Financial
Statements
2019

Financial
Statements2

Airbus / Financial Statements 2019

1

Airbus SE IFRS
Consolidated Financial Statements

2

Notes to the IFRS
Consolidated Financial Statements

3

Airbus SE IFRS
Company Financial Statements

4

Notes to the IFRS
Company Financial Statements

5

Other Supplementary Information
Including the Independent Auditor’s Report

Airbus / Financial Statements 20193

Chapter

1
4

Airbus / Financial Statements 2019

1

Airbus SE
IFRS Consolidated
Financial Statements
Airbus SE – IFRS Consolidated Income Statement
for the years ended 31 December 2019 and 201806

Airbus SE – IFRS Consolidated Statementof Comprehensive Income for the years ended
31 December 2019 and 201807

Airbus SE – IFRS Consolidated Statementof Financial Position for the years ended
31 December 2019 and 201808

Airbus SE – IFRS Consolidated Statementof Cash Flows for the years ended
31 December 2019 and 201810

Airbus SE – IFRS Consolidated Statementof Changes in Equity for the years ended
31 December 2019 and 201811

Airbus / Financial Statements 20195

Airbus SE – IFRS Consolidated Financial Statements /Airbus SE – IFRS Consolidated Income Statement
for the years ended 31 December 2019 and 2018
(In € million)

Note

Revenue

11

Cost of sales
Gross margin11

Selling expenses

2019

2018

70,47863,707(59,973)(54,920)

10,505

8,787

(908)

(861)

Administrative expenses

12(5,217)(1,574)

Research and development expenses

13(3,358)(3,217)

Other income

15

370

1,656

Other expenses

15

(356)

(182)

Share of profit from investments accounted for under the equity method

14

299

330

Other income from investments

14

4

109

1,339

5,048

Profit before financial result and income taxes
Interest income

228

208

Interest expense

(339)

(440)

Other financial result
Total financial result

16

Income taxes

17(Loss) Profit for the period

(164)

(531)

(275)

(763)

(2,389)(1,274)(1,325)3,011(1,362)

3,054

37

(43)

Attributable toEquity owners of the parent (Net income)Non-controlling interests

Earnings per share

€

€

Basic

18

(1.75)

3.94

Diluted18(1.75)

3.92

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

6

Airbus / Financial Statements 2019

Airbus SE – IFRS Consolidated Financial Statements /Airbus SE – IFRS Consolidated Statement of Comprehensive Income
for the years ended 31 December 2019 and 2018
(In € million)

Note(Loss) Profit for the period

2019

2018

(1,325)

3,011(2,669)

(552)

267

(249)

Other comprehensive income
Items that will not be reclassified to profit or loss:
Remeasurement of the defined benefit pension plans

31

Change in fair value of financial assets
Share of change from investments accounted for under the equity method
Income tax relating to items that will not be reclassified

17

(130)

3

410

(2)

54

108

(1,434)(2,959)136(80)

Items that may be reclassified to profit or loss:
Foreign currency translation differences for foreign operations
Change in fair value of cash flow hedges

37

Change in fair value of financial assets

3

(11)

342

728

Other comprehensive income, net of tax(3,021)(3,014)

Total comprehensive income for the period(4,346)(3)(4,364)

72

18

(75)

Share of change from investments accounted for under the equity method
Income tax relating to items that may be reclassified

17

Attributable toEquity owners of the parent
Non-controlling interests

1

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

Airbus / Financial Statements 20197

Airbus SE – IFRS Consolidated Financial Statements /Airbus SE – IFRS Consolidated Statement of Financial Position
for the years ended 31 December 2019 and 2018
Note

2019

Intangible assets

19

16,591

16,726

Property, plant and equipment

20

17,294

16,773

2

3

8

1,626

1,693

Other investments and other long-term financial assets

21

4,453

3,811

Non-current contract assets

22

91

65

Non-current other financial assets

25

1,033

1,108

Non-current other assets

26

522

888

(In € million)

2018

AssetsNon-current assets

Investment property
Investments accounted for under the equity method

Deferred tax assets

17

5,008

4,835

Non-current securities

36

11,066

10,662

57,68656,564

Total non-current assets
Current assets
Inventories

23

31,55031,891

Trade receivables

22

5,674

6,078

Current portion of other long-term financial assets

21

449

489

Current contract assets

22

1,167

789

Current other financial assets

25

2,060

1,811

Current other assets

26

2,423

4,246

1,784

1,451

Current tax assets
Current securities

36

2,302

2,132

Cash and cash equivalents

36

9,314

9,413

56,72358,3000334

114,409

115,198

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

Total assets

8

Airbus / Financial Statements 20197

Airbus SE – IFRS Consolidated Financial Statements /

2019

2018

Capital stock

784

777

(In € million)

Note

Equity and liabilities
Equity attributable to equity owners of the parent

Share premium

3,555

2,941

Retained earnings

2,241

5,923

Accumulated other comprehensive income

(523)

134

Treasury shares
Total equity attributable to equity owners of the parent

(51)
9,724

15

(5)

34

5,990

9,719

Non-controlling interests

Total equity

(82)
5,975

Liabilities
Non-current liabilities
Non-current provisions

24

12,542

11,571Long-term financing liabilities

36

8,189

7,463

Non-current contract liabilities

22

16,98015,832

Non-current other financial liabilities

25

7,498

8,009

Non-current other liabilities

26

384

460

Deferred tax liabilities

17

398

1,318

Non-current deferred income

5440

Total non-current liabilities

46,04544,693

6,372

7,317

Current liabilities
Current provisions

24

Short-term financing liabilities

36

1,959

1,463

Trade liabilities

22

14,80816,237

Current contract liabilities

22

26,426

26,229Current other financial liabilities

25

2,647

2,462

Current other liabilities

26

6,817

5,288

2,780

732

565

626

62,37460,3540432

Total liabilities

108,419

105,479

Total equity and liabilities

114,409

115,198

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

7

1

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

Airbus / Financial Statements 20199

Airbus SE – IFRS Consolidated Financial Statements /Airbus SE – IFRS Consolidated Statement of Cash Flowsfor the years ended 31 December 2019 and 2018
(In € million)

Operating activities(Loss) Profit for the period attributable to equity owners of the parent (Net income)(Loss) 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
Inventories
Trade receivables
Contract assets and liabilities
Trade liabilities
Other assets and liabilities and others
Cash provided by operating activities (1)Investing activities
Purchases of intangible assets, property, plant and equipment, investment property
Proceeds from disposals of intangible assets, property, plant and equipment and investment property
Acquisitions of subsidiaries, joint ventures, businesses and non-controlling interests (net of cash)
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 sale and liabilities
directly associatedPayments for investments in securities
Proceeds from disposals of securities
Cash (used for) investing activities
Financing activities
Increase in financing liabilities
Repayment of financing liabilities
Cash distribution to Airbus SE shareholders
Dividends paid to non-controlling interests
Payments for liability for puttable instruments
Changes in capital and non-controlling interests
Change in treasury shares
Cash (used for) financing activities
Effect of foreign exchange rate changes on cash and cash equivalents

Note

2019

2018

(1,362)
37

3,054
(43)

(228)
339
151
(187)
2,389
(1,476)
2,927
600
(77)
(299)
475
(1,752)
2,216
117
29
1,297
(1,625)
2,398
3,753

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

(2,340)112
8(2,285)
213
129

(952)

(707)

358
210

597
191

7

137
(2,861)
2,464(2,864)320(2,010)1,917(1,635)

36
36
34

402
(562)
(1,280)
0
319
194
(31)
(958)
(45)

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

(114)

(2,593)10

8

Net (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
thereof presented as cash and cash equivalents
thereof presented as part of disposal groups classified as held for sale

9,428

12,021

36

9,314

9,428

36
7

9,314
0

9,413
15

(1) In 2018, cash provided by operating activities has been positively impacted by certain agreements reached with the Company’s suppliers and customers relating to the settlementof claims and negotiation on payment terms. Such measures do not have a material impact in 2019.

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

10

Airbus / Financial Statements 2019

Airbus SE – IFRS Consolidated Financial Statements /Airbus SE – IFRS Consolidated Statement of Changes in Equity
for the years ended 31 December 2019 and 2018
Equity attributable to equity holders of the parent
Accumulated othercomprehensive income(In € million)

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

Noncontrolling
Total interests

Total
equityBalance at
1 January 2018

775

2,826

4,586

772

776

999

(2)

10,732

2

10,734

Profit for the period

0

0

3,054

0

0

0

0

3,054

(43)

3,011

Other comprehensive
income

0

0

(569)

(280)

(2,249)116

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

Total comprehensive
income for the period

0

0

2,485

(280)

(2,249)

116

0

72

(75)

(3)

Capital increase

34

2

115

0

0

0

0

0

117

0

117

Share-based payment(IFRS 2)

32

0

0

62

0

0

0

0

62

0

62

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

34

0

0

(1,161)

0

0

0

0

(1,161)0(1,161)

0

0

(49)

0

0

0

0

(49)

68

19

34

0

0

0

0

0

0

(49)

(49)

0

(49)

492 (1,473)

Equity transaction(IAS 27)
Change in treasury shares

Balance at
31 December 2018

777

2,941

5,923

1,115

(51)

9,724

(5)

9,719

Restatements (1)

0

0

(122)

0

0

0

0

(122)

0

(122)

Balance at 1
January 2019,restated (1)

777

2,941

5,801

492

(1,473)

1,115

(51)

9,602

(5)

9,597

(Loss) Profit
for the period00(1,362)

0

0

0

0

(1,362)37(1,325)

Other comprehensive
income00(2,345)327(1,048)64

0(3,002)(19)(3,021)

Total comprehensive
income for the period00(3,707)327(1,048)64

0(4,364)18(4,346)

Capital increase

34

7

614

0

0

0

0

0

621

0

621

Share-based payment(IFRS 2)

32

0

0

76

0

0

0

0

76

0

76

Cash distribution to
Airbus SE shareholders /Dividends paid to noncontrolling interests

34

0

0

(1,280)

0

0

0

0

(1,280)0(1,280)

0

0

1,351

0

0

0

0

1,351

2

1,353

0

0

0

0

0

0

(31)

(31)

0

(31)

784

3,555

2,241

819 (2,521)

1,179

(82)

5,975

15

5,990

Equity transaction(IAS 27)
Change in treasury shares

Balance at
31 December 201934

1(1) Opening balance figures are restated due to the application of IFRIC 23.

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

Airbus / Financial Statements 201911

Chapter

2
12

Airbus / Financial Statements 20192

Notes to the
IFRS Consolidated
Financial Statements
2.1

Basis of Preparation

15

2.2

Airbus Structure

20

2.3

Segment Information

27

2.4

Airbus Performance

29

2.5

Operational Assets and Liabilities

35

2.6

Employees Costs and Benefits

47

2.7

Capital Structure and Financial Instruments

60

2.8

Other Notes

79

2.9

Appendix “Simplified Airbus Structure”

82

Airbus / Financial Statements 201913

Notes to the IFRS Consolidated Financial Statements /Contents /

14

2.1

Basis of Preparation

15

1.
2.
3.
4.
5.

The Company
Signiﬁcant Accounting Policies
Key Estimates and Judgements
Change in Accounting Policies and Disclosures
Brexit

15
15
17
18
20

2.2

Airbus Structure

20

6.
7.
8.

20
21

9.

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

2.3

Segment Information

27

10.

Segment Information

27

2.4

Airbus Performance

29

11.
12.
13.
14.

29
30
30

15.
16.
17.
18.

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

2.5

Operational Assets and Liabilities

35

19.
20.

Intangible Assets
Property, Plant and Equipment

35
38

Airbus / Financial Statements 2019

24
26

31
31
31
32
35

21.

Other Investments and Other Long-Term Financial
AssetsContract Assets and Contract Liabilities, Trade
Receivables and Trade Liabilities
Inventories
Provisions, Contingent Assets and Contingent
Liabilities
Other Financial Assets and Other Financial
Liabilities
Other Assets and Other Liabilities
Sales Financing Transactions

43
44
45

2.6

Employees Costs and Beneﬁ ts

47

28.
29.
30.
31.
32.
33.

Number of Employees
Personnel Expenses
Personnel-Related Provisions
Post-Employment Beneﬁts
Share-Based Payment
Remuneration

47
47
48
48
54
56

2.7

Capital Structure and Financial Instruments

60

34.
35.
36.
37.

Total Equity
Capital Management
Net Cash
Information about Financial Instruments

60
61
62
65

2.8

Other Notes

79

38.
39.
40.

Litigation and Claims
Auditor Fees
Events after the Reporting Date

79
81
81

2.9

Appendix “Simpliﬁ ed Airbus Structure”

82

22.
23.
24.
25.
26.
27.

40
40
41
42

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

2.1 Basis of Preparation
1.

The Company

The accompanying IFRS Consolidated Financial Statements
present the ﬁnancial position and the results of operations ofAirbus SE together with its subsidiaries referred to as “theCompany”, a European public limited-liability company (Societas
Europaea) with its seat (statutaire zetel) in Amsterdam, The
Netherlands, its registered address at Mendelweg 30, 2333
CS Leiden, The Netherlands, and registered with the Dutch
Commercial Register (Handelsregister) under number 24288945.

2.

The Company’s reportable segments are Airbus, Airbus
Helicopters and Airbus Defence and Space (see “– Note 10:
Segment Information”). The Company is listed 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 12 February 2020.

