presented and are reviewed on an ongoingbasis. Key estimates and judgements that have a signiﬁcant
inﬂuence on the amounts recognised in Airbus’ Consolidated
Financial Statements are mentioned below:

Airbus makes estimates and provides, across the programmes,for costs related to in service technical issues which havebeen identiﬁ ed and for which solutions have been deﬁ ned,
which reﬂects the latest facts and circumstances. Airbus iscontractually liable for the repair or replacement of the defective
parts but not for any other damages whether direct, indirect,
incidental or consequential (including loss of revenue, proﬁt
or use). However, in view of overall commercial relationships,
contract adjustments may occur, and be considered on a caseby case basis.

Revenue recognition on construction contracts — The
PoC method is used to recognise revenue under construction
contracts. 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 construction contract signiﬁ cant estimates
include total contract costs, remaining costs to completion,
total contract revenues, contract risks and other judgements.

Estimates and judgements are subject to change basedon new information as contracts and related programmes
progress. Furthermore, the complex design and manufacturing
processes of Airbus’ industry require challenging integrationand coordination along the supply chain including an ongoingassessment of suppliers’ assertions which may additionallyimpact the outcome of these monitoring processes(see “– Note 10: Revenues, Cost of Sales and Gross Margin”
and “– Note 22: Provisions, Contingent Assets and Contingent
Liabilities” for further information).

The management of the operating Divisions continually review
all estimates involved in such construction contracts and adjusts
them as necessary (see “– Note 21: Trade Receivables andTrade Liabilities” for further information).
Provisions — The determination of provisions, for example forcontract losses, warranty costs, restructuring measures andlegal proceedings is based on best available estimates. Lossmaking contracts are identiﬁed by monitoring the progress ofthe contract as well as the underlying programme and updating
the estimate of contract costs, which also requires signiﬁcantjudgement related to achieving certain performance standards
as well as estimates involving warranty costs. Depending on thesize and nature of Airbus’ contracts and related programmes,
the extent of assumptions, judgements and estimates in thesemonitoring processes differs. In particular, the introductionof commercial or military aircraft programmes (such as
the A350 XWB and the A400M) or major derivative aircraft
programmes particularly involves an increased level of estimatesand judgements associated with the expected development,
production and certiﬁ cation schedules and expected cost
components.

Employee beneﬁts — Airbus accounts for pension and otherpost-retirement beneﬁts in accordance with actuarial valuations.
These valuations rely on statistical and other factors in order toanticipate future events. The actuarial assumptions may differ
materially from actual developments due to changing market
and economic conditions and therefore result in a signiﬁcantchange in post-retirement employee beneﬁt obligations andthe related future expense (see “– Note 29: Post-Employment
Beneﬁts”).
Legal contingencies — Airbus companies are parties tolitigations related to a number of matters as described in“– Note 36: Litigation and Claims”. The outcome of these matters
may have a material effect on the ﬁnancial position, resultsof operations or cash ﬂows of Airbus. Management regularly
analyses current information about these matters and provides
provisions for probable cash outﬂows, including the estimateof legal expenses to resolve the matters. Internal and externallawyers are used for these assessments. In making the decision
regarding the need for provisions, management considers thedegree of probability of an unfavourable outcome and the ability
to make a sufﬁciently reliable estimate of the amount of loss.

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The ﬁling of a suit or formal assertion of a claim against Airbus
companies or the disclosure of any such suit or assertion, does
not automatically indicate that a provision may be appropriate.
Income taxes — Airbus operates and earns income in numerous
countries and is subject to changing tax laws in multiple
jurisdictions within these countries. Signiﬁcant judgements arenecessary in determining the worldwide income tax liabilities.
Although management believes that it has made reasonableestimates about the ﬁ nal outcome of tax uncertainties, noassurance can be given that the ﬁnal tax outcome of thesematters will be consistent with what is reﬂected in the historicalincome tax provisions. At each end of the reporting period,
Airbus assesses whether the realisation of future tax beneﬁts
is probable to recognise deferred tax assets. This assessment
requires the exercise of judgement on the part of managementwith 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

4.

amount of total deferred tax assets could be reduced, throughvaluation allowances recognition, if estimates of projected futuretaxable income and beneﬁts from available tax strategies arelowered, or if changes in current tax regulations are enacted
that impose restrictions on the timing or extent of Airbus’ ability
to utilise future tax beneﬁts. The basis for the recoverability testof deferred tax assets is the same as Airbus’ latest ﬁve year
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 thenature of temporary differences (see “– Note 15: Income Tax”).
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 21: Trade Receivables and Liabilities”.

Change in Accounting Policies and Disclosures

The accounting policies applied by Airbus for preparing its 2016 year-end Consolidated Financial Statements are the same asapplied for the previous year. Amendments and improvements to standards effective on 1 January 2016 have no impact on theConsolidated Financial Statements.

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 2016 and have not been applied in preparing these Consolidated Financial Statements andearly adoption is not planned:Standards and amendments

IASB effective date forannual reporting periods
beginning on or afterEndorsement status
Endorsed

IFRS 9 “Financial instruments”

1 January 2018

IFRS 15 “Revenue from contracts with customers”

1 January 2018

Endorsed

Clarifications to IFRS 15 “Revenue from contracts with customers”

1 January 2018

Not yet endorsed

Amendments to IFRS 10 and IAS 28 “Sale or contribution of assets between
an investor and its associate or joint venture”-

Not yet endorsed

Amendment to IAS 7 “Disclosure initiative”

1 January 2017

Not yet endorsed

Amendments to IFRS 2 “Classification and measurement of share-based
payment transactions”

1 January 2018

Not yet endorsed

IFRIC 22 “Foreign currency transactions and advance consideration”

1 January 2018

Not yet endorsed

IFRS 16 “Leases”

1 January 2019

Not yet endorsed

IFRS 9 “Financial Instruments”
IFRS 9, published in July 2014, replaces the existing guidance in
IAS 39 “Financial instruments: recognition and measurement”.
IFRS 9 includes revised guidance on the classiﬁ cation andmeasurement of ﬁnancial instruments, including a new expectedcredit loss model for calculating impairment on ﬁnancial assets,

and the new general hedge accounting requirements. It also
carries forward the guidance on recognition and derecognitionof ﬁnancial instruments from IAS 39.
An assessment of the materiality of IFRS 9 impact on Airbus’
Financial Statements is currently being performed.

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IFRS 15 “Revenue from Contracts with Customers”
On 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
will replace the current revenue recognition standards IAS 18“Revenue” and IAS 11 “Construction contracts” and related
interpretations when it becomes effective.
Airbus has completed an initial qualitative assessment of thepotential impact of the adoption of IFRS 15 on its consolidated
ﬁnancial statements.
Revenue recognition should depict the transfer of control of thegoods and services to the customer. IFRS 15 will require Airbus to
identify the different performance obligations it assumes under acontract, and account for them separately based on their relative
stand-alone selling prices. For all contracts, including long-term
construction contracts currently accounted for under the PoC
method, Airbus will only be able to recognise revenue oncecertain conditions providing evidence that control of a goodor service has transferred to the customer are met. IFRS 15
introduces three criteria among which control is transferred overtime and as a result revenue could be recognised over time:(i) customer simultaneously receives and consumes thebenefits provided by the entity’s performance as the entity
performs;(ii) the entity’s performance creates or enhances an asset thatthe customer controls as the asset is created or enhanced;(iii) the entity’s performance does not create an asset withalternative use to the entity and the entity has enforceable
right to payment to performance completed to date.
The current signiﬁ cant accounting policies (see “– Note 2:
Signiﬁcant Accounting Policies”) will be impacted by IFRS 15,
as follows:
Sales of commercial aircraft – Revenue will be recognised
once the customer is controlling the aircraft. In most of thecases, the physical delivery of the aircraft results in the transfer
of control to the customer. Airbus does not expect any change
in the timing of the revenue recognition of commercial aircraft.

The assessment of the impact on the measurement of therevenue is still ongoing speciﬁcally on the concessions granted
by some of Airbus’ suppliers to Airbus’ customers and on
potential impact of signiﬁcant ﬁnancing component.
Construction contracts – This notion is not maintained under
IFRS 15. Airbus has been analysing its major construction
contracts (see “– Note 2: Signiﬁcant Accounting Policies”) andmay conclude for some of them that the criteria stated under
the criteria (ii) and/or (iii) criteria above are not fulﬁlled. In suchcase, revenue and related production costs will be recognised
at the delivery of each separate performance obligation insteadof over the contract using a single margin.
In certain circumstances, the standard considers work inprogress to be controlled by the customer, in which case it would
be inappropriate for an entity to recognise work in progressas an asset on its balance sheet. As a result, Airbus will use amethod which will reﬂect the over time transfer of control whensold assets have no alternative use to the ﬁnal customer. The
assessment of the quantitative impact of the implementationof the new revenue standard is still ongoing.
Transition – Airbus plans to adopt IFRS 15 in its consolidated
ﬁnancial statements for the year ending 31 December 2018,using the retrospective approach.
The implementation of IFRS 15 will generate more extensive
disclosures in the ﬁnancial statements (i.e. backlog based oncontract transaction price).

IFRS 16 “Leases”
IFRS 16 introduces a single, on-balance lease sheet accounting
model for lessees. A lessee recognises a right-of-use asset
representing its right to underlying asset and a lease liability
representing its obligation to make lease payments.
Airbus does not expect signiﬁcant change on current ﬁnancial
leases and on the current accounting recognition of its actual
leases when Airbus is acting as a lessor.
The assessment of the materiality of IFRS 16 impact on
operating leases on Airbus’ Financial Statements is currently
being performed.

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2.2 Airbus Structure
5.

Scope of Consolidation

Consolidation — Airbus’ Consolidated Financial Statements
include the ﬁnancial statements of Airbus Group SE and allmaterial subsidiaries controlled by Airbus. Airbus’ subsidiaries
prepare their ﬁnancial statements at the same reporting dateas Airbus’ Consolidated Financial Statements (see Appendix“Simpliﬁed Airbus Structure Chart”).
Subsidiaries are entities controlled by Airbus including so-called
Structured Entities (“SE”) which are created to accomplish anarrow 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 the control of SE is performed in three steps.
In a ﬁrst step, Airbus identiﬁes the relevant activities of the SE(which may include managing lease receivables, managing thesale or re-lease at the end of the lease and managing the saleor re-lease on default) and in a second step, Airbus assesses
which activity is expected to have the most signiﬁcant impact
on the SE’s return. Finally, Airbus determines which party or
parties control this activity.
Airbus’ interests in equity-accounted investees compriseinvestments in associates and joint ventures. Investments inassociates and in joint ventures are accounted for using theequity method and are initially recognised at cost.
The ﬁnancial statements of Airbus’ investments in associates
and joint ventures are generally prepared for the same reporting
period as for the parent company. Adjustments are made where
necessary to bring the accounting policies and accounting
periods in line with those of Airbus.

PERIMETER OF CONSOLIDATION
31 December

Number of companies

2016

2015

Fully consolidated entities

244

262
53

Investments accounted for using the equity method:■in joint ventures52■

in associates

23

19

319

334

Total

For more details related to unconsolidated and consolidated SE, please see “– Note 25: Sales Financing Transactions”.

6.

Acquisitions and Disposals

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

using appropriate valuation techniques which are generally
based on a forecast of the total expected future net cash
flows.

The determination of the fair value of the acquired assets
and the assumed liabilities which are the basis for themeasurement of goodwill requires significant estimates.
Land, buildings and equipment are usually independently
appraised while marketable securities are valued at market
prices. If any intangible assets are identified, depending on
the type of intangible asset and the complexity of determining
its fair value, Airbus either consults with an independent
external valuation expert or develops the fair value internally,

These evaluations are linked closely to the assumptions madeby management regarding the future performance of theassets concerned and the discount rate applied.
Loss of control, loss of joint control, loss of significant
influence — Upon loss of control of a subsidiary, the assets
and liabilities and any components of Airbus’ equity related
to the subsidiary are derecognised. Any gain or loss arisingfrom the loss of control is recognised within other income
or other expenses in the Consolidated Income Statement.

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If Airbus retains any interest in the previous subsidiary, suchinterest is measured at fair value at the date the control is lost.
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 Airbus has received sufﬁ cient evidence
that the loss of control will occur in the 12 months after theclassiﬁcation. 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 the equity method is highly
probable and will 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 accounted for under the equity method.

6.1

Acquisitions

On 9 March 2016, Airbus Commercial Aircraft acquired 100% of
the shares of the Navtech Inc. Group (“Navtech”), a leading
global provider of ﬂight operations solutions, and has recognised
goodwill of € 104 million. The one year window period for thecompletion of the purchase price allocation will end on 9 March2017.
Navtech provides aviation services with a suite of flight
operations products, aeronautical charts, navigation datasolutions, ﬂight planning, aircraft performance and crew planningsolutions. Navtech generates annual revenues of approximately
US$ 40 million and employs over 250 employees, mainly basedin Waterloo (Canada) and in Hersham and Cardiff (UK).
There were no material acquisitions in 2015.

6.2

Disposals

On 17 June 2015, Airbus Commercial Aircraft signed anagreement with Singapore-based ST Aerospace Ltd. (“STA”)
to offer passenger-to-freighter (“P2F”) conversion solutions for
its A320 and A321 aircraft. Elbe Flugzeugwerke’s (“EFW”),
Dresden (Germany), assets and liabilities were classiﬁ ed as
disposal groups held for sale as of 31 December 2015. On
4 January 2016, STA acquired an additional 20% of the sharesby way of a contribution in kind and a capital increase to EFW,
and consequently, Airbus lost the control of EFW. Airbus
retains 45% of the shares of EFW with signiﬁcant inﬂuence.
Airbus Commercial Aircraft has recognised in other income a€ 19 million gain during the year.
On 2 June 2016, Airbus DS Holding SAS (France) and Astrium
International Holdings B.V. (Netherlands), as beneﬁciaries, anda French private equity ﬁrm, Apax Partners, closed the saleof the business communications entities. The assets andliabilities of these entities were previously classiﬁed as disposalgroups held for sale. The gain resulting from this transaction of€ 146 million was recognised in other income (reported in Airbus
Defence and Space Division).
On 25 March 2015, Airbus sold 1,612,407 Dassault Aviation
shares, corresponding to 17.5% of the Dassault Aviation’s sharecapital, of which 460,688 shares (5%) were sold to Dassault
Aviation for € 980 per share and 1,151,719 shares (12.5%) weresold to institutional investors at € 1,030 per share. On 14 April
2015, Airbus sold an additional 115,172 shares (1.25%) toinstitutional investors at € 1,030 per share.
As of 31 March 2015, the remaining equity investment in
Dassault Aviation with the carrying amount of € 1,320 million
was classified as an asset held for sale (reported in“Other / HQ / Conso.”) as Airbus intends to pursue market
opportunities to sell the remainder of this investment. Prior
to the reclassification, the carrying amount included theAirbus interest in Dassault Aviation’s ﬁrst quarter 2015 result
and a negative catch-up on 2014 of € -119 million.
In 2015, Airbus recognised € 748 million (€ 697 million in share of
proﬁt from investments accounted for under the equity methodand € 51 million in other income) representing the net capitalgain on partial disposal after transaction costs.
On 14 June 2016, Airbus Group SAS sold approximately
1.33 million shares in Dassault Aviation, around 62% toinstitutional investors and 38% to Dassault Aviation, at a
price of € 950 per share. The total gain on these transactions
amounted to € 528 million recognised in other income (reported
in “Other / HQ / Conso.”).
The remaining investment, representing 10% of Dassault
Aviation’s share capital, is now classiﬁed as other investments
and measured at fair value (see “– Note 19: Other Investments
and Other Long-Term Financial Assets”). The resulting gainof € 340 million is recognised in other income (reported in“Other / HQ /Conso.”). Previously, the investment in Dassault
Aviation was classiﬁed as asset held for sale.
The Company also issued bonds exchangeable in Dassault
Aviation shares (see “– Note 34: Net Cash”). In the event of
exchange in full of the bonds, Airbus will have fully disposed of
its Dassault Aviation stake.
On 14 January 2015, Airbus and Safran completed the ﬁrst phaseof the integration process of Airbus Safran Launchers (“ASL”)
enabling the entity to become operational. Coordination andprogramme management of the civil activities of the launcher
business as well as relevant participations were transferred
to ASL.
Airbus received 50% of issued shares in ASL initially recognisedat € 56 million as at-equity investment. The loss of control inthe business resulted in a capital gain of € 49 million, which isreported in Airbus Defence and Space Division in other income.

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On 16 June 2015, ASL, the French state and the Centre
National d’Études Spatiales (“CNES”), the French space
agency, reached an agreement to transfer CNES’s stake in
Arianespace to ASL, which was authorised on 20 July 2016
by the European Commission. On 12 August 2015, ASL wasawarded the Ariane 6 development contract by the European
Space Agency (“ESA”).

Airbus and Safran ﬁnalised the respective contribution balance
sheet in the third quarter 2016 in alignment with the provisionof the Master Agreement. On 31 December 2016, the transferof the 34.68% of CNES’s stake in Arianespace to ASL wascompleted. ASL holds 74% of the shares of Arianespace. Thischange in the shareholder mix at Arianespace ﬁ nalises thecreation of a new launcher governance in Europe.

On 20 May 2016, Airbus and Safran signed the second phaseof the Master Agreement enabling the joint venture to be
fully equipped for all design, development, production andcommercial activities related to civil and military launchers andassociated propulsion systems. During the second phase,
Safran and Airbus integrated within the joint venture all theremaining contracts, assets and industrial resources, related
to space launchers and associated propulsion systems.
On 30 June 2016, Airbus contributed the second phaseassets and liabilities in exchange for shares issued by Airbus
Safran Launchers Holding, and also sold additional assets
in exchange for € 750 million in cash. Airbus participation in
ASL accounted for at-equity amounts to € 677 million. The
loss of control in the business resulted in a capital gain of€ 1,175 million recognised in other income (reported in Airbus
Defence and Space Division).

The allocation of the purchase price is currently ongoing at
ASL level and is expected to be ﬁnalised during the one year
window period ending on 30 June 2017. As a result of thispreliminary allocation, € 7 million depreciation expense net oftax was recognised during the year 2016.

6.3

On 20 August 2015, Airbus Defence and Space GmbH,
Rohde & Schwarz GmbH und Co. KG, Thales Electronic
Systems GmbH and Northrop Grumman Litef GmbH soldtheir shares in Elektroniksystem und Logistik GmbH (“ESG”)
to E-Sicherheitsbeteiligungen GmbH. Airbus recognised a€ 59 million gain in share of proﬁt from investments accounted
for under the equity method, which is reported in Airbus Defence
and Space Division. The assets and liabilities of this company
were classiﬁed as held for sale as at 31 December 2014.
On 1 October 2015, Airbus sold its shares in its fully owned
subsidiary Cimpa SAS to Sopra Steria Group. The € 72 million
gain on this disposal is recognised in other income.

Assets and Disposal Groups Classiﬁed as Held for Sale

As of 31 December 2016, Airbus accounted for assets anddisposal groups of assets classified as held for sale in theamount of € 1,148 million (2015: € 1,779 million). Disposal groupof liabilities classified as held for sale as of 31 December
2016 amount to € 991 million (2015: € 231 million). The assets
and disposal groups classiﬁed as held for sale are related tothe defence electronics companies and Atlas Elektronik GmbH(“Atlas”).

business, a leading global provider of mission-critical sensors,
integrated systems and services for premium defence andsecurity applications mainly based in Ulm (Germany). Suchdivestment is part of the strategic review of the Airbus Defence
and Space business portfolio. The transaction is expected to
be closed within 12 months of the date of the agreement. The
assets and liabilities relative to this disposal group have beenclassiﬁed as held for sale since 31 March 2016.

On 18 March 2016, Airbus reached an agreement with afﬁliates
of KKR & Co. L.P. (the acquirer) to sell its defence electronics

On 20 December 2016, Airbus signed a sale purchase agreement
to sell to Thyssen Krupp its 49% stake in Atlas.

The assets and disposal group of assets and liabilities classiﬁed as held for sale consist of:
31 December

2016

2015

Non-current financial assets

13

1,253

Other non-current assets

354

269

Inventory

428

75

Trade receivables

247

84

Other assets

89

11

Cash and cash equivalents

17

87

1,148

1,779

559

69

(In € million)

Assets and disposal group of assets classified as held for sale
Provisions
Non-current financial liabilities

60

Trade liabilities

85

0

Other liabilities

341

162

Disposal group of liabilities classified as held for sale

991

231

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Annual Report 2016

Registration Document 2016

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2

3

4

5

Financial Statements 2016

1

2

3

4

5

Notes to the IFRS Consolidated Financial Statements
2.2 Airbus Structure

6.4

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

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

2016

2015

Total selling price received by cash and cash equivalents

2,273

277

Cash and cash equivalents included in the disposed subsidiaries

Total

(15)

(23)

2,258

254

The aggregate cash ﬂow from disposals of subsidiaries and assets and disposals groups classiﬁed as held for sales in 2016 results
mainly from the completion of the creation of ASL, the sale of Dassault Aviation shares and the sale of business communication
entities.
The aggregate cash ﬂow from disposals of subsidiaries and assets and disposals groups classiﬁed as held for sales in 2015 results
mainly from the sale of CIMPA, the partial sale of Dassault Aviation share and the completion of the ﬁrst phase of the creation of ASL.

7.

Investments Accounted for under the Equity Method

31 December(In € million)

2016

2015

Investments in joint ventures

1,437

1,264

Investments in associates

Investments accounted for under the equity method

7.1

171

62

1,608

1,326

Investments in Joint Ventures

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

Airbus’ interest in equity on investee at beginning of the year

2016

2015

1,264

885

595

179

Result from continuing operations attributable to Airbus

182

243

Other comprehensive income attributable to Airbus

(93)

46

Dividends received during the year

(195)

(89)

Reclassification as asset held for sale

(198)

0

Deconsolidation of investment

(112)

0

New joint ventures(1)

OthersCarrying amount of the investment at 31 December

(6)

0

1,437

1,264

(1) In 2016, it includes the impact of the completion of the second phase of the ASL creation (see “– Note 6: Acquisitions and Disposals”).

Airbus’ individually material joint ventures are ASL, Paris (France), MBDA S.A.S., Paris (France), and GIE ATR, Blagnac (France),as parent companies of their respective groups. These joint venture companies are not publicly listed.

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Financial Statements 2015

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Notes to the IFRS Consolidated Financial Statements
2.2 Airbus Structure

ASL is a 50% joint venture between Airbus and Safran. ASL isthe 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.
ASL inherits a rich portfolio of products and services, enabling
it to deliver innovative and competitive solutions to numerous
customers around the world.

GIE ATR is manufacturing advanced turboprop aircraft. It isa 50% joint venture between Alenia Aermacchi, a Leonardo(formerly Finmeccanica) group company and Airbus. Both Alenia
Aermacchi and Airbus provide airframes which are assembled
by GIE ATR in France. The members of ATR GIE are legally
entitled to the whole beneﬁts and are liable for the commitmentsof the Company. GIE ATR is obliged to transfer its cash to eachmember of the joint venture.

Airbus held a 37.5% stake in MBDA at 31 December 2016 and2015, which is a joint venture between Airbus, BAE Systems
and Leonardo (formerly Finmeccanica). MBDA offers missile
systems capabilities that cover the whole range of solutions
for air dominance, ground-based air defence and maritime
superiority, as well as advanced technological solutions forbattleﬁeld engagement.

Atlas was a joint venture of Thyssen Krupp and Airbus (which at
31 December 2015 held a 49% stake). As of 31 December 2015,
it was also considered an individually material joint venture.
Following the signature of the sale purchase agreement, itsremaining equity investment has been reclassiﬁed as asset held
for sale (see “– Note 6: Acquisitions and Disposals”).

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

MBDA

GIE ATR(In € million)

2016

2015

2016

2015

2016

2015

Revenues

2,227

1,215

2,955

2,875

1,651

1,760

(35)

0

(92)

(86)

(18)

(50)

Interest income

2

0

8

2

0

1

Interest expense

(2)

0

(3)

(15)

(3)

(2)

Depreciation and amortisation

Income tax expense

(40)

5

(66)

(74)

(3)

0

Profit from continuing operations

102

(8)

213

218

331

340

Other comprehensive income

(4)

0

(215)

65

14

16

356

Total comprehensive income (100%)

98

(8)

(2)

283

345

Non-current assets

5,324

229

2,339

2,010

147

94

Current assets

5,518

1,652

6,425

5,384

814

639

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

797

21

1,890

1,420

7

5

526

11

1,357

1,249

98

111

35

0

7

9

0

0

6,511

1,669

7,119

5,811

407

159

333

10

122

26

0

0

Total equity (100%)

3,805

201

288

334

456

463

Equity attributable to equity owners of the parent

3,797

201

288

334

456

463

8

0

0

0

0

0

Non-controlling interests

ASL

MBDA

(In € million)

2016

2015

Airbus’ interest in equity on investee

1,899

101

255

0

(1,479)(49)

Goodwill
PPA adjustments, net of tax

2016

GIE ATR

2015

2016

2015

108

125

228

232

282

282

0

0

0

0

0

0

Fair value adjustments and modifications
for differences in accounting policies

0

0

(14)

(13)

0

0

Elimination of downstream inventory

2

(1)

0

0

(4)

0

677

51

376

394

224

232

Carrying amount of the investment
at 31 December

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2.2 Airbus Structure

The development of these investments is as follows:
ASL

2016

(In € million)

MBDA

GIE ATR

2015

2016

2015

2016

2015

Airbus’ interest in equity on investee at beginningof the year

51

0

394

306

232

118

Result from continuing operations attributable to Airbus

38

(4)

80

84

166

170

Other comprehensive income attributable to Airbus

(2)

0

(82)

28

7

8

Dividends received during the year

0

0

(16)

(24)

(177)

(64)

590

55

0

0

0

0

0

0

0

0

(4)

0

677

51

376

394

224

232

Changes in consolidation
OthersCarrying amount of the investment
at 31 December

Airbus’ share of contingent liabilities of MBDA as of 31 December 2016 is € 455 million (2015: € 399 million).

7.2

Investments in Associates

Airbus’ interests in associates, being accounted for under the equity method, are stated in aggregate in the following table:
2016

2015(1)

Airbus’ interest in equity on investee at beginning of the year

62

77

Result from continuing operations attributable to Airbus

49

40

Other comprehensive income attributable to Airbus

(27)

(29)

Dividends received during the year

(10)

(10)

Disposal of shares

(3)

(16)

Changes in consolidation(2)1000Carrying amount of the investment at 31 December

171

62

(In € million)(1) In 2015, excluding the individually material investment in Dassault Aviation, reclassified during the year to assets held for sale (see “– Note 6: Acquisitions and Disposals”).
(2) In 2016, it includes the change in consolidation method of EFW.

The cumulative unrecognised comprehensive loss amounts for these associates to € -108 million and € -117 million as of
31 December 2016 and 2015, respectively (thereof € +9 million for the period).

2

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Financial Statements 2015

5

1

2

3

Notes to the IFRS Consolidated Financial Statements
2.3 Segment Information

8.

Related Party Transactions(In € million)

Sales of goods
and services
and otherincomePurchases ofgoods andservices andother expense

Receivables
due as of
31 December

Payablesdue as of
31 December

Otherliabilities /Loans
received as of
31 December

2016
Total transactions with associates
Total transactions with joint ventures

11

55

4

9

85

1,904

488

1,213

203

815

2015
Total transactions with associates
Total transactions with joint ventures

7

40

96

4

79

1,771

121

1,850

14

544

Transactions with unconsolidated subsidiaries are immaterial
to Airbus’ Consolidated Financial Statements.
A part of the shares in Dassault Aviation was sold back to
Dassault Aviation during 2016 and 2015 (for more details, see“– Note 6: Acquisitions and Disposals”).
As of 31 December 2016, Airbus granted guarantees of€ 152 million to Air Tanker group in the UK (2015: € 503 million).

For information regarding the funding of Airbus’ pension plans,
which are considered as related parties, please 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”.

2.3 Segment Information
Airbus operates in three reportable segments which reﬂect theinternal organisational and management structure according to
the nature of the products and services provided.
Airbus Commercial Aircraf t (formerly Airbus) —Development, manufacturing, marketing and sale ofcommercial jet aircraft of more than 100 seats; aircraft
conversion and related services; development, manufacturing,marketing and sale of regional turboprop aircraft and aircraftcomponents.
■
Airbus Helicopters — Development, manufacturing,marketing and sale of civil and military helicopters; provisionof helicopter related services.