Signiﬁcant Accounting Policies

Basis of preparation — The Company’s Consolidated
Financial Statements are prepared in accordance with
International Financial Reporting Standards (“IFRS”), issued
by the International Accounting Standards Board (“IASB”) as
endorsed by the European Union (“EU”) and Part 9 of Book 2of the Netherlands Civil Code. When reference is made to IFRS,
this intends to be EU-IFRS.
The Consolidated Financial Statements have been preparedon a historical cost basis, unless otherwise indicated. They areprepared and reported in euro (“€”) and all values are rounded
to the nearest million appropriately. Due to rounding, numberspresented may not add up precisely to the totals provided andpercentages may not precisely reﬂect the absolute ﬁgures.
The Company describes the accounting policies applied in eachof the individual notes to the ﬁnancial statements and avoids
repeating the text of the standard, unless this is considered
relevant to the understanding of the note’s content. On 1 January
2019, the Company has implemented the new standards IFRS 16“Leases” and IFRIC 23 “Uncertainty over Income Tax Treatments”.
As a result, the Company has changed its accounting policies
for lease accounting and for classiﬁcation and measurement ofcertain liabilities linked to uncertainty over income tax, as detailedin “— Note 4: Change in Accounting Policies and Disclosures”.
The Company also early adopted the Amendments to IFRS 9,
IAS 39 and IFRS 7 “Interest Rate Benchmark Reform”. The
implementation of other amendments has no material impact
on the Company’s Consolidated Financial Statements as of
31 December 2019.The most signiﬁcant accounting policies
are described below, and have been updated accordingly.
Revenue recognition — Revenue is recognised when the
Company transfers control of the promised goods or services
to the customer. The Company measures revenue, for theconsideration to which the Company is expected to be entitledin exchange for transferring promised goods or services. Variableconsiderations are included in the transaction price when it
is highly probable that there will be no signiﬁcant reversal of
the revenue in the future. The Company identiﬁes the various
performance obligations of the contract and allocates thetransaction price to these performance obligations. Advancesand pre-delivery payments (contract liabilities) are received
in the normal course of business and are not considered to

be a signiﬁcant ﬁnancing component as they are intended toprotect the Company from the customer failing to complete its
contractual obligations.
Revenue from the sale of commercial aircraft is recognised
at a point in time (i.e. at delivery of the aircraft). The Company
estimates the amount of price concession granted by theCompany’s engine suppliers to their customers as a reductionof both revenue and cost of sales.
Revenue from the sale of military aircraft, space systems
and services — When control of produced goods or renderedservices is transferred over time to the customer, revenue isrecognised over time, i.e. under the percentage of completion
method (“PoC” method).
The Company transfers control over time when:– it produces a good with no alternative use and the Company
has an irrevocable right to payment (including a reasonablemargin) for the work completed to date, in the event ofcontract termination at the convenience of customers (e.g.
Tiger contract); or– it creates a good which is controlled by the customer as thegood is created or enhanced (e.g. Euroﬁghter contracts, someborder security contracts, A400M development); or– the customer simultaneously receives and consumes the
beneﬁts provided by the Company (e.g. maintenance contracts).

2

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

Airbus / Financial Statements 201915

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

with the underlying programme status. An estimate of the related
contract costs is made, which requires signiﬁcant and complex
assumptions, judgements and estimates related to achieving
certain performance standards as well as estimates involving
warranty costs (see “– Note 3: Key Estimates and Judgements”, “–
Note 11: Revenue and Gross Margin” and “– Note 24: Provisions,Contingent Assets and Contingent Liabilities”).
Research and development expenses — The costs forinternally generated research are expensed when incurred. The
costs for internally generated development are capitalised when:– the product or process is technically feasible and clearlydeﬁned (i.e. the critical design review is ﬁnalised);– adequate resources are available to successfully complete
the development;– the beneﬁts from the assets are demonstrated (a market exists
or the internal usefulness is demonstrated) and the costs
attributable to the projects are reliably measured;– the Company intends to produce and market or use thedeveloped product or process and can demonstrate its
proﬁtability.
Income tax credits granted for research and development
activities are deducted from corresponding expenses or from
capitalised amounts when earned.
Capitalised development costs, are recognised either as
intangible assets or, when the related development activities
lead to the construction of specialised tooling for production(“jigs and tools”), or involve the design, construction and testingof prototypes and models, as property, plant and equipment.
Capitalised development costs are generally amortised overthe estimated number of units produced. If the number of units
produced cannot be estimated reliably, they are amortised overthe estimated useful life of the internally generated intangible
asset. Amortisation of capitalised development costs is
recognised in cost of sales.
Inventories are measured at the lower of acquisition cost
(generally the average cost) or manufacturing cost and net
realisable value. Manufacturing costs comprise all costs that are
directly attributable to the manufacturing process, such as directmaterial and labour, and production related overheads (based on
normal operating capacity and normal consumption of material,
labour and other production costs), including depreciation
charges. Net realisable value is the estimated selling price inthe ordinary course of the business less the estimated costs tocomplete the sale.
Transactions in foreign currency, i.e. transactions incurrencies other than the functional currency of an entity of
the Company, are translated into the functional currency at

16

Airbus / Financial Statements 2019the foreign exchange rate prevailing at the transaction date.
Monetary assets and liabilities denominated in foreign currencies
at the end of the reporting period are remeasured into thefunctional currency at the exchange rate in effect at that date.
Except when deferred in equity as qualifying cash ﬂow hedges(see “– Note 37: Information about Financial Instruments”),
these foreign exchange remeasurement gains and losses arerecognised, in line with the underlying item:– in proﬁt before ﬁnance costs and income taxes if the substanceof the transaction is commercial (including sales ﬁnancing
transactions); and– in ﬁnance costs for ﬁnancial transactions.
Non-monetary assets and liabilities denominated in foreign
currencies that are stated at historical cost are translated intofunctional currency at the foreign exchange rate in effect at thedate of the transaction. Translation differences on non-monetaryﬁnancial assets and liabilities that are measured at fair value arereported as part of the fair value gain or loss. However, translationdifferences of non-monetary ﬁnancial assets measured at fairvalue and classiﬁed as fair value through other comprehensive
income (“OCI”) are included in accumulated other comprehensive
income (“AOCI”).
Hedge accounting — Most of the Company’s revenue isdenominated in US dollar (“US$”), while a major portion of its
costs are incurred in euro. The Company is signiﬁcantly exposedto the risk of currency changes, mainly resulting from US$/€exchange rates. Furthermore, the Company is exposed, though
to a much lesser extent, to foreign exchange risk arising fromcosts incurred in currencies other than the euro and to othermarket risks such as interest rate risk, commodity price andequity price risk.
In order to manage and mitigate those risks, the Company
enters into derivative contracts. The Company applies hedge
accounting to its derivative contracts whenever the relevant IFRS
criteria can be met. Hedge accounting ensures that derivative
gains or losses are recognised in proﬁt or loss (mainly in revenue)
in the same period that the hedged items or transactions affectproﬁt or loss.
The major portion of the Company’s derivative contracts is
accounted for under the cash ﬂow hedge model. The fair value
hedge model is used only for certain interest rate derivatives.
Derivative contracts which do not qualify for hedge accounting
are accounted for at fair value through proﬁt and loss; any related
gains or losses being recognised in ﬁnancial result.
The Company’s hedging strategies and hedge accounting
policies are described in more detail in “– Note 37: Information
about Financial Instruments”.

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

3.

Key Estimates and Judgements

The preparation of the Company’s Consolidated Financial
Statements requires the use of estimates and assumptions. In
preparing these ﬁnancial statements, management exercises its
best judgement based upon its experience 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 ongoing basis.
Key estimates and judgements that have a signiﬁcant inﬂuenceon the amounts recognised in the Company’s Consolidated
Financial Statements are mentioned below:
Revenue recognition for per formance obligationstransferred over time — The PoC method is used to recogniserevenue for performance obligations transferred over time.
This method places considerable importance on accurate
estimates at completion as well as on the extent of progress
towards completion. For the determination of the progress ofthe performance obligations, signiﬁcant estimates include total
contract costs, remaining costs to completion, total contract
revenue, contract risks and other judgements.
The management of the operating Divisions continually review all
estimates involved in such performance obligations and adjusts
them as necessary (see “– Note 22: Contract Assets, Contract
Liabilities and Trade Receivables, and Trade Liabilities”).
Provisions — The evaluation of provisions, such as onerous
contracts, warranty costs, restructuring measures and legal
proceedings are based on best available estimates. Onerous
contracts are identified by monitoring the progress of thecontract and the underlying programme performance. The
associated estimates of the relevant contract costs requiresigniﬁcant judgement related to performance achievements
including estimates involving warranty costs. Depending on
the size and nature of the Company’s contracts and related
programmes, the extent of assumptions, judgements andestimates in these monitoring processes differs. In particular,
the introduction of commercial or military aircraft programmes(e.g. A400M) or major derivative aircraft programmes involves anincreased level of estimates and judgements associated with the
expected development, production and certiﬁcation schedules
and expected cost components.
The Company makes estimates and provides across the
programmes, for costs related to identiﬁed in service technicalissues for which solutions have been deﬁned, and for which
the associated costs can be reliably estimated taking into
consideration the latest facts and circumstances. The Company
is contractually liable for the repair or 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 must be considered ona case by case basis.
Estimates and judgements are subject to change based on new
information as contracts and related programmes progress.
Furthermore, the complex design and manufacturing processesof the Company’s industry require challenging integration andcoordination along the supply chain including an ongoingassessment of suppliers’ assertions which may additionallyimpact the outcome of these monitoring processes.

Employee beneﬁts — The Company accounts for pension
and other post-retirement beneﬁts in accordance with actuarial
valuations. These valuations rely on statistical and other factors inorder to anticipate 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 expenses (see “– Note 31: Post-Employment
Beneﬁts”).
Legal contingencies — Airbus companies are parties tolitigations related to a number of matters as described in “–
Note 38: Litigation and Claims”. The outcome of these matters
may have a material effect on the ﬁnancial position, results ofoperations or cash ﬂows of the Company. Management regularly
analyses current information concerning these matters andprovides provisions for probable cash outﬂows, including theestimate of legal expenses to resolve the matters. Internal andexternal lawyers are used for these assessments. In making
the decision regarding the need for provisions, management
considers the degree of probability of an unfavourable outcome
and the ability to make a sufﬁciently reliable estimate of theamount of loss. The ﬁling of a suit or formal assertion of a claim
against the Airbus companies or the disclosure of any such suitor assertion, does not automatically indicate that a provision
may be appropriate.
Income taxes — The Company operates and earns income innumerous 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, theCompany 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
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 the Company’s
ability to utilise future tax beneﬁts. The basis for the recoverability
test of deferred tax assets is the same as the Company’s latest
operative planning also taking into account certain qualitative
aspects regarding the nature of the temporary differences.
Qualitative factors include but are not limited to an entity’s historyof planning accuracy, performance records, business model,
backlog, existence of long-term contracts as well as the natureof temporary differences (see “– Note 17: Income Tax”).

2

Other subjects that involve assumptions and estimates are further
described in the respective notes (see “– Note 7: Acquisitions
and Disposals”, “– Note 19: Intangible Assets” and “– Note 22:
Contract Assets, Contract Liabilities and Trade Receivables,
and Trade Liabilities”).

Airbus / Financial Statements 201917

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

4.

Change in Accounting Policies and Disclosures

The accounting policies applied by the Company in preparation of its 2019 year-end Consolidated Financial Statements are thesame as applied for the previous year, except for the ﬁrst application of the new standards described below. Other than that,amendments, improvements to and interpretations of standards effective from 1 January 2019 have no material impact on theConsolidated Financial Statements.

New, Revised or Amended IFRSs Applied from 1 January 2019
IFRS 16 “Leases”
In May 2016, the IASB published the new standard IFRS 16,
which replaces the previous guidance on leases, including
IAS 17 “Leases”, IFRIC 4 “Determining Whether an Arrangement
Contains a Lease”, SIC-15 “Operating Leases—Incentives”, and
SIC-27 “Evaluating the Substance of Transactions Involving theLegal Form of a Lease”. IFRS 16 introduces a uniform lessee
accounting model. Applying that model, a lessee is required torecognise a right-of-use asset representing the lessee’s right touse the underlying asset and a ﬁnancial liability representing thelessee’s obligation to make future lease payments.
There are exemptions for short-term leases and leases of lowvalue assets. Lessor accounting remains comparable to thatprovided by the previous leases standards (IAS 17) and hence
lessors will continue to classify their leases as operating leases
or ﬁnance leases.
The Company adopted the new standard IFRS 16 on 1 January
2019 using the modiﬁed retrospective method and therefore thecumulative effect of adopting IFRS 16 has been recognised as
an adjustment to the opening balance of retained earnings which
is nil at 1 January 2019, with no restatement of comparative
information.

Identifying a lease
Under IFRS 16, the Company assesses whether a contract is orcontains a lease based on the deﬁnition of a lease. A contractis, or contains a lease if the contract conveys the right to control
the use of an identiﬁed asset for a speciﬁed period of time inexchange for consideration.
On transition to IFRS 16, the Company elected to apply thepractical expedient according to which it is not required toreassess whether a contract is, or contains, a lease. The previous
determination pursuant to IAS 17 and IFRIC 4 of whether acontract is, or contains, a lease is thus maintained for existing
contracts.

The Company as a lessee
As a lessee, the Company previously classified leases as
operating or ﬁnance leases based on assessment of whether
the risks and rewards incidental to ownership of the underlying
asset were transferred. Under IFRS 16, the Company recognises
right-of-use assets and lease liabilities for most of its leases.
Leases which were classiﬁed as operating leases under IAS 17
are now recognised on the balance sheet.

18

Airbus / Financial Statements 2019

When applying IFRS 16 for the ﬁrst time, the Company has used
the following practical expedients for leases previously classiﬁed
as operating leases under IAS 17:– to apply a single discount rate to a portfolio of leases withreasonably similar characteristics;– to generally measure the right of use relating to the leased
asset at the amount of the lease liability, using the discountrate at 1 January 2019. Where accrued lease liabilities existed,
the right-of-use asset has been adjusted by the amount of
the accrued lease liability under IFRS 16. At initial applicationof IFRS 16, the measurement of the right-of-use does notinclude initial direct costs. In some cases, the value of rightof-use assets may differ from the value of the liabilities due tooffsetting against existing provisions or as a result of valuation
allowances; and– not to apply the new recognition requirements to short-termleases and to leases of low value assets as soon as the newstandard is effective.
The Company’s operating leases mainly relate to real estate
assets, company cars and equipment. The most signiﬁcant
impact identiﬁed by the Company relates to its operating leasesof real estate assets (such as land, warehouses, storage facilities
and ofﬁces).
For leases that were classiﬁed as ﬁnance leases under IAS 17,
the Company did not change the carrying amount of the rightof-use asset and the lease liability as of 31 December 2018,measured under IAS 17.

The Company as a lessor
The Company is not required to make any adjustments ontransition to IFRS 16 for leases in which it acts as a lessor as
IFRS 16 compared to previous leases standards does not trigger
any change from previous accounting treatment.

Impacts on financial statements
The Company has presented right-of-use assets within“Property, plant and equipment” and lease liabilities within“Financing liabilities” and classiﬁed the principal portion of lease
payments within ﬁnancing activities and the interest portion
within operating activities. When measuring lease liabilities,
the Company discounts lease payments using its incremental
borrowing rate at 1 January 2019. The weighted-average rateapplied is 1.23%. At 1 January 2019, the impact of renewal
options that are reasonably certain to be exercised has beenassessed as not signiﬁcant for the Company.

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

1 January 2019(In € million)

Operating lease commitment at 31 December 2018 as disclosed
in the Company’s Consolidated Financial Statements

1,494

Short-term and low-value leases recognised on a straight-line basis as expenses(29)

Discounted effect using the incremental borrowing rate at 1 January 2019(113)

Finance lease liabilities recognised as at 31 December 2018330

Lease liabilities recognised at 1 January 2019

IFRIC 23 “Uncertainty over Income
Tax Treatments”
In 2017, the IASB issued IFRIC 23 “Uncertainty over Income
Tax Treatments”. The interpretation clariﬁ es the recognition
and measurement requirements when there is uncertainty overincome tax treatments. In assessing the uncertainty, an entity
shall consider whether it is probable that a taxation authority
will accept the uncertain tax treatment.
The Company adopted the interpretation on 1 January 2019and has elected to apply the limited exemption in IFRIC 23

1,682

relating to transition for classiﬁcation and measurement, andaccordingly has not restated comparative periods in the yearof initial application. As a consequence, any adjustments tothe carrying amounts of tax liabilities are recognised at the
beginning of the reporting period, with the difference recognised
in opening equity. The impact is € 122 million as at transitiondate.
In addition, the uncertain tax liabilities formerly included underprovisions have been reclassiﬁed to current income tax liabilitiesfor € 326 million.

New, Revised or Amended IFRSs Issued, not Applicable but Anticipated
Amendments to IFRS 9, IAS 39 and IFRS 7“Interest Rate Benchmark Reform”
Following the ﬁnancial crisis, the reform and replacement ofbenchmark interest rates such as interbank offered rates(“IBORs”) has become a priority for global regulators. There iscurrently uncertainty around the timing and precise nature ofthese changes.
The Company has elected to early adopt the Amendments to
IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark Reform”
issued in September 2019 by the IASB. The amendments

provide temporary relief from applying speciﬁ c accounting
requirements to hedging relationships directly affected by the
IBOR reform. The reliefs have the effect that the IBOR reform
should not cause hedge accounting to terminate. The Company
has mainly hedged its debts in bonds and loans with interest rate
swaps based on Euribor and US-Libor. In assessing whether thehedges are expected to be highly effective on a forward-looking
basis, the Company has therefore assumed that Euribor and
US-Libor interest rates are not altered by IBOR reform and has
not discontinued the hedges. Details on the interest rate swaps
are developed under Note 37.4.

2

New, Revised or Amended IFRSs 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 2019 and have not been applied in preparing these Consolidated Financial Statements and early
adoption is not planned:
IASB effective date
for annual reporting periods
beginning on or afterEndorsement
statusAmendments to References to the Conceptual Framework in IFRS Standards

1 January 2020

Endorsed

Amendments to IFRS 3: Definition of a Business

1 January 2020

Not yet endorsed

Amendments to IAS 1 and IAS 8: Definition of Material

1 January 2020

EndorsedStandards and amendments

IFRS 17 “Insurance Contracts”

1 January 2021

Not yet endorsed

Amendments to IAS 1: Classification of Liabilities as Current or Non-current

1 January 2022

Not yet endorsed

Airbus / Financial Statements 201919

Notes to the IFRS Consolidated Financial Statements /2.2 Airbus Structure

5.

BrexitIn June 2018, the Company published its Brexit Risk
Assessment outlining its expectations regarding the material
consequences and risks for the Company arising from the
UK leaving the European Union without a deal (a “No deal
Brexit”). In September 2018, the Company launched a projectto mitigate against the major disruptions Brexit could potentiallycause to the Company’s business and production activities.
To date, signiﬁcant progress has been made in mitigating theidentiﬁed risks through for example the modiﬁcation of Airbus’
customs systems, and the stockpiling of parts associated withtransportation and logistics. The UK Government’s Withdrawal
Agreement was ratiﬁed and the UK left the European Union inan orderly manner on 31 January, opening a transition period

until 31 December. During this transition period, the European
Union and the UK are continuing to negotiate their future longterm relationship, including around alignment of the regulatory
framework for aviation. Until we know and understand the new
EU/UK relationship, the risk of a No deal Brexit at the end of
the transition period cannot be excluded. Despite the actions
the Company is taking internally, the Company’s operations
and supply chain may still suffer from disruptions, the nature,materiality and duration of which is impossible to predict withany level of certainty. Accordingly, the Company will continue torun its Brexit project and associated crisis management plan,in order to further eradicate and mitigate identiﬁed future risks.

2.2 Airbus Structure
6.

Scope of Consolidation

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

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

PERIMETER OF CONSOLIDATION
31 December
2019

2018

185

189

in joint ventures52

45

in associates

25

19

Total

262

253

(Number of companies)

Fully consolidated entities
Investments accounted for under the equity method

For more details related to unconsolidated and consolidated structured entities, see “– Note 27: Sales Financing Transactions”.

20

Airbus / Financial Statements 2019

Notes to the IFRS Consolidated Financial Statements /2.2 Airbus Structure

7.

Acquisitions and Disposals

Business combinations are accounted for using the acquisition
method, as at the acquisition date, which is the date on which
control is transferred to the Company.
The determination of the fair value of the acquired assets andthe assumed liabilities which are the basis for the measurementof goodwill requires significant estimates. Land, buildings
and equipment are usually independently appraised while
marketable securities are valued at market prices. If intangible
assets are identiﬁed, depending on the type of intangible asset
and the complexity of determining its fair value, the Company
either consults with an independent external valuation expert
or develops the fair value internally, using appropriate valuation
techniques which are generally based on a forecast of the total
expected future net cash ﬂows.
These evaluations are linked closely to the assumptions madeby management regarding the future performance of the assets
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 the Company’s equity
related to the subsidiary are derecognised. Any gain or

7.1

loss arising from the loss of control is recognised within
other income or other expenses in the Consolidated Income
Statement. If the Company retains any interest in the previous
subsidiary, such interest is measured at fair value at the datethe control is lost.
Assets and liabilities of a material subsidiary for which a loss ofcontrol is highly probable are classiﬁed as assets and liabilities
held for sale when the Company has received sufﬁcient 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 for the equity method
is highly probable and is expected to occur in the coming
12 months, this associate or joint venture is classiﬁed as an
asset held for sale.
Sale of investment in an associate or joint venture — Anygain or loss arising from the disposal of investment accounted
for under the equity method is recognised within share of proﬁt
from investments.

Acquisitions

In March 2019, the Company became party to a Debt Financing
facility under a Note Purchase Agreements with OneWeb
Communications for an amount of $ 200 million. The new
ﬁnancing was funded in three equal tranches and has been
fully drawn during 2019. Based on the latest developments, are-assessment of the OneWeb ﬁnancial assets was performedin December 2019 leading to a decrease in the fair value of theequity investment by € 45 million recorded through OCI, and a
depreciation of a loan by € 31 million recorded through ﬁnancial
result. The Company will continue to assess the recoverability of
the One-Web investment.
On 16 October 2017, Airbus, Bombardier Inc. (“Bombardier”)
and Investissement Québec (“IQ”) signed an agreement thatbrings together Airbus’ global reach and scale with Bombardier’s
newest, state-of-the-art jet aircraft family. Under the agreement,
Airbus provides procurement, sales and marketing, andcustomer support expertise to the C Series Aircraft Limited
Partnership (“CSALP”), newly named Airbus Canada Limited
Partnership (“ACLP”), the entity that manufactures and sells
the A220. The partnership brings together two complementary
product lines. On 8 June 2018, having received all required
regulatory approvals, Airbus, Bombardier and IQ closed the
C Series transaction effective on 1 July 2018.

On 1 July 2018, Airbus has obtained control of ACLP when it
acquired 50.01% Class A ownership units in ACLP. Bombardierand IQ owned at this date 33.55% and 16.44%, respectively.
Airbus has consolidated ACLP using the full integration method
effective from 1 July 2018. At closing, Airbus paid US$ 1 per shareto assume a net liability. Technology and inventories are the main
assets acquired. Airbus has assumed the liabilities of ACLP which
are mainly related to customer contracts in the backlog, trade
payables, advance payments received and refundable advanceliabilities. The functional currency of ACLP is the US dollar.

2

Bombardier continues with its current funding plan of ACLP
and funded the second half of 2018 and 2019 cash shortfallsof ACLP for a total amount of $ 575 million. Bombardier has
further agreed to continue to fund any cash shortfall up to a
maximum aggregate amount of $ 350 million over 2020 and 2021.
Bombardier funding is performed in consideration for non-voting
participating Class B common units in ACLP. Airbus has the
choice to reimburse Bombardier’s funding for the lower of thenominal amount plus a yearly 2% interest or an amount equal
to the fair value of the shares of ACLP at the purchase date ofClass A ownership units.

As at 31 December 2019, the shareholding structure is the following:

Shareholder

Voting rights
Class A common units in %Non-voting rights
Class B common units in %Total in %Airbus

50.26

0

46.02

Bombardier

33.72

100

39.31

IQ

16.02

0

14.67

Airbus / Financial Statements 201921

Notes to the IFRS Consolidated Financial Statements /2.2 Airbus Structure

Airbus beneﬁts from a call right in respect of all of Bombardier’s
interests in ACLP at fair market value, with the amount for ClassB shares subscribed by Bombardier capped at the invested
amount plus accrued interests if any, exercisable no earlier than
7.5 years following the closing, except in the event of certainchanges in the control of Bombardier, in which case the rightis accelerated. Airbus also beneﬁts from a call right in respectof all IQ’s interests in ACLP at fair market value no earlier than
4.5 years following the closing.
Bombardier beneﬁts from a corresponding put right whereby it
could require Airbus to acquire its interest at fair market value
after the expiry of the same period. IQ will also beneﬁt fromtag along rights in connection with a sale by Bombardier of its
interests in the partnership.

Airbus used the full goodwill approach to account for thistransaction. Bombardier’s and IQ’s interests in ACLP are measured
at their estimated fair value. The fair value measurement of theassets acquired and liabilities assumed has been performed byan independent expert. According to IFRS 3, the fair values ofacquired assets and assumed liabilities have been determined
excluding Airbus speciﬁ c synergies (mainly with respect tovolumes sold and manufacturing costs).
The transaction has been approved by the Boards of Directorsof both Airbus and Bombardier, as well as the Cabinet of theGovernment of Québec. The partnership’s head ofﬁce, primary
assembly line and related functions are based in Mirabel, Québec(Canada).
The opening balance sheet of ACLP has not been adjusted in2019 and has been completed on 1 July 2019 in accordancewith IFRS 3 “Business Combinations” after the one year period.

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

Intangible assets

(1)

1,377

Property, plant and equipment

252

Deferred tax assets

86

Inventories (2)660Trade receivables

8

Other financial assets

350

Other assets

93

Cash and cash equivalents

129

Total assets acquired

2,955

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

77

Trade liabilities

270

Contract liabilities

685

Other financial liabilities

827

Other liabilities

356

Total liabilities assumed

4,824

Net assets assumed

1,870

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

(4)

2,246
(225)

(6)

3,891

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

22

Airbus / Financial Statements 2019

Notes to the IFRS Consolidated Financial Statements /2.2 Airbus Structure

7.2

Disposals

On 23 December 2019, the Company ﬁnalised the sale of PFW
Aerospace GmbH to Hutchinson Holding GmbH. Since 2011,
Airbus held 74.9% in PFW Aerospace GmbH, a key supplier in theaerospace industry, while Safeguard held the remaining 25.1%.
Airbus received a consideration of € 103 million and recogniseda gain of € 57 million, reported in other income. Assets andliabilities of the disposed company were previously classiﬁed
as held for sale.
On 29 March 2019, the Company conﬁrmed the agreement tosell its shares in Alestis Aerospace S.L. to Aciturri Aeronáutica
S.L., a company headquartered in Miranda de Ebro, Spain.
The closing of the transaction occurred on 30 July 2019. The
Company recognised a gain for an amount of € 45 million in

7.3

Airbus. Assets and liabilities of the disposed company werepreviously classiﬁed as held for sale.
On 1 October 2018, the Company completed the disposalof its subsidiar y Compañía Española de Sistemas
Aeronáuticos, S.A. (“CESA”) to Héroux-Devtek Inc. (“HérouxDevtek”), for a purchase price of € 114 million.
On 7 March 2018, the Company ﬁnalised the sale of Plant
Holdings, Inc., held by the Airbus DS Communications Inc.
business, to Motorola Solutions after receiving the required
regulatory approvals. Airbus Defence and Space recognised again of € 159 million, reported in other income.

Assets and Disposal Groups Classified as Held for Sale

As of 31 December 2019, the Company accounted for assets and disposal group of assets classified as held for sale in
the amount of € 0 million (2018: € 334 million) and for disposal group of liabilities classified as held for sale in the amount of€ 0 million (2018: € 432 million), following the disposal of PFW Aerospace GmbH and Alestis Aerospace S.L.
The assets and disposal group of assets and liabilities classiﬁed as held for sale consist of:
31 December(In € million)

2019

2018
232

Non-current assets

0

Inventories

021

Trade receivables

063

Other assets

02Cash and cash equivalents

016

Assets and disposal groups of assets classified as held for sale

0334

Provisions

03

Non-current financing liabilities

0201

Trade liabilities

042

Other liabilities

0186

Disposal groups of liabilities classified as held for sale

0

432

7.4

2

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

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

Total selling price received by cash and cash equivalents

2019

2018

173

325

Cash and cash equivalents included in the disposed subsidiaries

(36)

(5)

Total

137

320

The aggregate cash ﬂows from disposals of subsidiaries andassets and disposals groups classiﬁed as held for sale in 2019
result mainly from the sale of PFW Aerospace GmbH and Alestis

Aerospace S.L. In 2018, they resulted mainly from the sale ofPlant Holdings, Inc. and CESA.