■■

Airbus Defence and Space — Military combat aircraft
and training aircraft; provision of defence electronics and of
global security market solutions such as integrated systems
for global border security and secure communications
solutions and logistics; training, testing, engineering and otherrelated services; development, manufacturing, marketingand sale of missiles systems; development, manufacturing,marketing and sale of satellites, orbital infrastructures andlaunchers; provision of space related services; development,
manufacturing, marketing and sale of military transport aircraft
and special mission aircraft and related services.

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2

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Financial Statements 2016

5

1

2

3

4

5

Notes to the IFRS Consolidated Financial Statements
2.3 Segment Information

9.

Segment Information

The following table presents information with respect to Airbus’ business segments. As a rule, inter-segment transfers are carriedout on an arm’s length basis. Inter-segment sales predominantly take place between Airbus Commercial Aircraft and Airbus
Defence and Space and between Airbus Helicopters and Airbus Commercial Aircraft. The holding function of Airbus, the Airbus
Group Bank and other activities not allocable to the reportable segments, combined together with consolidation effects, aredisclosed in the column “Other / HQ / Conso.”.
Airbus uses EBIT as a key indicator of its economic performance.
Business segment information for the year ended the 31 December 2016 is as follows:(In € million)

Total revenues
Internal revenues

AirbusCommercial
Airbus
Aircraft Helicopters
49,237

6,652

AirbusDefenceTotal
and Space segments
11,85467,743

Other /
HQ /Conso.

Consolidated

57

67,800

(646)

(448)

(118)

(1,212)(7)(1,219)

Revenues

48,591

6,204

11,736

66,531

50

66,581

Profit before finance costs
and income taxes (EBIT)

1,543

308

(93)

1,758

500

2,258

thereof:■depreciation and amortisation(1,568)

(183)

(483)

(2,234)(60)(2,294)■

research and development expenses(2,147)

(327)

(332)

(2,806)(164)(2,970)■■share of profit from investments
accounted for under the equity method
additions to other provisions

185

6

41

232

(1)

231

1,395

693

3,700

5,788

311

6,099

Interest result(275)

Other financial result(692)

Income taxes(291)

Profit for the period

1,000Business segment information for the year ended the 31 December 2015 is as follows:(In € million)

AirbusCommercial
Airbus
Aircraft Helicopters

AirbusDefenceTotal
and Space segments

Other /
HQ /Conso.

Consolidated

Total revenues

45,854

6,786

13,08065,720296

66,016

Internal revenues

(764)

(633)

(163)

(1,560)(6)(1,566)

Revenues

45,0906,153

12,91764,160290

64,450

Profit before finance costs
and income taxes (EBIT)

2,287

427

736

3,450

612

4,062

thereof:■depreciation and amortisation(1,608)

(159)

(654)

(2,421)(45)(2,466)■

research and development expenses(2,702)

(325)

(344)

(3,371)(89)(3,460)■■share of profit from investments
accounted for under the equity method

179

4

159

342

674

1,016

additions to other provisions

897

616

2,009

3,522

263

3,785

Interest result(368)

Other financial result(319)

Income taxes(677)

Profit for the period

2,698

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Financial Statements 2015

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2

3

Notes to the IFRS Consolidated Financial Statements
2.3 Segment Information

Segment capital expenditures(In € million)

2016

2015

Airbus Commercial Aircraft

2,304

2,001

Airbus Helicopters

236

280

Airbus Defence and Space

469

552

Other / HQ / Conso.

51

91

3,060

2,924

Total capital expenditures(1)(1) Excluding expenditure for leased assets.

Segment assets

31 December(In € million)

2016

2015

Airbus Commercial Aircraft

51,45747,857

Airbus Helicopters

10,104

10,172

Airbus Defence and Space

16,457

19,388Other / HQ / Conso.

1,709

738

79,727

78,155

Total segment assets
UnallocatedDeferred and current tax assets

8,667

7,619

Securities

11,448

11,639Cash and cash equivalents(1)10,143

6,590

Assets classified as held for sale

1,148

1,779

111,133

105,782

Total assets(1) Investments made by Airbus Group SE in certain securities and trade liabilities have been reassessed and reclassified. Previous year figures are adjusted by € -899 million.

The revenues by geographical areas are disclosed in “– Note 10: Revenues, Cost of Sales and Gross Margin”. The property, plantand equipment by geographical areas is disclosed in “– Note 18: Property, Plant and Equipment”.

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2

3

4

5

Notes to the IFRS Consolidated Financial Statements
2.4 Airbus Performance

2.4 Airbus Performance
10. Revenues, Cost of Sales and Gross Margin
Revenues
Revenues are mainly comprised of sales of goods and services, as well as revenues associated with construction contracts
accounted for under the PoC method, contracted research and development and customer ﬁnancing.
2016(In € million)

2015

Revenues from construction contracts

10,956

9,860

Other revenues(1)55,62554,590Total(2)66,58164,450

9,045

8,328

thereof service revenues including sale of spare parts(1) Includes mainly revenues from sales of commercial aircraft recognised under IAS 18.
(2) For more details, please see “– Note 9: Segment Information”.

Revenues increased by 3.3%, mainly at Airbus Commercial
Aircraft, mostly driven by a positive volume effect and afavourable foreign exchange impact. Deliveries increased to
688 aircraft (635 in the previous year). Airbus Defence andSpace revenues decreased mainly due to perimeter changes for
defence activities (see “– Note 6: Acquisitions and Disposals”)
and include revenues related to the A400M programme of€ 1,702 million (2015: € 1,648 million).

Revenues by geographical areas based on the location of the customer are as follows:(In € million)

2016

2015

Europe21,377

20,060Asia – Pacific

21,26618,755

North America

8,931

10,217

Middle East

8,464

8,612

Latin America

4,925

4,096

Other countries

1,618

2,710

66,58164,450

Total

Cost of Sales and Gross Margin
Cost of sales increased by 10.3%. The increase was primarily
due to business growth at Airbus Commercial Aircraft, the higher
net charge related to A400M programme for € 2,210 million(in 2015: € 290 million) and to A350 XWB programme for€ 385 million (in 2015: € 0 million).
Inventories recognised as an expense during the period amountto € 47,835 million (in 2015: € 45,289 million).
The gross margin decreased by € -3,587 million to € 5,264 million
compared to € 8,851 million in 2015, resulting in a gross marginrate decrease from 13.7% to 7.9%. Included are net charges
recorded in 2016, as mentioned above.

In 2016, Airbus Commercial Aircraft has delivered 49 A350 XWB
aircraft, including to 7 new customers.
To reflect expected lower revenues escalation, increased
learning curve costs and delivery phasing, Airbus Commercial
Aircraft recorded a net charge of € 385 million on A350 XWB
loss making contracts in the second quarter 2016.
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’scommitment. Despite the progress made, challenges remain
with the ramp-up acceleration and recurring costs convergence.

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Notes to the IFRS Consolidated Financial Statements
2.4 Airbus Performance

17 A400M aircraft were delivered during 2016. Acceptanceactivities of one additional aircraft were ﬁnalised at the end of
December 2016, but transfer of title only took place on 1 January
2017 (corresponding revenues will be recognised in 2017). In
total, 38 aircraft have now been delivered to the customer asof 31 December 2016.
Industrial efﬁciency and military capabilities remain 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 have 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 remains 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 ﬁnallysome 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 has recorded
a charge of € 2,210 million in 2016 (thereof € 1,026 million in
the first half-year 2016). This represents the current best
management assessment. Challenges remain on meeting
contractual capabilities, securing sufﬁcient export orders intime, cost reduction and commercial exposure, which could
be signiﬁcant. Given the order of magnitude on the cumulative
programme loss, the Board of Directors has mandated the
management to re-engage with customers to cap the remaining
exposure.
The A400M contractual SOC 1, SOC 1.5 and SOC 2 milestones
remain to be achieved. SOC 1 fell due end October 2013,
SOC 1.5 fell due end December 2014, and SOC 2 end of
December 2015. 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 unlikely that any of these termination rights will be
exercised.

11. Research and Development Expenses

Research and development expenses decreased by 14.2% primarily reﬂecting R&D activities on the A350 XWB programme at
Airbus Commercial Aircraft. In addition, an amount of € 311 million of development costs has been capitalised, mainly related to
the H160 and A350 XWB programmes.

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

2016(In € million)

2015

Share of profit from investments in joint ventures

182

243

Share of profit from investments in associates(1)

49

773

Share of profit from investments accounted for under the equity method

231

1,016

Other income from investments

2154(1) In 2015, it includes a significant impact from the investment in Dassault Aviation. For more details, please see “– Note 6: Acquisitions and Disposals”.

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Notes to the IFRS Consolidated Financial Statements
2.4 Airbus Performance

13. Other Income and Other Expenses
Other income increased by € +2,215 million. This increaseis mainly due to the capital gain of € 1,175 million following
the completion of the creation of ASL, the capital gain of€ 146 million from the sale of the business communications
entities, the capital gain from the sale of Dassault Aviation sharesof € 528 million and the revaluation at fair value of the remaining
investment in Dassault Aviation for € 340 million (see “– Note 6:
Acquisitions and Disposals”).
Other expenses increased to € -254 million compared to€ -222 million in 2015.

14. Total Finance Costs
Interest income derived from Airbus’ asset management and lending activities is recognised as interest accrues, using theeffective interest rate method.
(In € million)

2016

2015

Interest on European Government refundable advances

(212)

(280)

Others

(63)

(88)

(275)

(368)

Change in fair value measurement of financial instruments

(370)

(119)

Foreign exchange translation of monetary items

(220)

(74)

Unwinding of discounted provisions

(65)

(101)

Others(37)(25)

Total other financial result

(692)

(319)

Total

(967)

(687)

Total interest result(1)(1) In 2016, the total interest income amounts to € 247 million (in 2015: € 183 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 € -522 million (in 2015: € -551 million) are recognised as total interest expenses. Both amounts are calculated
by using the effective interest method.

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

2016

2015

Current tax expense

(753)

(661)

Deferred tax benefit (expense)

462

(16)

(291)

(677)

Total

In 2016, € 15 million of current tax income (in 2015: € 42 million) and € -13 million of deferred tax expense (in 2015: € -56 million)
relate to prior years.
Main income tax rates and main changes impacting Airbus:
Countries

2016

2017

> 2017

Netherlands

25.00%

25.00%

25.00%

France(1)34.43%

34.43%

34.43%

Germany

30.00%

30.00%

30.00%

Spain

25.00%

25.00%

25.00%

UK(2)20.00%

19.00%

18.00%(1) A tax law has been enacted in December 2016 changing the rate for income taxes from 34.43% to 28.92% as of 1 January 2020.
(2) 20% from 1 April 2015 until 31 March 2017, 19% from 1 April 2017 until 31 March 2020 and 17% from 1 April 2020.

Financial Statements 2016 - AIRBUS ° 31 °2

Q

Annual Report 2015

Registration Document 2015

1

2

3

4

Financial Statements 2015
Financial Statements 2015

5

1

2

3

Notes to the IFRS Consolidated Financial Statements
2.4 Airbus Performance

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

2016

Profit before income taxes

1,291

3,375

* Corporate income tax rate

25.0%

25.0%

Expected (expense) for income taxes

(323)

(844)

Effects from tax rate differentials

(194)

(329)

Income from investments / associates(1)

580

412

Tax credit

73

66

(117)

(90)
96

Change of tax rate

2015

Change in valuation allowances(102)

Non-deductible expenses and tax-free income

(208)

12

Reported tax (expense)

(291)

(677)

(1) In 2016, it includes the impact of the completion of the second phase of the ASL creation and the impact from the sale of shares of Dassault Aviation, both subject to specifictax treatment. In 2015, it includes the impact of the partial sale of shares of Dassault Aviation subject to specific tax treatment. For more details, see “– Note 6: Acquisitions andDisposals”.

Changes in valuation allowances represent reassessments of the recoverability of deferred tax assets based on future taxable
proﬁts of certain companies mainly for Airbus Commercial Aircraft and Airbus Defence and Space in Germany. The amount ofchange in valuation allowances of € -102 million in 2016 (2015: € 96 million) excludes a positive impact of € 2 million (2015: € 1 million)
from a change in tax rates which is presented in the line “change of tax rate”.
As Airbus 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 Airbus 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, Airbus assesses its
ability to control the distribution of dividends based on existing
shareholder agreements and recognises deferred tax liabilities
accordingly.

As of 31 December 2016, 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 € 104 million.
Companies in deﬁ cit situations in two or more subsequent
years recorded a total deferred tax asset balance of € 1 million(in 2015: € 52 million). Assessments show that these deferred
tax assets will be recovered in future through either (i) own
projected proﬁts, or (ii) proﬁts of other companies integrated in
the same ﬁscal group (“régime d’intégration fiscale” in France,“steuerliche Organschaft” in Germany) or (iii) via the “losssurrender-agreement” in the UK.

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

NOL

FranceGermany

Spain

UK

Other
countries

31 December
2016

31 December
2015

958

1,565

307

1,809

270

4,909

6,503

Trade tax loss carry forwards

0

1,510

0

0

0

1,510

1,955

Tax credit carry forwards

0

0

392

54

14

460

323

Tax effect

330

462

470

361

83

1,706

1,849

Valuation allowances

(9)

(268)

(149)

(51)

(9)

(486)

(423)

321

194

321

310

74

1,220

1,426

Deferred tax assets on NOL’s
and tax credit carry forwards

NOLs, capital losses and trade tax loss carry forwards are indeﬁnitely usable in France, Germany, the UK and Spain. 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.

Financial Statements 2016 - AIRBUS ° 32 °

4

5

Q

Annual Report 2016

Registration Document 2016

1

2

3

4

Financial Statements 2016

5

1

2

3

4

5

Notes to the IFRS Consolidated Financial Statements
2.4 Airbus Performance

Roll forward of deferred taxes:(In € million)

2016

2015

Net deferred tax asset at beginning of the year

5,559

4,587

Deferred tax benefit (expense) in income statement

462

(16)

Deferred tax recognised directly in AOCI (IAS 39)

(7)

1,112

Deferred tax on remeasurement of the net defined benefit pension plans

365

(235)

OthersNet deferred tax asset at 31 December

(114)

111

6,265

5,559

Details of deferred taxes recognised cumulatively in equity are as follows:
31 December

2016

2015

(97)

(86)

Cash flow hedges

2,616

2,612

Deferred tax on remeasurement of the net defined benefit pension plans

1,678

1,313

Total

4,197

3,839

(In € million)

Available-for-sale investments

Deferred income taxes as of 31 December 2016 are related to the following assets and liabilities:
1 January 2016

(In € million)

Deferredtax
assetsDeferredtax
liabilities

Other movements

Movement throughincome statement

31 December 2016

OCI /IAS 19Others(1)R&D
tax
credits

Deferredtax
assetsDeferredtax benefit(expense)

Deferredtax
liabilities

Intangible assets

53

(538)

0

16

0

(71)

70

(610)

Property, plant and equipment

832(1,353)

0

8

0

(130)

741

(1,384)

Investments and other long-term
financial assets
Inventories
Receivables and other assets
Prepaid expenses
Provision for retirement plans

186

(157)

(10)

(46)

0

(82)

197

(306)

1,333

(752)

0

111

0

(879)

1,140

(1,327)837(2,615)

(4)

21

0

2,601

2,007

(1,167)

3

(1)

0

0

0

(1)

1

0

1,519

0

393

(77)

0

(415)

1,420

0

Other provisions

1,999

(627)

0

14

0

1,055

3,876

(1,435)

Liabilities

4,007

(440)

1

(71)

0

(1,400)4,785(2,688)Deferred income

98

(74)

0

(7)

0

17

105

(71)

NOLs and tax credit carry forwards

1,849

0

0

(91)

81

(133)

1,706

0

Deferred tax assets (liabilities)
before offsetting

12,716(6,557)

380

(122)

81

562

16,048(8,988)

(600)

0

(22)

(15)

(58)

(100)

(795)

0

Valuation allowanceson deferred tax assets
Set-off(5,357)

5,357

0

0

0

0

(7,696)

7,696

Net deferred tax assets (liabilities)

6,759(1,200)

358

(137)

23

462

7,557

(1,292)(1) “Others” mainly comprises changes in the consolidation scope and foreign exchange rate effects.

Financial Statements 2016 - AIRBUS ° 33 °2

Q

Annual Report 2015

Registration Document 2015

1

2

3

4

5

Financial Statements 2015
Financial Statements 2015

1

2

3

Notes to the IFRS Consolidated Financial Statements
2.4 Airbus Performance

Deferred income taxes as of 31 December 2015 are related to the following assets and liabilities:
Other movements

Movement throughincome statement

31 December 2015

Deferredtax
liabilities

OCI /IAS 19R&D
tax
credits

Deferredtax
assets

1 January 2015

(In € million)

Deferredtax
assetsOthers(1)Deferredtax benefit(expense)

Deferredtax
liabilities

Intangible assets

50

(475)

0

(1)

0

(59)

53

(538)

Property, plant and equipment490(1,355)

0

(10)

0

354

832

(1,353)

Investments and other long-term
financial assets

332

(167)

(35)

80

0

(181)

186

(157)

Inventories

1,219

(457)

0

(8)

0

(173)

1,333

(752)

397

(2,267)

(115)

(1)

0

208

837

(2,615)

2

0

0

0

0

0

3

(1)

Receivables and other assets
Prepaid expenses
Provision for retirement plans

1,897

0

(235)

13

0

(156)

1,519

0

Other provisions

2,422

(498)

0

(2)

0

(550)

1,999

(627)

Liabilities

2,335

(871)

1,389

1

0

713

4,007

(440)

53

(22)

0

0

0

(7)

98

(74)

NOLs and tax credit carry forwards

2,080

0

0

82

(51)

(262)

1,849

0

Deferred tax assets (liabilities)
before offsetting

11,277(6,112)

1,004

154

(51)

(113)

12,716(6,557)

Deferred income

Valuation allowanceson deferred tax assets

(578)

0

(127)

8

0

97

(600)

0

Set-off(4,982)

4,982

0

0

0

0

(5,357)

5,357

Net deferred tax assets (liabilities)

5,717(1,130)

877

162

(51)

(16)

6,759

(1,200)(1) “Others” mainly comprises changes in the consolidation scope and foreign exchange rate effects.

16. Earnings per Share

2016

2015

Profit for the period attributable to equity owners of the parent (Net income)€ 995 million€ 2,696 million

Weighted average number of ordinary shares

773,798,837

785,621,099€ 1.29€ 3.43

Basic earnings per share

Diluted earnings per share – Airbus’ categories of dilutive
potential ordinary shares are Stock Option Plan (“SOP”),
share-settled Performance Units relating to Long-Term
Incentive Plans (“LTIP”) and the convertible bond issued
on 1 July 2015. The last SOP expired in December 2016. During
2016, the average price of the Company’s shares exceeded
the exercise price of the share-settled Performance Units
and therefore 287,807 shares (in 2015: 359,335 shares) wereconsidered in the calculation of diluted earnings per share. The
dilutive effect of the convertible bond was also considered in
the calculation of diluted earnings per share in 2016, by adding
back € 7 million of interest expense to the proﬁt for the period
attributable to equity owners of the parent (2015: € 3 million)
and by including 5,022,990 of dilutive potential ordinary shares(2015: 2,511,495 shares).

Profit for the period attributable to equity owners of the parent (Net income)Weighted average number of ordinary shares (diluted)(1)Diluted earnings per share(1) Dilution assumes conversion of all potential ordinary shares.

Financial Statements 2016 - AIRBUS ° 34 °

2016

2015

€ 1,002 million€ 2,699 million

779,109,634

788,491,929€ 1.29€ 3.42

4

5

Annual Report 2016

Q

Registration Document 2016

1

2

3

4

Financial Statements 2016

5

1

2

3

4

5

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

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.
Intangible assets as of 31 December 2016 and 2015 comprise the following:
31 December 2016

1 January 2016

(In € million)GrossamountAmortisation /Impairment

Net book
value

Gross
amountAmortisation /Impairment

Net book
value

Goodwill

10,498(1,073)

9,425

10,995(1,088)

9,907

Capitalised development costs

2,871(1,164)

1,707

2,686

(1,027)

1,659

Other intangible assets

Total

3,399

(2,463)

936

3,375

(2,386)989

16,768(4,700)12,06817,056(4,501)

12,555

Net Book Value(In € million)

Balance atBalance at
Changes in
Amortisation / 31 December
1 January Exchange
consolidation
Impairment
2016
2016 differences Additions
scope Reclassification(1) Disposals(1)Goodwill

9,907

(11)

89

52

(102)

(510)

0

9,425

Capitalised
development
costs

1,659

(38)

311

3

(19)

0

(209)

1,707

Other intangible
assets

Total

989

10

199

21

(15)

(26)

(242)

936

12,555

(39)

599

76

(136)

(536)

(451)

12,068(1) Includes intangible assets from entities disposed and reclassified to assets of disposal groups classified as held for sale (see “– Note 6: Acquisitions and Disposals”).

(In € million)

Balance at
Changes in
1 January Exchange
consolidation
2015 differences Additions
scope Reclassification(1)Amortisation /Disposals
Impairment

Balance at
31 December
2015

Goodwill

9,979

60

0

0

(107)

(25)

0

9,907

Capitalised
development
costs

1,688

20

154

0

0

0

(203)

1,659

Other intangible
assets

1,091

17

211

0

(37)

(11)

(282)

989

12,758

97

365

0

(144)

(36)

(485)

12,555Total(1) Includes intangible assets from entities reclassified to assets of disposal groups classified as held for sale (see “– Note 6: Acquisitions and Disposals”).

Development Costs
Airbus has capitalised development costs in the amount of € 1,707 million as of 31 December 2016 (€ 1,659 million as of 31 December2015) as internally generated intangible assets mainly for the Airbus Commercial Aircraft A350 XWB (€ 808 million) and A380(€ 336 million) programmes. The amortisation for the A380 and A350 XWB programmes development costs is performed on aunit of production basis.

Financial Statements 2016 - AIRBUS ° 35 °2

Q

Annual Report 2015

Registration Document 2015

1

2

3

4

Financial Statements 2015
Financial Statements 2015

5

1

2

3

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

Impairment Tests
Airbus assesses at each end of the reporting period whether
there is an indication that a non-ﬁ nancial asset or a Cash
Generating Unit (“CGU”) to which the asset belongs may be
impaired. In addition, intangible assets with an indeﬁnite usefullife, intangible assets not yet available for use and goodwill aretested for impairment in the fourth quarter of each ﬁnancial year
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 allocated to
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
are calculated based on a risk-free rate of interest and amarket risk premium. In addition, the discount rates reﬂect thecurrent market assessment of the risks speciﬁc to each groupof cash-generating units by taking into account speciﬁc peergroup information on beta factors, leverage and cost of debt.
Consequently, slight changes to these elements can materiallyaffect the resulting valuation and therefore the amount of apotential impairment charge.
These estimates are influenced by several assumptions
including growth assumptions of CGUs, availability andcomposition of future defence and institutional budgets, foreignexchange ﬂuctuations or implications arising from the volatilityof capital markets. Cash ﬂow projections take into account pastexperience and represent management’s best estimate about
future developments.

As of 31 December 2016 and 2015, goodwill was allocated to CGUs or group of CGUs, which is summarised in the following
schedule:
AirbusCommercial
Aircraft

AirbusHelicopters

AirbusDefenceand Space

Other / HQ

Goodwill as of 31 December 2016

6,873

308

2,230

14

9,425

Goodwill as of 31 December 2015

6,759

299

2,835

14

9,907

(In € million)

Consolidated

The goodwill mainly relates to the creation of Airbus in 2000 and the Airbus Combination in 2001.

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
Airbus’ impairment testing are based on operative planning.
The operative planning, which covers a planning horizon of ﬁve
years, 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% (2015: 2%);■
future interest rates projected per geographical market, for
the European Monetary Union, the UK and the US;■
future exchange rate of 1.25 US$/€ (2015: 1.25 US$/€) toconvert in euro the portion of future US dollar which are nothedged;■Airbus follows an active policy of foreign exchange risk hedging.
As of 31 December 2016, the total hedge portfolio with maturities
up to 2023 amounts to US$ 102 billion (US$ 102 billion as of
31 December 2015) and covers a major portion of the foreignexchange exposure expected over the period of the operativeplanning (2017 to 2021). The average US$/€ hedge rate of
the US$/€ hedge portfolio until 2023 amounts to 1.25 US$/€(previous year: 1.28 US$/€) and for the US$/£ hedge portfolio
until 2022 amounts to 1.49 US$/£ (previous year: 1.58 US$/£).

For the determination of the operative planning in the CGUs,
management assumed future exchange rate of 1.25 US$/€ from2017 onwards to convert in euro the portion of future US dollar
which are not hedged.
General economic data derived from external macroeconomic
and ﬁnancial studies has 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 of these
Consolidated Financial Statements, have been applied in theindividual CGUs.

Airbus Commercial Aircraft■

The planning takes into account the decision to ramp-up
A320 programme deliveries progressively to a maximum of
60 aircraft per month. A330 deliveries are now at rate 6 asAirbus Commercial Aircraft transitions for the introduction of
the ﬁrst A330 Neo from 2018. The A350 XWB delivery rateincreases to 10 aircraft per month from the end of 2018 whilst
A380 deliveries are expected to reduce to 12 deliveries per
year from 2018.

Financial Statements 2016 - AIRBUS ° 36 °

4

5

Q

Annual Report 2016

Registration Document 2016

1

2

3

4

5

Financial Statements 2016

1

2

3

4

5

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

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 General
Market Forecast updated in 2016. The development of market
share per segment considers enlargement of the competitionas per current best assessment. Current market evolutions
are considered through sensitivities.
■
Due to the huge hedge portfolio, the carrying value and theplanned cash ﬂows of the CGU Airbus Commercial Aircraft
are materially inﬂuenced.
■
Cash ﬂows are discounted using a euro weighted WACC of
6.9% (2015: 8.4%).

■

Airbus Helicopters
The planning takes into account the ramp-up of our medium
segment driven by the H135 which has been certiﬁ ed in2015 and the H175, the continuing deliveries of NH90 anda continuous growth of our support and services activity.
■
In the absence of long-term ﬁnancial reference, expectedcash flows generated beyond the planning horizon are
considered through a terminal value. The terminal value
reﬂects management’s assessment of a normative operating
year based on an outlook of a full aeronautic cycle over the
next decade.
■Long-term commercial assumptions in respect of market
share, deliveries and market value are based on the helicopter
market forecast considering the decrease of last three 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 WACC of
6.7% (2015: 8.2%).

Airbus Defence and Space
After a successful restructuring and portfolio review, Airbus
Defence and Space’s focus for the planning period is to increasebusiness and proﬁtability while implementing a growth strategy
to pave the way for future upsides.
The planning period is characterised by a strong forecasted
order intake across Military Aircraft and Space Systems.
■
The major products driving signiﬁcant growth are A400M
programme, including export contracts, Combat aircraft,
Tankers, satellites and Services.
■
Airbus Defence and Space assumes a further increasein proﬁ tability over the planning period, driven by higher
programme performance and cost savings.
■
Airbus Defence and Space’s Free Cash Flow target is also
expected to grow leveraging on a solid cash generation fromcurrent contracts and businesses as well as future orderintakes (Military Aircraft, Satellites, Communication Intelligenceand Security) and improvement on the A400M programme.
■
Cash ﬂows are discounted using a euro weighted WACC of
6.5% (2015: 8.0%).
■

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

3 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).

For details on assets related to lease arrangements on sales ﬁnancing, please see “– Note 25: Sales Financing Transactions”.

Financial Statements 2016 - AIRBUS ° 37 °2

Annual Report 2015

Q

Registration Document 2015

1

2

3

4

Financial Statements 2015
Financial Statements 2015

5

1

2

3

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

Property, plant and equipment as of 31 December 2016 and 2015 comprise the following:
31 December 2016Grossamount(In € million)

Depreciation /Impairment

1 January 2016
Net book
value(1)GrossamountDepreciation /Impairment

Net book
value(1)Land, leasehold improvements and buildings
including buildings on land owned by others

9,444(4,252)

5,192

9,518

(4,349)5,169

Technical equipment and machinery

20,331(12,076)

8,255

20,296(11,946)

8,350

Other equipment, factory and officeequipment(2)3,933(2,939)

994

4,324

(3,290)1,034

Construction in progress

2,472

0

2,472

2,574

0

2,574

36,180(19,267)

16,91336,712(19,585)

17,127

Total(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 € 356 million (2015: € 364 million).