Airbus / Financial Statements 201923

Notes to the IFRS Consolidated Financial Statements /2.2 Airbus Structure

8.

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

2019

2018

Investments in joint ventures

1,444

1,484

Investments in associates

182

209

1,626

1,693

Total

Investments accounted for under the equity method decreased by € -67 million to € 1,626 million (2018: € 1,693 million). They
mainly include the equity investments in ArianeGroup, MBDA and ATR GIE.

8.1

Investments in Joint Ventures

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

2019

2018

Carrying amount of the investments at 1 January

1,484

1,424

Share of results from continuing operations

264

291

Share of other comprehensive income

(82)

(15)

Dividends received during the year

(225)

(182)

3

(34)

1,444

1,484

OthersCarrying amount of the investments at 31 December

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

24

Airbus / Financial Statements 2019

The Company holds a 37.5% stake in MBDA at 31 December
2019, which is a joint venture between the Company, BAE
Systems and Leonardo. MBDA offers missile systems capabilities
that cover the whole range of solutions for air dominance,
ground-based air defence and maritime superiority, as well as
advanced technological solutions for battleﬁeld engagement.
ATR GIE manufactures advanced turboprop aircraft. It is a
50% joint venture between Leonardo group company and theCompany. Both Leonardo and the Company provide airframes
which are assembled by ATR GIE in France. The members of
ATR GIE are legally entitled exclusively to the beneﬁts and are
liable for the commitments of the Company. ATR GIE is obliged
to transfer its cash to each member of the joint venture.

Notes to the IFRS Consolidated Financial Statements /2.2 Airbus Structure

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

ATR GIE(In € million)

2019

2018

2019

2018

2019

2018

Revenue

3,069

3,587

3,703

3,164

1,438

1,498

Depreciation and amortisation

(128)

(128)

(126)

(107)

(33)

(19)

Interest income

4

5

13

9

0

0

Interest expense

(15)

(3)

(26)

(6)

0

0

Income tax expense

(71)

(83)

(127)

(99)

(3)

(3)

Profit from continuing operations

133

251

268

239

106

193

Other comprehensive income

(79)

(14)

(79)

5

0

0

Total comprehensive income (100%)

54

237

189

244

106

193

Non-current assets

6,207

5,748

2,718

2,437

252

172

Current assets

6,610

6,626

7,707

7,654

729

674

828

507

2,906

2,658

6

3

1,067

688

1,114

1,046

166

87

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

517

137

5

9

0

0

7,601

7,514

8,693

8,462

592

460

57

28

25

6

0

0

Total equity (100%)

4,149

4,172

618

583

223

299

Equity attributable to the equity owners of the parent

4,145

4,157

618

583

223

299

4

15

0

0

0

0

Current liabilities
thereof current financial liabilities(excluding trade and other payables and provisions)Non-controlling interests

ArianeGroupMBDA(In € million)

2019

2018

2019

The Company’s interest in equity on investee

2,073

2,078

244

244

(1,519)Airbus Defence and Space PPA (including 2016 Ariane 6 catch-up)

ATR GIE

2018

2019

2018

232

218

111

150

282

282

0

0

(1,519)

0

0

0

0

(52)

(37)

0

0

0

0

Contingent liability release adjustment

(30)

(25)

0

0

0

0

Fair value adjustments and modifications for differencesin accounting policies

0

Goodwill
PPA adjustments, net of tax

(19)

(21)

(11)

(11)

0

Dividend adjustment

0

0

(53)

(26)

0

0

Elimination of downstream inventory

2

2

0

0

(5)

(4)

699

722

450

463

106

146

Carrying amount of the investment at 31 December

2

The development of these investments is as follows:
ArianeGroupMBDA

ATR GIE

2019

2018

2019

2018

2019

2018

Carrying amount of the investment at 1 January

722

698

463

397

146

169

Share of results from continuing operations

52

88

101

91

54

98

Share of other comprehensive income

(38)

(8)

(30)

(1)

(3)

4

Dividends received during the year

(38)

(26)

(84)

(26)

(90)

(125)
0

(In € million)

Changes in consolidation

0

0

0

0

0

Others

0

(30)

(1)

2

(1)

0

699

722

450

463

106

146

Carrying amount of the investment at 31 December

The Company’s share of contingent liabilities as of 31 December 2019 relating to MBDA is € 412 million (2018: € 420 million).

Airbus / Financial Statements 201925

Notes to the IFRS Consolidated Financial Statements /2.2 Airbus Structure

8.2

Investments in Associates

The Company’s interests in associates, accounted for under the equity method, are stated in aggregate in the following table:(In € million)

2019

2018

Carrying amount of the investment at 1 January

209

193

Share of results from continuing operations

35

39

Share of other comprehensive income

(14)

11

Dividends received during the year

(21)

(36)

0

1

Changes in consolidation
Others(27)

1

Carrying amount of the investment at 31 December

182

209

The cumulative unrecognised comprehensive loss for these associates amounts to € -52 million and € -30 million as of 31 December
2019 and 2018, respectively (thereof € -22 million for the period).

9.

Related Party Transactions(In € million)

Sales of
Purchases ofgoods andgoods andservices andservices and Receivables atother income other expenses 31 December

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

2019
Total transactions
with associates

4

204

5

36

97

7

Total transactions
with joint ventures

2,069

268

1,289

1,432

2

1,222

Total transactions
with associates

13

222

3

39

95

20

Total transactions
with joint ventures

2,197

209

1,200

1,175

0

1,121

2018

Transactions with unconsolidated subsidiaries are immaterial to
the Company’s Consolidated Financial Statements.
As of 31 December 2019, the Company granted guarantees of€ 129 million to Air Tanker Group in the UK (2018: € 129 million).

26

Airbus / Financial Statements 2019

For information regarding the funding of the Company’s pension
plans, which are considered as related parties, see “– Note 31:“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 33: Remuneration”.

Notes to the IFRS Consolidated Financial Statements /2.3 Segment Information

2.3 Segment Information
The Company operates in three reportable segments which reﬂect the internal organisational and management structure according
to the nature of the products and services provided.
– Airbus — Development, manufacturing, marketing and saleof commercial jet aircraft of more than 100 seats; aircraft
conversion and related services; development, manufacturing,marketing and sale of regional turboprop aircraft and aircraftcomponents. It also includes the holding function of theCompany and its bank activities.

– Airbus Defence and Space — Military Aircraft design,development, delivery, and support of military aircraft suchas combat, mission, transport and tanker aircraft and theirassociated services. Space Systems design, development,delivery, and support of full range of civil and defence
space systems for telecommunications, earth observations,navigation, science and orbital systems. Connected Intelligence
provision of services around data processing from platforms,
secure communication and cyber security. In addition, the main
joint ventures design, develop, deliver, and support missile
systems as well as space launcher systems. Unmanned Aerial
Systems design, development, delivery and service support.

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

10.

Segment Information

The following tables present information with respect to the Company’s business segments. As a rule, inter-segment transfers arecarried out on an arm’s length basis. Inter-segment sales predominantly take place between Airbus and Airbus Defence and Spaceand between Airbus Helicopters and Airbus. Other activities not allocable to the reportable segments, together with consolidation
effects, are disclosed in the column “Transversal/Eliminations”.
The Company uses EBIT as a key indicator of its economic performance.
Business segment information for the year ended 31 December 2019 is as follows:(In € million)

AirbusAirbusHelicopters

Total revenue

54,775

6,007

Internal revenue

(696)

(429)

54,0795,578

50,577
21

Revenue

AirbusDefence andSpaceTransversal /Eliminations

Consolidated
Airbus10,907071,689(86)

0(1,211)

10,821070,478

2,924

3,457

0

56,958

278

3,942

0

4,241

2

thereofsales of goods at a point in timesales of goods over time
services, including sales of spare parts

3,481

2,376

3,422

0

9,279

2,205

414

(881)

(399)

1,339

depreciation and amortisation(2,130)

(160)

(555)

(82)

(2,927)

research and development expenses(2,405)

(291)

(302)

(360)

(3,358)

Profit before finance result and income taxes (EBIT)
thereofshare of profit from investments accounted
for under the equity method
additions to other provisions (1)

63

8

228

0

299

(1,573)(429)(1,788)(11)(3,801)

Interest result(111)

Other financial result(164)

Income taxes(2,389)Loss for the period(1,325)(1) See “– Note 24: Provisions, Contingent Assets and Contingent Liabilities”.

Airbus / Financial Statements 201927

Notes to the IFRS Consolidated Financial Statements /2.3 Segment Information

Business segment information for the year ended 31 December 2018 is as follows:(In € million)

AirbusAirbusHelicopters

Total revenue

47,9705,934Internal revenue

(771)

(411)

47,199AirbusDefence andSpaceTransversal /Eliminations

Consolidated
Airbus

11,063064,967(78)

0(1,260)

5,523

10,985063,70744,175

2,917

3,080

0

50,172

23

362

4,579

0

4,964

3,001

2,244

3,326

0

8,571

4,295

366

676

(289)

5,048

depreciation and amortisation(1,794)

(167)

(457)

(26)

(2,444)

research and development expenses(2,214)

(315)

(328)

(360)

(3,217)

Revenue
thereofsales of goods at a point in timesales of goods over time
services, including sales of spare parts
Profit before finance result and income taxes (EBIT)
thereofshare of profit from investments accounted
for under the equity method
additions to other provisions

114

10

206

0

330

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

Interest result(232)

Other financial result(531)

Income taxes(1,274)

Profit for the period

3,011

Segment capital expenditures

31 December(In € million)

2019

2018

Airbus

1,678

1,618

Airbus Helicopters

163

149

Airbus Defence and Space

498

518

Transversal / Eliminations

Total capital expenditures (1)

1

0

2,340

2,285

(1) Excluding expenditure for leased assets.

Segment assets

31 December(In € million)

2019

2018

Airbus64,723

66,612

Airbus Helicopters

9,407

8,885

Airbus Defence and Space

17,456

19,056

Transversal / Eliminations(6,651)(8,182)

Total segment assets

84,93586,371

UnallocatedDeferred and current tax assets

6,792

6,286

Securities

13,368

12,794

Cash and cash equivalents

9,314

9,413

Assets classified as held for sale
Total assets

0334

114,409

115,198

Revenue by geographical areas is disclosed in “– Note 11: Revenue and Gross Margin”. Property, plant and equipment by geographicalareas is disclosed in “– Note 20: Property, Plant and Equipment”.

28

Airbus / Financial Statements 2019

Notes to the IFRS Consolidated Financial Statements /2.4 Airbus Performance

Segment order backlog

31 December
2019

2018

(In € million)(in %)(In € million)(in %)

Airbus424,08290

411,65990

Airbus Helicopters

16,627

3

14,943

3

Airbus Defence and Space

32,263

735,316

8

Transversal / Eliminations(1,484)0(2,393)(1)

471,488100

459,525

100

Total

As of 31 December 2019, the total backlog represents theaggregate amount of the transaction price allocated to theunsatisﬁed and partially unsatisﬁed performance obligations to
the Company’s customers. Backlog commitments are relative
to the Company’s enforceable contracts with its customers
where it is probable that the consideration will be collected.
The value of the backlog is measured in accordance withthe revenue recognition standard (IFRS 15) implemented asof 1 January 2018. As a result, contractual rebates, enginesconcessions, and variable considerations are taken into accountfor measurement. Contracts stipulated in a currency different
than the presentation currency are translated to euro using the
spot rate as of 31 December 2019 and 2018. Adjustments to thevalue of the backlog could result from changes in the transaction
price. The backlog will mainly be released into revenue over a
period of seven years.

2.4 Airbus Performance
11.

Revenue and Gross Margin

Revenue increased by € +6,771 million to € 70,478 million (2018: € 63,707 million), mostly at Airbus (€ +6,880 million) driven by higherdeliveries of 863 aircraft (in 2018: 800 aircraft), and a favourable foreign exchange impact.
Revenue by geographical areas based on the location of the customer is as follows:(In € million)

2019

2018

Asia-Pacific

22,62523,297

Europe22,591

17,780

North America

12,036

11,144

Middle East

7,053

6,379

Latin America

1,851

1,437

Other countries

Total

The gross margin increased by € +1,718 million to € 10,505 million
compared to € 8,787 million in 2018, mainly driven by higherdeliveries, favourable mix and improved performance at Airbus,
partly offset by Airbus Defence and Space performance andprovisions recognised on the A400M programme. The grossmargin rate increased from 13.8% to 14.9%.
In 2019, Airbus has delivered 112 A350 XWB aircraft. New
order intakes, cancellations, delivery postponements and othercontractual agreements to the end of December 2019 have been
reﬂected in the ﬁnancial statements.
Risks continue to be closely monitored in line with the schedule,
aircraft performance and overall cost envelope, as per customer
commitments. Despite the progress made, challenges remain
with recurring cost convergence.

4,322

3,670

70,47863,7072

As of 31 December 2018, the Company’s largest A380 operator
reviewed its aircraft ﬂeet strategy going forward and concluded it
is forced to restructure and reduce its A380 order by 39 aircraft.
The Company entered into discussions with the customer inlate 2018 which ﬁnally resulted in the signature of a head ofagreement on 11 February 2019. Without this customer’s A380
order, the Company has no substantial order backlog and nobasis to sustain A380 production, despite all sales and marketing
efforts in recent years. As a consequence of this decision,deliveries of the A380 will cease in 2022.
At year-end 2018, in view of the above, the Company
reassessed accordingly the expected market assumptions andthe recoverability and depreciation method of speciﬁc assets
allocated to the A380 programme. As a result, the Company
impaired speciﬁc A380 assets in the amount of € 167 million,

Airbus / Financial Statements 201929

Notes to the IFRS Consolidated Financial Statements /2.4 Airbus Performancerecognised an onerous contract provision for an amount of€ 1,257 million and updated the measurement of refundable
advances including interest accretion for a total amountof € 1,426 million. As a consequence, the recognition of theonerous contract provision as well as other speciﬁc provisions
and the remeasurement of the liabilities affected the consolidated
income statement before taxes by a net € 463 million in EBIT andpositively impacted the other ﬁnancial result by € 177 million asof 31 December 2018.
In 2019, the Company recorded an additional net charge of€ 99 million in EBIT as part of its continuous assessment ofassets recoverability and quarterly review of onerous contract
provision assumptions.
As of 31 December 2019, the Company has delivered a total of
88 A400M aircraft including 14 in 2019.
On 13 June 2019, the Company concluded together with OCCAR
and the Nations the negotiations on a global re-baselining of
the programme. A contract amendment has been signed by allparties, providing a revised aircraft delivery schedule, an updated
technical capability roadmap and a revised retroﬁt schedule.
The Company continued with development activities towardachieving the revised capability roadmap. Important certiﬁcation
milestones have been achieved in 2019, in particular on critical
Paratrooper Simultaneous Dispatch and Helicopter Air to Air
refuelling capabilities. Technical modiﬁcations corresponding to
NSOC2 contractual standard have been certiﬁed and qualiﬁed.
However NSOC2 Type Acceptance initially planned in 2019 isstill pending due to on-going discussions on some operational
limitations.

12.

Retroﬁt activities are progressing in line with the customer agreed
plan.
In the fourth quarter 2019, an update of the contract estimate
at completion has been performed and an additional chargeof € 1,212 million has been recorded. This reﬂects mainly the
updated estimates on the export scenario during the launch
contract phase based of a revision of the market perspectives
taking into account the current environment, including thesuspension of the export licenses by the German Government
and its consequences on potential prospects. It reﬂects as wellsome cost increases in particular for retroﬁt and an updated
view on applicable escalation.
Risks remain on development of technical capabilities and theassociated costs, on aircraft operational reliability in particularwith regard to powerplant, on cost reductions and on securingexport orders in time as per the revised baseline.
Due to the repeatedly prolonged suspension of defence
export licences to Saudi Arabia by the German Government,
and the consequential inability of the Company to execute acustomer contract, a revised Estimate at Completion (EAC)
was performed. As a result a € 221 million impairment charge
mainly on inventories on top of a € 112 million ﬁnancial expense
related to hedge ineffectiveness, have been recognised as of
30 September 2019. The Company is engaging with its customer
to agree a way forward on this contract. The outcome of thesenegotiations is presently unclear but could result in signiﬁcant
further ﬁnancial impacts.

Administrative Expenses

Administrative expenses increased by € +3,643 million to € 5,217 million (2018: € 1,574 million), mainly due to the ﬁnal agreements
reached with the French Parquet National Financier (PNF), the U.K. Serious Fraud Ofﬁce (SFO) and the U.S. Department of State(DoS). For further information, see “– Note 38: Litigation and Claims”.

13.

Research and Development Expenses

Research and development expenses increased by € +141 million to € 3,358 million compared to € 3,217 million in 2018, primarily
reﬂecting research and development activities on the A320 and A350 programmes. In addition, an amount of € 133 million ofdevelopment costs has been capitalised, mainly related to Airbus programmes.

30

Airbus / Financial Statements 2019

Notes to the IFRS Consolidated Financial Statements /2.4 Airbus Performance

14.

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

Share of profit from investments in joint ventures
Share of profit from investments in associates

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

2019

2018

265

291

34

39

299

330

4

109

Share of profit from investments under the equity method and other income from investments decreased by € -136 million
to € 303 million compared to € 439 million in 2018.

15.

Other Income and Other Expenses

Other income decreased by € -1,286 million to € 370 million
compared to € 1,656 million in 2018. This decrease is mainly
related to the exceptional release of liabilities on the A380
programme in 2018, partly compensated by the capital gains
from the sale of PFW Aerospace GmbH and Alestis Aerospace
S.L in 2019. For more details, see “– Note 7: Acquisitions andDisposals”.

16.

Other expenses increased by € +174 million to € -356 million
compared to € -182 million in 2018.

Total Financial Result

Interest income derived from the Company’s asset management and lending activities is recognised as interest accrues, using
the effective interest rate method.
2019

2018

Interests on European Governments’ refundable advances

(96)

(181)

Others(15)(51)(In € million)

Total interest result

(1)

(111)

(232)

Change in fair value measurement of financial instruments

68

(340)

Foreign exchange translations on monetary items

(69)

(238)

Unwinding of discounted provisions

(46)

(44)

Others(117)

91

Total other financial result

(164)

(531)

Total

(275)

(763)

2

(1) In 2019, the total interest income amounts to € 228 million (2018: € 208 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 € -339 million (2018: € -440 million) are recognised as total interest expenses. Both amounts are calculated by using theeffective interest method.

Total financial result improved by € +488 million to € -275 million
compared to € -763 million in 2018. This is mainly due to thepositive impact from foreign exchange valuation of monetary
items for an amount of € 169 million and the revaluation fromﬁnancial instruments of € 408 million. The ﬁnancial result includes
the ﬁnancial expense of € -112 million on hedge ineffectiveness(see “– Note 11: Revenue and Gross Margin”).

Airbus / Financial Statements 201931

Notes to the IFRS Consolidated Financial Statements /2.4 Airbus Performance

17.

Income Tax

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

2019

2018

Current tax expense(2,903)

(477)

514

(797)

(2,389)(1,274)

2019

2020

> 2020

Deferred tax expense
Total

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

(1)

25.00

25.00

21.70

France (2)

34.43

32.02

25.83

Germany

30.00

30.00

30.00

Spain

25.00

25.00

25.00

(3)

19.00

17.00

17.00

UK

(1) A tax law has been enacted in 2019 changing the rate for income taxes from 25.00% to 21.70% as of 2021.
(2) A tax law has been enacted in 2017 changing the rate for income taxes from 34.43% to 32.02% for 2019, to 28.92% for 2020, to 27.37% for 2021 and to 25.83% from 2022.
This tax law has been amended in 2019 postponing the tax rate decrease to 32.02% to 2020, to 28.4% to 2021 and to 25.83% from 2022.
(3) 17% from 1 April 2020.

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

2019

2018

Profit before income taxes

1,064

4,285

Corporate income tax rate

25.0%

25.0%

Expected (expense) for income taxes(266)(1,071)

Effects from tax rate differentials / Change of tax rate

(439)

(41)

21

40

Capital gains and losses on disposals / mergers
Income from investment and associates

74

76

Tax credit

49

64

Change in valuation allowances (1)

(467)

(299)

Non-deductible final agreements reached with PNF, SFO and DoS

(899)

0

Tax contingencies

(331)

(110)

Other non-deductible expenses and tax-free income

Reported tax (expense)

(131)

67

(2,389)(1,274)(1) Reassessments of the recoverability of deferred tax assets based on future taxable profits.

The income tax expense amounts to € -2,389 million in 2019(2018: € -1,274 million). The high effective tax rate in 2019 is mainly
driven by the non-deductibility of the penalties accounted forin the 2019 accounts (see “– Note 38: Litigation and claims”). It
also comprises deferred tax impairments and tax risk updates
partially offset by the sales of PFW Aerospace GmbH and Alestis
Aerospace S.L. at a reduced tax rate (see “– Note 7: Acquisitions
and Disposals”).
In 2018, the effective tax rate was mainly impacted bynon- realised tax losses in the period leading to additional
deferred tax asset impairment. This was partially offset by thetax-free sale of Plant Holdings Inc. (see “– Note 7: Acquisitions
and Disposals”).

32

Airbus / Financial Statements 2019

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

Notes to the IFRS Consolidated Financial Statements /2.4 Airbus Performance

As of 31 December 2019, the aggregate amount of temporary differences associated with investments in subsidiaries, branches andassociates and interests in joint arrangements, for which deferred tax liabilities have not been recognised, amounts to € 152 million.
Deferred tax on net operating losses (“NOLs”), trade tax loss carry forwards and tax credit carry forwards are:
FranceGermany

Spain

UK

Other
countries

31 December
2019

31 December
2018

600

2,432

110

1,520

2,300

6,962

6,307

Trade tax loss carry forwards

0

2,544

0

0

0

2,544

2,020

Tax credit carry forwards

0

0

287

10

2

299

332

(In € million)

NOL

Tax effect

155

745

314

269

590

2,073

1,868

Valuation allowances

(131)

(711)

(182)

(52)

(512)

(1,588)(1,015)

24

34

132

217

78

485

853

Deferred tax assets on NOLs
and tax credit carry forwards

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

2019

2018

Net deferred tax assets at 1 January

3,516

3,560

Deferred tax expense in income statement

514

(797)

Deferred tax recognised directly in AOCI

308

754

Deferred tax on remeasurement of the net defined benefit pension plans

442

(28)

Others(170)

27

Net deferred tax assets at 31 December

4,610

3,516

(In € million)

2019

2018

Financial assets at fair value through OCI

(151)

(75)

Details of deferred tax recognised cumulatively in equity are as follows:

Cash flow hedges

830

446

Deferred tax on remeasurement of the net defined benefit pension plans

2,136

1,694

Total

2,815

2,065

Airbus / Financial Statements 2019233

Notes to the IFRS Consolidated Financial Statements /2.4 Airbus Performance

Deferred income taxes as of 31 December 2019 are related to the following assets and liabilities:
1 January 2019

Other movements

Movement throughincome statement

31 December 2019

R&D
tax
credits

Deferredtax benefit(expense)

Deferredtax
assetsDeferredtax
liabilities

Deferredtax
assetsDeferredtax
liabilities

OCI /IAS 19Intangible assets

147

(462)

0

(16)

0

49

221

(503)

Property, plant and equipment613(1,011)

0

(3)

0

176

55

(281)
(38)

(In € million)

Others(1)

Investments and other long-term
financial assets

1,416

(14)

0

21

0

436

1,897

Inventories

1,416

(13)

0

(3)

0

1,199

2,636

(37)

Receivables and other assets

646(1,681)

319

51

0

1,292

1,937

(1,310)0Prepaid expenses

12

0

0

0

0

1

13

Provisions for retirement plans

695

(57)

884

11

0

(573)

961

0

1,890

44

0

(17)

0

(448)

2,026

(557)

887

(1,689)

0

(79)

0

(1,233)

1,528(3,642)Other provisions
Liabilities
Deferred income

0

(63)

0

3

0

(157)

19

(236)

NOLs and tax credit carry forwards

1,868

0

0

0

(33)

238

2,073

0

Deferred tax assets (liabilities)
before offsetting

9,590(4,946)

1,203

(32)

(33)

981

13,366(6,604)

Valuation allowances on deferred
tax assets(1,127)

0

(453)

0

(105)

(467)

(2,152)0

Set-off(3,628)

3,628

0

0

0

0

(6,206)

6,206

Net deferred tax assets(liabilities)

4,835(1,318)

750

(32)

(138)

514

5,008

(398)

(1) “Others” mainly comprises changes in the consolidation scope and foreign exchange rate effects.

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

Other movements

Movement throughincome statement

31 December 2018

R&D
tax
credits

Deferredtax benefit(expense)

Deferredtax
assetsDeferredtax
liabilities

OCI /IAS 19Intangible assets

70

(586)

0

0

0

201

147

(462)

Property, plant and equipment

681(1,257)

0

1

0

177

613

(1,011)(In € million)

Investments and other long-term
financial assets

Others

(1)

559

(167)

0

9

0

1,001

1,416

(14)

Inventories

1,376(1,871)

0

0

0

1,898

1,416

(13)

Receivables and other assets

3,553(3,286)

590

(61)

0

(1,831)646(1,681)

Prepaid expenses

0

(2)

0

0

0

14

12

0

Provisions for retirement plans

1,480

0

(156)

27

0

(713)

695

(57)

Other provisions

3,508(1,239)

0

0

0

(335)

1,890

44

Liabilities

2,504(2,211)

123

(4)

0

(1,214)887(1,689)Deferred income

(94)

(67)

0

0

0

98

0

(63)

NOLs and tax credit carry forwards

1,617

0

0

86

(41)

206

1,868

0

Deferred tax assets (liabilities)
before offsetting

15,254(10,686)

557

58

(41)

(498)

9,590

(4,946)

Valuation allowances on deferred
tax assets(1,008)

0

169

11

0

(299)

(1,127)0

Set-off(9,684)

9,684

0

0

0

0

(3,628)3,628

Net deferred tax assets(liabilities)

4,562(1,002)

726

69

(41)

(797)

4,835

(1,318)(1) “Others” mainly comprises changes in the consolidation scope and foreign exchange rate effects.

34

Deferredtax
liabilities

Deferredtax
assetsAirbus / Financial Statements 2019

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

18.

Earnings per Share(Loss) Profit for the period attributable to equity owners of the parent (Net income)Weighted average number of ordinary shares

2019

2018

€ (1,362) million€ 3,054 million

777,039,858

775,167,941€ (1.75)€ 3.94

Basic earnings per share

Diluted earnings per share – The Company’s categories ofdilutive potential ordinary shares are share-settled Performance
Units relating to Long-Term Incentive Plans (“LTIP”) and theconvertible bond issued on 1 July 2015.
As there is a loss in 2019, the effect of potentially dilutive ordinary
shares is anti-dilutive.
During 2018, the average price of the Company’s shares
exceeded the exercise price of the share-settled Performance
Units and therefore 752,107 shares were considered in thecalculation of diluted earnings per share. The dilutive effect of
the convertible bond was also considered in the calculation ofdiluted earnings per share in 2018, by adding back € 7 millionof interest expense to the proﬁt for the period attributable toequity owners of the parent and by including 5,022,990 of dilutive
potential ordinary shares.
As at 30 December 2019, the conver tible bond has been
converted into 5,020,942 newly issued shares (see “– Note 34:
Total Equity”).

(Loss) Profit for the period attributable to equity owners of the parent (Net income),
adjusted for diluted calculation
Weighted average number of ordinary shares (diluted) (1)

2019

2018

€ (1,362) million€ 3,061 million

777,039,858

780,943,038€ (1.75)€ 3.92

Diluted earnings per share(1) In 2018, dilution assumes conversion of all potential ordinary shares.