Net Book Value(In € million)

Balance atBalance at
Changes in
Depreciation / 31 December
1 January Exchange
consolidation
Impairment
2016
2016 differences Additions
scope Reclassification(1) Disposals(1)Land, leasehold
improvements
and buildings
includingbuildings on land
owned by others

5,169

(61)

67

(3)

349

(37)

(292)

5,192

Technical
equipment
and machinery

8,350

(263)

531

20

1,059

(137)

(1,305)

8,255

Other equipment,
factory and officeequipment

1,034

(5)

419

2

109

(351)

(214)

994

Constructionin progress

2,574

(88)

1,788

1

(1,615)

(188)

0

2,472

17,127

(417)

2,805

20

(98)

(713)

(1,811)

16,913Total(1) Includes property, plant and equipment from entities disposed and reclassified to assets of disposal groups classified as held for sale (see “– Note 6: Acquisitions and Disposals”).

(In € million)

Balance at
Changes in
Depreciation /1 January Exchange
consolidation
Impairment
2015 differences Additions
scope Reclassification(1) Disposals(1)Balance at
31 December
2015

Land, leasehold
improvements
and buildings
includingbuildings on land
owned by others

4,808

33

339

0

372

(79)

(304)

5,169

Technical
equipment andmachinery

8,246

154

508

0

869

(154)

(1,273)

8,350

Other equipment,
factory and officeequipment

1,162

38

377

0

0

(199)

(344)

1,034

Constructionin progress

Total

2,105

24

1,811

0

(1,366)

0

0

2,574

16,321

249

3,035

0

(125)

(432)

(1,921)

17,127(1) Includes property, plant and equipment from entities disposed and reclassified to assets of disposal groups classified as held for sale (see “– Note 6: Acquisitions and Disposals”).

In 2016, Airbus capitalised € 5 million of borrowing cost on the production of qualifying assets (2015: € 8 million). Airbus’ borrowing
rate at the end of 2016 was 1.46% (2015: 2.06%).

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2.5 Operational Assets and Liabilities

Property, Plant and Equipment by Geographical Areas
31 December(In € million)

2016

France

7,263

7,035

Germany

4,348

4,294

UK

2,472

3,015

Spain

1,636

1,560

Other countries

1,078

1,105

16,797

17,009Property, plant and equipment by geographical areas(1)2015(1) Property, plant and equipment by geographical areas excludes leased assets of € 116 million (2015: € 118 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” (€ 310 million as of 31 December 2016
compared to 2015 of € 320 million).

Future nominal operating lease payments (for Airbus as alessee) for rental and lease agreements not relating to aircraft
sales ﬁ nancing amount to € 768 million as of 31 December
2016 (2015: € 844 million), and relate mainly to procurement
operations (e.g. facility leases).

Maturities as of 31 December 2016 and 31 December 2015 are as follows:
31 December

2016(In € million)

2015

Not later than 1 year

159

158

Later than 1 year and not later than 5 years

397

393

Later than 5 years

212

293

Total

768

844

19. Other Investments and Other Long-Term Financial Assets

31 December(In € million)

2016

Other investments

2,091

1,232

Other long-term financial assets

1,564

1,260

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

3,655

2,492

522

178

4,177

2,670

Current portion of other long-term financial assets
Total

Other investments mainly comprise Airbus’ participations.
The increase is mainly due to the reclassiﬁ cation in otherinvestments (see “– Note 6: Acquisitions and D isposals”) of
the remaining investment in Dassault Aviation (Airbus share:
10%) amounting to € 876 million as of 31 December 2016. Othersigniﬁcant participations at 31 December 2016 include AviChina(Airbus share: 5.0%, 2015: 5.0%) amounting to € 180 million(2015: € 199 million) and CARMAT SAS (Airbus share: 22.4%,
2015: 24.2%) amounting to € 38 million (2015: € 43 million).

2015

Other long-term financial assets and the current portion ofother long-term financial assets encompass other loans in theamount of € 1,147 million and € 717 million as of 31 December
2016 and 2015, and the sales ﬁnance activities in the form ofﬁnance lease receivables and loans from aircraft ﬁnancing (see“– Note 25: Sales Financing Transactions”).

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20. Inventories

31 December 2016
(In € million)

Gross amount

Write-down

Net book value

Raw materials and manufacturing supplies

3,288

(508)

2,780

Work in progress

27,304(6,246)

21,058Finished goods and parts for resale

3,374

(624)

2,750

Advance payments to suppliers

3,155

(55)

3,100

37,121(7,433)29,688Total

31 December 2015

Gross amount

Write-down

Net book value

Raw materials and manufacturing supplies

3,229

(476)

2,753

Work in progress

25,585(5,150)20,435

Finished goods and parts for resale

3,134

(779)

2,355

Advance payments to suppliers

3,559

(51)

3,508

35,507(6,456)

29,051(In € million)

Total

The increase in work in progress of € +623 million is driven by
Airbus Commercial Aircraft mainly associated with A350 XWB
ramp-up, partly offset by a decrease in Airbus Defence andSpace, mainly related to the reclassification of defence
electronics entities to disposal groups classiﬁed as held forsale and the creation of ASL (see “– Note 6: Acquisitions andDisposals”). It is also related to a decrease in work in progress
for the A400M programme reﬂecting the netting of inventories
with the respective portion of the loss making contracts
provision (see “– Note 22: Provisions, Contingent Assets andContingent Liabilities”). Finished goods and parts for resale

increased by € +395 million, primarily at Airbus Commercial
Aircraft. Advance payments to suppliers decreased at Airbus
Defence and Space, mostly due to the creation of ASL.
Write-downs for inventories are recorded when it becomesprobable that total estimated contract costs will exceed total
contract revenues. In 2016, write-downs of inventories in theamount of € -306 million (2015: € -410 million) are recognisedin cost of sales, whereas reversal of write-downs amounts
to € 217 million (2015: € 66 million). At 31 December 2016
€ 9,374 million of work in progress and € 2,301 million of ﬁnishedgoods and parts for resale were carried at net realisable value.

21. Trade Receivables and Trade Liabilities
Trade receivables arise when Airbus provides goods orservices 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 priceand are subsequently measured at amortised cost less any
allowance for impairment. Gains and losses are recognised in
the Consolidated Income Statement when the receivables are
derecognised or impaired as well as through the amortisation
process.
Allowance for doubtful accounts involves significant
management judgement and review of individual receivables

based on individual customer creditworthiness, current
economic trends including potential impacts from the EUsovereign debt crisis and analysis of historical bad debts.
Assets and liabilities relative to constructions contracts —In the construction contract business, an asset or liability isclassiﬁed as current when the item is realised or settled within
Airbus’ normal operating cycle for such contracts and as noncurrent otherwise. As a result, assets and liabilities relating to
the construction contract business such as trade receivables
and payables and receivables from PoC method, that are settled
as part of the normal operating cycle are classiﬁed as current
even when they are not expected to be realised within 12 months
after the reporting period.

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Trade Receivables
31 December(In € million)

2016

2015

Receivables from sales of goods and services

8,366

8,153

Allowance for doubtful accounts

(265)

(276)

Total

8,101

7,877

1,153

1,819

thereof trade receivable not expected to be collected within 1 year

The trade receivables increased by € +224 million, mainly in
Airbus Commercial Aircraft.
In application of the PoC method, as of 31 December 2016an amount of € 2,882 million (in 2015: € 2,936 million) for
construction contracts is included in the trade receivables netof related advance payments received.
The aggregate amount of costs incurred and recognised
profits (less recognised losses) to date amounts to€ 73,017 million (in 2015: € 71,813 million).
The gross amount due from customers for contract work,on construction contracts recognised under the PoC method,is the net amount of costs incurred plus recognised proﬁts lessthe sum of recognised losses and progress billings. In 2016, it
amounts to € 7,887 million (in 2015: € 9,190 million). Due to thenature of certain contracts and the respective recognition ofrevenues, these incurred costs also include associated workin progress and respective contract losses.
The gross amount due to customers for contract work on
construction contracts recognised under the PoC method, isthe net amount of costs incurred plus recognised proﬁts less thesum of recognised losses and progress billings for all contracts
in progress for which progress billings exceed costs incurred
plus recognised proﬁts (less recognised losses). In 2016, thegross amount due to customers amounts to € 87 million (in2015: € 77 million).

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

2016

2015

Allowance balance at beginning of the year

(276)

(289)

Foreign currency translation adjustment(1)0

Utilisations / disposals

39

15(Additions)

Allowance balance at 31 December

(27)

(2)

(265)

(276)

Trade Liabilities
As of 31 December 2016, trade liabilities amounting to € 133 million (2015: € 129 million) will mature after more than one year.

22. Provisions, Contingent Assets and Contingent Liabilities
Provisions — The determination of provisions, for example forcontract losses, warranty costs, restructuring measures andlegal proceedings is based on best available estimates.
In general, as the contractual and technical parameters to beconsidered for provisions in the aerospace sector are rather

2complex, uncertainty exists with regard to the timing andamounts of 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)

2016

Provision for pensions (Note 29)

8,656

7,615

Other provisions (Note 22)

8,313

7,465

16,96915,080

Total

2015

thereof non-current portion

10,826

9,871

thereof current portion

6,143

5,209

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Movements in other provisions during the year were as follows:
Balance at
1 January
2016

Exchangedifferences

Increasefrompassageof timeContract losses

356

(3)

0

2,787

(1,196)

(674)

(119)

1,151

Outstanding costs

2,431

2

0

1,099

(219)

(967)

(186)

2,160

Aircraft financing risks(1)

618

21

40

50

(14)

(66)

(55)

594

Obligation from services
and maintenanceagreements

600

8

14

138

0

(134)

(35)

591

Warranties

385

2

2

87

(40)

(73)

(24)

339

Personnel-related
provisions(2)

1,145

(1)

1

615

(80)

(538)

(122)

1,020

Litigation and claims(3)

130

0

0

39

3

(14)

(36)

122

Asset retirement

161

(1)

6

2

1

(1)

(2)

166

Other risks and charges

1,639

(4)

2

1,282

(105)

(523)

(121)

2,170

Total

7,465

24

65

6,099

(1,650)(2,990)

(700)

8,313

(In € million)

Reclassification /Change inconsolidated
Additions
group

Used

Released

Balance at
31 December
2016(1) See “– Note 25: Sales Financing Transactions”.
(2) See “– Note 28: Personnel-Related Provisions”.
(3) See “– Note 36: Litigation and Claims”.

In 2016, provision for contract losses mainly includes the A400M programme (€ 825 million) and other Airbus Defence and Space
programmes (€ 260 million). The additions to the contract losses provision include the net charge of € 2,210 million for the A400M
programme before netting with work in progress. Reclassiﬁcation / Change in consolidated group mainly relates to the offsetting of
the A400M programme contract provision to respective inventories (see “– Note 10: Revenues, Costs of Sales and Gross Margin”).
The majority of the addition to provisions for outstanding costs relates to Airbus Defence and Space (€ 529 million) and corresponds
among others to the Euroﬁghter programme and to diverse tasks to complete on construction contracts, as well as to Airbus
Helicopters (€ 501 million), mainly for the NH90 and Tiger programmes.
The agreement on insurance reimbursement that was under negotiation at year-end 2015 was settled during the ﬁrst half-year 2016.
An additional provision of € 160 million related to restructuring measures has been recorded at year-end 2016 following theannouncement in September 2016 of the merger of Airbus structure with the commercial aircraft activities of its largest division
Airbus Commercial Aircraft to increase future competitiveness. Accordingly, a plan including temporary contract termination,
non-replacement of attrition, redeployment, partial and early retirement as well as voluntary leaves in Germany, France, the UK
and Spain has been communicated to the employees and the European Works Council in November 2016.
In Airbus Helicopters, the business has been reassessed in 2016 leading to a restructuring provision of € 42 million.
In 2016, after reassessing and adjusting the restructuring provision recorded in 2013 in Airbus Defence and Space andHeadquarters, € 20 million has been released.
An H225 Super Puma helicopter was involved in an accident on 29 April 2016. Management is cooperating fully with the authorities
to determine the precise cause of the accident. On the basis of recent developments, an estimate of the related future costs has
been prepared and consequently a provision has been recorded in the accounts as of 31 December 2016.
Contingent assets and contingent liabilities — Airbus is
exposed to technical and commercial contingent obligations
due to the nature of its businesses. To mitigate this exposure,
Airbus has subscribed a Global Aviation Insurance Programme(“GAP”). When Airbus has obtained insurance coverage fromthird parties for these risks, any reimbursement is recognised
separately only when it is virtually certain to be received.
Information required under IAS 37 “Provisions, contingent
liabilities and contingent assets” is not disclosed if Airbus
concludes that disclosure can be expected to prejudiceseriously its position in a dispute with other parties.

For other contingent liabilities, please see “– Note 36: Litigation
and Claims” and “– Note 10: Revenues, Cost of Sales 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.

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

Positive fair values of derivative financial instruments

(1)

2016

2015

893

931

Others83

165

Total non-current other financial assets

976

1,096

Receivables from related companies

517

616

Positive fair values of derivative financial instruments(1)

258

349

Others482

437

Total current other financial assets

1,257

1,402

Total

2,233

2,498

(1) See “– Note 35: Information about Financial Instruments”.

Other Financial Liabilities
31 December(In € million)

2016

2015

Liabilities for derivative financial instruments(1)

6,544

6,703

European Governments refundable advances

6,340

6,716

Others429

619

13,313

14,038

Liabilities for derivative financial instruments(1)

4,476

3,884

European Governments refundable advances

730

570

Total non-current other financial liabilities

Liabilities to related companies

116

80

Others439

487

Total current other financial liabilities

5,761

5,021

Total

19,074

19,059

5,761

5,021

thereof other financial liabilities due within 1 year
(1) See “– Note 35: Information about Financial Instruments”.

Refundable advances from European Governments are provided to Airbus to ﬁnance research and development activities for certain
projects on a risk-sharing basis, i.e. they have to be repaid to the European Governments subject to the success of the project.

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

2016

2015

Prepaid expenses

2,265

2,051

93

115

Total non-current other assets

2,358

2,166

Value added tax claims

1,589

1,450

Prepaid expenses

552

663

Others435

706

Total current other assets

2,576

2,819

Total

4,934

4,985

OthersOther Liabilities
31 December(In € million)

2016

2015

Customer advance payments

15,714

14,472Others565

521

Total non-current other liabilities

16,27914,993Customer advance payments(1)24,11523,612

Tax liabilities (excluding income tax)

1,047

885

2,373

2,540

Total current other liabilities

Others27,53527,037

Total

43,81442,03026,562

26,313

thereof other liabilities due within 1 year

(1) Of which € 6,318 million (2015: € 8,252 million) relate to construction contracts mainly in Airbus Defence and Space (2016: € 5,001 million and 2015: € 7,007 million) and Airbus
Helicopters (2016: € 1,317 million and 2015: € 1,246 million).

25. Sales Financing Transactions
Sales ﬁnancing — With a view to facilitating aircraft sales for
Airbus Commercial Aircraft and Airbus Helicopters, Airbus may
enter into either on-balance sheet or off-balance sheet sales
ﬁnancing transactions.
On-balance sheet transactions where Airbus Commercial
Aircraft is lessor are classiﬁed as operating leases, ﬁnance leases
and loans, inventory and to a minor extent, equity investments:(i) Operating leases – Aircraft leased out under operatingleases are included in property, plant and equipment at costless accumulated depreciation (see “– Note 18: Property,
Plant and Equipment”). Rental income from operating leases
is recorded as revenues on a straight-line basis over theterm of the lease.

(ii) Finance leases and loans – When, pursuant to a financing
transaction, substantially all the risks and rewards ofownership of the financed aircraft reside with a third party,
the transaction is characterised as either a finance leaseor a loan. In such instances, revenues from the sale of theaircraft are recorded upon delivery, while financial interestis recorded over time as financial income. The outstandingbalance of principal is recorded on the statement of financial
position (on-balance sheet) in long-term financial assets, netof any accumulated impairments.
(iii) Inventory – 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 inventory held for resale if there is no subsequent
lease agreement in force (see “– Note 20: Inventories”).

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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
Commercial Aircraft, made when a customer-order isplaced, to provide financing to the customer in the eventthat the customer fails to secure sufficient 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 in place, (ii) commitments
may be transferred in full or part to third parties prior todelivery, (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 anddoes not incur an unusual risk in relation thereto. In order tomitigate customer credit risks for Airbus, such commitments
typically contain financial conditions which guaranteed
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 Commercial Aircraft considers
the financial risks associated with such guarantees to be
acceptable, because (i) the guarantee only covers a trancheof the estimated future value of the aircraft, and its levelis considered prudent in comparison to the estimatedfuture value of each aircraft, and (ii) the exercise dates ofoutstanding asset value guarantees are distributed through2028. It is management policy that the present value of theguarantee given does not exceed 10% of the sales price of
the aircraft.
As of 31 December 2016, the nominal value of asset value
guarantees provided to beneficiaries amounts to € 836 million(2015: € 781 million), excluding € 51 million (2015: € 97 million)
where the risk is considered to be remote. The present
value of the risk inherent in asset value guarantees wherea settlement is being considered probable is fully provided
for and included in the total of provisions recognised for
asset value risks of € 580 million (2015: € 550 million) (see“– Note 22: Provisions, Contingent Assets and Contingent
Liabilities”).
(iii) Operating head-lease commitments – Airbus has enteredinto head-lease sub-lease transactions in which it acts as alessee under an operating head-lease and lessor under the
sub-lease. Airbus’ customer financing exposure to operating
head-lease commitments, determined as the present valueof the future head-lease payments, was € 0 million in 2016(2015: € 92 million).

Exposure — In terms of risk management, Airbus 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) the book 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 ﬁ nancing SEs before impairment.
This Gross Customer Financing Exposure may differ fromthe value of related assets on Airbus’ Statement of Financial
Position and related off-balance sheet contingent commitments,
mainly because (i) assets are recorded in compliance with IFRS,
but may relate to transactions that are ﬁnanced on a limited
recourse basis and (ii) the carrying amount of the assets on theConsolidated Statement of Financial Position may have beenadjusted for impairment losses.
Gross Customer Financing Exposure amounts to US$ 1.8 billion(€ 1.7 billion) (2015: US$ 1.5 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 proceeds fromresale 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 for what management
believes is its conservative assessment of market conditions andfor repossession and transformation costs. The net exposure
is fully provided for by way of impairment losses and otherprovisions.
Impairment losses and provisions — For the purpose ofmeasuring an impairment loss, each transaction is tested
individually. Impairment losses relating to aircraft under operatinglease and second hand aircraft for resale (included in inventory)
are recognised for any excess of the aircraft’s carrying amountover the higher of the aircraft’s value in use and its fair valueless cost to sell. Impairment allowances are recognised forﬁnance leases and loans when their carrying amounts exceed
the present value of estimated future cash ﬂows (including cash
ﬂows expected to be derived from a sale of the aircraft). Under
its provisioning policy for sales ﬁnancing risk, Airbus records
provisions as liabilities for estimated risk relating to off-balance
sheet commitments.

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Security — Sales ﬁnancing transactions, including those thatare structured through SE, are generally collateralised by theunderlying aircraft. Additionally Airbus beneﬁts from protective
covenants and from security packages tailored according to
the perceived risk and the legal environment.
Airbus endeavours to limit its sales ﬁ nancing exposure bysharing its risk with third parties usually involving the creation of
an SE. Apart from investor interest protection, interposing an SE
offers advantages such as ﬂexibility, bankruptcy remoteness,
liability containment and facilitating sell-downs of the aircraft
ﬁnanced. An aircraft ﬁnancing SE is typically funded on a nonrecourse basis by a senior lender and one or more providers ofsubordinated ﬁnancing. When Airbus acts as a lender to suchSEs, it may take the role of the senior lender or the providerof subordinated loan. Airbus consolidates an aircraft ﬁnancing
SE if it is exposed to the SE’s variable returns and has theability to direct the relevant remarketing activities. Otherwise,
it recognises only its loan to the SE under other long-term
ﬁnancial assets. At 31 December 2016 the carrying amount of
its loans from aircraft ﬁnancing amounts to € 732 million (2015:€ 553 million). This amount also represents Airbus’ maximum
exposure to loss from its interest in unconsolidated aircraft
ﬁnancing SEs.

On-Balance Sheet Operating and Finance Leases
The minimum future operating lease payments (undiscounted) due from customers to be included in revenues, and the future
minimum lease payments (undiscounted) from investments in ﬁnance leases to be received in settlement of the outstanding
receivable at 31 December 2016 are as follows:
Aircraft underoperating lease

Finance leasereceivable(1)Not later than 1 year

25

133

Later than 1 year and not later than 5 years

60

71(In € million)

Later than 5 years

815

31 December 2016

93

219

(1) Includes € 12 million of unearned finance income.

Off-Balance Sheet Commitments
Operating head-lease commitments comprise operating lease payments due by Airbus Commercial Aircraft as lessee underhead-lease transactions. As of 31 December 2016 and as of 31 December 2015, the scheduled payments owed under sales
ﬁnancing head-leases are as follows:
31 December

2016(In € million)

2015

Not later than 1 year

52

62

Later than 1 year and not later than 5 years

48

98

0

0

Total aircraft lease commitments(1)Later than 5 years

100

160

Of which commitments where the transaction has been sold to third parties

(100)

(149)

0

11

Total aircraft lease commitments where Airbus bears the risk (not discounted)(1) Backed by sublease income from customers with an amount of € 75 million in 2016 (2015: € 119 million).

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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(In € million)

2016

2015

Loans

45

94

Liabilities to financial institutions

0

0

Total sales financing liabilities

45

94

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 2016 and 2015 are as follows:
31 December 2016

(In € million)

Operating leases(1)Finance leases and loans
Inventory
Other investments

31 December 2015

AirbusCommercial
Aircraft

AirbusHelicopters

Total

AirbusCommercial
Aircraft

169

44

213

337

0

337

1,094

54

1,148

779

61

840

208

0

208

179

0

179

AirbusHelicopters

Total

28

0

28

28

0

28

1,499

98

1,597

1,323

61

1,384

Off-balance sheet customer financing

182

21

203

84

8

92

Non-recourse transactions on-balance sheet

(109)

0

(109)

(17)

0

(17)

On-balance sheet customer financing

0

0

0

(24)

0

(24)

Gross Customer Financing Exposure

Off-balance sheet adjustments

1,572

119

1,691

1,366

69

1,435

Collateral values(1,157)(60)(1,217)

(922)

(20)

(942)

Net exposure

415

59

474

444

49

493

Operating leases

(89)

(9)

(98)

(220)

0

(220)

Finance leases and loans

(158)

(50)

(208)

(113)

0

(113)

On-balance sheet commitments - provisions(2)

0

0

0

0

(49)

(49)

On-balance sheet commitments - inventories

(154)

0

(154)

(93)

0

(93)

Off-balance sheet commitments - provisions(2)

(14)

0

(14)

(18)

0

(18)

(415)

(59)

(474)

(444)

(49)

(493)

Asset impairments and provisions(1) For 2016 and 2015, depreciation amounts to € 12 million and € 27 million respectively and related accumulated depreciation is € 84 million and € 203 million respectively.
(2) See “– Note 22: Provisions, Contingent Assets and Contingent Liabilities”.

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Annual Report 2015

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Registration Document 2015

1

2

3

4

Financial Statements 2015
Financial Statements 2015

5

1

2

3

Notes to the IFRS Consolidated Financial Statements
2.6 Employees Costs and Beneﬁ ts

2.6 Employees Costs and Beneﬁts
26. Number of Employees

AirbusCommercial
Aircraft

AirbusHelicopters

AirbusDefenceand Space

31 December 2016

73,85222,50734,39731 December 2015

72,81622,52038,206

Total
segments

Other / HQ

Consolidated

130,756

3,026

133,782

133,542

3,032

136,574

27. Personnel Expenses(In € million)

2016

2015

Wages, salaries and social contributions

12,59513,022

Net periodic pension cost (Note 29)

Total

533

598

13,128

13,62028. Personnel-Related Provisions
Several German Airbus companies provide life-time working account models, being employee beneﬁt plans with a promised returnon 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 expense in that period, recognisedin other personnel charges.

(In € million)

Balance at
1 January
2016

Exchangedifferences

Increasefrompassageof time Additions

Reclassification /Change inconsolidated
group Used Released

Balance at
31 December
2016

Restructuring measures /pre-retirement part-time work(1)

265

0

0

247

(11)

(97)

(39)

Other personnel charges

880

(1)

1

368

(69)

(441)

(83)

655

1,145

(1)

1

615

(80) (538)

(122)

1,020

Total

365

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

29. Post-Employment Beneﬁts

31 December(In € million)

2016

2015

Provision for retirement plans (Note 29.1)

7,749

6,867

Provision for deferred compensation (Note 29.2)

Total

Financial Statements 2016 - AIRBUS ° 48 °

907

748

8,656

7,615

4

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Registration Document 2016

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2

3

4

5

Financial Statements 2016

1

2

3

4

5

Notes to the IFRS Consolidated Financial Statements
2.6 Employees Costs and Beneﬁ ts

29.1 Provisions for Retirement Plans
When Airbus employees retire, they receive indemnities as
stipulated in retirement agreements, in accordance withregulations and practices of the countries in which Airbus
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 dessalaries (“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 — Airbus 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.
Parts of the pension obligation in Germany are funded by assets
invested in speciﬁ c funding vehicles. Besides a relief fund(“Unterstützungskasse”), Airbus has implemented a Contractual
Trust Arrangement. The Contractual Trust Arrangement
structure is that of a bilateral trust arrangement. Assets thatare transferred to the relief fund and the Contractual Trust
Arrangement qualify as plan assets under IAS 19.
UK — The Airbus Group 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 Airbus companies
located in the UK and participating in the scheme. The majorityof the Scheme’s liabilities relate to Airbus Defence and SpaceLtd. 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 to cover the
Scheme’s obligations. Since 1 November 2013, this plan isgenerally closed for new joiners, who participate in a separate
deﬁned contribution plan.

Moreover, Airbus participates in the UK in several funded
trustee-administered pension plans for both executive andnon-executive employees with BAE Systems being the principal
employer. Airbus’ most signiﬁ cant investments in terms of
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 Airbus 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, Airbus and thescheme Trustees agreed on a sectionalisation, which was
implemented on 1 April 2016. Although BAE Systems remains
the only principal employer of the Scheme, Airbus has obtained
powers in relation to its section which are the same as if itwere the principal employer. The deﬁcit of the Main Scheme
was allocated between BAE Systems and Airbus based inprinciple on each Member’s last employer, which was donein December 2015. Before, the deﬁcit allocation was basedon the relative payroll contributions of active members whichamounted to a share of Airbus in BAE Systems’ main scheme in2015 to 20.96%. The impact of this change was mainly reﬂectedin the remeasurements of the previous period.
The other schemes qualify as multi-employer deﬁned beneﬁt
pension plans under IAS 19 “Employee beneﬁts”. Based on
detailed information about the other pension schemes provided
by BAE Systems, Airbus is able to appropriately and reliably
estimate the share of its participation in the schemes, i.e. its
share in plan assets, deﬁned beneﬁt obligation (“DBO”), andpension costs. The information enables Airbus to derive keys
per plan to allocate for accounting purposes an appropriate
proportion in plan assets, DBO and pension costs to its UK
investments as of the reporting date, taking into account the
impact of contributions as well as future extra contributions
agreed by BAE Systems with the trustees. Therefore, Airbus
accounts for its participation in BAE Systems’ UK deﬁned beneﬁtschemes under the deﬁned beneﬁt accounting approach inaccordance with IAS 19.
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
Airbus 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.

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2

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4

5

Financial Statements 2015
Financial Statements 2015

1

2

3

Notes to the IFRS Consolidated Financial Statements
2.6 Employees Costs and Beneﬁ ts

In the event that an employer who participates in the BAE
Systems pension schemes fails or cannot be compelled tofulfil its obligations as a participating employer, the remaining
participating employers are obliged to collectively take on its
obligations. Airbus considers the likelihood of this event asremote. However, for the Main Scheme Airbus considers thatits obligation is in principle limited to that related to its section.

Risks
The DBO exposes Airbus to actuarial risks, including thefollowing 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 will continue, 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. A ﬁxed interest rate has
been agreed for the deferred compensation plan P3, which isﬁnanced by the employees.
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 signiﬁ cant retirement plans as of
31 December are as follows:
Pension plans inGermany

FranceParticipation in BAE
Systems Pension
Scheme (UK)

UK

2016

2015

2016

2015

2016

2015

2016

Discount rate

1.7

2.4

1.9

2.5

2.7

3.9

2.6

3.9

Rate of compensation increase

2.75

2.75

2.5

2.5

2.6

3.0

2.6

3.2

Rate of pension increase

1.7

1.7

- / 1.7- / 1.7

3.0

2.9

3.1

2.3-3.2

Inflation rate

1.7

1.7

1.7

1.7

3.1

3.0

3.1

3.2

Assumptions in %For Germany and France, Airbus derives the discount rate used
to determine the DBO from yields on high quality corporate
bonds with an AA rating. The determination of the discount rateis based on the iBoxx€ Corporates AA bond data and uses the
granularity of single bond data in order to receive more market
information from the given bond index. The discount rate forthe estimated duration of the respective pension plan is thenextrapolated along the yield curve. In the UK it is determined withreference to the full yield curve of AA-rated sterling-denominatedcorporate bonds of varying maturities. The salary increase
rates are based on long-term expectations of the respective
employers, derived from the assumed inﬂation rate and adjusted
by promotional or productivity scales.

2015

Rates for pension payment increases are derived from therespective inﬂation rate for the plan.
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 then yields
on index-linked and ﬁxed-interest long-term government bonds.
For the calculation of the German pension obligation, the“2005 G” mortality tables (generation tables) as developed byProfessor Dr. Klaus Heubeck are applied. For the UK schemes,
the Self-Administered Pensions S1 mortality tables based on
year of birth (as published by the Institute of Actuaries) is usedin conjunction with the results of an investigation into the actual
mortality experience of scheme members. In France, Institutefor French Statistics (“INSEE”) tables are applied.

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5

Financial Statements 2016

1

2

3

4

5

Notes to the IFRS Consolidated Financial Statements
2.6 Employees Costs and Beneﬁ ts

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

Balance as of
1 January 2015

Plan assets

Participation in
BAE Systems
PensionPensionplans of
SchemeAirbusin the UK

Total

Participation in
BAE Systems
PensionPensionplans of
SchemeAirbusin the UK

Total

Total
provisions

10,625

4,337

14,962(4,237)(3,158)(7,395)

7,567

Service cost

358

81

439

0

0

0

439

Interest cost and income

219

175

394

(105)

(130)

(235)

159

from changes indemographic assumptions

(2)

0

(2)

0

0

0

(2)

from changes in financial
assumptions(642)(1,218)(1,860)000(1,860)from changes in experience
adjustments

Remeasurements: Actuarial(gains) and losses arising
■

■

■

213

(44)

169

0

0

0

169

from plan assets

0

0

0

67

898

965

965

Change in consolidation,transfers and others

(95)

5

(90)

0

0

0

(90)

Benefits paid

■

(338)

(168)

(506)

139

168

307

(199)

Contributions by employer
and other plan participants

0

0

0

(245)

(117)

(362)

(362)

Foreign currency translation
adjustment

54

279

333

(50)

(202)

(252)

81

Balance as of
31 December 2015

10,392

3,447

13,839(4,431)(2,541)(6,972)

6,867

Service cost

316

63

379

0

0

0

379

Interest cost and income

251

119

370

(126)

(90)

(216)

154

Settlements

(4)

0

(4)

0

0

0

(4)

Remeasurements: Actuarial(gains) and losses arising
■

■

■

■

from changes indemographic assumptions

6

0

6

0

0

0

6

from changes in financial
assumptions

1,027

786

1,813

0

0

0

1,813

from changes in experience
adjustments

158

0

158

0

0

0

158

0

0

0

(179)

(296)

(475)

(475)

from plan assets

Change in consolidation,transfers and others

(530)

2

(528)

44

0

44

(484)

Benefits paid

(348)

(79)

(427)

132

79

211

(216)

Contributions by employer
and other plan participants

0

0

0

(104)

(167)

(271)

(271)

Foreign currency translation
adjustment

(164)

(530)

(694)

133

383

516

(178)

11,104

3,808

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

7,749

Balance as of
31 December 2016

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Financial Statements 2015
Financial Statements 2015

5

1

2

3

Notes to the IFRS Consolidated Financial Statements
2.6 Employees Costs and Beneﬁ ts

The funding of the plans is as follows:
31 December

2016

2015

(In € million)

DBO

Plan assets

DBO

Plan assets

Unfunded pension plans

1,577

0

1,491

0

Funded pension plans (partial)

13,335(7,163)

12,348(6,972)

Total

14,912(7,163)

13,839(6,972)

In 2016, contributions in the amount of € 104 million(2015: € 241 million) are made into the pension plans of Airbus,
mainly relating to the relief fund in Germany with € 50 million(2015: € 50 million) and the Airbus Group UK scheme with€ 50 million (2015: € 58 million). Previous year included
additionally the Contractual Trust Arrangement of € 130 million.

Contributions of approximately € 400 million are expected tobe made in 2017.
The weighted average duration of the DBO for retirement plansand deferred compensation is 16 years at 31 December 2016(31 December 2015: 14 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 (as of 31 December 2016 unless otherwise noted):
ActiveDeferredPensioner

Germany

44%

6%

50%

France

99%

0%

1%

67%

16%

17%

60%

17%

23%

UK

(1)

Participation in BAE Systems Pension Scheme (Main Scheme)(1) As of 5 April 2016.

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 2016:
Change in actuarial assumptions

Impact on DBO
Change as of 31 December

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

2016

2015

15,93014,680

Increase by 0.5%-point(1,197)(1,007)

Decrease by 0.5%-point

1,322

1,062

Increase by 0.25%-point

106

188

Decrease by 0.25%-point

(279)

(305)

Increase by 0.25%-point

342

256

Decrease by 0.25%-point

(486)

(369)

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.

Increase by 1 year

287

283

Reduction by 1 year

(461)

(411)

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.

Financial Statements 2016 - AIRBUS ° 52 °

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4

Financial Statements 2016

5

1

2

3

4

5

Notes to the IFRS Consolidated Financial Statements
2.6 Employees Costs and Beneﬁ ts

The fair value of the plan assets for retirement plans and deferred compensation can be allocated to the following classes:
2016(In € million)

QuotedpricesUnquoted
prices

2015

Total

QuotedpricesUnquoted
prices

Total
990

Equity securities
1,112

0

1,112

990

0

Rest of the world

Europe

5

0

5

0

0

0

Emerging markets

248

0

248

221

0

221

Global

1,474

0

1,474

1,454

0

1,454

Corporates

1,877

0

1,877

1,549

0

1,549

Governments

1,464

0

1,464

1,715

0

1,715

Pooled investment vehicles

17

288

305

273

0

273

Commodities

161

0

161

119

0

119

Bonds

Hedge funds

236

0

236

251

0

251

Derivatives

0

(60)

(60)

0

(58)

(58)

Property

337

3

340

331

4

335

Cash and money market funds

62

0

62

48

0

48

Others

209

(142)

67

252

(64)

188

7,202

89

7,291

7,203

(118)

7,085

Balance as of 31 December

The majority of funded plans apply broadly an asset-liability
matching (“ALM”) framework. The strategic asset allocation(“SAA”) of the plans takes into account the characteristics of
the underlying obligations. Investments are widely diversiﬁed,
such that the failure of any single investment would not have amaterial impact on the overall level of assets. A large portion ofassets in 2016 consists of ﬁxed income instruments, equities,
although Airbus also invests in property, commodities andhedge funds. Airbus is reassessing 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 SAA.

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

Share ofmulti-employer
plan in the UK

Total

Germany

FranceUK

Others

DBO

7,793

1,545

1,044

10

3,447

13,839Plan assets

3,464

17

950

0

2,541

6,972

Recognised as of 31 December 2015

4,329

1,528

94

10

906

6,867

DBO

8,227

1,643

1,223

11

3,808

14,912

Plan assets

3,514

17

1,000

0

2,632

7,163

Recognised as of 31 December 2016

4,713

1,626

223

11

1,176

7,749

(In € million)

Employer’s contribution to state and private pension plans, mainly in Germany and France, are to be considered as deﬁned
contribution plans. Contributions in 2016 amount to € 703 million (2015: € 689 million).

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Financial Statements 2015
Financial Statements 2015

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1

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3

Notes to the IFRS Consolidated Financial Statements
2.6 Employees Costs and Beneﬁ ts

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:2016(In € million)

2015

DBO

Plan
assets

Total

DBO

Plan
assets

Total

Balance as of 1 January

841

(113)

728

744

(81)

663

Service cost

118

0

118

137

0

137

Interest cost

20

0

20

14

0

14

Interest income

0

(3)

(3)

0

(2)

(2)

Remeasurements: Actuarial (gains) and losses arising■from changes in financial assumptions

0

0

0

(34)

0

(34)

■

from changes in experience adjustments

35

0

35

0

0

0

■

from plan assets

91

2

93

0

3

3

Transfer and change in consolidation

(80)

1

(79)

(15)

0

(15)

Benefits paid

(7)

0

(7)

(5)

0

(5)

Contributions

0

(15)

(15)

0

(33)

(33)

1,018

(128)

890

841

(113)

728

Balance as of 31 December
RECOGNISED AS

31 December(In € million)

2016

2015

Provision

907

748

Non-current other assets and current other assets

17

20

890

728

Total

The portion of the obligation, which is not protected by thepension guarantee association or Pensions-Sicherungs Verein(“PSV”) in case of an insolvency of Airbus companies concerned,
is covered by securities. Trust agreements between the trust andthe participating companies stipulate that some portions of theobligation must be covered with securities in the same amount,
while other portions must be covered by 115% leading to an
overfunding of the related part of the obligation. These amounts
are recognised as other non-current and current assets.

30. Share-Based Payment
Share-based compensation — In 2007, Airbus introduced a
Performance and Restricted Unit Plan or LTIP which qualiﬁes
as a cash settled share-based payment plan under IFRS 2. The
grant of so called “units” will not physically be settled in shares(except with regard to Airbus Executive Committee Members). For
details of the conversion of some Performance Units granted to
Executive Committee Members into equity-settled plans pleasesee “– Note 31.1: Remuneration-Executive Committee”. In 2016,
Airbus implemented a Performance Units and Performance
Share Plan, which is granted in units as well as 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 theextent to which the employees have rendered service to date.
The fair value of each LTIP unit is determined using a forward
pricing model. Changes of the fair value are recognised as
personnel expense of the period, leading to a remeasurementof the provision.
Besides the SOP that has been granted in the past and theequity settled part of the LTIP 2016, the Employee ShareOwnership Plan (“ESOP”) is an additional equity settled
share-based payment plan. Airbus offers its employees under
this plan the Company shares at fair value matched with anumber of free shares based on a determining ratio. The fairvalue of shares provided is reﬂected as personnel expense in
Airbus’ Consolidated Income Statements with a corresponding
increase in equity.

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2.6 Employees Costs and Beneﬁ ts

30.1 SOP and LTIP
Based on the authorisation given to it by the Shareholders’Meetings, Airbus’ Board of Directors approved a SOP in 2006(see date below). This plan provides to the Members of the
Executive Committee as well as to Airbus’ senior management
the grant of options for the purchase of the Company’s shares.
For the Company’s SOP, the granted exercise price exceeded
the share price at the grant date.
In the years 2011 to 2015, the Board of Directors of Airbus
approved the granting of LTIP Performance and Restricted
Units. In 2016, it approved an LTIP Performance Units andPerformance Share Plan.

In 2014, Airbus decided to hedge the share price risk inherent in
the cash-settled LTIP units by entering equity swaps where thereference price is based on the Airbus share price. To the extent
that LTIP units are hedged, compensation expense recognised
for these units will effectively reﬂect the reference price ﬁxed
under the equity swaps.
In 2016, compensation expense for LTIPs including theeffect of the equity swaps amounted to € 35 million (in 2015:€ 175 million). For the SOP, expenses were neither recognisedin 2016 nor in 2015.

The fair value of units and shares granted per vesting date is as follows (LTIP plan 2016):
Expected vesting date
FV of Performance Units and Shares(In € per unit / share granted)

May 2020 – Performance share

45.15

May 2020 – Performance unit

45.13

May 2021 – Performance unit

44.71

As of 31 December 2016 provisions of € 179 million (2015: € 320 million) relating to LTIP have been recognised.
The lifetime of the Performance and Restricted Units as well as Performance Shares is contractually ﬁxed (see the description of
the respective tranche). For the units, the measurement is next to other market data, mainly affected by the share price as of theend of the reporting period (€ 62.84 as of 31 December 2016) and the lifetime of the units.
The principal characteristics of the SOP as at 31 December 2016 are summarised in the table below:
SOP 2006
Date of Shareholders’ Meeting

4 May 2006

Grant date18 December 2006

Number of options granted

1,747,500

Number of options outstanding0

Total number of eligible employees
Vesting conditions

221
50% of options may be exercised after a period of two years from the date of grantof the options; 50% of options may be exercised as of the third anniversaryof the date of grant of the options (subject to specific provisions contained in the
Insider Trading Rules — see “Part 2/3.1.3 Governing Law — Dutch Regulations”)

Expiry date16 December 2016

Conversion right

One option for one share

Vested100%

Exercise price
Exercise price conditions€ 25.65
110% of fair market value of the shares at the date of grant

Number of exercised options

1,501,000

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The following table summarises the development of the number of outstanding stock options:
Number of options

Balance at
1 January

Exercised

Forfeited

Balance at
31 December

2015

511,750(241,750)(5,500)264,500

2016

264,500(224,500)(40,000)

0

Tranches
SOP 2006

The weighted average share price at the date of exercise for share options exercised in 2016 was € 59.21 (2015: € 60.65).
The principal characteristics of the LTIPs as at 31 December 2016 are summarised below:
LTIP 2011
Grant date(1)

9 November 2011

LTIP 2012

LTIP 2013

LTIP 201413 December 2012 17 December 2013 13 November 2014

LTIP 2015

LTIP 2016

29 October 2015

25 October 2016

Performance and Restricted Unit plan

Performance plan

Units

Performance Restricted Performance Restricted Performance Restricted Performance Restricted Performance Restricted

Numberof units
granted(2)2,606,900 882,591 2,123,892 621,980 1,245,052 359,060 1,114,962

Numberof units
outstanding
Total numberof eligible
beneficiaries
Vesting
conditions
Share priceper unit islimited atthe vesting
dates to(3)Vesting
dates

Number ofvested units

0

0

1,771

880,095

283,320 1,159,814

1,797

Units

Shares291,420926,398

240,972

615,792

621,198

346,100 1,068,502 287,442

916,246

239,674

615,792

621,198

1,709

1,621

1,564

1,671

The Performance and Restricted Units and Performance Shares will vest if the participant is still employed by an Airbus company
at the respective vesting dates and, in the case of Performance Units and Shares, upon achievement of mid-term businessperformance. Vesting schedule is made up of four payments (from the LTIP 2014 onwards two payments) over two years.

-€ 55.66€ 92.34€ 94.90€ 112.62€ 105.34

25% each:
25% each
25% each:in May 2016
expected:in May 2015
in November 2016
in May 2017
in November 2015 25% each expected: in November 2017
in May 2016
in May 2017
in May 2018
in November 2016 in November 2017 in November 2018

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

3,108,160 823,828

2,500

2,116

855,388289,135

3,860

0

0

0

-

50% each
expected:in100%
May 2020 expectedinin
May 2021 May 202000(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 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).
(3) 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, eachvalued with the respective reference share price of € 27.83 (for LTIP 2012), € 46.17 (for LTIP 2013), € 47.45 (for LTIP 2014), € 56.31 (for LTIP 2015) and € 52.67 (for LTIP 2016).

30.2 ESOPIn 2016, the Board of Directors approved a new ESOP. Eligible
employees were able to purchase a ﬁxed number of previously
unissued shares at fair market value (4, 6, 10, 19, 38 or 76 shares).
Airbus matched each ﬁxed number of shares with a number of
the Company free shares based on a determined ratio (4, 5, 7,
11, 16 and 25 free shares, respectively). During a custody periodof at least one year or, provided the purchase took place in thecontext of a mutual fund (regular savings plan), of ﬁve years,
employees are restricted from selling the shares, but have theright to receive all dividends paid. Employees who directly
purchased the Company shares have, in addition, the ability tovote at the annual shareholder meetings. The subscription price
was equal to the closing price at the Paris stock exchange on
23 February 2016 and amounted to € 55.41. Investing throughthe mutual fund led to a price which corresponds to the average
price at the Paris stock exchange during the 20 trading days
immediately preceding 23 February 2016, resulting in a priceof € 54.31. The Company issued and sold 485,048 ordinary

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shares with a nominal value of € 1.00 each. Compensation
expense (excluding social security contributions) of € 27 million
was recognised in connection with ESOP.
In 2015, the Board of Directors approved a new ESOP. Eligible
employees were able to purchase a ﬁxed number of previously
unissued shares at fair value (4, 6, 9, 19, 37, 74 or 148 shares).
Airbus matched each ﬁxed number of shares with a number of
the Company free shares based on a determined ratio (4, 5, 6,
11, 16, 25 and 39 free shares, respectively). During a lock-up
period 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 tovote at the annual shareholder meetings. The subscription price
was equal to the closing price at the Paris stock exchange on
26 February 2015 and amounted to € 51.63. Investing throughthe mutual fund led to a price which corresponds to the average
price at the Paris stock exchange during the 20 trading days
immediately preceding 26 February 2015, resulting in a price of€ 49.70. The Company issued and sold 477,985 ordinary shareswith a nominal value of € 1.00 each. Compensation expense(excluding social security contributions) of € 25 million wasrecognised in connection with ESOP.

31. Remuneration
31.1 Remuneration – Executive Committee
Airbus’ 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:
2016

2015

Salaries and other short-term benefits (including bonuses)

28.4

23.2

Post-employment benefit costs

6.1

7.5

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

20.5

15.4

Termination benefits

0.0

3.5

(In € million)

Executive Committee, including Executive Board Member

Other benefits

0.7

0.8

Social charges

5.5

6.5

1.8

1.5

63.0

58.4

Non-Executive Board Members
Short-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 – Chapter 4.4: Remuneration Report”.

Salaries and Other Short-Term Benefits (Including Bonuses)
The amount of bonuses is based on estimated performanceachievement as at the balance sheet date and difference
between previous year estimation and actual pay-out in thecurrent year. Outstanding short-term beneﬁts (bonuses) at yearend 2016 for Executive Committee Members based on estimatedperformance achievement at year-end was € 13.4 million (2015:€ 13.4 million).

In 2015, Airbus had to recognise high salary taxes for Executive
Committee Members subject to French tax jurisdictions underthe “Taxe sur les hauts revenus”, requiring exceptional 50%
charges on individual annual remuneration exceeding € 1 million(2015: € 1 million). For 2016, this surtax has been abolished.

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Post-Employment Benefit Cost
The pension DBO of the Executive Committee, including theCEO, at 31 December 2016 amounted to € 68.3 million (2015:€ 61.6 million). The disclosed DBO reﬂects the total outstandingbalance for all Executive Committee Members subject to adeﬁned beneﬁt plan and in charge at the end of the respectivebalance sheet date.

Share-Based Remuneration (“LTIP Award”)
The share-based payment expenses result from not yet forfeitedunits granted to the Executive Committee Members under the
Airbus LTIP which are re-measured to fair value as far as they
are cash settled.
In 2016, the Members of the Executive Committee were granted
85,386 Performance Units and 91,082 Performance Sharesfor LTIP 2016 and 13,674 additional units for LTIP 2015 (2015:
184,652 units), the respective fair value of these Performance
Units and Shares at the respective grant dates was € 8.76 million(2015: € 10.3 million). Fair value of outstanding LTIP balancesat the end of 2016 for all Executive Committee Members

was € 14.5 million (2015: € 21.6 million). The total number ofoutstanding Performance and Restricted Units amounted to467,245 at 31 December 2016 (2015: 775,744), granted to thecurrent Members of the Executive Committee.
Until and including the plan 2015, based on the intention of theBoard of Directors to increase the long-term commitment of
Executive Committee Members to the success of Airbus, theBoard 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 theplans, 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 thevesting dates of the respective plan.

The number of Performance Units granted to Executive Committee Members 31 December 2016 are summarised below:
LTIP 2011(1)LTIP 2012(2)LTIP 2013(3)LTIP 2014

LTIP 2015(4)Total number of units granted

337,280

245,551

203,000

199,310

189,476

Number of cash-settled units

227,949

177,933

138,300

147,269

143,217

Number of equity-settled units

109,331

67,71864,70052,041

46,25931 December
2012

28 February
2013

28 February
2014

28 February
2015

28 February
2016€ 29.50€ 39.70€ 53.39€ 55.33€ 59.78

Date of conversion
Share price at date of conversion(1) Based on performance achievement of 128% for Performance Units under 2011 LTIP.
(2) Based on performance achievement of 89% for Performance Units under 2012 LTIP.
(3) Based on performance achievement of 75% for Performance Units under 2013 LTIP.

SOP

Other Benefits

To the other current Members of the Executive Committee
and to Airbus’ senior management, there were no outstanding
stock options at 31 December 2016 (2015: 264,500). During theyear 2016, the Executive Committee Members have exercised
10,000 options (2015: 241,085) granted under the remaining
SOP 2006. 97,500 options (2015: 137,500) were exercisedand 40,000 options (2015: 0 options) were forfeited by former
Executive Committee Members. As all Airbus SOPs vested
before 2012 no related personnel expense was recognised in2016 or in 2015.

Other beneﬁ ts include expenses for Executive Committee
Members’ company cars and accident insurance. There were no
outstanding liabilities at 31 December 2016 or 2015 respectively.

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31.2 Remuneration – CEO
The total remuneration of the CEO and Executive Member of the Board of Directors, related to the reporting periods 2016 and2015, can be summarised as follows:
2016

2015

Base salary

1,500,000

1,400,004(In €)

Annual variable pay

2,062,000

1,659,000

Post-employment benefits costs

1,075,888

1,079,861

Share-based remuneration (“LTIP award”)(1)

1,528,732

2,401,751

Other benefits

71,75569,050Social charges

11,66811,368(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” for details. The pay-out from vested cash settled LTIP in 2016 was € 2,279,689 (2015: € 3,148,629).

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 € 21,251,788 as of 31 December 2016 (€ 17,118,048
as of 31 December 2015), whilst the amount of current service and interest cost related to his pension promise accounted for in
the ﬁscal year 2016 represented an expense of € 1,075,888 (2015: € 1,079,861). This amount has been accrued in the Consolidated
Financial Statements.

Share-Based Remuneration
The table below gives an overview of the interests of the CEO, under the various LTIPs of Airbus:
LTIP
Granted date

2011

2012

2013

2014

2015

2016

Performance Units

51,40050,30030,30029,50024,862

28,480Re-evaluation of PU

128%

89%

75%

100%

100%

100%

PUs re-evaluated65,792

44,76722,726

29,50024,862

28,480

Vested in 2016■

in cash24,672

16,787

0

0

0

0

■

in shares

16,448

0

0

0

0

0

Outstanding 2016■

in cash0

16,78811,36322,125

18,647

14,240■in shares

0

11,192

11,363

7,375

6,215

14,240November 2016

November 2017

July 2020

May 2020

Vesting scheduleCash-settled units
Equity-settled units

For vesting dates, please see “– Note 30.1: SOP and LTIP”
November 2018

June 2019

Vesting of all Performance Units granted to the CEO is subject to performance conditions.
Fair value of outstanding LTIP balances at the end of 2016 for the CEO was € 2,353,453 (2015: € 3,460,607).

Other Benefits
The CEO is entitled to accident insurance coverage and a company car. In 2016, the total amount expensed was € 71,755 (2015:€ 69,050). Airbus has not provided any loans to / advances to / guarantees on behalf of the CEO.

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31.3 Remuneration – Board of Directors
The remuneration of the Non-Executive Members of the Board of Directors was as follows:2016(In €)

2015

Fixum(1)Attendance fees(2)Total

Fixum(1)Attendance fees

Total

Denis Ranque

180,000

60,000240,000

Manfred Bischoff

26,15420,00046,154

180,000

70,000250,000

80,00025,000Ralph D. Crosby

80,00050,000130,000

105,000

80,00035,000115,000

Non-Executive Board Members

Catherine Guillouard

67,58240,000107,58200

0

Hans-Peter Keitel

100,000

60,000160,000

100,000

35,000135,000

Hermann-Josef Lamberti

110,000

55,000165,000

110,000

30,000140,000(3)

Anne Lauvergeon

32,692

10,00042,692100,000

30,000130,000

Lakshmi N. Mittal

100,000

50,000150,000

100,000

35,000135,000

María Amparo Moraleda Martínez

100,000

55,000155,000

50,00020,00070,000(3)

Claudia Nemat

67,58230,00097,582000

Sir John Parker

110,000

60,000170,000

110,000

30,000140,000

Michel Pébereau

32,69220,00052,692100,000

25,000125,000

Carlos Tavares(4)Jean-Claude Trichet

54,06620,00074,06600

0100,000

60,000160,000

100,000

35,000135,000

Former Non-Executive Board Members
Josep Piqué i Camps

Total

0

0

0

41,668041,6681,160,768

590,000

1,750,768

1,151,668

370,000

1,521,668(1) The fixum related to 2016 was paid 50% in December 2016 and the other 50% will be paid in July 2017. The fixum related to 2015 was paid in 2016.
(2) The attendance fees are paid at the end of each semester.
(3) Member of the Company Board of Directors and Audit Committee as of 28 April 2016.
(4) Member of the Company Board of Directors as of 28 April 2016.

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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:
2016

2015

785,344,784

784,780,585

Issued for ESOP

1,474,716

1,539,014

Issued for exercised options

224,500

1,910,428(14,131,131)(2,885,243)

772,912,869

785,344,784(In number of shares)

Issued as at 1 January

Cancelled
Issued as at 31 December
Treasury shares as at 31 December(184,170)(1,474,057)

Outstanding as at 31 December

772,728,699

783,870,727

Authorised shares

3,000,000,000

3,000,000,000

Holders of ordinary shares are entitled to dividends and areentitled to one vote per share at general meetings of theCompany.

which € 223 million were recognised in ﬁnancial liability which
led to a reduction of equity by € -513 million. The share buyback
has been completed for a total amount of € 1 billion.

Capital stock comprises the nominal amount of shares
outstanding. The addition to capital stock represents thecontribution for exercised options of € 224,500 (in 2015:€ 1,910,428) in compliance with the implemented SOP andby employees of € 1,474,716 (in 2015: € 1,539,014) under the
ESOPs.

On 28 April 2016, the Annual General Meeting (“AGM”) of
the Company authorised the Board of Directors, for a period
expiring at the AGM to be held in 2017, to issue shares andgrant rights to subscribe for shares in the Company’s sharecapital for the purpose of:Share premium mainly results from contributions in kind in
the course of the creation of Airbus, cash contributions fromthe Company’s initial public offering, capital increases andreductions due to the issuance and cancellation of shares.
Retained earnings include mainly the proﬁt of the period and thechanges in other comprehensive income from remeasurementsof the deﬁned beneﬁt pension plans net of tax which amounts to€ -1,383 million in 2016 (2015: € +491 million), and cash dividend
payments to Airbus Group SE shareholders.
On 28 April 2016, the Shareholders’ General Meeting decided to
distribute a gross amount of € 1.30 per share, which was paid on
4 May 2016. For the ﬁscal year 2016, Airbus’ Board of Directors
proposes a cash distribution payment of € 1.35 per share.
Treasury shares represent the amount paid or payable for own
shares held in treasury and relates to the share buyback which
took place between 2 November 2015 and 30 June 2016. As of
31 December 2015, the Company bought back € 264 million ofshares and recognised a ﬁnancial liability of € 223 million for its
irrevocable share buyback commitment at that date. Recognitionof the ﬁnancial liability led to a corresponding reduction of equity.
In 2016, the Company bought back € 736 million of shares of

ESOPs and share- related LTIPs in the limit 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 28 April 2016, the AGM authorised the Board of
Directors for an 18-month period to repurchase up to 10%of the Company’s issued and outstanding share capital (i.e.
issued share capital excluding shares held by the Company or
its subsidiaries) at a price not exceeding the higher of the price ofthe 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.
Furthermore, the AGM authorised both the Board of Directors
and the CEO, with powers of substitution, that the number ofshares repurchased by the Company pursuant to the sharebuyback programme are cancelled.