2.5 Operational Assets and Liabilities
19.

2

Intangible Assets

Intangible assets comprise (i) goodwill (see “– Note 6: Scope of Consolidation”), (ii) capitalised development costs (see “– Note 2:
Signiﬁcant Accounting Policies”) and (iii) other intangible assets, e.g. internally developed software and acquired intangible assets.
Intangible assets with ﬁnite useful lives are generally amortised on a straight-line basis over their respective estimated useful lives(3 to 10 years) to their estimated residual values.
31 December 2019 and 2018 comprise the following:
31 December 201931 December 2018

(In € million)GrossamountAmortisation /Impairment

Net book
value

Gross
amountAmortisation /Impairment

Net book
value

Goodwill

14,062(1,043)13,01914,077(1,038)13,039

Capitalised development costs

3,209(1,749)

1,460

3,070

(1,488)

1,582

Other intangible assets

Total

4,785

(2,673)

2,112

4,572

(2,467)2,105

22,056(5,465)

16,591

21,719(4,993)

16,726

Airbus / Financial Statements 201935

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

NET BOOK VALUE(In € million)

Balance at
Changes in
Balance at
1 January Exchange
consolidation
Amortisation / 31 December(1)(1)
2019 differences Additions
scope Reclassification Disposals
Impairment
2019

Goodwill

13,039

11

0

0

4

(35)

0

13,019

Capitalised
development
costs

1,582

8

134

13

49

7

(333)

1,460

Other
intangible
assets

Total

2,105

32

275

42

(104)

(8)

(230)

2,112

16,726

51

409

55

(51)

(36)

(563)

16,591

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

Balance at
31 December
2018(1) Includes intangible assets from entities disposed (see “– Note 7: Acquisitions and Disposals”).

(In € million)

Goodwill

9,141

12

0

3,894

(4)

(3)

0

13,039

Capitalised
development
costs

1,763

(2)

91

0

(12)

0

(259)

1,582

Other
intangible
assets

Total

725

34

233

1,377

(59)

(7)

(199)

2,105

11,629

44

324

5,271

(75)

(10)

(458)

16,726(1) Includes intangible assets from entities disposed and reclassified to assets and disposal groups classified as held for sale (see “– Note 7: Acquisitions and Disposals”).

Intangible assets decreased by € -135 million to € 16,591 million (2018: € 16,726 million). Intangible assets mainly relate to goodwillof € 13,019 million (2018: € 13,039 million). The decrease is primarily due to the disposal of PFW Aerospace GmbH (see “– Note 7:
Acquisitions and Disposals”).

Capitalised Development Costs
The Company has capitalised development costs in the amount of € 1,460 million as of 31 December 2019 (€ 1,582 million as of
31 December 2018), mainly for Airbus programmes (€ 952 million).

Impairment Tests
Each year the Company assesses whether there is an indicationthat a non-ﬁnancial asset or a cash generating unit (“CGU”) to
which the asset belongs may be impaired. In addition, intangible
assets with an indeﬁnite useful life, intangible assets not yet
available for use and goodwill are tested for impairment annually,irrespective of whether there is any indication for impairment.
An impairment loss is recognised in the amount by which theasset’s carrying amount exceeds its recoverable amount. For the
purpose of impairment testing, any goodwill is 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
the recoverable amount of a CGU or the group of CGUs towhich 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

36

Airbus / Financial Statements 2019are based on the weighted average cost of capital (“WACC”)
for the groups of cash generating units. The discount rates arecalculated based on a risk-free rate of interest and a market
risk premium. In addition, the discount rates reﬂect the current
market assessment of the risks speciﬁc to each group of CGUs
by taking into account speciﬁc peer group information on beta
factors, leverage and cost of debt. Consequently, slight changes
to these elements can materially affect the resulting valuation andtherefore the amount of a potential impairment charge.
These estimates are inﬂuenced by several assumptions including
growth assumptions of CGUs, availability and composition of
future defence and institutional budgets, foreign exchange
fluctuations or implications arising from the volatility ofcapital markets. Cash ﬂow projections take into account pastexperience and represent management’s best estimate of future
developments.

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

As of 31 December 2019 and 2018, goodwill was allocated to CGUs or group of CGUs and is summarised in the following schedule:
AirbusDefence andSpaceTransversal /Eliminations(In € million)

AirbusAirbusHelicopters

Consolidated
AirbusGoodwill as of 31 December 201910,733

129

2,157

0

13,019Goodwill as of 31 December 2018

10,759

128

2,152

0

13,039The goodwill mainly relates to the creation of the Company in 2000 and the Airbus Combination in 2001.
The annual impairment tests performed in 2019 led to no impairment charge.

General Assumptions Applied in the Planning
Process
The basis for determining the recoverable amount is the value in
use of the CGUs. Generally, cash ﬂow projections used for theCompany’s impairment testing are based on operative planning.
The operative planning, used for the impairment test, is based on
the following key assumptions which are relevant for all CGUs:– increase of expected future labour expenses of 2.0% (2018:2.0%);– future interest rates projected per geographical market, for theEuropean Monetary Union, the UK and the US;– future exchange rate of 1.25 US$/€ (2018: 1.25 US$/€)
to convert in euro the portion of future US dollar which is
not hedged (see “– Note 37: Information about Financial
Instruments);
General economic data derived from external macroeconomic
and ﬁnancial studies have been used to derive the general key
assumptions.
In addition to these general planning assumptions, the following
additional CGU specific assumptions, which represent
management’s current best assessment as of the date ofthese Consolidated Financial Statements, have been applied
in individual CGUs.

Airbus– The planning takes into account the current production rate
assumptions and provides an assessment of expected futuredeliveries on that basis.
– 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 2019. 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 signiﬁcant hedge portfolio, the carrying value andplanned cash ﬂows of the CGU Airbus are materially inﬂuenced.
– Cash ﬂows are discounted using a euro weighted pre-tax
WACC of 11.6% (2018: 10.6%).

Airbus Helicopters– The planning takes into account the evolution of programmes
based upon the current backlog and an assessment of orderintake for platforms and services.
– In the absence of long-term ﬁnancial reference, expected cash
ﬂows generated beyond the planning horizon are consideredthrough a terminal value.
– Long-term commercial assumptions in respect of market
share, deliveries and market value are based on the helicopter
market forecast considering the decrease over recent years
in the civil and parapublic market partially driven by decreaseof investment in oil and gas, needs of helicopter ﬂeet renewal
and growth markers and the increase of Airbus Helicoptersmarket share in this environment. Current market evolutions
are considered through sensitivities.
– Cash ﬂows are discounted using a euro weighted pre-tax
WACC of 10.7% (2018: 10.4%).

Airbus Defence and Space– Overall the defence and space markets are expected to growat a steady rate during the period of the operative planninghorizon.
– Business growth is underpinned by growing defence
opportunities boosted after ﬁ nalisation of the successful
portfolio re-shaping programme. Underlying performance isimproved by focusing on project delivery, cost control andefﬁciency.
– In the absence of long-term ﬁnancial reference, expected cash
ﬂows generated beyond the planning horizon are consideredthrough a terminal value.
– Cash ﬂows are discounted using a euro weighted pre-tax
WACC of 8.5% (2018: 9.1%).

Airbus / Financial Statements 2019237

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

20.

Property, Plant and Equipment

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

10 to 50 years

Site improvements

6 to 30 years

Technical equipment and machinery

2 to 20 years

Jigs and tools (1)5 years

Other equipment, factory and office equipment

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

Property, plant and equipment as of 31 December 2019 and 2018 comprises the following:
31 December 201931 December 2018

GrossamountDepreciation /Impairment

Net book
value

Gross
amountDepreciation /Impairment

Net book
value

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

9,879(5,056)

4,823

9,873

(4,692)

5,181

7,257

21,994(13,972)

8,022(In € million)

Technical equipment and machinery

23,144(15,887)

Other equipment, factory and officeequipment (1)3,782(2,825)

957

3,714

(2,812)902

Construction in progress

2,714

0

2,714

2,668

0

2,668

Right-of-use assets (2)

1,793

(250)

1,543

-

-

-

41,312(24,018)

17,294

38,249(21,476)

16,773Total(1) Includes the net book value of aircraft under operating lease (see “– Note 27: Sales Financing Transactions”).
(2) The net book value of land and buildings under right-of-use assets amounts to € 1,369 million.

NET BOOK VALUE(In € million)

ChangesinBalance
Balance atconsoliBalance
at 31 Dec. IFRS 16 1 January Exchange
dation ReclassiDepreciation / at 31 Dec.
(1)
(1)
(2)
2018 Impact
2019 differences Additions
scope fication Disposals
2019
Impairment

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

5,181

(269)

4,912

25

82

(52)

184

(8)

(320)

4,823

Technical equipment
and machinery

8,022

(64)

7,958

71

408

(88)

935

(15)

(2,012)

7,257

Other equipment,
factory and officeequipment

902

(12)

890

7

169

(42)

170

(15)

(222)

957

2,668

0

2,668

24

1,332

(3)

(1,315)

8

0

2,714

0

1,697

1,697

6

201

(6)

(28)

(56)

(271)

1,543

16,773

1,352

18,125

133

2,192

(191)

(54)

(86)

(2,825)

17,294

Constructionin progress
Right-of-use assets

Total(1) Includes property, plant and equipment from entities disposed (see “– Note 7: Acquisitions and Disposals”).
(2) Accelerated depreciation previously included in onerous contract provision has been offset with the release of the provision in the presentation of the Consolidated Statementof Cash Flows for the year ended 2019.

38

Airbus / Financial Statements 2019

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

Balance at
Changes in
1 January Exchange
consolidation ReclassiDepreciation /2018 differences Additions
scope fication (1) Disposals (1)Impairment

Balance at
31 December
2018

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

5,091

9

84

172

166

(40)

(301)

5,181

Technical equipment
and machinery

8,066

70

391

69

888

(50)

(1,412)

8,022

939

10

147

0

50

(15)

(229)

902

Other equipment,
factory and officeequipment
Constructionin progress

Total

2,514

(7)

1,381

11

(1,223)

(8)

0

2,668

16,610

82

2,003

252

(119)

(113)

(1,942)

16,773(1) Includes property, plant and equipment from entities disposed and reclassified to assets and disposal groups classified as held for sale (see “– Note 7: Acquisitions
and Disposals”).

Property, plant and equipment increased by € +521 million to € 17,294 million (2018: € 16,773 million), mainly due to the applicationof IFRS 16 offset by depreciation in the period. Property, plant and equipment includes right-of-use assets for an amount of€ 1,543 million as of 31 December 2019.
For details on assets related to lease arrangements on sales ﬁnancing, see “– Note 27: Sales Financing Transactions”.
PROPERTY, PLANT AND EQUIPMENT BY GEOGRAPHICAL AREAS
31 December
2019(In € million)

2018

France

7,912

7,630

Germany

4,322

4,281

UK

1,991

2,144

Spain

1,405

1,500

Other countries

Total

1,664

1,218

17,294

16,773

2

The Company as Lessee
The Company leases mainly real estate assets, cars andequipment (such as land, warehouses, storage facilities andofﬁces).
Short-term leases and leases of low-value assets refer mainly
to IT equipment (e.g. printers, laptops and mobile phones) andother equipment.
The Company incurred interest expense on lease liabilities of€ 14 million. The expense in relation to short-term and low-value
assets is insigniﬁcant.
There are no signiﬁcant variable lease payments included in the
Company’s lease arrangements.
The discount rate used to determine the right-of-use asset andthe lease liability for each country and leased asset is calculated
based on the incremental borrowing rate at inception of thelease. The Company calculated the rate applicable to each lease
contract on the basis of the lease duration.

Real Estate Leases
The Company leases land and buildings mainly for its
operational business warehouses including logistic facilities,
ofﬁces, production halls and laboratories. The major leases arelocated in France, Germany, Spain, the US and the UK. As lease
contracts are negotiated on an individual basis, lease terms
contain a wide range of different terms and conditions. Leases
are typically made for a ﬁxed period of 3-25 years and may
include extension, termination and other options, which provide
operational ﬂexibility to the Company.
In November 2019, additional clariﬁcations were issued by the
IFRS Interpretations Committee. Consequently, economic terms
should be taken into account when determining the enforceable
period of a lease. Based on its lease portfolio, the Company
considers that there are no economic consequences leading toa reassessment of the previously assessed enforceable period.

The maturity analysis of lease liabilities, based on contractual
undiscounted cash ﬂows is shown in Note 37.1 – Financial Risk
Management.

Airbus / Financial Statements 201939

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

Vehicle Leases

Off-Balance Sheet Commitments

The Company leases cars for management and other functions.
Vehicle leases typically run for an average period of 3 years anddo not provide renewal options.

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” (€ 429 million as of 31 December 2019,2018: € 256 million).

Other Leases
The Company also leases IT equipment, machinery and otherequipment that combined are insigniﬁcant to the total leased
asset portfolio.

21.

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

2019

2018

Other investments

2,516

2,267

Other long-term financial assets

1,937

1,544

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

4,453

3,811

449

489

4,902

4,300

Current portion of other long-term financial assets

Total

Other investments mainly comprise the Company’s
participations. The signiﬁcant participations at 31 December
2019 include the remaining investment in Dassault Aviation(9.90%, 2018: 9.89%) amounting to € 968 million (2018:€ 999 million).

22.

Contract Assets and Contract Liabilities, Trade Receivables
and Trade Liabilities

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

40

Other long-term financial assets and the current portionof other long-term financial assets include other loans
in the amount of € 2,036 million as of 31 December 2019(2018: € 1,523 million), and the sales ﬁ nancing activities in
the form of ﬁnance lease receivables and loans from aircraft
ﬁnancing.

Airbus / Financial Statements 2019

A400M, Tiger, NH90), contract liabilities are classiﬁed as current
when the relating inventories or receivables are expected to berecognised within the normal operating cycle of the long-term
contract.
Trade receivables arise when the Company provides goods
or services directly to a customer with no intention of trading
the receivable. Trade receivables include claims arising fromrevenue recognition that are not yet settled by the debtor. Trade
receivables are initially recognised at their transaction prices
and are subsequently measured at amortised cost less any
allowances for impairment. Gains and losses are recognised in
the Consolidated Income Statement when the receivables are
derecognised, impaired or amortised.
Impairment and allowances of trade receivables andcontract assets are measured at an amount equal to the lifetime expected loss as described in “– Note 37: Information about
Financial Instruments”.

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

Contract Assets, Contract Liabilities and Trade Receivables
Signiﬁcant changes in contract assets and contract liabilities during the period are as follows:2019(In € million)

2018

Contract
assetsContract
liabilities

Contract
assetsContract
liabilities-(37,303)-(23,464)
23,472

Revenue recognised that was included in the contract liability
balance at 1 January
Increases due to cash received, excluding amounts recognised
as revenue-

38,312-

Transfers from contract assets recognised at 1 January(3,436)-(2,740)-

Increase as a result of changes in the measure of progress

3,941

-

3,074

-

As of 31 December 2019, trade receivables amounting to € 203 million (2018: € 583 million) will mature after more than one year.
The respective movement in the allowance for doubtful accounts in respect of trade receivables and contract assets during theperiod was as follows:(In € million)

2019

2018

Allowance balance at 1 January

(269)

(252)

Foreign currency translation adjustment

0(5)

Utilisations / disposals and business combinations

39

28

Additions

(167)

(40)

Allowance balance at 31 December

(397)

(269)

Trade Liabilities
Trade liabilities of € 14,808 million (2018: € 16,237 million) decreased by € -1,429 million, mainly in Airbus.
As of 31 December 2019, trade liabilities amounting to € 107 million (2018: € 29 million) will mature after more than one year.

23.

2

Inventories
31 December 201931 December 2018

GrossamountWritedown

Net book
value

Gross
amountWritedown

Net bookvalue

Raw materials and manufacturing supplies

3,860

(581)

3,279

3,827

(554)

3,273

Work in progress

22,553(2,034)

20,51923,119(1,476)

21,643Finished goods and parts for resale

4,729

(617)

4,112

3,949

(555)

3,394

(In € million)

Advance payments to suppliers

Total

3,704

(64)

3,640

3,631

(50)

3,581

34,846(3,296)31,55034,526(2,635)31,891Inventories of € 31,550 million (2018: € 31,891 million) decreasedby € -341 million. This is driven by Airbus (€ -338 million) and
Airbus Defence and Space (€ -651 million), partly offset by anincrease at Airbus Helicopters (€ +578 million). In Airbus, thedecrease reﬂects a lower work in progress associated with the
widebody programmes partly compensated by a higher work inprogress associated with A320 programme. In Airbus Defence
and Space, the reduction is mainly driven by a decrease in work inprogress for the A400M reﬂecting the netting inventories with therespective portion of the onerous contracts provision. In Airbus
Helicopters, the increase reﬂects higher inventory associatedwith the Super Puma programme.

In 2019, write-downs o f inventories in the amount of€ -1,071 million (2018: € -883 million) are recognised in cost of
sales, whereas reversal of write-downs amounts to € 55 million(2018: € 264 million). At 31 December 2019, € 19,448 million ofwork in progress and € 3,901 million of ﬁnished goods and partsfor resale were carried at net realisable value.
Inventories recognised as an expense during the period amountto € 50,888 million (2018: € 44,437 million).

Airbus / Financial Statements 201941

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

24.

Provisions, Contingent Assets and Contingent Liabilities

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

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

31 December
2019(In € million)

2018

Provisions for pensions

8,353

7,072

Other provisions

10,561

11,816

Total

18,914

18,888

thereof non-current portion

12,542

11,571

thereof current portion

6,372

7,317

Provisions for pensions – As of 31 December 2019, the changes in actuarial assumptions resulted overall in a total net increasein pension liability of € 2,687 million, principally reﬂecting the weakening of interest rates in Germany, France, Canada and the UK,
partly compensated by the contributions made into the various pension vehicles of € 1,758 million (see “– Note 31: Post-Employment
Beneﬁts”).
The decrease in other provisions is mainly due to the changes in provisions for onerous contracts.
Movements in other provisions during the year were as follows:
Balance at
1 January Exchange
2019 differences(In € million)

Increase
Reclassification /from
Change inpassageconsolidatedof time Additions
group

Balance at
31 December
Used Released
2019

Onerous contracts

5,489

48

0

1,408

(870)

(2,007)

(113)

3,955

Outstanding costs

1,324

2

0

412

(8)

(426)

(90)

1,214

1

1

0

(3)

5

Aircraft financing risks

(1)

6

0

0

Obligation from services
and maintenanceagreements

651

0

18

28

0

(98)

(28)

571

Warranties

327

1

1

100

(28)

(62)

(16)

323

Personnel-related
provisions (2)

920

0

4

595

(40)

(468)

(28)

983

Litigation and claims (3)

587

0

0

416

3

(50)

(45)

911

Asset retirement

153

1

22

29

0

0

(2)

203

2,359

7

0

812

(134)

(294)

(354)

2,396

11,816

59

45

3,801

(1,076)(3,405)(679)

10,561Other risks and charges

Total(1) See “– Note 27: Sales Financing Transactions”.
(2) See “– Note 30: Personnel-Related Provisions”.
(3) See “– Note 38: Litigation and Claims”.

Provisions for onerous contracts in 2019 mainly include the release, utilisation and net presentation of the A380 and A220
programme losses against inventories, partly compensated by the A400M net charge recorded (see “– Note 11: “Revenue and
Gross Margin”).
Personnel-related provisions include restructuring provisions and other personnel charges. For more details, see “– Note 30:
Personnel-Related Provisions”.
Following adoption of IFRIC 23, uncertain tax liabilities formerly included under provisions for other risks and charges have been
reclassiﬁed to current income tax liabilities (see “– Note 4: Change in Accounting Policies and Disclosures”).

42

Airbus / Financial Statements 2019

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

Contingent assets and contingent liabilities — The Company
is exposed to technical and commercial contingent obligations
due to the nature of its businesses. To mitigate this exposure,
the Company has subscribed a Global Aviation Insurance
Programme (“GAP”). Information required under IAS 37“Provisions, Contingent Assets and Contingent Liabilities” isnot disclosed if the Company concludes that disclosure canbe expected to prejudice seriously its position in a dispute withother parties.

25.

For other contingent liabilities, see “– Note 38: Litigation and
Claims” and “– Note 11: Revenue and Gross Margin” (mainly
A400M programme).
Other commitments include contractual guarantees andperformance bonds to certain customers as well as commitments
for future capital expenditures and amounts which may bepayable to commercial intermediaries if future sales materialise.

Other Financial Assets and Other Financial Liabilities

Other Financial Assets
31 December(In € million)

Positive fair values of derivative financial instruments(1)

Others

2019

2018

996

1,031

37

77

Total non-current other financial assets

1,033

1,108

Receivables from related companies

1,148

1,082

Positive fair values of derivative financial instruments (1)

444

286

Others468

443

Total current other financial assets

2,060

1,811

Total

3,093

2,919

(1) See “– Note 37: Information about Financial Instruments”.

Other Financial Liabilities

2

31 December(In € million)

Liabilities for derivative financial instruments (1)
(2)

2019

2018

2,434

1,132

3,725

4,233

Others

1,339

2,644

Total non-current other financial liabilities

7,498

8,009

Liabilities for derivative financial instruments (1)

1,560

1,623

552

344

159

175

European Governments’ refundable advances

European Governments’ refundable advances(2)

Liabilities to related companies

376

320

Total current other financial liabilities

2,647

2,462

Total

10,145

10,471

2,647

2,125

Othersthereof other financial liabilities due within 1 year

(1) See “– Note 37: Information about Financial Instruments”.
(2) Refundable advances from European G overnments are provided to the Company to finance research and development activities for certain projects on a risk-sharing basis,
i.e. they are repaid to the European Governments subject to the success of the project.

The total net fair value of derivative ﬁnancial instruments deteriorated by € -1,116 million to € -2,554 million (2018: € -1,438 million) as
a result of the strengthening of the US dollar versus the euro associated with the mark to market valuation of the hedge portfolio.

Airbus / Financial Statements 201943

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

The allocation of European Governments’ refundable advances
between non-current and current presented in the IFRS
Consolidated Financial Statements ended 31 December 2019is based on the applicable contractual repayment dates.

26.

The European Governments’ refundable advances decreasedby € -300 million to € 4,277 million (2018: € 4,577 million),primarily related to the payments made on the A380 programme(see “– Note 11: Revenue and Gross Margin”).

Other Assets and Other Liabilities

Other Assets
31 December
2019

2018

Cost to fulfil a contract

351

777

Prepaid expenses

86

33

Others85

78(In € million)

522

888

Value added tax claims

1,252

3,255

Cost to fulfil a contract

626

464

Prepaid expenses

147

121

Total non-current other assets

398

406

Total current other assets

2,423

4,246

Total

2,945

5,134

OthersOther Liabilities
31 December(In € million)

2018

Others384

460

Total non-current other liabilities

384

460

Tax liabilities (excluding income tax)

614

2,706

Others

6,203

2,582

Total current other liabilities

6,817

5,288

Total

7,201

5,748

6,817

5,288

thereof other liabilities due within 1 year

44

2019

Airbus / Financial Statements 2019

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

27.

Sales Financing Transactions

Sales ﬁnancing — With a view to facilitating aircraft sales for
Airbus and Airbus Helicopters, the Company may enter intoeither on-balance sheet or off-balance sheet sales ﬁnancing
transactions.
On-balance sheet transactions where the Company is lessor
are classiﬁed as operating leases, ﬁnance leases and loans,inventories and to a minor extent, equity investments:(i) operating leases – Aircraft leased out under operating leases
are included in property, plant and equipment at cost lessaccumulated depreciation (see “– Note 20: Property, Plant andEquipment”). Rental income from operating leases is recorded
as revenue on a straight-line basis over the term of the lease;(ii) finance leases and loans – When, pursuant to a financing
transaction, substantially all the risks and rewards of ownershipof the financed aircraft reside with a third party, the transaction
is characterised as either a finance lease or a loan. In such
instances, revenue from the sale of the aircraft are recorded
upon delivery, while financial interest is recorded over time
as financial income. The outstanding balance of principal isrecorded on the statement of financial position (on-balance
sheet) in long-term financial assets, net of any accumulated
impairments;(iii) inventories – Second hand aircraft acquired as part of acommercial buyback transaction, returned to Airbus after
a payment default or at the end of a lease agreement areclassified as inventories held for resale if there is no subsequent
lease agreement in force (see “– Note 23: Inventories”).
Off-balance sheet commitments — Financing commitments
are provided to the customer either as backstop commitments
before delivery, asset value guarantees at delivery or counter
guarantees:(i) backstop commitments are guarantees by Airbus, madewhen a customer-order is placed, to provide financing to
the customer in the event that the customer fails to securesufficient funding when payment becomes due under the order.
Such commitments are not considered to be part of Gross
Customer Financing Exposure as (i) the financing is not in place,(ii) commitments may be transferred in full or part to third parties
prior to delivery, (iii) past experience suggests it is unlikely thatall such proposed financings actually will be implemented and,(iv) Airbus retains the asset until the aircraft is delivered and does
not incur an unusual risk in relation thereto. In order to mitigate
customer credit risks for Airbus, such commitments typicallycontain financial conditions, such as condition precedents,
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 considers the financial risks
associated with such guarantees to be acceptable, because(i) the guarantee only covers a tranche of the estimated future
value of the aircraft, and its level is considered prudent incomparison to the estimated future value of each aircraft, and(ii) the exercise dates of outstanding asset value guarantees
are distributed through 2031.

As of 31 Decem ber 2019, the nominal value of asset value
guarantees considered as variable considerations under
IFRS 15 provided to beneﬁciaries amounts to € 656 million (2018:€ 639 million), excluding € 9 million (2018: € 27 million) where therisk is considered to be remote. The present value of the risk
inherent in asset value guarantees where a settlement is being
considered probable is fully provided for and included in the
total of contract liabilities for an amount of € 551 million (2018:€ 511 million) (see “– Note 22: Contract Assets, Contract Liabilities
and Trade Receivables, and Trade Liabilities”).
Exposure — In terms of risk management, the Company
manages its gross exposure arising from its sales ﬁnancing
activities (“Gross Customer Financing Exposure”) separately
for (i) customer’s credit risk and (ii) asset value risk.
Gross Customer Financing Exposure is the sum of (i) thebook value of operating leases before impairment, (ii) the
outstanding principal amount of ﬁnance leases or loans due
before impairment, (iii) the guaranteed amounts under ﬁnancial
guarantees (iv) the book value of second hand aircraft for
resale before impairment, and (v) the outstanding value of any
other investment in sales ﬁnancing structured entities before
impairment. This Gross Customer Financing Exposure may differ
from the value of related assets on the Company’s Statementof Financial Position and related off-balance sheet contingent
commitments, mainly because (i) assets are recorded incompliance with IFRS, but may relate to transactions that are
ﬁnanced on a limited recourse basis and (ii) the carrying amountof the assets on the Consolidated Statement of Financial Position
may have been adjusted for impairment losses.
Gross Customer Financing Exposure amounts to US$ 0.9 billion(€ 0.8 billion) (2018: US$ 1.0 billion (€ 0.9 billion)).
Net exposu re 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 isprovided for by way of impairment losses and other provisions.

2

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. Finance leases and loans are measured at fairvalue, based on the present value of estimated future cash ﬂows
(including cash ﬂows expected to be derived from a sale of theaircraft). Under its provisioning policy for sales ﬁnancing risk,
Airbus and Airbus Helicopters record provisions as liabilities
for estimated risk relating to off-balance sheet commitments.
Security — Sales ﬁnancing transactions, including those that are
structured through structured entities, are generally collateralisedby the underlying aircraft. Additionally, the Company beneﬁts
from protective covenants and from security packages tailoredaccording to the perceived risk and the legal environment.

Airbus / Financial Statements 201945

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

The Company endeavours to limit its sales ﬁnancing exposureby sharing its risk with third parties usually involving the creationof a structured entity. Apart from investor interest protection,interposing a structured entity offers advantages such as
ﬂ exibility, bankruptcy remoteness, liability containment andfacilitating sell-downs of the aircraft ﬁnanced. An aircraft ﬁnancing
structured entity is typically funded on a non-recourse basis
by a senior lender and one or more providers of subordinatedﬁnancing. When the Company acts as a lender to such structured
entities, it may take the role of the senior lender or the providerof subordinated loan. The Company consolidates an aircraft
ﬁnancing structured entity if it is exposed to the structured
entity’s variable returns and has the ability to direct the relevant
remarketing activities. Otherwise, it recognises only its loan tothe structured entity under other long-term ﬁnancial assets. At
31 December 2019 the carrying amount of its loans from aircraft
ﬁnancing amounts to € 349 million (2018: € 502 million). This
amount also represents the Company’s maximum exposure
to loss from its interest in unconsolidated aircraft ﬁnancing
structured entities.