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32.2 Non-Controlling Interests
The non-controlling interests (“NCI”) from non-wholly owned subsidiaries amount to € -5 million as of 31 December 2016(2015: € 7 million). These NCI do not have a material interest in Airbus’ activities and cash ﬂows.
Subsidiaries with NCI that are material to their stand-alone ﬁnancial information are:
GEW
AirbusTechnologies (Pty) Ltd. DS Optronics (Pty) Ltd
Principal place of business

Pretoria (South Africa)

Ownership interest held by NCI

Irene (South Africa)

AlestisAerospace S.L.

PFW
Aerospace GmbHLa Rinconada (Spain)

Speyer (Germany)

2016

2015

2016

2015

2016

2015

2016

2015

25%

25%

30%

30%

38.09%

38.09%

25.10%

25.10%

NCI (in € million)

13

9

10

7

(34)

(25)

(28)

(28)

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

1

2

1

1

(5)

(7)

0

0

33. Capital Management
Airbus 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 Airbus. Consequently, operating liquidity is of great importance.
As part of its capital management, it is one of Airbus’ objectives to maintain a strong credit rating by institutional rating agencies.
This enables Airbus to contain its cost of capital which positively impacts its stakeholder value (entity value). Next to other nonﬁnancial parameters, the credit rating is based on factors such as, cash ﬂow ratios, proﬁtability and liquidity ratios. Airbus monitorsthese ratios to keep them in a range compatible with a strong rating.
Rating agency

Long-term rating

Outlook

Short-term ratingStandard and Poor’s(1)A+

StableA-1+

Moody’s Investors Services

A2

StableP-1

Fitch Ratings (unsolicited)A-

StableF-2(1) The long-term rating with Standard and Poor’s has been upgraded to A+ from A in September 2016.

Airbus’ stand-alone ratings reﬂect the strong backlog providing
revenue visibility and Airbus Commercial Aircraft leading market
position, Airbus’ strong liquidity and improving credit metrics
as well as management’s focus on programmes execution,
proﬁtability and cash generation improvement. The rating isconstrained by Airbus’ exposure to structural currency risk.
In accordance with Airbus’ 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 Airbus Commercial Aircraft’s position as asolid counterparty for its customers and suppliers.
Among other indicators, Airbus uses a Value Based Management
approach in order to guide the Company towards sustainablevalue creation by generating ﬁnancial returns above the costof capital.
The key elements of the Value Based Management concept are:the deﬁnition of ﬁnancial returns;
the deﬁnition of the Company’s capital base; and■the measurement of value creation derived from the two
above.
■■

Airbus uses Return on Capital Employed (“RoCE”) to measure
the value created by ﬁnancial returns relative to its capital base.
RoCE, as deﬁned by Airbus, uses EBIT for the numerator and
Average Capital Employed for the denominator. The Average
Capital Employed for Airbus is deﬁned as the average of theannual opening and closing positions of Fixed Assets plus Net
Operating Working Capital plus O perating C ash less Other
Provisions.
Financial value is created if proﬁts relative to Airbus’ Capital
Employed exceed the Company’s cost of capital. Value canbe measured by comparing RoCE to the WACC. A ﬁve year
plan for a value creation ambition is constructed annually, andis 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 and realised Treasury
swaps. The Company’s long-term aspiration is to reach theﬁrst quartile of RoCE performance among our aerospace anddefence peers.
Airbus also monitors the level of dividends paid to its
shareholders.

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The Company generally satisﬁes its obligations arising fromshare-based payment plans by issuing new shares. In order toavoid any dilution of its current shareholders out of these sharebased payment plans, the Company performs share buybacks
and cancels its own shares following the decisions of the Boardof Directors and approval of the AGM. Apart from this purpose,
the Company generally does not trade with treasury shares.
The Company complies with the capital requirements underapplicable law and its Articles of Association.

34. Net Cash

The net cash-position provides ﬁnancial ﬂexibility to fund Airbus’ operations, to react to business needs and risk proﬁle and toreturn capital to the shareholders.
31 December(In € million)

2016

2015

Cash and cash equivalents(1)10,143

6,590

Current securities

1,551

1,788

Non-current securities

9,897

9,851

Short-term financing liabilities(1,687)(2,790)Long-term financing liabilities(8,791)(6,335)

Total(1)11,1139,104(1) Investments made by Airbus Group SE in certain securities and trade liabilities have been reassessed and reclassified. Previous year figures are adjusted by € -899 million.

Derivative instruments recognised on Airbus’ Statement of
Financial Position consist of (i) instruments that are enteredinto as hedges of Airbus’ operating activities or interest result,and (ii) embedded foreign currency derivatives that arise fromseparating 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)

2016

2015

Bank account and petty cash

3,100

1,504

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

5,513

3,220

Short-term securities (available-for-sale)(1)

1,535

1,952

12

1

10,160

6,677

17

87

10,143

6,590

OthersTotal cash and cash equivalents(1)

Recognised in disposal groups classified as held for sale
Recognised in cash and cash equivalents(1)(1) Investments made by Airbus Group SE in certain securities and trade liabilities have been reassessed and reclassified. Previous year figures are adjusted by € -899 million.

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.

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34.2 Securities

34.3 Financing Liabilities

The majority of Airbus’ securities consists of debt securities andare classiﬁed as available-for-sale ﬁnancial assets and carriedat their fair values (see “– Note 35.2: Carrying Amounts andFair Values of Financial Instruments” for more details on how
available-for-sale assets are accounted for).

Financing liabilities comprise obligations towards ﬁnancial
institutions, issued corporate bonds, deposits made bycustomers of Airbus Group Bank, borrowings received fromjoint 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.

Airbus’ security portfolio amounts to € 11,448 millionand € 11,639 million as of 31 December 2016 and 2015,
respectively. The security portfolio contains a non-current
portion of available-for-sale-securities of € 9,897 million (in2015: € 9,848 million), no amount of securities designated atfair value through proﬁt and loss (in 2015: € 3 million), and acurrent portion of available-for-sale-securities of € 1,551 million(in 2015: € 1,788 million).
Included in the securities portfolio as of 31 December 2016
and 2015, respectively, are corporate and government bonds
bearing either ﬁxed rate coupons (€ 10,736 million nominal value;comparably in 2015: € 10,956 million) or ﬂoating rate coupons(€ 360 million nominal value; comparably in 2015: € 397 million)
and foreign currency funds of hedge funds (€ 6 million nominal
value; 2015: € 8 million).
When Airbus enters into securities lending activities, thesecurities pledged as collateral continue to be recognised on
the balance sheet. There were no such securities pledged asof 31 December 2016 and 2015.

Financing liabilities to ﬁ nancial institutions include liabilities
from securities lending transactions. In securities lendingtransactions, Airbus receives cash from its counterparty andtransfers the securities subject to the lending transaction as
collateral. The amount of cash received is recognised as aﬁnancing liability. The securities lent are not derecognised, but
remain on Airbus’ Statement of Financial Position.
The Company has issued several euro-denominated bonds
under its Euro Medium Term Note programme (“EMTN”) and astand-alone US dollar-denominated bond on the US institutional
market under Rule 144A. It has also issued an euro-denominatedconvertible bond and euro-denominated exchangeable bonds
into Dassault Aviation shares. Furthermore, the Company has
long-term US dollar-denominated loans outstanding with theEuropean Investment Bank (“EIB”) and the Development Bankof Japan (“DBJ”).

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

Principal
amount(In million)

EMTN 15 years€ 500

EMTN 7 years

US$ Bond 10 years€ 1,000

US$ 1,000

EMTN 10 years€ 1,000

EMTN 15 years
US$ Commercial
paper programme

31 December

2016
533

0

940

1,052

2015
550

1,018

Issuancedate
Sep. 2003

Aug. 2009

917

Apr. 2013

1,021

Apr. 2014

€ 500

526

497

Oct. 2014

US$ 3,000

0505

Apr. 2015

Convertible bond
7 years

EMTN 10 years

EMTN 15 years
Exchangeablebonds 5 years

€ 500

€ 600

€ 900

€ 1,078

Bonds

DBJ 10 years

US$ 300

464

589

861

458

0

May 2016

0

1,048

0

6,013

4,966

285

Jul. 2015

May 2016

276

Couponor interest
rate
5.50%

4.625%

2.70%

2.375%

2.125%

0.00%

0.875%

1.375%EIB 7 years

US$ 406

385

373

Feb. 2013

3M US-Libor+0.93%

OthersLiabilities to financial
institutions

US$ 320

304

294

0

223

370

153

2,423

2,462

Dec. 2014

2.52%

Dec. 2015

6M US-Libor+0.559%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 from 1 day
to 12 months. The programme has been set up in 2003 with amaximum volume of € 2 billion, increased in 2013 to a maximum

1.386%

0.951%

1.49%

0.333%

Apr. 2024

Interest rate
swapped into 3M
Euribor +1.40%

Oct. 2029

Interest rate
swapped into 3M
Euribor +0.84%

Jul. 2022

Convertible into
Airbus Group SE
shares at € 99.54
per share

May 2026

Interest rate
swapped into 3M
EuriborMay 2031

Interest rate
swapped into 3M
Euribor

Jun. 2021

Exchangeable
into Dassault
Aviation sharesJan. 2021

Interest rate
swapped into
4.76% fixedInterest rate
swapped into
3.2% fixed

Feb. 2020

Aug. 2011

Share buybackcommitment

2.194%

Apr. 2023

Interest rate
swapped into 3M
Libor +0.68%

Aug. 2021

567

EIB 10 years

2.394%

Aug. 2016

Interest rate
swapped into 3M
Euribor +1.57%

Jan. 2011

488

576

2.73%

Sep. 2018

Interest rate
swapped into 3M
Euribor +1.72%

3M US-Libor+1.15%

US$ 721

591

4.68%

Additionalfeatures0.00%

EIB 10 years

US$ 627

5.58%

MaturitydateJun. 2016

3M US-Libor+0.85%

EIB 10 years

Effective
interest
rate

2.52%

Dec. 2024

Interest rate
swapped into 3M
Libor +0.61%

Dec. 2025

volume of € 3 billion. As of 31 December 2016, there was nooutstanding 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.

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Financing liabilities include outstanding debt of € 85 million(2015: € 129 million) relating to a loan Airbus Commercial
Aircraft received from Air 2 US in 1999 by way of a reinvestment
note amounting to US$ 800 million, bearing a ﬁ xed interest
rate of 9.88%, and other liabilities related to sales ﬁnancing(see “– Note 25: Sales Financing Transactions”).
(In € million)

In June 2016, the Company issued € 1,078 million exchangeablebonds into Dassault Aviation shares, with a 5-year maturity.
The exchangeable bonds were issued at 103.75% of par witha coupon of 0%. Their effective interest rate, after separationof the equity conversion option related to Dassault Aviation
shares, is 0.333%.

Not exceeding 1 year

Over 1 year up to 5 years

More than 5 years

Bonds

Total

0

1,581

4,432

6,013

Liabilities to financial institutions

351

1,573

499

2,423

Loans

332

213

118

663

Liabilities from finance leases

15

154

220

389

989

1

0

990

31 December 2016

1,687

3,522

5,269

10,478

Bonds

Others

(1)

1,523

550

2,893

4,966

Liabilities to financial institutions

349

1,112

1,001

2,462

Loans

255

163

240

658

Liabilities from finance leases

13

145

230

388

Others(1)31 December 2015

650

1

0

651

2,790

1,971

4,364

9,125

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

The aggregate amounts of ﬁnancing liabilities maturing during the next ﬁve years and thereafter as of 31 December 2016 and asof 31 December 2015, are as follows:
31 December(In € million)

2016

2015

1 year

1,687

2,790

2 years829

228

3 years

271

835

4 years703

252

5 years

1,719

656

Thereafter

5,269

4,364

10,478

9,125

Total

35. Information about Financial Instruments
35.1 Financial Risk Management
By the nature of its activities, Airbus is exposed to a variety ofﬁnancial risks: (i) market risks, in particular foreign exchange risk,
but also interest rate risk, equity price risk and commodity pricerisk, (ii) liquidity risk and (iii) credit risk. Airbus’ overall ﬁnancial
risk management activities focus on mitigating unpredictableﬁnancial market risks and their potential adverse effects on
Airbus’ operational and ﬁnancial performance.

policies 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 establishedtreasury committees and Airbus’ Divisions.
Airbus uses financial derivatives solely for risk mitigating
purposes (“hedging”) and applies hedge accounting for asigniﬁcant portion of its hedging portfolio.

The ﬁnancial risk management of Airbus is generally carriedout by the Corporate Finance department at Airbus under

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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.
Airbus manages a long-term hedge portfolio with maturities ofseveral years covering its net exposure to US dollar sales, mainly
from the activities of Airbus Commercial Aircraft. This hedge
portfolio covers a large portion of Airbus’ ﬁrm commitments
and highly probable forecast transactions.
Most of Airbus’ revenue is denominated in US dollars, while amajor portion of its costs is incurred in euro and to some extent
in other foreign currencies. Consequently, to the extent that
Airbus does not use ﬁnancial instruments to hedge its exposure
resulting from this currency mismatch, its proﬁts will be affectedby changes in the €/US$ exchange rate. As Airbus intends togenerate proﬁts primarily from its operations rather than throughspeculation on exchange rate movements, it uses hedging
strategies to manage and minimise the impact of exchange
rate ﬂuctuations on these proﬁts.
With respect to its commercial aircraft products, Airbus
typically hedges ﬁrmly committed sales in US dollars using a“ﬁrst ﬂow approach”. Under that approach, the foreign currency
derivatives Airbus enters into are designated as a hedge of theﬁrst US dollar inﬂows received from the customer at aircraft
delivery in a given month. The strategy implies that only a portionof the expected monthly customer payments made at aircraft
delivery are hedged. For this reason, a reduction of monthly
cash inﬂows as a result of postponements or order cancellations
have no impact on the effectiveness of the hedge as long as theactual gross US dollar cash inﬂows received at aircraft delivery
in a particular month exceed the portion designated as being
hedged in that month.
Similarly, though to a much lesser extent, Airbus hedges its
expected foreign currency exposure arising from US dollar or
pound sterling cash outﬂows in the commercial aircraft businesson a ﬁrst outﬂow basis.
In military aircraft and non-aircraft businesses, Airbus hedges
in and outﬂows in foreign currencies from ﬁrmly committed
or highly probable forecast sales and purchase contracts.
Here, foreign currency derivatives are typically contracted inlower volumes; they may be accounted for using a ﬁrst ﬂow
approach or are designated as hedges of speciﬁ c agreed
milestone payments. The amount of the expected ﬂ ows to
be hedged can cover up to 100% of the equivalent of the net
US dollar exposure at inception. The coverage ratio considers
the variability in the range of potential outcomes taking into
account macroeconomic movements affecting spot rates andinterest rates as well as the robustness of the commercial
cycle.

In situations where the payment dates for hedged firmly
committed cash ﬂows are not ﬁxed and subject to potentiallysigniﬁcant delays, Airbus may use rollover strategies, usually
involving F/X swaps.
For all foreign currency hedges of future cash ﬂows which qualify
for hedge accounting under IAS 39, Airbus uses the cash ﬂow
hedge model, which requires (i) recognising the effective portionof the fair value changes of the hedging derivatives in equity(within other comprehensive income) and (ii) recognising theeffect of the hedge in proﬁt or loss when the hedged cash ﬂows
affect proﬁt or loss.
In addition, Airbus hedges currency risk arising from ﬁnancial
assets or liabilities denominated in currencies other thanthe euro, including foreign currency receivable and payableaccounts, as well as foreign currency denominated fundingtransactions or securities. Airbus applies hedge accounting if
a mismatch in terms of proﬁt or loss recognition of the hedging
instrument and hedged item would otherwise occur. Frequently,
however, the currency-induced gains or losses of the hedging
instrument and the hedged item match in terms of proﬁt orloss recognition (“natural hedge”), so no hedge accounting
is required. Sometimes such gains or losses may end up in
different sections of the income statement (such as operating
proﬁt for the hedged item and ﬁnancial result for the hedging
instrument). If so, Airbus may choose to present 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, Airbus primarily uses foreign currency
forwards, foreign currency options and to a minor extent nonderivative ﬁnancial instruments.
Airbus also has foreign currency derivative instruments which
are embedded in certain purchase contracts denominated in acurrency other than the functional currency of any substantial
party to the contract, principally in US dollar and pound sterling.
If such embedded derivatives are required to be accounted forseparately from the host purchase contract, related gains orlosses are generally recognised in other ﬁnancial result. However,if the embedded derivatives qualify for hedge accounting, Airbus
might choose to designate them as a hedging instrument in ahedge of foreign currency risk, in which case they are accounted
for under the cash ﬂow hedge model as described above.
Interest rate risk — Airbus uses an asset-liability management
approach with the objective to limit its interest rate risk. Airbus
undertakes to match the risk proﬁle of its interest-bearing assets
with those of its interest-bearing liabilities. The remaining net
interest rate exposure is managed through several types ofinterest rate derivatives, such as interest rate swaps and interest
rate futures contracts, in order to minimise risks and ﬁnancial
impacts.

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The vast majority of related interest rate hedges qualify for hedge
accounting, and most of them are accounted for under the fairvalue hedge model. As a result, both the fair value changes ofthese derivatives and the portion of the hedged items’ fair valuechange that is attributable to the hedged interest rate risk arerecognised in proﬁt and loss, where they offset to the extent
the hedge is effective.
A few interest rate swaps that have been entered into as ahedge of certain of Airbus’ variable rate debt (see “– Note 34.3:
Financing Liabilities”) are accounted for under the cash ﬂow
hedge model, and related fair value gains are recognised in
OCI and reclassiﬁed to proﬁt or loss when the hedged interest
payments affect proﬁt or loss.
Airbus 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, Airbus has an
Asset Management Committee in place that meets regularly andaims to limit the interest rate risk on a fair value basis througha value-at-risk approach.
Commodity price risk — Airbus is exposed to risk relating toﬂuctuations in the prices of commodities used in the supply
chain. Airbus 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 andthose of the hedged item or transaction do not match in terms
of proﬁt or loss, Airbus applies cash ﬂow hedge accounting to
the derivative instruments.
Equity price risk — Airbus is to a small extent invested in equity
securities mainly for operational reasons. Airbus’ exposure toequity price risk is hence limited. Furthermore, Airbus is exposed
under its LTIP to the risk of the Company share price increases.
Airbus limits these risks through the use of equity derivatives
that qualify for hedge accounting and have been designatedas hedging instruments in a cash ﬂow hedge.
Sensitivities of market risks — The approach used tomeasure and control market risk exposure within Airbus’
ﬁnancial instrument portfolio is, amongst other key indicators,
the value-at-risk (“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 movementwith a speciﬁ ed conﬁ dence level. The VaR used by Airbus
is based upon a 95% conﬁdence level and assumes a ﬁ veday holding period. The VaR model used is mainly based on
the so called “Monte-Carlo-Simulation” method. Deriving thestatistical behaviour of the markets relevant for the portfolio
out of market data from the previous two years and observed
interdependencies between different markets and prices, themodel generates a wide range of potential future scenarios formarket price movements.
Airbus’ VaR computation includes Airbus’ ﬁnancial debt, shortterm and long-term investments, foreign currency forwards,
swaps and options, commodity contracts, finance leasereceivables and liabilities, foreign currency trade payables andreceivables, including intra-Airbus payables and receivables
affecting Airbus proﬁt and loss.
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 5-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.
■
T he use of historical data as a basis for estimating thestatistical behaviour of the relevant markets and finallydetermining the possible range of future outcomes out of
this statistical behaviour may not always cover all possible
scenarios, especially those of an exceptional nature.
■

Airbus uses VaR amongst other key ﬁgures in order to determine
the riskiness of its ﬁnancial instrument portfolio and in orderto optimise the risk-return ratio of its ﬁnancial asset portfolio.
Further, Airbus’ 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 of thisportfolio are measured and serve amongst other measures as abasis for the decisions of Airbus’ Asset Management Committee.

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A summary of the VaR position of Airbus’ ﬁnancial instruments portfolio at 31 December 2016 and 2015 is as follows:
Total VaR

Equity price VaR

Foreign exchange hedges for forecast
transactions or firm commitments

1,778

0

1,873

0

180

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

80

57

58

0

19

Finance lease receivables andliabilities, foreign currency trade
payables and receivables

81

0

15

0

86

(In € million)

Currency VaR Commodity price VaRInterest rate VaR

31 December 2016

Commodity contracts

4

0

1

4

0

Equity swaps

4

4

0

0

0

Diversification effect

(276)

(1)

(127)

0

(70)

All financial instruments

1,671

60

1,820

4

215

Foreign exchange hedges for forecast
transactions or firm commitments

1,814

0

1,870

0

181

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

196

162

61

0

14

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

87

0

22

0

83

Commodity contracts

7

0

3

6

0

Equity swaps

11

11

0

0

0

31 December 2015

Diversification effect(1)

(403)

(8)

(148)

0

(91)

All financial instruments

1,712

165

1,808

6

187

(1) Investments made by Airbus Group SE in certain securities and trade liabilities have been reassessed and reclassified.

The total VaR as of 31 December 2016 is stable compared to year-end 2015. The market environment, in particular foreign exchange
volatility, as well as the size of the net foreign exchange portfolio, is comparable to year-end 2015. 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 foreignexchange hedging portfolio in the amount of € 1,778 million (2015: € 1,814 million) cannot be considered as a risk indicator for
Airbus in the economic sense. When looking at the ﬁnancial instrument types the noticeable change is within the ﬁnancial assets
coming from the lower equity price VaR related to the decrease of the Dassault Aviation equity portfolio.

Liquidity Risk
Airbus’ policy is to maintain sufﬁcient cash and cash equivalents
at any time to meet its present and future commitments asthey fall due. Airbus manages its liquidity by holding adequate
volumes of liquid assets and maintains a committed credit facility(€ 3.0 billion as of 31 December 2016 and 2015) in addition to
the cash inﬂow generated by its operating business. Airbus
continues to keep within the asset portfolio the focus on low
counterparty risk. In addition, Airbus maintains a set of otherfunding sources, and accordingly may issue bonds, notes andcommercial papers or enter into security lending agreements.

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

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The contractual maturities of Airbus’ ﬁnancial liabilities, based on undiscounted cash ﬂows and including interest payments, if
applicable, are as follows:
Carrying Contractual
amount(1) cash flows(1) < 1 year(1)(In € million)

1 year2 years

2 years3 years

3 years4 years

4 years5 years> 5 years(5,856)31 December 2016
Non-derivative financial liabilities(23,994)(25,293)(14,903)(1,268)

(458)

(886)

(1,923)

Derivative financial liabilities(11,020)(13,891)(4,568)(3,772)(2,897)(1,511)

(831)

(312)

Total

(35,014)(39,184)(19,471)(5,040)(3,355)(2,397)(2,754)(6,168)(4,929)31 December 2015
Non-derivative financial liabilities(21,175)(22,456)(14,412)(832)(1,113)

(408)

(762)

Derivative financial liabilities(10,587)(12,690)(3,973)(2,747)(3,518)(1,898)

(506)

(48)

Total

(31,762)(35,146)(18,385)(3,579)(4,631)(2,306)(1,268)(4,977)(1) Investments made by Airbus Group SE in certain securities and trade liabilities have been reassessed and reclassified. Previous year figures are adjusted by € 899 million.

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 € 7,070 million at 31 December 2016 (€ 7,286 million at 31 December 2015) are not included.

Credit Risk
Airbus is exposed to credit risk to the extent of non-performanceby either its customers (e.g. airlines) or its counterparts withregard to ﬁnancial instruments or issuers of ﬁnancial instruments
for gross cash investments. However, Airbus has policies inplace to avoid concentrations of credit risk and to ensure thatcredit risk is limited.

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 Commercial Aircraft
and ATR, Airbus may agree to participate in the ﬁ nancingof customers, on a case-by-case basis, directly or throughguarantees provided to third parties. In determining the amountand terms of the ﬁ nancing transaction, Airbus Commercial
Aircraft and ATR take into account the airline’s credit ratingand economic factors reﬂecting the relevant ﬁnancial market
conditions, together with appropriate assumptions as to theanticipated future value of the ﬁnanced asset.

As far as central treasury activities are concerned, credit risk
resulting from ﬁnancial instruments is managed on Airbus level.
In order to ensure sufﬁcient diversiﬁcation, a credit limit system
is used.
Airbus monitors the performance of the individual ﬁ nancial
instruments and the impact of the market developments on
their performance and takes appropriate action on foreseeable
adverse development based on pre-deﬁned procedures andescalation levels.

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)
or internal assessment of customers’ (such as airlines’)
creditworthiness by way of internal risk pricing methods.

The following table breaks down the carrying amounts of non-cash loans and receivables including ﬁnance leases, separately
showing those that are impaired, renegotiated or past due:(In € million)

Not
past
due

Renegociated /Past due
Past due
Past due
not past due /Past due> 3 and> 6 and> 9 and
Past due
not impaired Impaired ≤ 3 months ≤ 6 months ≤ 9 months ≤ 12 months > 12 months

Total

31 December 2016
Customer financing

846

0

0

4

3

86

0

0

939

Trade receivables

5,976

27

42

1,035

232

281

77

431

8,101

Others

1,313

9

78

111

48

182

22

466

2,229

Total

8,135

36

120

1,150

283

549

99

897

11,26931 December 2015
Customer financing

721

0

0

0

0

0

0

0

721

Trade receivables

5,823

115

162

866

402

112

96

301

7,877

Others

1,251

24

8

196

30

45

198

183

1,935

Total

7,795

139

170

1,062

432

157

294

484

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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.
At year-end there was no indication that any ﬁnancial assets
carried at fair value were impaired.

35.2

Carrying Amounts and Fair Valuesof Financial Instruments

Financial instruments — Airbus’ ﬁnancial assets mainly consist
in cash, short to medium-term deposits and securities. Airbus’
ﬁnancial liabilities include trade liabilities, obligations towards
ﬁnancial institutions, issued bonds and refundable advancesfrom European Government s. All purchases and sales ofﬁnancial assets are recognised on the settlement date according
to market conventions. Airbus classiﬁes its ﬁnancial assets inthe following three categories: (i) at fair value through proﬁt or
loss, (ii) loans and receivables and (iii) available-for-sale ﬁnancial
assets. Their classiﬁ cation is determined by management
when ﬁrst recognised and depends on the purpose for theiracquisition.
Within Airbus, all investments in entities which do not qualify
for consolidation or equity-method accounting are classiﬁed as
non-current available-for-sale ﬁnancial assets. They are includedin the line other investments and other long-term ﬁnancial assets
in the Consolidated Statement of Financial Position.
Available-for-sale financial assets — Financial assets
classiﬁed as available-for-sale are accounted for at fair value.
Changes in their fair value other than impairment losses andforeign exchange gains and losses on monetary items arerecognised directly within AOCI. As soon as such ﬁ nancial

assets are sold or otherwise disposed of, or are determined to
be impaired, the cumulative gain or loss previously recognisedin equity is recorded as part of other income (other expense)from investments in the Consolidated Income Statement forthe period. Interest earned on the investment is presented asinterest income in the Consolidated Income Statement using theeffective interest method. Dividends earned on investment arerecognised as other income (other expense) from investmentsin the Consolidated Income Statement when the right to thepayment has been established.
In case of the impairment of debt instruments classiﬁ ed asavailable-for-sale, interest continues to be accrued at the original
effective interest rate on the reduced carrying amount of theasset and is recorded in ﬁnancial result. If, in a subsequent year,
the fair value of a debt instrument increases and the increase canbe objectively related to an event occurring after the impairment
loss was recognised in the Consolidated Income Statement, theimpairment loss is reversed through the Consolidated Income
Statement.
Financial assets at fair value through proﬁ t or loss —Within Airbus, only derivatives not designated as hedges are
categorised as held for trading. Furthermore, Airbus designates
certain ﬁnancial assets (such as investments in accumulatedmoney market funds) at fair value through proﬁt or loss at initialrecognition if they are part of a group of ﬁnancial assets thatis managed and its performance is evaluated on a fair value
basis, in accordance with a documented risk management orinvestment strategy.
Airbus assigns its ﬁnancial instruments into classes based on
their balance sheet category.

2

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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 2016:
Fair value
for hedge
relations

Fair value throughprofit or loss(In € million)

Held fortrading

Loans and receivables
Available- and financial liabilities
for-sale
at amortised cost

Designated

Fair
value

Fair
value

Amortised
cost

Other

Fair
value

Financial
instruments
total
Book
value

Fair
value

2,091

AssetsOther investments and otherlong-term financial assets■

Equity investments(1)(2)

0

0

0

2,091

0

0

0

2,091

■

Customer financing(3)

0

0

0

0

732

735

207

939

942

■

Other loans

0

0

0

0

1,147

1,147

0

1,147

1,147

Trade receivables

0

0

0

0

8,101

8,101

0

8,101

8,101

Other financial assets■

Derivative instruments(6)

66

0

1,085

0

0

0

0

1,151

1,151

■

Non-derivative instruments

0

0

0

0

1,082

1,082

0

1,082

1,082
11,448

Securities

0

0

0

11,44800011,448Cash and cash equivalents

0

5,513

0

1,535

3,095

3,095

0

10,143

10,143

Total

66

5,513

1,085

15,074

14,157

14,160207

36,102

36,10500

00(6,013)(6,217)0(6,013)(6,217)

Liabilities
Financing liabilities■■■

Issued bonds andcommercial papers
Liabilities to banks and otherfinancing liabilities

0

0

0

0

(4,076)(4,086)0(4,076)(4,086)

Finance lease liabilities(4)

0

0

0

0

0

0

(389)

(389)

(389)

(349)

0

(10,671)

0

0

0

0

(11,020)(11,020)(7,070)

Other financial liabilities■■

Derivative instruments(7)European Governments
refundable advances(5)

0

0

0

0

(7,070)(7,070)0(7,070)

Other

(38)

0

0

0

(946)

(946)

0

(984)

(984)

Trade liabilities

0

0

0

0

(12,532)(12,532)

0(12,532)(12,532)(387)

0(10,671)0(30,637)(30,851)■

Total(389) (42,084) (42,298)(1) Other than those accounted for under the equity method.
(2) For certain unlisted equity investments price quotes are not available and fair values may not be reliably measurable using valuation techniques because the range of reasonable
fair value estimates is significant and the probabilities of the various estimates within the range cannot be reasonably assessed. These equity investments are accounted forat cost, and their fair values as reported in the table above equal their carrying amounts. As of 31 December 2016, the aggregate carrying amount of these investments was€ 494 million.
(3) This includes finance lease receivables, which are not assigned to an IAS 39 measurement category, but reported as “other”.
(4) 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 “other”.
(5) The European Governments refundable advances of € 7,070 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 thevarious estimates within the range. This may change and reliable fair value measures become available as the related programmes approach the end of production.
(6) This includes credit value adjustments of € -44 million, of which € -42 million is recognised in OCI.
(7) This includes debit value adjustments of € 87 million, of which € 82 million is recognised in OCI.

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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 2015:
Fair value throughprofit or loss(In € million)

Fair value
for hedge
relations

Availablefor-sale

Held fortrading

Designated

Fair
value

Fair
value

Loans and receivables
and financial liabilities
at amortised cost
Amortised
cost

Other

Fair
value

Financial
instruments total
Book
value

Fair
value

AssetsOther investments and otherlong-term financial assets■

Equity investments(1)(2)

0

0

0

1,232

0

0

0

1,232

1,232

■

Customer financing(3)

0

0

0

0

553

553

168

721

721

■

Other loans

0

0

0

0

717

717

0

717

717

Trade receivables

0

0

0

0

7,877

7,877

0

7,877

7,877

317

0

963

0

0

0

0

1,280

1,280

0

0

0

0

1,218

1,218

0

1,218

1,218

0

3

0

11,63600

011,639

11,639Other financial assets■

Derivative instruments(6)■Non-derivative instruments

Securities
Cash and cash equivalents(8)Total(8)

0

3,220

0

1,952

1,418

1,418

0

6,590

6,590

317

3,223

963

14,82011,783

11,783

168

31,274

31,27400

0

0(4,966)(5,091)

0(4,966)(5,091)

Liabilities
Financing liabilities■

Issued bonds andcommercial papers
Liabilities to banks andother financing liabilities

0

0

0

0

(3,771)(3,822)0(3,771)(3,822)Finance lease liabilities(4)

0

0

0

0

0

0

(388)

(388)

(388)

Derivative instruments(7)

(427)

0

(10,160)

0

0

0

0

(10,587)(10,587)

European Governments
refundable advances(5)

0

0

0

0

(7,286)(7,286)0(7,286)(7,286)

Other

(74)

0

0

0

(1,112)(1,112)0(1,186)(1,186)

Trade liabilities(8)

0

0

0

0

(10,864)(10,864)0(10,864)(10,864)(501)

0(10,160)

0(27,999)(28,175)

(388)

■

■

Other financial liabilities■■■

Total(8)(39,048) (39,224)(1) Other than those accounted for under the equity method.
(2) For certain unlisted equity investments price quotes are not available and fair values may not be reliably measurable using valuation techniques because the range of reasonable
fair value estimates is significant and the probabilities of the various estimates within the range cannot be reasonably assessed. These equity investments are accounted forat cost, and their fair values as reported in the table above equal their carrying amounts. As of 31 December 2015, the aggregate carrying amount of these investments was€ 404 million.
(3) This includes finance lease receivables, which are not assigned to an IAS 39 measurement category, but reported as “other”.
(4) 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 “other”.
(5) The European Governments refundable advances of € 7,286 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 thevarious estimates within the range. This may change and reliable fair value measures become available as the related programmes approach the end of production.
(6) This includes credit value adjustments of € -47 million, of which € -28 million is recognised in OCI.
(7) This includes debit value adjustments of € 117 million, of which € 95 million is recognised in OCI.
(8) Investments made by Airbus Group SE in certain securities and trade liabilities have been reassessed and reclassified. Previous year figures are adjusted by € -899 million.

Fair Value Hierarchy
Fair value of ﬁnancial instruments — The fair value of quoted
investments is based on current market prices. If the market
for ﬁ nancial assets is not active, or in the case of unlisted
ﬁnancial instruments, Airbus determines fair values by using
generally accepted valuation techniques on the basis of market
information available at the end of the reporting period. Derivative
instruments are generally managed on the basis of Airbus’ net
exposure to the credit risk of each particular counterparty andfair value information is provided to Airbus’ key management

personnel on that basis. For these derivative instruments, thefair value is measured based on the price that would be received
to sell a net long position, or transfer a net short position, fora 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;

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Level 2: inputs other than quoted prices that are observable forthe asset or liability – fair values measured based on Level 2
input typically rely on observable market data such as interest
rates, foreign exchange rates, credit spreads or volatilities;■
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 Airbus’ own data and may require the use of assumptions
that are inherently judgemental and involve various limitations.

■

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 minor extent on Level 3 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 2016 and 2015, respectively:
31 December 2016
(In € million)

31 December 2015

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

1,597

0

0

1,597

828

0

0

828

0

1,148

3

1,151

0

1,234

46

1,280

11,4462

0

11,448

11,474165

0

11,639Financial assets measured at fair value
Equity instruments
Derivative instruments
Securities

5,513

1,535

0

7,048

3,042

2,130

0

5,172

18,5562,685

321,244

15,344

3,529

46

18,919Derivative instruments0(11,009)(11)(11,020)0(10,587)0(10,587)

Other liabilities

0

0

(38)

(38)

0

0

(74)

(74)

0

(11,009)(49)(11,058)

0(10,587)(74)(10,661)

Cash equivalents(1)Total(1)Financial liabilities measured at fair value

Total(1) Investments made by Airbus Group SE in certain securities and trade liabilities have been reassessed and reclassified. Previous year figures are adjusted by € -899 million.

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

Commodity
swap
agreements

Financial liabilities
Total

Written put
options on
NCI interests

Commodity
swap
agreements

Earn-outagreements

Total
(137)

1 January 2015

2

2

(127)

0

(10)

Total gains or losses in profit or loss

59

59

0

0

0

0

OCI

0

0

60

0

0

60

(15)

(15)

3

0

0

3

Settlements
31 December 2015

46

46

(64)

0

(10)

(74)

Total gains or losses in profit or loss

(10)

(10)

(2)

(11)

0

(13)

0

0

0

0

0

0

(33)

(33)

38

0

0

38

3

3

(28)

(11)

(10)

(49)

OCI
Settlements

31 December 2016

The proﬁt of the period impact attributable to Level 3 ﬁnancial assets and liabilities which are still held by Airbus as of 31 December
2016 was a loss of € -16 million (2015: gain of € 46 million).

Financial Assets Classified as Level 3
The ﬁnancial assets measured at fair value that are classiﬁed
as Level 3 mainly consist of short-term commodity contracts
whose notional amounts vary with the actual volumes of certain
commodity purchases made by Airbus in speciﬁ c months.
For fair value measurement purposes, 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.
A deviation of 10% of actual monthly volumes purchasedfrom expected monthly volumes purchased would increase or
decrease (depending on whether actual volumes are 10% moreor 10% less than expected volumes) the total Level 3 fair value ofthese short-term commodity contracts by less than € 1 million.

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Financial Liabilities Classified as Level 3
The ﬁnancial liabilities measured at fair value that are classiﬁed as
Level 3 consist of several written put options on non-controllinginterest of Airbus subsidiaries. The fair values of these NCI
puts (i.e. the net present value of their redemption amount on
exercise) are derived from a discounted cash ﬂow analysis of
the latest operating planning ﬁgures of the respective entities.
The fair value measurements are performed on an annual basis
in line with the operative planning cycle. Apart from the detailed
5-year operating planning ﬁgures, there are two unobservable
inputs that signiﬁcantly affect the values of the NCI puts: the
WACC used to discount the forecasted cash ﬂows and thegrowth rate used to determine the terminal value. WACC andgrowth rates as well as operating planning ﬁgures that wereused for the determination of the Level 3 fair values are derived

from the input perimeters as applied for the impairment test as
disclosed in “– Note 17: Intangible Assets – Goodwill Impairment
Tests”. An increase (decrease) of the discount rates by 50 basis
points results in a decrease (increase) of the NCI put values by€ 1 million (€ 5 million). An increase (decrease) in the growth rates
by 50 basis points increases (decreases) the NCI put values by€ 1 million (€ 5 million) respectively.
Another element of ﬁnancial liabilities measured at fair value
classiﬁed as Level 3 are earn-out payments that have been
agreed with former shareholders of entities acquired by Airbus
in business combinations. Fair value measurement is based on
the expectation regarding the achievement of deﬁned target
ﬁgures by the acquired entity or its ability to close identiﬁed
customer contracts.

Financial Assets Designated at Fair Value through Profit or Loss
The following types of financial assets held at 31 December 2016 and 2015, respectively, are designated at fair value throughproﬁt or loss:(In € million)

Nominal amount at
initial recognition asof 31 December 2016

Nominal amount at
Fair value as of initial recognition as of
31 December 201631 December 2015

Fair value as of
31 December 2015

Designated at fair value through profit
or loss at recognition:■

Money market funds (accumulating)■Foreign currency funds of hedge funds

Total

5,513

5,513

3,220

3,220

6

0

8

3

5,519

5,513

3,228

3,223

Airbus manages these assets and measures their performance on a fair value basis.
In addition, Airbus invests in non-accumulating money market funds, which pay interest on a monthly basis. The fair value of those
funds corresponds to their nominal amount at initial recognition date amounting to € 705 million (2015: € 720 million).

Fair Value Measurement Method
The methods Airbus uses to measure fair values are as follows:
Equity instruments — The fair values of listed equity instruments
reﬂect quoted market prices. The fair values of unlisted equity
instruments may not be reliably measured because the range ofreasonable fair value estimates is signiﬁcant and the probabilitiesof the various estimates within the range cannot be reasonably
assessed. Those instruments are measured at cost, and theircarrying amounts used as a proxy for fair value.
Customer ﬁnancing assets and other loans — The carrying
amounts reﬂected in the annual accounts are used as a proxyfor fair value.
Trade receivables and other receivables — The carrying
amounts reﬂected in the annual accounts are used as reasonableestimates of fair value because of the relatively short period
between the receivables’ origination and their maturity.
Securities — The fair values of securities reﬂect their quoted
market price at the end of the reporting period.

Cash and cash equivalents include cash in hand, cash inbanks, checks, ﬁxed deposits as well as commercial papers
and money market funds. The carrying amounts reﬂected in theannual accounts are used as reasonable estimates of fair value
because of the relatively short period between the originationof the instrument and its maturity or due date. The fair valueof commercial papers is determined based on Level 2 input
by discounting future cash ﬂ ows using appropriate interest
rates. The fair values of money market funds are determinedby reference to their quoted market price.
Derivatives — The fair values of derivative instruments reﬂect
quoted market prices, where available, but in most cases
are determined using recognised valuation techniques suchas 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.

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Furthermore, to the extent that these instruments are subject
to master netting arrangements and similar agreements andmanaged on the basis of net credit exposure, their fair values
reﬂect credit and debit value adjustments based on the net longor net short position that Airbus has with each counterparty.
Except for certain short-term commodity contracts discussed
in the Level 3 section above, derivative fair values are measured
based on Level 2 input.
Financing liabilities — The fair values disclosed for ﬁnancing
liabilities, other than those of issued bonds and issued
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, thecarrying amounts reﬂected in the annual accounts are used
as reasonable estimates of fair value because of the relatively
short period between the origination of these instruments andtheir maturity.
Trade liabilities and current other ﬁnancial liabilities — For
the same reason, carrying amounts are used as reasonable
fair value approximations for trade liabilities and current otherﬁnancial liabilities.

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 2016 and 2015:31 December

2016(Interest rate in %)

2015

2016

€

2015

2016

US$

2015
£

6 months(0.26)(0.08)

1.31

0.94

0.60

1 year

(0.11)

0.14

1.62

1.12

0.81

0.85
1.13

5 years(0.06)

0.21

1.97

1.72

0.87

1.59

10 years

0.54

0.89

2.35

2.18

1.23

1.99

35.3 Potential Effect of Set-Off Rights on Recognised Financial Assets and Liabilities
Airbus reports all its ﬁnancial assets and ﬁnancial liabilities on a gross basis. With each derivative counterparty there are masternetting agreements in place providing for the immediate close-out of all outstanding derivative transactions and payment of 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 collateralcontinue to be recognised on the balance sheet and the amount of cash received at the outset of the transaction is separately
recognised as a ﬁnancial liability. The following tables set out, on a counterparty speciﬁc basis, the potential effect of master netting
agreements and collateralised borrowings on Airbus’ ﬁnancial position, separately for ﬁnancial assets and ﬁnancial liabilities thatwere subject to such agreements as of 31 December 2016 and 31 December 2015, respectively:

Derivative instruments(In € million)Grossamounts
recognisedGrossamounts
recognised
set off inthe financial
statements

Net amounts
presented in
the financial
statements

Related amounts not set
off in the statementof financial position
Financial
instruments

Cash collateral
received

Net amount

31 December 2016
Financial assets

1,363

0

1,363

(1,358)0

5Financial liabilities

10,8790

10,879(1,358)0

9,521

31 December 2015
Financial assets

1,280

0

1,280

(1,280)0

0Financial liabilities

10,5870

10,587(1,280)09,307

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5

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

35.4 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 Airbus 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(In € million)

7 years > 7 years

Total

1 year

2 years

3 years

4 years

5 years

6 years

22,482

22,163

18,416

11,839

5,496

1,291

(11)

Purchased US-dollar put options

0

0

4,079

4,198

740

0

0

0

9,017

Written US-dollar put options

0

0

4,079

4,198

740

0

0

0

9,017

(104)

0

0

0

0

0

0

0

(104)

20,395

21,23420,041

14,655

4,086

(367)

(445)

2

79,60131 December 2016
Net forward sales contracts

081,676

Foreign exchange options

Foreign exchange swap contracts
31 December 2015
Net forward sales contracts
Foreign exchange options
Purchased US-dollar put options

0

0

0

3,536

3,399

441

0

0

7,376

Written US-dollar put options

0

0

0

3,536

3,399

441

0

0

7,376

Foreign exchange swap contracts

906

0

0

0

0

0

0

0

906

7 years > 7 years

Total

The notional amounts of interest rate contracts are as follows:
Remaining period(In € million)

1 year

2 years

3 years

4 years

5 years

6 years

Interest rate contracts

36

1,096

989

7

988

4

949

3,771

7,840

Interest rate future contracts

130

0

0

0

0

0

0

0

130

Interest rate contracts

1,382

36

1,194

1,152

7

864

4

3,232

7,871

Interest rate future contracts

1,032

0

0

0

0

0

0

0

1,032

31 December 201631 December 2015

Please also see “– 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 2016

270

41

16

6

0

333

31 December 2015

336

129

23

11

1

500

(In € million)

The notional amounts of equity swaps are as follows:
Remaining period
1 year

2 years

3 years

4 years> 4 years

Total

31 December 2016

76

52

49

19

0

196

31 December 2015

153

76

52

49

19

349

(In € million)

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Registration Document 2015

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2

3

4

Financial Statements 2015
Financial Statements 2015

5

1

2

3

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

35.5 Derivative Financial Instruments and Hedge Accounting Disclosure
The development of the foreign exchange rate hedging instruments recognised in AOCI as of 31 December 2016 and 2015 is asfollows:
Equity attributable
to equity ownersof the parent(In € million)

Non-controllinginterests

Total

1 January 2015

(3,310)(22)(3,332)

Unrealised gains and losses from valuations, gross(1)(8,421)(111)(8,532)

Transferred to profit or loss for the period, gross(1)

3,762

71

3,833

Changes in fair values of hedging instruments recorded in AOCI, gross(4,659)(40)(4,699)Changes in fair values of hedging instruments recorded in AOCI, tax

1,134

13

1,147

Share of changes in fair values of hedging instruments frominvestments accounted for under the equity method, net

(29)

0

(29)

Changes in fair values of hedging instruments recorded in AOCI, net(3,554)(27)(3,581)31 December 2015

(6,864)(49)(6,913)

Unrealised gains and losses from valuations, gross(3,462)(50)(3,512)

Transferred to profit or loss for the period, gross

3,199

66

3,265

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

(263)

16

(247)

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

12

(8)

4

Share of changes in fair values of hedging instruments frominvestments accounted for under the equity method, net

(38)

0

(38)

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

(289)

8

(281)

(7,153)(41)(7,194)31 December 2016
(1) Previous year figures are adjusted to correct a sign error.

In the year 2016, an amount of € -3,265 million (2015 adjusted: € -3,833 million) was reclassiﬁed from equity mainly to revenues
resulting from matured cash ﬂow hedges. No material ineffectiveness arising from hedging relationship has been determined.
In addition, a loss of € -27 million was recognised in the proﬁt of the period in 2016 (2015: gain of € 20 million) on derivatives thatwere designated as hedging instruments in a fair value hedge, and a gain of € 12 million (2015: loss of € -18 million) attributable tothe hedged risk was recognised in the proﬁt of the period on the corresponding hedged items. Corresponding with its carrying
amounts, the fair values of each type of derivative ﬁnancial instruments as of 31 December 2016 and 2015, respectively, are as
follows:
31 December

2016(In € million)

Foreign currency contracts – cash flow hedges

2015

AssetsLiabilities

AssetsLiabilities

946(10,398)832(10,017)

Foreign currency contracts – not designated in a hedge relationship

4

(25)

182

(82)

Interest rate contracts – cash flow hedges

0

(26)

0

(40)

Interest rate contracts – fair value hedges

122

(38)

101

(8)

Interest rate contracts – not designated in a hedge relationship

59

(71)

80

(87)

Commodity contracts – cash flow hedges

2

(27)

0

(57)

Commodity contracts – not designated in a hedge relationship

3

(34)

46

(73)

Equity swaps – cash flow hedges

15

(3)

30

(7)

Embedded bonds conversion option – not designated in a hedge relationship

0

(122)

0

0

Embedded foreign currency derivatives – cash flow hedges

0

(179)

0

(31)

Embedded foreign currency derivatives – not designated in a hedge relationship

Total

0

(97)

9

(185)

1,151

(11,020)

1,280(10,587)

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2

3

4

5

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2.8 Other Notes

35.6 Net Gains or Net Losses
Airbus’ net gains or net losses recognised in proﬁt or loss in 2016 and 2015, respectively, are as follows:(In € million)

2016

2015

Financial assets or financial liabilities at fair value through profit or loss:
(451)

(178)

Designated on initial recognition

Held for trading

50

166

Available-for-sale financial assets

15

183

Loans and receivables(1)

(160)

(182)

Financial liabilities measured at amortised cost

(249)

(192)

(1) Contain among others impairment losses.

Net losses of € -50 million (2015: net gain of € 366 million) are recognised directly in equity relating to available-for-sale ﬁnancial
assets.
Interest income from ﬁnancial assets or ﬁnancial liabilities through proﬁt or loss is included in net gains or losses.

35.7 Impairment Losses
The following impairment losses on ﬁnancial assets are recognised in proﬁt or loss in 2016 and 2015, respectively:
2016

2015

Equity instruments

(12)

(49)

Customer financing

(123)

(25)

(10)

(12)

(In € million)

Other investments and other long-term financial assets:

Other loans
Trade receivables

Total

(34)

(25)

(179)

(111)

2.8 Other Notes
36. Litigation and Claims

2

Litigation and claims — Various legal actions, governmental
investigations, proceedings and other claims are pending or
may be instituted or asserted in the future against the Company.
Litigation is subject to many uncertainties, and the outcomeof individual matters is not predictable with certainty. The
Company believes that it has made adequate provisions tocover current or contemplated litigation risks. It is reasonably
possible that the ﬁ nal resolution of some of these matters
may require the Company to make expenditures, in excess ofestablished reserves, over an extended period of time and ina range of amounts that cannot be reasonably estimated. The
term “reasonably possible” is used herein to mean that the
chance of a future transaction or event occurring is more thanremote but less than likely.

Airbus 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
than as described below, Airbus 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 Group SE’s or Airbus’ 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.

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3

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2.8 Other Notes

WTO

Euroﬁghter Austria

Although Airbus is not a party, Airbus 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 EUlaunched 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 the extension until the end of2040 of subsidies originally granted by the State of Washington
to Boeing and other US aerospace ﬁrms until 2024.

In March 2012, the German public prosecutor, following a request
for assistance by the Austrian public prosecutor, launcheda criminal investigation into alleged bribery, tax evasion andbreach of trust by current and former employees of EADS
Deutschland GmbH (renamed on 1 July 2014 Airbus Defence
and Space GmbH) and Euroﬁghter Jagdﬂugzeug GmbH as well
as by third parties relating to the sale of Euroﬁghter aircraft toAustria in 2003. After having been informed of the investigationin 2012, Airbus retained the law firm Clifford Chance toconduct a fact ﬁnding independent review. Upon concluding
its review, Clifford Chance presented its fact ﬁnding report toAirbus in December 2013. Airbus provided the report to the
public prosecutors in Germany. Airbus’ request for access tothe prosecutor’s ﬁle is pending. Airbus Defence and SpaceGmbH settled with the tax authorities in August 2016 on thequestion of deductibility of payments made in connection with
the Euroﬁghter Austria campaign. In February 2017, the AustrianFederal Ministry of Defence has raised criminal allegations
against Airbus Defence and Space GmbH for wilful deception
and fraud in the context of the sale of the Euroﬁghter aircraft toAustria and respective damage claims. Airbus is cooperating
fully with the authorities.

On 1 June 2011, the WTO adopted the Appellate Body’s ﬁnal
report in the case brought by the US assessing funding toAirbus Commercial Aircraft from European Governments. On
1 December 2011, the EU 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 US did not agree,
the matter is now under WTO review pursuant to WTO rules.
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
Prompted by a whistleblower’s allegations, Airbus conductedinternal audits and retained PricewaterhouseCoopers (“PwC”) to
conduct an independent review relating to GPT Special ProjectManagement Ltd. (“GPT”), a subsidiary that Airbus acquired in2007. The allegations called into question a service contract
entered into by GPT prior to its acquisition by Airbus, relating toactivities conducted by GPT in Saudi Arabia. PwC’s report wasprovided by Airbus to the UK Serious Fraud Ofﬁce (the “SFO”) in
March 2012. In the period under review and based on the work
it undertook, nothing came to PwC’s attention to suggest that
improper payments were made by GPT. In August 2012, the SFO
announced that it had opened a formal criminal investigation
into the matter. Airbus is in continuing engagement with theauthorities.

Investigation by the UK SFO into Civil Aviation
Business
In the context of review and enhancement of its internal
compliance improvement programme, Airbus discovered
misstatements and omissions relating to information provided
in respect of third party consultants in certain applications forexport credit ﬁnancing for Airbus customers. In early 2016,
Airbus informed the UK, German and French Export Credit
Agencies (“ECAs”) of the irregularities discovered. Airbus madea similar disclosure to the UK Serious Fraud Ofﬁce (“SFO”). In
August 2016, the SFO informed Airbus that it had opened aninvestigation into allegations of fraud, bribery and corruption
in the civil aviation business of Airbus relating to irregularities
concerning third party consultants (business partners). Airbus
is cooperating fully with the SFO. The SFO investigation andany enforcement action potentially arising as a result could havenegative consequences for Airbus. The potential imposition ofany monetary penalty (and the amount thereof) arising fromthe SFO investigation would depend on factual ﬁndings, andcould have a material impact on the ﬁ nancial statements,
however at this stage it is too early to determine the likelihood
or extent of any liability. Investigations of this nature could
also result in (i) civil claims or claims by shareholders against
Airbus (ii) adverse consequences on Airbus’ ability to obtain orcontinue ﬁnancing for current or future projects (iii) limitations
on the eligibility of group companies for certain public sector
contracts and/or (iv) damage to Airbus’ business or reputation
via negative publicity adversely affecting Airbus’ prospects inthe commercial market place.

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Notes to the IFRS Consolidated Financial Statements
2.8 Other Notes

ECA Financing

Review of Business Partner Relationships

ECA ﬁnancing continues to be suspended. Airbus is working
with the relevant ECAs to re-establish ECA ﬁnancing.

In light of regulatory investigations and commercial disputes,
including those discussed above, Airbus has determined toenhance certain of its policies, procedures and practices,
including Ethics and Compliance. Airbus is accordingly in theprocess of revising and implementing improved procedures,
including those with respect to its engagement of consultants
and other third parties, in particular in respect of sales support
activities and is conducting enhanced due diligence as a precondition for future or continued engagement and to inform
decisions on corresponding payments. Airbus has therefore
engaged legal, investigative, and forensic accounting expertiseof the highest calibre to undertake a comprehensive review of all
relevant third party business consultant relationships and related
subject matters. Airbus believes that these enhancements to
its controls and practices will best position it for the future,
particularly in light of advancements in regulatory standards.
Certain consultants and other third parties have initiatedcommercial litigation and arbitration against Airbus seeking
relief. The comprehensive review and these enhancements of
its controls and practices may lead to additional commercial
disputes or other civil law or criminal law consequences in the
future, which could have a material impact on the ﬁ nancial
statements, however at this stage it is too early to determine
the likelihood or extent of any liability.

Other Investigations
In October 2014, the Romanian authorities announced aninvestigation relating to a border surveillance project in Romania.
Airbus conﬁrms that Airbus Defence and Space GmbH had been
informed that the German prosecution ofﬁce is also investigating
potential irregularities in relation to this project, a project in Saudi
Arabia and a project of Tesat-Spacecom GmbH & Co. KG.
The public prosecutor in Germany has launched administrative
proceedings in the context of those investigations against Airbus
Defence and Space GmbH and Tesat-Spacecom GmbH &Co. KG. Airbus has cooperated fully with the authorities. In
October 2016, the German authorities announced that they
were dropping their investigations into the Romanian and Saudi
projects. The tax authorities may challenge the tax treatmentof business expenses in connection with the Romanian andSaudi projects.
In 2013, public prosecutors in Greece and Germany launchedinvestigations into a current employee and former managing
directors and employees of Atlas Elektronik GmbH (“Atlas”),
a joint company of ThyssenKrupp and Airbus, on suspicionof bribing foreign ofﬁcials and tax evasion in connection withprojects in Greece. The public prosecutor in Germany haslaunched an administrative proceeding for alleged organisationaland supervisory shortfalls against Atlas. The authorities in
Greece have launched civil claims against Atlas. In 2015, thepublic prosecutor in Germany launched another investigation
into current and former employees and managing directors ofAtlas on suspicion of bribery and tax evasion in connection
with projects in Turkey and extended the investigation in 2016
to ﬁve current and former employees of Atlas’ shareholders. A
further investigation was also launched against two former Atlas
employees on suspicion of bribery in connection with projects
in Pakistan. In 2016 two further investigations were started
by the Bremen public prosecutor with regard to operations inIndonesia and Thailand. With the support of its shareholders,
Atlas is cooperating fully with the authorities and is conducting
its own internal investigation. Settlement talks with the Bremen
public prosecutor started in November 2016.

Commercial Disputes
In May 2013, Airbus has been notiﬁed of a commercial dispute
following the decision taken by Airbus to cease a partnershipfor sales support activities in some local markets abroad. Airbus
believes it has solid grounds to legally object to the alleged
breach of a commercial agreement. However, the consequencesof this dispute and the outcome of the proceedings cannot be
fully assessed at this stage. The arbitration will not be completed
until 2018 at the earliest.
In the course of another commercial dispute, Airbus received
a statement of claim alleging liability for refunding part of thepurchase price of a large contract which the customer claims
it was not obliged to pay. The dispute is currently the subjectof arbitration.

Airbus is cooperating with a judicial investigation against
unknown persons in France related to Kazakhstan. Airbus
is cooperating with French judicial authorities pursuant to arequest for mutual legal assistance made by the governmentof Tunisia in connection with historical aircraft sales.

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2.8 Other Notes

37. Auditor Fees
With reference to Section 2:382a (1) and (2) of the Netherlands Civil Code, the following fees for the ﬁnancial year 2016 have been
charged by EY to the Company (2015: by KPMG), its subsidiaries and other consolidated entities:
2016 - EY

2015 - KPMG

Audit of the financial statements

6,578

6,008

Other audit engagements

1,226

2,396

362

608

(In € thousand)Tax services
Other non-audit services

Total

6,870

3,764

15,036

12,776

In 2016, Airbus was audited by EY only (2015: by KPMG only). Other audit ﬁrms have audit fees related to audit process, certiﬁcationand examination of individual and consolidated accounts of € 4 million in 2016 (2015: € 6 million).

38. Events after the Reporting Date
On 1 January 2017, Airbus Group has been further integrated by merging its Group structure with the commercial aircraft activities
of Airbus, with associated restructuring measures. In this new set-up, the Company will retain Airbus Defence and Space andAirbus Helicopters as divisions.
These Consolidated Financial Statements have been authorised for issuance by the Board of Directors on 21 February 2017.

Financial Statements 2016 - AIRBUS ° 82 °4

5

15.80 %AirbusOperations, S.L.
(Spain)Airbus Operations
Limited(UK)

Airbus Operations
GmbH(Germany)

Financial Statements 2016 - AIRBUS ° 83 °Astrium Services
UK Limited
(UK)

5%

Paradigm Secure
Communications
Limited(UK)

Infoterra Limited(UK)

Paradigm
Services Limited(UK)

Vector Aerospace
Holding SAS(France)

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

Airbus Helicopters
DeutschlandGmbH(Germany)

Airbus Helicopters(France)

5

Subsidiaries held with no indication of ownership percentage are 100 % owned.
Legal forms are indicated for information purposes and are not always part of the legal name.

Airbus Safran
Launchers Group

50 %Airbus Defence
and Space
Limited(UK)

EADS Casa
Holding(France)95 %4MBDA Group

Airbus Safran Launchers Group

MBDA Group

99.99 %

Airbus DS GmbH
(Germany)

Airbus Defence
and Space Holding
France SAS(France)

4.04 %

5.06 %

97.57 %

Airbus DS
Holdings B.V.
(The Netherlands)

2.43 %

Airbus Helicopters
Holding(France)3

Airbus Group North America

Airbus Defence
and Space SAS(France)

Airbus DS SAS(France)37.5 %*

Airbus DS Holding
SAS(France)

Stelia Aerospace(France)95.96 %

Airbus GroupSAS(France)

Airbus SAS(France)4.68 %EADS Casa
France(France)

CRI, S.A.
(Spain)90.26 %

Airbus Defence
and Space, S.A.
(Spain)Premium Aerotec
GmbH(Germany)

2

Airbus Helicopters

ATR GIE(France)50 %*Airbus Group, Inc.
(USA)

1

Airbus Defence and SpaceElbe
FlugzeugwerkeGmbH(Germany)

45 %Airbus Defence
and Space GmbH
(Germany)

Airbus Operations
SAS(France)

Airbus Group
Limited(UK)

Annual Report 2016

*Airbus owns indirectly 50 % of ATR GIE, 50 % of Airbus Safran Launchers Group and 37.50 % of MBDA Group.

66.08 %

18.12 %DADC Luft-und
Raumfahrt
Beteiligungs GmbH
(Germany)(The Netherlands)

AIRBUS GROUP SE

Q
Registration Document 2016
Financial Statements 2016

Notes to the IFRS Consolidated Financial Statements
2.9 Appendix “Simpliﬁ ed Airbus Structure Chart”

1
2
3
4
5

2.9 Appendix “Simpliﬁed Airbus Structure Chart”

2Chapter3

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Airbus Group SE
IFRS Company
Financial Statements
IFRS Company Income Statements
for the years ended 31 December 2016 and 201586

IFRS Company Statements of Comprehensive
Income for the years ended 31 December 2016
and 2015

86

IFRS Company Statements of Financial Position
at 31 December 2016 and 2015

87

IFRS Company Statements of Cash Flowsfor the years ended 31 December 2016 and 2015

88

IFRS Company Statements of Changes in Equity
for the years ended 31 December 2016 and 2015

89

3

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Financial Statements 2015

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Airbus Group SE — IFRS Company Financial Statements

IFRS Company Income Statements
for the years ended 31 December 2016 and 2015

Note

(In € million)

2016

2015

Operating income

531

476

Operating expenses

(652)

(634)

Income from investments

4,021

9

0

(5)

3,900

(154)

Loss on disposal of investments
4

Total operating result
Interest income

204

225

Interest expense

(120)

(133)

Other financial result
5

Total financial result
Profit before income taxes

(101)

127

(17)

219

3,883

65

17

(11)

3,900

54

(In € million)

2016

2015

Profit for the period

3,900

54

138

26

Tax income (expense)

6

Profit for the period

IFRS Company Statements of Comprehensive Income
for the years ended 31 December 2016 and 2015

Other comprehensive income
Items that will be reclassified to profit or loss:
Net change in fair value of available-for-sale financial assets
Net change in fair value of cash flow hedges

40

Other comprehensive income, net of tax

142

26

4,042

80

Total comprehensive income of the period

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Airbus Group SE — IFRS Company Financial Statements

IFRS Company Statements of Financial Position
at 31 December 2016 and 2015

(In € million)

Note

2016

2015

AssetsNon-current assets
Investments in subsidiaries and associates

7

15,545

14,521Long-term financial assets

8

3,296

3,594

Non-current other financial assets

8

7,602

7,979

Non-current other assets
Deferred tax assets

6

Non-current securities

12

4

5

9

15

9,670

9,593

36,12635,707

Current assets
102

11

Current other financial assets

Trade receivables
8

4,656

4,431

Current accounts Group companies

8

9,409

8,353

160

149

Current securities

12

1,489

1,683

Cash and cash equivalents

12

Current other assets

Total assets

8,758

6,515

24,574

21,14260,70056,849Equity and liabilities
Stockholders’ equity

11

Issued and paid up capital

773

785

Share premium

2,745

3,484

Retained earnings

4,014

4,939

353

211

Treasury shares

(3)

(303)

Result of the year

3,900

54

11,782

9,170

Legal reserves

Non-current liabilities
Long-term financing liabilities

12

7,934

5,394

Non-current financial liabilities

8

7,698

7,960

15,632

13,354Current liabilities
Short-term financing liabilities

12

98

1,823

Current accounts Group companies

828,55728,415Current financial liabilities

8

4,543

3,991

88

96

Current other liabilities

Total equity and liabilities

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Financial Statements 2015

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3

Airbus Group SE — IFRS Company Financial Statements

IFRS Company Statements of Cash Flowsfor the years ended 31 December 2016 and 2015

Note

(In € million)

Profit for the period (Net income)

2016

2015

3,900

54
(225)

Adjustments to reconcile profit for the period to cash provided by operating activities:
Interest income(204)

Interest expense

120

133

Interest received

231

206

Interest paid

(104)

(117)

Income tax received

03

Depreciation and amortisation

0

5

Valuation adjustments

(102)

(240)

Deferred tax (income) expense

(17)

11

Change in current and non-current provisions

122

Change in other operating assets and liabilities:

(136)

(3)
(2)

■

Trade receivables

(126)

■

Trade liabilities

(9)

0

■

Other assets and liabilities

(1)

(1)

3,700

(171)

(921)

(546)

(642)

(670)

Cash provided by (used for) operating activities
Investments:■

Acquisitions of subsidiaries, joint ventures, businesses and non-controlling interests■

Payments for long-term financial assets■

7

Proceeds from disposals of associates, joint ventures, other investments
and other long-term financial assets

11

44

1,340

127

Payments for investments in securities(2,037)(6,877)

Proceeds from disposals of securities

2,300

4,592

51

(3,330)■

Repayments of other long-term financial assets

Cash provided by (used for) investing activities
Draw-down in financing liabilities

2,580

788

Repayment of financing liabilities(1,607)

(136)

(797)

4,056

(1,008)(945)

Change in current accounts Group companies
Cash distribution to Airbus Group SE shareholders
Changes in capital

60

171

(736)

(264)

(1,508)

3,670

0

146

Net increase in cash and cash equivalents

2,243

315

Cash and cash equivalents at beginning of period

6,515

6,200

8,758

6,515

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

Cash and cash equivalents at end of period

Financial Statements 2016 - AIRBUS ° 88 °

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2

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1

2

3

4

5

Airbus Group SE — IFRS Company Financial Statements

IFRS Company Statements of Changes in Equity
for the years ended 31 December 2016 and 2015

Accumulated othercomprehensive income

Balance at 1 January 2015

Capital
stock

Share
premium

Retainedearnings

Availablefor-salefinancialassets

785

4,500

4,860

195

(10)

(8)

10,322
54

Cash flow
hedgesTreasurysharesTotalequityProfit for the period

0

0

54

0

0

0

Other comprehensive income

0

0

0

26

0

0

26

Total comprehensive income of the period

0

0

54

26

0

0

80

Capital increase

3

115

0

0

0

0

118

Share-based payments (IFRS 2)

0

0

29

0

0

0

29

Cash distribution to Airbus Group SE shareholders

0

(945)

0

0

0

0

(945)

Equity component convertible bond

0

0

53

0

0

0

53

Change in treasury shares

0

0

(3)

0

0

(484)

(487)

Cancellation of treasury shares

(3)

(186)

0

0

0

189

0

Balance at 31 December 2015

785

3,484

4,993

221

(10)

(303)

9,170

0

0

3,900

0

0

0

3,900

Profit for the period
Other comprehensive income

0

0

0

138

4

0

142

Total comprehensive income of the period

0

0

3,900

138

4

0

4,042
60

Capital increase

2

58

0

0

0

0

Share-based payments (IFRS 2)

0

0

31

0

0

0

31

Cash distribution to Airbus Group SE shareholders

00(1,008)00

0(1,008)
(513)

0

0

(2)

0

0

(511)

Cancellation of treasury shares

(14)

(797)

0

0

0

811

0

Balance at 31 December 2016

773

2,745

7,914

359

(6)

(3)

11,782

Change in treasury shares

3

Financial Statements 2016 - AIRBUS ° 89 °

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1

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Notes to the
IFRS Company
Financial Statements
4.1 Basis of Presentation

93

4.2 Company Performance95

4.3 Operational Assets and Liabilities

97

4.4 Employees

100

4.5 Capital Structure and Financial Instruments

100

4

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CONTENTS
4.1 Basis of Presentation

93

1.

The Company

93

2.

Signiﬁcant Accounting Policies

93

3.

Related Party Transactions

94

4.2 Company Performance95

4.

Total Operating Result

95

5.

Total Financial Result

95

6.

Income Tax

96

4.3 Operational Assets and Liabilities 97
7.

Investments in Subsidiaries, Associates
and Participations

97

8.

Financial Assets and Liabilities

99

9.

Commitments and Contingencies

100

4.4 Employees

100

10.

100

Number of Employees

4.5 Capital Structure and Financial
Instruments

100

11.

Total Equity

100

12.

Cash, Securities and Financing Liabilities

102

13.

Information about Financial Instruments

104

14.

Events after the Reporting Date

109

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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 Group 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 21 February 2017. 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 ReportingStandards (“IFRS”), issued by the International AccountingStandards Board (“IASB”) as endorsed by the European Union(“EU”) and with Part 9 of Book 2 of the Dutch Civil Code.
In the Company Financial Statements of Airbus Group SE,
unless otherwise 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
as presented 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 less impairments, whereas in prior years, investments
in Group companies were stated at net asset value. As aconsequence, the determination of the results in the Company
Financial Statements changed compared to previous years.
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, unless otherwise indicated.
Regarding the application of new, revised or amended IFRS
standards issued but not yet applied please refer to Note 2“Signiﬁcant accounting policies” of the Group’s Consolidated

Financial Statements. Further information about Share-Based
Payments and Employee Stock Ownership Plans (ESOP) ispresented in Note 30 and information about Remuneration ispresented 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 Group’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.

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

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Financial Statements 2015

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Notes to the IFRS Company Financial Statements

3.

Related Party Transactions

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

Intercompany Transactions
A comprehensive exchange of internal services between thesubsidiaries of a multinational corporation like Airbus Group SE

is common practice. In its responsibility as holding company
to manage its subsidiaries and to assist the businessactivities conducted by companies of the Airbus Group andits subsidiaries, Airbus Group SE applies transfer prices for
its business activities in conformity with market levels and inaccordance with national and international tax requirements(arm’s length principle).

The following table discloses the related party intercompany transactions in 2016 and 2015:
Transactions
with subsidiaries
2016

Transactions
with associates
2016

Transactions
with subsidiaries
2015

Transactions
with associates
2015

Rendering of services, dividend income
and interest income

4,634

33

560

62

Purchases of services, investment charge
and interest expenses(In € million)

(736)

(2)

(724)

(4)

Intercompany receivables due asof 31 December

12,88683

12,40018

Intercompany payables due asof 31 December(32,403)(666)(32,414)(503)

Hedge relationships receivable asof 31 December

10,7300

10,4820

Hedge relationships payable asof 31 December(1,344)0(1,383)0

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

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4.2 Company Performance4.

Total Operating Result

2016

2015

Corporate services rendered to Group companies

531

476

(In € million)

Operating income
Operating expenses

(652)

(634)

Service fees charged by Group companies

(596)

(581)

Administrative expenses

(56)

(53)

Income from investments

4,021

9

Dividends received from Group companies

4,021

9

Expense from investments

0(5)Loss on disposal of investments

0

(5)

3,900

(154)

Total operating result

5.

Total Financial Result

2016

2015

Interest result(1)8492Interest income from available-for-sale securities

89

93

Others(5)(1)

Other financial result

(101)

127

Option liability exchangeable bond(In € million)

(64)

0

Equity instruments

5159Interest rate hedging

(16)

(11)

Financing income (expense)

3(9)

FX revaluation

(29)

(12)

Total financial result

(17)

219

(1) In 2016, the total interest income amounts to € 204 million (in 2015: € 225 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 € -120 million (in 2015: € -133 million) are recognised as total interest expenses. Both amounts arecalculated by using the effective interest method.

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.

4

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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
Group Finance B.V., Airbus DS Holdings B.V. and Airbus Defence
and Space Netherlands B.V. and therefore the Company isseverally and jointly liable for income tax liabilities of the ﬁscal
unity as a whole.
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:
2016(In € million)

2015

Current tax expense

00

Deferred tax income (expense)

17

(11)

Total

17

(11)

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

2016

Profit before income taxes

3,883

65

* Corporate income tax rate

25.0%

25.0%

Expected expense for income taxes

(971)

(16)

Non-taxable income from investments

1,005

1

2015

Option liability exchangeable bond

(16)

0

Income from other companies within the fiscal unity

(6)

5

Other

5

(1)

Reported tax income (expense)

17

(11)

The ﬁrst tranche of tax loss carry forwards (€ 20 million) will expire by the end of 2023.
Deferred income taxes as of 31 December 2016 are related to the following assets and liabilities:

1 January 2016

Other movements

Movement
throughincomestatement

31 December 2016
Deferredtax
assetsDeferredtax
liabilities(In € million)

Deferredtax
assetsDeferredtax
liabilities

OCI

OthersDeferredtax benefit(expense)

Securities

0

(21)

(22)

0

0

0

(43)

Financial instruments

0

(3)

(1)

0

3

0

(1)

Net operating loss and tax loss
carry forwards

39

0

0

0

14

53

0

Deferred tax assets (liabilities)
before offsetting

39

(24)

(23)

0

17

53

(44)

Set-off

(24)

24

0

0

0

(44)

44

Net deferred tax assets (liabilities)

15

0

(23)

0

17

9

0

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Notes to the IFRS Company Financial Statements

Deferred income taxes as of 31 December 2015 are related to the following assets and liabilities:

1 January 2015

Other movements

Movement
throughincomestatement

31 December 2015

Deferredtax benefit(expense)

Deferredtax
assetsDeferredtax
liabilities(In € million)

Deferredtax
assetsDeferredtax
liabilities

OCI

Securities

0

(31)

10

0

0

0

(21)

Financial instruments

27

0

0

0

(30)

0

(3)

Net operating loss and tax loss carry forwards

23

0

0

(3)

19

39

0

Deferred tax assets (liabilities)
before offsetting

50

(31)

10

(3)

(11)

39

(24)

Set-off

(31)

31

0

0

0

(24)

24

Net deferred tax assets (liabilities)

19

0

10

(3)

(11)

15

0

Others

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

2016

2015

(43)

(21)

Available-for-sale investments
Cash flow hedges

Total

2

3

(41)

(18)

4.3 Operational Assets and Liabilities
7.

Investments in Subsidiaries, Associates and Participations

Subsidiaries

Associates

Participations

Total

14,04821

174

14,243

196

0

0

196

Loss on disposal of investments

(5)

0

0

(5)

Share-based payments (IFRS 2)

29

0

0

29

(In € million)

Balance at 1 January 2015
Additions

Fair value changes through AOCI

0

0

58

58

Balance at 31 December 2015

14,26821

232

14,521

Additions

136

0

785

921

Share-based payments (IFRS 2)

31

0

0

31

Fair value changes through AOCI

0

0

72

72

14,43521

1,089

15,545

Balance at 31 December 2016

4

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Financial Statements 2015
Financial Statements 2015

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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.
Available-for-sale participations are stated at fair value withchanges in fair value recognised in Other Comprehensive
Income.
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.

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.

Change of Investments in Subsidiaries
On 26 January 2016, Airbus Group SE made a further capital
contribution of € 100 million into Airbus Group Bank GmbH.

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.

On 26 September 2016, Airbus Group SE made a further capital
contribution of € 22 million into Airbus Group Proj B.V., a 100%
subsidiary, in the frame of the industrial partnership with OneWeb
Ltd. for the design and manufacturing of microsatellites.

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.

With effect of 1 January 2015, Airbus Operations GmbH
contributed its A400M “IFA and Cargo Hold System”, Bremen
business into Airbus Defence and Space GmbH in turn to becomea new shareholder. As a consequence Airbus Group SE’s
participation in Airbus Defence and Space GmbH was diluted
from 78.48% to 66.08%.

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.

On 23 December, 2016, Airbus Group SE contributed its 100%
subsidiary Airbus Group SAS to its subsidiary Airbus SAS fora total amount of € 1,118 million. In return for this contribution
Airbus Group SE received additional shares in Airbus SAS foran equivalent amount.
During the year 2016, Airbus Group SE made further capital
contributions into Airbus Group Ventures Fund for a total amountof € 14 million.

Change of Investments in Associated Companies
and Participations
On 13 September 2016, Airbus Group SE internally acquired
9.05% of the shares in Dassault Aviation SA for a total amountof € 785 million. The acquisition of these shares in Dassault
Aviation SA is related to the issuance by the Company of an
exchangeable bond in June 2016 (see Note 12 “Cash, Securities
and Financing Liabilities”). After a share cancellation by Dassault
Aviation SA on 23 December 2016, reducing its capital by 9.6%,
the Company’s stake in Dassault Aviation SA increased to
10.00% of the total shares.

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Notes to the IFRS Company Financial Statements

INFORMATION ON PRINCIPAL INVESTMENTS OF THE COMPANY

2016

2015
%

Company

Head office

50.90

50.90

Aero Ré S.A.

Bertrange (Luxembourg)

66.08

66.08

Airbus Defence and Space GmbH

Taufkirchen (Germany)

100.00100.00Airbus Defence and Space S.A.

Madrid (Spain)

97.57

97.57

Airbus DS Holdings B.V.

Leiden (Netherlands)

100.00100.00Airbus Group Bank GmbH

Munich (Germany)

100.00100.00Airbus Group Finance B.V.

Leiden (Netherlands)

100.00100.00Airbus Group, Inc.

Herndon, VA (USA)100.00100.00Airbus Group Ltd.

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

Leiden (Netherlands)

0.00

100.00Airbus Group S.A.S.

Toulouse (France)

99.00

99.00

Airbus Group Ventures Fund I, L.P.

Mountain View, CA (USA)100.00100.00Airbus Helicopters Holding S.A.S.

Marignane (France)

90.26

94.42

Airbus S.A.S.

Toulouse (France)

100.00100.00DADC Luft-und Raumfahrt Beteiligungs GmbH

Taufkirchen (Germany)

10.00

0.00

Dassault Aviation S.A.

Paris (France)

100.00100.00Premium Aerotec GmbH

Augsburg (Germany)

Percentages represent share held directly by Airbus Group SE.

8.

Financial Assets and Liabilities

Financial assets and liabilities at 31 December 2016 and 2015 consist of the following:
31 December(In € million)

2016

2015

Long-term financial assets

3,296

3,594

Long-term loans Group companies

3,296

3,583

Long-term loans external
Non-current other financial assets

0

11

7,602

7,979

Positive fair values of derivative financial instruments

7,602

7,979

Current other financial assets

4,656

4,431

Positive fair values of derivative financial instruments

4,551

3,982

Current portion long-term loans Group companies
Current accounts Group companies(1)Receivables from subsidiaries

105

449

(19,148)(20,062)

9,409

8,353

Liabilities to subsidiaries(28,557)(28,415)

Non-current financial liabilities(7,698)(7,960)

Negative fair values of derivative financial instruments(7,698)(7,960)Current financial liabilities(4,543)(3,991)

Negative fair values of derivative financial instruments(4,543)(3,991)(1) The receivables from and liabilities to subsidiaries include mainly transactions in connection with the cash pooling in Airbus Group SE. Terms and conditions are in agreementwith the prevailing market environment.

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Financial Statements 2015
Financial Statements 2015

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Notes to the IFRS Company Financial Statements

9.

Commitments and Contingencies

Off-Balance Sheet Commitments
Airbus Group SE issued guarantees on behalf of Group companies
in the amount of € 5,849 million (2015: € 6,347 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. In addition, the Company
has entered into capital contribution commitments with Group
companies in the amount of € 54 million (2015: € 54 million).

On 8 December 2015, Airbus Group SE entered into a
partnership agreement to establish a corporate venture capitalfund, dubbed Airbus Group Ventures, as well as a technology
and business innovation center in Silicon Valley with a totalcommitment 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 2016, Airbus Group SE made further capital
contributions into Airbus Group Ventures Fund for a total amountof US$ 15 million.

4.4 Employees
10. Number of Employees
The average number of the persons employed by the Company in 2016 was 2 (2015: 3).

4.5 Capital Structure and Financial Instruments
11. Total Equity

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

Issued as at 1 January

2016

2015

785,344,784

784,780,585

Issued for ESOP

1,474,716

1,539,014

Issued for exercised options

224,500

1,910,428(14,131,131)(2,885,243)

772,912,869

785,344,784

Cancelled
Issued as at 31 December(184,170)(1,474,057)

Outstanding as at 31 December

Treasury shares as at 31 December

772,728,699

783,870,727

Authorised shares

3,000,000,000

3,000,000,000

Holders 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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Annual Report 2016

Registration Document 2016

1

2

3

4

5

Financial Statements 2016

1

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 of € 224,500 (in 2015:€ 1,910,428) in compliance with the implemented stock option
plans and by employees of € 1,474,716 (in 2015: € 1,539,014)
under the Employee Stock Ownership Plans (“ESOP”).
Share premium mainly results from contributions in kind in
the course of the creation of Airbus Group, cash contributions
from the Initial Public Offering, capital increases and reductions
due to the issuance and cancellation of shares as well as cash
distributions to Airbus Group SE shareholders.
Retained earnings include mainly the proﬁt of the period andcash dividend payments to Airbus Group SE shareholders.
On 28 April 2016, the Shareholders’ General Meeting decided
to distribute a gross amount of € 1.30 per share, which was paidon 3 May 2016. For the ﬁscal year 2016, the Group’s Board of
Directors proposes a cash distribution payment of € 1.35 pershare.
Accumulated Other Comprehensive Income (“AOCI”)
includes:change from available-for-sale financial assets (seeNote 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 AOCI 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 and relates to the share buyback which
took place between 2 November 2015 and 30 June 2016. Asof 31 December 2015, the Group bought back € 264 million ofshares and recognised a ﬁnancial liability of € 223 million for its
irrevocable share buyback commitment at that date. Recognitionof the ﬁnancial liability led to a corresponding reduction of equity.
In 2016, the Group bought back € 736 million of shares on which€ 223 million were recognised in ﬁnancial liability which led toa reduction of equity by € -513 million. The share buyback has
been completed for a total of € 1 billion.

Authorisations Granted by the Shareholders’
General Meeting of Airbus Group SE Heldon 28 April 2016
On 28 April 2016, the Annual General Meeting (“AGM”) of
the Company authorised the Board of Directors, for a period
expiring at the AGM to be held in 2017, to issue shares andgrant rights to subscribe for shares in the Company’s sharecapital for the purpose of:
ESOPs and share related LTIPs in the limit of 0.14% of theCompany’s authorised share capital (see “– Note 30: ShareBased Payments” of the Group’s Consolidated Financial
Statements);■
funding the Company and its Group companies, provided thatsuch powers shall be limited to an aggregate of 0.3% of theCompany’s authorised capital (see “– Note 34.3: Financing
Liabilities” of the Group’s Consolidated Financial Statements).
■

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 28 April 2016, the AGM authorised the Board of
Directors for an 18-month period to repurchase up to 10%of the Company’s issued and outstanding share capital (i.e.
issued share capital excluding shares held by the Company or
its subsidiaries) at a price not exceeding the higher of the price ofthe 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.
Furthermore, the AGM authorised both the Board of Directors
and the CEO, with powers of substitution, that the number ofshares repurchased by the Company pursuant to the sharebuyback programme are cancelled.

4

Financial Statements 2016 - AIRBUS ° 101 °Q

Annual Report 2015

Registration Document 2015

1

2

3

4

5

Financial Statements 2015
Financial Statements 2015

1

2

3

Notes to the IFRS Company Financial Statements

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 2016 and 2015 is as follows:
31 December(In € million)

2016

2015

Consolidated equity

3,657

5,966

AOCI - Restatement of investments from Consolidated to Company Financial Statements

5,198

4,527

Retained Earnings - Restatement of investments from Consolidated to Company Financial Statements

2,713(1,537)Retained Earnings - Valuation investments at historical cost

1,487

1,487

Retained Earnings - Impairment of financial assets(1,273)(1,273)Company’s equity

11,7829,170

The difference between the net income according to the Consolidated Financial Statements and Company’s Financial Statements
for the year ended 31 December 2016 and 2015 is as follows:
2016

2015

995

2,696

Income from investments according to Consolidated Financial Statements(1,118)(2,694)

Income from investments according to Company Financial Statements

4,021

9

0

(5)

(In € million)

Consolidated net income

Loss on / Impairment of financial assets
Other valuation differences

Company’s net income (Profit for the period)

2

48

3,900

54

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)

2016

Bank accounts

1,710

444

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

5,513

3,220

Short-term securities (available-for-sale)

1,535

2,851

Total cash and cash equivalents

8,758

6,515

2015

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)

2016

Current securities (available-for-sale)

1,489

1,683

Non-current securities (available-for-sale)

9,670

9,590

Non-current securities (at fair value through profit or loss)

Total securities

Financial Statements 2016 - AIRBUS ° 102 °

2015

0

3

11,15911,276

4

5

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5

1

2

3

4

5

Notes to the IFRS Company Financial Statements

Included in the securities portfolio as of 31 December 2016
and 2015, respectively, are corporate and government bonds
bearing either ﬁxed rate coupons (€ 10,458 million nominal value;comparably in 2015: € 10,604 million) or ﬂoating rate coupons(€ 359 million nominal value; comparably in 2015: € 397 million)
and foreign currency funds of hedge funds (€ 6 million nominal
value; 2015: € 8 million).

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 relatedparties.
The Company has received several euro-denominated loans and one US dollar-denominated loan from Airbus Group Finance B.V.
(“AGFBV”). It has also issued a convertible bond in euro. Furthermore, the Company has long-term US dollar-denominated loans
outstanding with the European Investment Bank (“EIB”) and the Development Bank of Japan (“DBJ”). The terms and repayment
schedules of these bonds and loans are as follows:
Principal
amount(in million)

Carrying amount
2016

2015

Coupon orinterest
rate

€ 499

€ 499

3M Euribor+1.85%

at variable
rate

Sept. 2018at variablerateAug. 201631 December

Effective
interest
rate

Maturity

Additional features

Loans from Airbus Group Finance B.V.
AGFBV 15 years(EMTN)€ 500

AGFBV 7 years (EMTN)€ 1,000€0€ 999

3M Euribor+1.59%AGFBV 10 years(EMTN)€ 1,000€ 1,052€ 1,021

2.40%

2.45%

Apr. 2024

Interest rate swapped into
3M Euribor +1.40%

AGFBV 15 years(EMTN)

€ 500

€ 526

€ 497

2.15%

2.24%

Oct. 2029

Interest rate swapped into
3M Euribor +0.84%

AGFBV 10 years(EMTN)

€ 600

€ 589

€0

0.91%

0.95%

May 2026

Interest rate swapped into
3M Euribor

AGFBV 15 years(EMTN)

€ 900

€ 861

€0

1.41%

1.49%

May 2031

Interest rate swapped into
3M Euribor

AGFBV USD Loan
10 years

US$ 1,000

€ 940

€ 919

2.72%

2.80%

Apr. 2023

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

Billet de trésorerie
programme

US$ 0

€0

€ 505

Loans from financial institutions
DBJ 10 years

US$ 300

€ 285

€ 276

3M US-Libor+1.15%

4.84%

Jan. 2021

Interest rate swapped into
4.76% fixed

EIB 10 years

US$ 721

€ 488

€ 567

3M US-Libor+0.85%

3.20%

Aug. 2021

Interest rate swapped into
3.2% fixed

EIB 7 years

US$ 406

€ 385

€ 373

3M US-Libor+0.93%

at variablerate

Feb. 2020

EIB 10 years

US$ 627

€ 591

€ 576

2.52%

2.52%

Dec. 2024

EIB 10 years

US$ 320

€ 304

€ 294

6M US-Libor+0.56%

at variablerate

Dec. 2025

Share buybackcommitment

€0

€ 223

Others€0€ 11Interest rate swapped into
3M Euribor +0.61%

Bond
Convertible bond
7 years
Exchangeable bond
5 years

€ 500

€ 457

€ 1,048€0€ 8,032€ 7,217

thereof non-current
financing liabilities€ 7,934€ 5,394

thereof current
financing liabilities€ 98€ 1,823

Total€ 1,078

€ 464

0.00%

0.00%

Convertible into
Airbus Group SE shares at€ 99.54 per share

1.39%

July 2022

0.33%

Exchangeable into Dassault
Aviation SA shares at€ 1,306.25 per share
June 2021

Financial Statements 2016 - AIRBUS ° 103 °4

QAnnual Report 2015

Registration Document 2015

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3

4

5

Financial Statements 2015
Financial Statements 2015

1

2

3

Notes to the IFRS Company Financial Statements

The increase in long-term financing liabilities is mainly due tothe issuance in May 2016 of two bonds under the Company’s
EMTN-Programme for a total amount of € 1.5 billion, maturing
in 2026 and 2031, as well as the issuance in June 2016 of an
exchangeable bond for an amount of € 1.1 billion, maturing in
2021.
The decrease in short-term financing liabilities is mainly
due to the repayment of a bond under the Company’s EMTNProgramme that matured in August 2016 for an amount of€ 1 billion as well as repayment of the debts related to commercial
papers and share buyback commitment for a total amount of€ 728 million.
The Company can issue commercial paper under the so called“billet de trésorerie” programme at ﬂ oating or ﬁ xed interest
rates corresponding to the individual maturities ranging from1 day to 12 months. The programme has been set up in 2003
with a maximum volume of € 2 billion, increased in 2013 toa maximum volume of € 3 billion. As of 31 December 2016,
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.
In June 2016, the Company issued € 1,078 million exchangeablebonds into Dassault Aviation shares, with a 5-year maturity.
The exchangeable bonds were issued at 103.75% of par witha coupon of 0%. Their effective interest rate, after separationof the equity conversion option related to Dassault Aviation
shares, is 0.333%.

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 Group’s firm commitments and highly
probable forecast transactions. As explained above, owing to
the Company’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 Group please refer to Section 35.1 “Financial
Risk Management” of the Notes to the Consolidated Financial
Statements.
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.
Furthermore, Airbus Group is exposed under its long-term
incentive plan (LTIP) to the risk of Airbus Group share pricemovements. In order to limit these risks for the Group, theCompany enters into equity derivatives that reference theAirbus Group SE share price.
Sensitivities of market risks — The approach used to measure
and control market risk exposure within the Group’s ﬁnancial
instrument portfolio is amongst other key indicators the value-at-

Financial Statements 2016 - AIRBUS ° 104 °

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5

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Registration Document 2016

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Financial Statements 2016

5

1

2

3

4

5

Notes to the IFRS Company Financial Statements

risk (“VaR”). For information about VaR and the approach usedby 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 Group 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 2016 and 2015 is as follows:
Total VaR

Equity price VaR

Currency VaRInterest rate VaR

FX hedges

8

0

7

1

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

36

23

6

23

Equity swaps

4

4

0

0

Diversification effect

(14)

(2)

(11)

(1)

All financial instruments

34

25

2

23

FX hedges

19

0

19

0

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

50

22

29

28

Equity swaps

11

11

0

0

Diversification effect

(39)

(8)

(39)

0

All financial instruments

41

25

9

28

(In € million)

31 December 201631 December 2015

The decrease in the total VaR compared to 31 December 2015 is mainly triggered by an improved asset liability match in foreign
currencies.The Company enters into derivative instruments mainly for hedging purposes of the Group. The derivative instruments
entered into with Group-external counterparties are passed on a 1:1 basis to Airbus Group entities. As a result, the respective market
risks of the Group-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 Group’s present
and future commitments as they fall due. For information on how the Group monitors and manages liquidity risk, please refer to
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

(226)

(809)

(298)

(730)

4 years- More than
5 years
5 years

31 December 2016
Non-derivative financial liabilities
Derivative financial liabilities

Total(8,032)(9,042)(1,695)(5,284)(12,241)(15,147)(4,762)(4,104)(3,106)(1,630)(1,127)(418)(20,273)(24,189)(4,988)(4,913)(3,404)(2,360)(2,822)(5,702)(4,170)31 December 2015
Non-derivative financial liabilities(7,217)(8,064)(1,946)

(211)

(781)

(269)

(687)

Derivative financial liabilities(11,951)(13,698)(4,100)(3,635)(2,992)(1,976)

(560)

(435)

Total

(19,168)(21,762)(6,046)(3,846)(3,773)(2,245)(1,247)(4,605)

4

Credit Risk
The Company is exposed to credit risk to the extent of nonperformance by either the related parties to which it provides
ﬁnancing or its counterparts with regard to ﬁnancial instruments
or issuers of ﬁnancial instruments for gross cash investments.
Although the Company provides loans to Group companies its
credit risk is limited to its direct subsidiaries. For the policies

the Company has put in place to avoid concentrations ofcredit risk and to ensure that credit risk is limited please refer
to Section 35.1 “Financial Risk Management” of the Notes to
the Consolidated Financial Statements.
In 2016, the total receivables, neither past due nor impaired
amount to € 4,759 million (in 2015: € 4,946 million).

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3

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Financial Statements 2015
Financial Statements 2015

5

1

2

3

Notes to the IFRS Company Financial Statements

13.2 Carrying Amounts and Fair Values of 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 classiﬁ cation and accounting
policies as the Group. Please refer to Section 35.1 “Financial
Risk Management” of the Notes to the Consolidated Financial
Statements for more information.

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 tables present the carrying amounts and fair values of ﬁnancial instruments by class and by IAS 39 measurement
category as of 31 December 2016 and 2015:(In € million)

Held fortrading

Availablefor-saleLoans and receivables
and financial liabilities
at amortised cost

Financial
instruments
total

Fair
value

Book
value

Fair
value

Amortised
cost

Book
value

Fair value
for hedge
relations

Fair value throughprofit or loss
Designated

Fair
value

Fair
value

AssetsOther investments andlong-term financial assets■

Equity instruments

0

0

0

1,056

1,056

0

0

1,056

1,056

■

Loans

0

0

0

0

0

3,401

3,502

3,401

3,502

Trade receivables

0

0

0

0

0

102

102

102

102

Derivative instruments

12,031

0

122

0

0

0

0

12,153

12,153Current account Group
companies

Other financial assets
■

■

0

0

0

0

0

9,409

9,409

9,409

9,409

Securities

0

0

0

11,15911,15900

11,15911,159Cash and cash equivalents

0

5,513

0

1,535

1,535

1,710

1,710

8,758

8,758

12,0315,513

122

13,75013,75014,622

14,72346,03846,038Issued bonds andcommercial papers

0

0

0

0

0

1,512

1,557

1,512

1,557

Liabilities to banks andother financing liabilities

0

0

0

0

0

2,053

2,053

2,053

2,053

Internal loans payable

0

0

0

0

0

4,467

4,660

4,467

4,660

12,196

0

45

0

0

0

0

12,241

12,241

Total
Liabilities
Financing liabilities■■■

Other financial liabilities■■

Derivative instruments
Current accounts Group
companies

Total

0

0

0

0

0

28,55728,55728,55728,557

12,196

0

45

0

0

36,58836,827

48,83049,068Financial Statements 2016 - AIRBUS ° 106 °45

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3

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5

Notes to the IFRS Company Financial Statements

Fair value
for hedge
relations

Fair value throughprofit or loss(In € million)

Held fortrading

DesignatedAvailablefor-saleLoans and receivables
and financial liabilities
at amortised cost

Financial
instruments
total

Fair
value

Book
value

Fair
value

Amortised
cost

Book
value

Fair
value

Fair
value

AssetsOther investments andlong-term financial assets■

Equity instruments

0

0

0

199

199

0

0

199

199

■

Loans

0

0

0

0

0

4,043

4,147

4,043

4,147

Trade receivables

0

0

0

0

0

11

11

11

11

Other financial assets■■

Derivative instruments

11,899061

Current account Group
companies

0

0

0

0

0

0

11,96011,960

0

0

0

0

0

8,353

8,353

8,353

8,353

Securities

0

3

0

11,273

11,2730011,276

11,276

Cash and cash equivalents

0

3,220

0

2,851

2,851

444

444

6,515

6,515

11,8993,223

61

14,323

14,323

12,851

12,95542,35742,461

0

0

0

0

0

962

992

962

992

Total
Liabilities
Financing liabilities■■■

Issued bonds andcommercial papers
Liabilities to banks andother financing liabilities

0

0

0

0

0

2,309

2,338

2,309

2,338

Internal loans payable

0

0

0

0

0

3,945

4,070

3,945

4,070

11,901

0

50

0

0

0

0

11,951

11,951Other financial liabilities■■

Derivative instruments
Current accounts Group
companies

Total

0

0

0

0

0

28,41528,41528,41528,415

11,901

0

50

0

0

35,63135,81547,58247,766

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 2016 and 2015, respectively:
31 December 2016
(In € million)

Level 1

Level 231 December 2015

Total

Level 1

Level 2

Total

Financial assets measured at fair value
Equity instruments
Derivative instruments
Securities
Cash equivalents

Total

1,056

0

1,056

199

0

199

0

12,153

12,153

0

11,961

11,961

11,13920

11,15911,112

164

11,276

6,218

830

7,048

3,941

2,130

6,071

18,41313,00331,416

15,252

14,25529,5070

12,241

12,241

0

11,951

11,951

Financial liabilities measured at fair value
Derivative instruments
Other liabilities

0

0

0

0

0

0

Total

0

12,241

12,241

0

11,951

11,951

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Financial Statements 2015
Financial Statements 2015

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2

3

Notes to the IFRS Company Financial Statements

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
2016 and 31 December 2015, respectively:

Derivative instruments(In € million)

Gross amounts
Grossrecognised set
amounts off in the financial
recognised
statements

Related amounts not set off inthe statement of financial position

Net amounts
presented in
the financial
statements

Financial
instruments

Cash collateral
receivedNet
amount31 December 2016
Financial assets

12,1530

12,153(2,561)

0

9,592

Financial liabilities

12,241

0

12,241(2,561)

0

9,680

Financial assets

11,961

0

11,961(2,754)0

9,207

Financial liabilities

11,951

0

11,951(2,754)

0

9,197

7 years > 7 years

Total

31 December 2015

13.4 Notional Amounts of Derivative Financial Instruments
The maturity of hedged interest cash flows are as follows, speciﬁed by year of expected maturity:
Remaining period(In € million)

1 year

2 years

3 years

4 years

5 years

6 years

Interest rate contracts

30

0

0

0

488

0

949

3,595

5,062

Interest rate future contracts

130

0

0

0

0

0

0

0

130

Interest rate contracts

2,549

41

1,021

18

14

1,134

8

3,469

8,254

Interest rate future contracts

1,032

0

0

0

0

0

0

0

1,032

31 December 201631 December 2015

The notional amounts of equity swaps are as follows:
Remaining period
1 year

2 years

3 years

4 years> 4 years

Total

31 December 2016

77

52

49

19

0

197

31 December 2015

153

76

52

49

20

350

(In € million)

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13.5 Derivative Financial Instruments and Hedge Accounting Disclosure
In addition, a loss of € -27 million was recognised in the proﬁt for the period in 2016 (€ 20 million in 2015) on derivatives that were
designated as hedging instruments in a fair value hedge, and a gain of € 12 million (in 2015: € -18 million) attributable to the hedged
risk was recognised in the proﬁt for the period on the corresponding hedged items. Corresponding with its carrying amounts, thefair values of each type of derivative ﬁnancial instruments are as follows:
31 December

2016
Assets(In € million)

Foreign currency contracts – cash flow hedges
Foreign currency contracts – not designated in a hedge relationship2015
Liabilities

AssetsLiabilities

0

0

0

26

11,941

11,962

11,66911,671
13

Interest rate contracts – cash flow hedges

0

7

0

Interest rate contracts – fair value hedges

122

38

30

4

Interest rate contracts – not designated in a hedge relationship

23

57

100

100

Commodity contracts - not designated in a hedge relationship

52

52

130

130

Equity swaps – not designated in a hedge relationship

15

3

31

7

Option component of Exchangeable Bond

0

122

12,153

12,241

11,96011,951

Total

13.6 Net Gains or Net Losses
The Company’s net gains or net losses recognised in proﬁt or loss in 2016 and 2015, respectively are as follows:2016(In € million)

2015

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

(168)

70

Designated on initial recognition

49

165

Available-for-sale financial assets

15

183

Loans and receivables

(1)

(93)

375

Financial liabilities measured at amortised cost

123

(631)

Total

(74)

162

(1) Contain among others impairment losses.

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

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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 Proﬁt for the period of € 3,900 million as shown in theincome statements for the ﬁnancial year 2016 is to be added to retained earnings and that a payment of a gross amount of € 1.35
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 Group SE

Report on the audit of the Annual Financial Statements 2016 included in the annual report
Our opinion
We have audited the ﬁnancial statements 2016 of Airbus Group 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 Group SE as at
31 December 2016, and of its result and its cash ﬂows for 2016 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 2016;
the following statements for 2016: 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 Group SE in accordance with the Verordening inzake de onafhankelijkheid van accountants
bij assurance-opdrachten (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) andother 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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Materiality€ 198 million

Materiality

5% of the EBIT adjusted

Benchmark applied
Explanation

We consider EBIT adjusted as the most appropriate benchmark given the nature of the businessWe 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 Board of Directors that misstatements in excess of € 10 million which are identiﬁed during the audit, would bereported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.

Scope of the group audit
Airbus Group 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 Group SE. The Company is structured along the divisions: Airbus, Airbus Helicopters and Airbus Defence
and Space, each comprising of multiple entities in various countries.
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 Group 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 86% of total consolidated revenue and 99% of total consolidated
assets. The remaining 14% of revenues, and 1% of total assets results from entities, none of which individually represents morethan 1% of revenues. For remaining entities, we performed, amongst others, analytical procedures or speciﬁc audit procedureson certain account balances to corroborate our assessment that there are no signiﬁcant risks of material misstatements.
We executed a program that includes participation in risk assessment and planning discussions, setting the direction of the groupaudit work (including instructions to the divisional and entity auditors), review and discussion of the planned audit approach, obtaining
an understanding of the ﬁnancial reporting process and performing procedures on the group consolidation, participating in theevaluation of key accounting topics, reviewing the ﬁnancial statements and participating in meetings with the management of theCompany and its divisions. As part of our audit instructions, we also included questions on key programmes (A380, A350 XWB
and A400M) and the risk of non-compliance with laws and regulations. We involved several EY specialists to assist the audit team,including specialists from our tax, valuations, actuarial, treasury and compliance departments.
The audit of the three Airbus Divisions is performed jointly by EY network ﬁrms and other non-EY audit ﬁrms. Meetings were held withthe divisional auditors and divisional management to discuss the ﬁndings reported to the group audit team, as well as ﬁle reviews.
By performing the procedures mentioned above at group entities, together with additional procedures at consolidation level,
we have been 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 judgment, were of most signiﬁcance in our audit of the ﬁnancial
statements. We have communicated the key audit matters to the supervisory board. The key audit matters are not a comprehensive
reﬂection of all matters discussed.

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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.
Risk

Our audit approach

Litigation and claims and risk of non-compliance with laws and regulation
Description
A part of the Company’s business is characterised by competition for
individual significant contracts with customers which are often directly
or indirectly associated with governments. The process associatedwith these activities is susceptible to the risk of non-compliancewith laws and regulations. In addition the Company operates in a
number of territories where the use of commercial intermediaries
is normal practice. Subsidiaries of Airbus Group SE remain underinvestigation by various law enforcement agencies in Germany,
Greece, UK, Romania and Austria. In August 2016, the Company
announced that it had been informed by the Serious Fraud Office inthe UK that it had commenced a formal investigation into allegationsof fraud, bribery and corruption in the civil aviation business of theCompany. These allegations relate to irregularities concerning third
party consultants. Breaches of laws and regulations in this area canlead to fines, penalties, criminal prosecution, commercial litigation
and restrictions on future business.
Litigation and claims involve amounts that are potentially significant
and the estimate of the amount to be provided as a liability, if any,
is inherently subjective. The outcome of these matters may have amaterial effect on the Company’s result and financial position.
Reference is made to disclosure on Note 3 ‘Key estimates andjudgements’, and Note 36 ‘Litigations and claims’ of the financial
statements.

Our audit approach
We evaluated and tested the Company’s policies, procedures andcontrols over the selection of intermediaries, contracting arrangements,
ongoing management, payments and responses to suspected
breaches of policy. We sought to identify and tested payments madeto intermediaries during the year, made enquiries of appropriate
personnel and evaluated the tone set by management and the Boardof Directors and the Company’s approach to managing this risk.
Having enquired of management, the Audit Committee and the Boardof Directors as to whether the Company is in compliance with laws
and regulations relating to bribery and corruption, we made writtenenquiries of and met with the Company’s legal advisers to cross checkthe results of those enquiries with third parties and maintained a highlevel of vigilance to possible indications of significant non-compliancewith laws and regulations relating to bribery and corruption whilst
carrying out our other audit procedures. We discussed the areasof potential or suspected breaches of law, including the ongoinginvestigations, with the Audit Committee and the Board of Directors
as well as the Company’s legal advisers and assessed related
documentation. We 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 withaccounting standards and in particular whether it is the case that theinvestigations remain at too early a stage to assess the consequences(if any), including in particular the size of any possible fines.

Accounting for construction contracts, including revenue recognition and loss provision
Description
The amount of revenue and profit recognised in a year is dependent
on the assessment of the stage of completion of construction
contracts as well as estimated total revenues and estimatedtotal cost. Significant estimates are made to assess the stage ofcompletion based on milestones, estimated revenue and costs for
key programmes such as A400M and A350 XWB (contracts withlaunch customers only).
Depending on these assessments, the stage of completion isdetermined, revenue is recognised and loss provisions are recorded
when the contract margin is negative.
Provisions for contract losses relate mainly to the A400M and A350
XWB launch customers and are recorded when it becomes probablethat estimated total contract costs will exceed estimated total contract
revenues. Updates to these provisions can have a significant impact
on the Company’s result and financial position. The determination ofthese provisions is based on best available estimates and requires
significant management’s judgement and assumptions associatedwith the technical development achievement and certification
schedules, production plan (including assumptions on ramp up),
performance guarantees as well as expected outcome from ongoingnegotiations with customers.
A key risk is the A400M programme which remains in a critical phase.
Negotiations with OCCAR/Nations on military capabilities, pricerevision formula and commercial compensation remain ongoing.
Reference is made to the disclosure on Note 3 ‘Key estimates andjudgements’, Note 10 ‘Revenues, cost of sales and gross margin’
and Note 22 ‘Provisions, contingent assets and contingent liabilities’of the financial statements.

Our audit approach
We evaluated the design and implementation of internal controls foraccounting for construction contracts. We also performed detailed
procedures on individually significant programmes, including
discussions with the individual Head of Programme, and evaluatedmanagement’s assumptions in the determination of amongst others
the stage of completion of a project, estimates to complete for bothrevenue and costs, and any provisions for loss making contracts.
We focused on management’s assessment of key contract risks andopportunities to determine whether these are appropriately reflected in
the cost to complete forecasts, and paid specific attention for example
to technical development, delivery plan and certification schedules.
We challenged management’s assumptions by discussing andreviewing correspondence with customers, considered the accuracy
and consistency of similar estimates made in previous years andcorroborated the assumptions with the latest contractual information.
We paid particular attention to the loss provision for the A400M
programme, including the € (2,210) million additional net charge in2016, as well as related disclosures.

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Risk

Our audit approach

Valuation of inventories for contracts accounted for under IAS 18 and completeness of provision
for contract losses and customer service obligations
Description
Inventories amount in total to € 30 billion, including work in progressof € 21 billion. Key programmes (which are accounted for under
IAS 18 Revenue recognition, for which revenue and cost of sales
are recognised as each aircraft is delivered) in light of the risks
mentioned below are the A380 and the A350 XWB contracts with
non-launch customers. With respect to the A380, a key challenge issecuring the order flow.
Estimates of total contract costs and selling price per aircraft arenecessary to determine if the net realisable value impairment orprovision for contract losses is required.
In addition to the risk of contract cancellations, significant costs
or loss of revenue may be incurred in connection with remedialaction required to correct any performance issues detected. Dueto 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 3 ‘Key estimatesand judgements’, and notes 20 ‘Inventories’ and 22 ‘Provisions,contingent assets and contingent liabilities’ of the financial
statements.

Our audit approach
We evaluated the design and implementation of internal controls for
identifying and recording impairments and provisions and performed
detailed procedures including inquiry of the Head of Programmes andcorroboration with other audit evidence. We evaluated management’s
assumptions in the determination of the forecast revenue to bereceived, cost to be incurred (including any contractual penalties) andgross margin. Our evaluation was based on our assessment of thehistorical accuracy of the Company’s estimates in previous periods
and included an analysis of contingencies and impact of known
technical issues on cost forecasts and provisions.
Particular attention was paid to the commercial status of the A380
programme, including discussions with Airbus management on thestatus and their ongoing commitment to the A380 programme.

Goodwill impairment
Description
Goodwill amounts to € 9.4 billion (2015: € 9.9 billion) and represents
8% (2015: 9%) of the balance sheet total and 255% (2015: 166%)of total equity. There is a risk of irrecoverability of the Company’s
significant goodwill balance due to weak demand in certain markets
and aircraft market cyclicality.
In its impairment calculations the company uses assumptions suchas growth rates, weighted average costs of capital and underlying
foreign exchange rates. Due to the inherent uncertainty involved inforecasting and discounting future cash flows, which are the basisof the assessment of recoverability, this is one of the key judgmental
areas.
Reference is made to the disclosure on Note 17 ‘Intangible assets’ of
the financial statements.

Our audit approach
In this area our audit procedures included, amongst others, testing of
the Company’s budgeting procedures upon which the forecasts are
based and the principles and integrity of the Company’s discounted
cash flow model. We used our own valuation specialists to assist us inevaluating the assumptions and methodologies used by the Company,
in particular relating to the discount rate used. We also evaluatedmanagement’s sensitivity analyses on the assumptions for each cash
generating unit. We compared the sum of the discounted cash flows
to the Company’s market capitalisation to assess the reasonablenessof those cash flows.

Derivative financial instruments, including impact on capitalization of Airbus Group SE
Description
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 tochanges in market rates.
There is a high inherent risk of error in the Company financial
statements, both in valuation of the financial instruments and in thepresentation and disclosure in the financial statements.
The magnitude of the Company’s hedge portfolio and potential
significant changes in the exchange rate of the US dollar versus theEuro could have a negative impact on the equity of the Company
via the ‘mark to market’ valuation of the hedge portfolio. It therefore
also has a major impact on the capitalisation of Airbus Group SE,
with net equity (as percentage of total assets) amounting to 3.1% per
31 December 2016 (2015: 5.6%).
Reference is made to Note 35 ‘Information about financial
instruments’ of the financial statements.

Our audit approach
For the audit of financial instruments we used specialists who
tested the controls around the Company’s central treasury system,
independently calculated the valuation of the treasury portfolio andtested the application of the hedge accounting rules and the resulting
accounting treatment. We also obtained counterparty confirmationof the outstanding financial instruments to verify the existence andownership. Finally we evaluated whether appropriate disclosuresrelating to financial instruments were made in the financial statements.

Independence matter
Description
In 2016, few EY staff from The Netherlands were seconded for
non-audit services contracted and allowed outside the Netherlands.
This secondment abroad caused a formal breach of independence
under Dutch law.

Our audit response
After this breach was discovered by EY it was, together with the
mitigating and corrective measures taken, reported to the Airbus Audit
Committee and the Dutch regulator. Our independence has not been
compromised and thus does not affect our opinion as an independent
auditor.

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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:■■

the Report of the Board of Directors (we refer to www.airbusgroup.com for the Report of the Board of Directors);
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 theseprocedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard 720. The scopeof the procedures performed is 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 pursuant to 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 Group SE on 28 April 2016, as of theaudit for the year 2016.

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.
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 have detected allmaterial errors and fraud.
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 judgment and have maintained professional scepticism throughout the audit, in accordance with
Dutch Standards on Auditing, ethical requirements and independence requirements. Our audit included e.g.:■

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;

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Other Supplementary Information Including the Independent Auditor’s Reportobtaining 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 thecompany’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 Board of Directors regarding, among 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.
We provide the Board of Directors 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 Board of Directors, we determine those matters that were of most signiﬁcance in theaudit of the ﬁnancial statements of the current period and are therefore the key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances,not communicating the matter is in the public interest.
Amsterdam, 21 February 2017
Ernst & Young Accountants LLP
Signed by: A.A. van Eimeren

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