On-Balance Sheet Operating and Finance Leases
The future minimum operating lease payments (undiscounted) due from customers to be included in revenue, and the future
minimum lease payments (undiscounted) from investments in finance leases to be received in settlement of the outstanding
receivable at 31 December 2019 are as follows:(In € million)

Aircraft underoperating lease

Finance leasereceivables
7

Not later than 1 year

14

Later than 1 year and not later than 5 years

30

2

Later than 5 years

0

0

44

9

31 December 2019

Financing Liabilities
Financing liabilities from sales financing transactions are mainly based on variable interest rates (see “– Note 36.3: 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)

2018

Loans

24

22

Liabilities to financial institutions

0

0

Total sales financing liabilities

24

22

Customer Financing Cash Flows
Direct customer ﬁnancing cash ﬂows amount to € 58 million in 2019 (2018: € 79 million).

46

2019

Airbus / Financial Statements 2019

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

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 2019 and 2018 are as follows:

31 December 201931 December 2018

AirbusHelicopters

Total

AirbusAirbusHelicopters

154

0

471

39

154

110

32

142

510

637

67

704

Inventories

8

Other investments

4

0

8

22

0

22

0

4

6

0

6

On-balance sheet customer financing
Off-balance sheet customer financing

637

39

676

775

99

874

95

9

104

28

10

38

Airbus(In € million)

Operating leases(1)

Finance leases and loans

Total

Gross Customer Financing Exposure

732

48

780

803

109

912

Collateral values

(530)

(30)

(560)

(562)

(35)

(597)

Net exposure

202

18

220

241

74

315

Operating leases

(65)

(7)

(72)

(74)

(23)

(97)

Finance leases and loans

(126)

(11)

(137)

(144)

(51)

(195)

(6)

0

(6)

(17)

0

(17)

(5)

0

(5)

(6)

0

(6)

(202)

(18)

(220)

(241)

(74)

(315)

On-balance sheet commitments – inventories
Off-balance sheet commitments – provisions(2)

Asset impairments, fair value
adjustments and provisions(1) For 2019 and 2018, depreciation amounts to € 9 million and € 10 million respectively and related accumulated depreciation is € 44 million and € 55 million respectively.
(2) See “– Note 24: Provisions, Contingent Assets and Contingent Liabilities”.

2

2.6 Employees Costs and Beneﬁts
28.

Number of Employees

AirbusAirbusHelicopters

AirbusDefenceand Space

Consolidated
Airbus31 December 2019

80,98520,02433,922

134,931

31 December 201880,924

19,74533,002

133,67129.

Personnel Expenses(In € million)

2019

2018

Wages, salaries and social contributions

13,347

12,566

Net periodic pension cost (1)

Total

626

581

13,973

13,147(1) See “– Note 31.1: Provisions for Retirement Plans”.

Airbus / Financial Statements 201947

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

30.

Personnel-Related Provisions

Several German companies provide life-time working account models, being employee beneﬁt plans with a promised return on
contributions or notional contributions that qualify as other long-term employee benefits under IAS 19. The employees’ periodical
contributions into their life-time working accounts result in corresponding personnel expenses in that period, recognised in otherpersonnel charges.
Increase
Reclassification /Balance atfromChange in
1 January Exchange passage
consolidated
2019 differencesof time Additionsgroup(In € million)

Balance at
31 December
Used Released
2019

Restructuring measures /pre-retirement part-time work

243

0

0

172

(32)

(97)

(20)

266

Other personnel charges

677

0

4

423

(8)

(371)

(8)

717

Total

920

0

4

595

(40)

(468)

(28)

983

An additional provision of € 103 million related to restructuring measures has been recorded at year-end 2019 following theannouncement in December 2019 to the Works Council of the main features that will be carried out to increase future competitiveness.

31.

Post-Employment Beneﬁts
31 December(In € million)

2019

2018

Provisions for retirement plans

7,286

6,474

Provisions for deferred compensation

1,067

598

Retirement plans and similar obligations

8,353

7,072

31.1

Provisions for Retirement Plans

Plans description
When the Company employees retire, they receive indemnities
as stipulated in retirement agreements, in accordance withregulations and practices of the countries in which it operates.
France — The French pension system is operated on a “payas you go” basis. Besides the basic pension from the Frenchsocial security system, each employee is entitled to receive acomplementary pension from deﬁned contribution schemes
Association pour le Régime de Retraite Complémentaire dessalariés (“ARRCO”) and Association Générale des Institutions de
Retraite 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 beneﬁt obligations.
Germany — The Company has a pension plan (P3) for executive
and non-executive employees in place. Under this plan, theemployer provides contributions for the services rendered by
the employees, which are dependent on their salaries in therespective service period. These contributions are converted
into components which become part of the accrued pension
liability at the end of the year. Total beneﬁts are calculated asa career average over the entire period of service. Certain
employees that are not covered by this plan receive retirement
indemnities based on salary earned in the last year or on
an average of the last three years of employment. For some
executive employees, beneﬁts are dependent on the ﬁnal salary48

Airbus / Financial Statements 2019of the respective individual at the date of retirement and the time
period served as an executive.
In 2018, Airbus introduced the new Airbus Pensions Plan (“APP”)
with security-linked beneﬁts in Germany, which all new entrants
after 1 January 2018 will join. Accordingly, the existing pension
plan has been closed for new entrants. As of 1 January 2019deferred compensation which is ﬁnanced by the employees isoffered exclusively in APP for all employees.
Parts of the pension obligation in Germany are funded byassets invested in speciﬁc funding vehicles. Besides a relief
fund (“Unterstützungskasse”), the Company has implemented
a Contractual Trust Arrangement. The Contractual Trust
Arrangement structure is that of a bilateral trust arrangement.
Assets that are transferred to the relief fund and the Contractual
Trust Arrangement qualify as plan assets under IAS 19.
UK — The Company UK Pension Scheme (“the Scheme”) was
implemented by Airbus Defence and Space Ltd., Stevenage(UK) as the principal employer. This plan comprises all
eligible employees of Airbus Defence and Space Ltd. as well
as all personnel, who were recruited by one of the Company
subsidiaries located in the UK and participating in the Scheme.
The major part of the obligation is funded by scheme assets due
to contributions of the participating companies. The Scheme isa registered pension scheme under the Finance Act 2004. The
trustee’s only formal funding objective is the statutory funding
objective under the Pensions Act part 6 2004, which is toNotes to the IFRS Consolidated Financial Statements /2.6 Employees Costs and Beneﬁts

have sufﬁcient and appropriate assets to cover the Scheme’s
obligations. Since 1 November 2013, this plan is generally closed
for joiners, who participate in a separate deﬁned contribution plan.

The Company considers the likelihood of this event as remote.
However, for the Main Scheme the Company considers thatits obligation is in principle limited to that related to its section.

Moreover, the Company participates in the UK in several funded
trustee-administered pension plans for both executive and nonexecutive employees with BAE Systems being the principal
employer. The Company’s most signiﬁcant investments in termsof employees participating in these BAE Systems UK pension
plans is Airbus Operations Ltd. Participating Airbus Operations
Ltd. employees have continued to remain members in the BAE
Systems UK pension plans due to the UK pension agreement
between the Company and BAE Systems and a change in the
UK pensions legislation enacted in April 2006.

Canada — In 2018, Airbus acquired Airbus Canada Limited
Partnership (“ACLP”). ACLP sponsors deﬁned beneﬁt plans for
its salaried, hourly and executive employees.

Actuarial Risks for the Company
The deﬁned beneﬁt obligation (“DBO”) exposes the Company
to actuarial risks, including the following ones:
Market price risk — The return on plan assets is assumed tobe the discount rate derived from AA-rated corporate bonds.
If the actual return rate of plan assets is lower than the applied
discount rate, the net liability increases accordingly. Moreover,the market values of the plan assets are subject to volatility,
which also impacts the net liability.

For the most signiﬁcant of these BAE Systems Pension Schemes,
the Main Scheme, BAE Systems, the Company and the scheme
trustees agreed on a sectionalisation, which was implemented on
1 April 2016. Although BAE Systems remains the only principal
employer of the Scheme, the Company has obtained powers
in relation to its section which are the same as if it were theprincipal employer.

Interest rate risk — The level of the DBO is signiﬁcantly impacted
by the applied discount rate. The low interest rates, particular in
the euro-denominated market environment, lead to a relatively
high net pension liability. If the decline in returns of corporate
bonds continues, the DBO will further increase in future periods,
which can only be offset partially by the positive development ofmarket values of those corporate bonds included in plan assets.
Generally, the pension obligation is sensitive to movements in theinterest rate leading to volatile results in the valuation.

Based on the funding situation of the respective pension
schemes, the pension plan trustees determine the contribution
rates to be paid by the participating employers to adequately
fund the schemes. The different UK pension plans in which theCompany investments participate are currently underfunded.
Airbus Operations Ltd. (for its section of the Main Scheme)
and BAE Systems (for the other schemes) have agreed withthe trustees various measures designed to make good theunderfunding. These include (i) regular contribution payments
for active employees well above such which would prevail for
funded plans and (ii) extra employers’ contributions.

Inﬂ ation risk — The pension liabilities can be sensitive to
movements in the inﬂation rate, whereby a higher inﬂation rate
could lead to an increasing liability. Since some pension plans
are directly related to salaries, increases in compensations
could result in increasing pension obligations. For the deferredcompensation plan P3, which is ﬁnanced by the employees aﬁxed interest rate has been agreed.

In the event that an employer who participates in the BAE
Systems pension schemes fails or cannot be compelled to
fulﬁl its obligations as a participating employer, the remaining
participating employers are obliged to collectively take on its
obligations.

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 DBO.

2Main Average Assumptions
The weighted average assumptions used in calculating the actuarial values of the most signiﬁcant retirement plans as of
31 December 2019 are as follows:
Pension plans inGermany(Rate in %)2019

France20182019

Participation in
BAE Systems
Pension Scheme
in the UK

UK

2018

2019

2018

2019

Canada

2018

2019

2018

Discount rate

1.0

1.7

0.9

1.7

2.2

2.8

2.1

2.7

3.2

3.9

Rate of compensation increase

2.8

2.8

2.5

2.5

2.6

2.6

2.6

2.6

2.8

3.0

Rate of pension increase

1.4

1.6

1.7

1.7

2.8

3.0

2.8

2.9

1.8

2.0

Inflation rate

1.4

1.6

1.7

1.7

2.9

3.1

2.9

3.1

1.8

2.0

Discount rate — For Germany and France, the Company derives
the discount rate used to determine the DBO from yields on highquality corporate bonds with an AA rating. The determinationof the discount rate is based on the iBoxx € Corporates AA
bond data and uses the granularity of single bond data in orderto receive more market information from the given bond index.
The discount rate for the estimated duration of the respective

pension plan is then extrapolated along the yield curve.
In the UK, it is determined with reference to the full yield curveof AA-rated sterling-denominated corporate bonds of varying
maturities. The salary increase rates are based on long-term
expectations of the respective employers, derived from theassumed inﬂation rate and adjusted by promotional or productivity
scales.

Airbus / Financial Statements 201949

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

Rate of pension increase — Rates for pension payment
increases are derived from the respective inﬂation rate for the plan.

developed by Professor Dr. Klaus Heubeck are applied, while
the disability rates of the Heubeck Tables have been reduced
to 30%, to align with actual observation.

Inﬂation rates — Inﬂation rate for German plans corresponds
to the expected increase in cost of living. In the UK, theinﬂation assumptions are derived by reference to the difference
between the yields on index-linked and ﬁxed-interest long-term
government bonds.

For the UK schemes, the Self-Administered Pensions S1
mortality tables based on year of birth (as published by theInstitute of Actuaries) is used in conjunction with the results ofan investigation into the actual mortality experience of scheme
members. In France, Institute for French Statistics (“INSEE”)
tables are applied.

Mortality tables — For the calculation of the German pension
obligation, the “2018 G” mortality tables (generation tables) as
The development of the provision is set out below:
DBO(In € million)

Balance at 1 January 2018

Plan assets

PensionParticipation inplans
BAE Systemsof the Pension Scheme
Companyin the UK

Total

Pensionplans
of theCompany

Participation in
BAE Systems
PensionSchemein the UK

Total

Total
provisions(4,911)(2,832)(7,743)

7,127

11,2993,571

14,870Service cost(including past service cost)

381

84

464

0

0

0

464

Interest cost and income

202

85

287

(97)

(68)

(165)

123

changes in demographic
assumptions

112

(24)

88

0

0

0

88

changes in financial assumptions

(35)

(152)

(187)

0

0

0

(187)

changes in experience adjustments

117

48

165

0

0

0

165

Remeasurements: actuarial (gains)and losses arising from

0

0

0

398

105

502

502

Changes in consolidation, transfersand others

plan assets

247

0

247

(209)

0

(209)

38

Benefits paid

(380)

(115)

(495)

148

115

262

(233)

Contributions by employer
and other plan participants

3

5

8

(1,281)(335)(1,616)(1,608)Foreign currency translation
adjustments

(14)

(27)

(40)

11

25

36

(5)

11,932

3,475

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

6,474

Service cost(including past service cost)

443

63

506

0

0

0

506

Interest cost and income

206

94

300

(105)

(79)

(183)

117

changes in demographic
assumptions

1,011

(32)

979

0

0

0

979

changes in financial assumptions

1,446

310

1,756

0

0

0

1,756

changes in experience adjustments

105

(4)

102

0

0

0

102

(538)

(128)

(667)

(667)

Balance at 31 December 2018

Remeasurements: actuarial (gains)and losses arising fromplan assets
Changes in consolidation, transfersand others

(88)

0

(88)

(13)

0

(13)

(101)

Benefits paid

(403)

(106)

(509)

151

106

257

(252)

Contributions by employer
and other plan participants

5

2

7

(1,590)(91)(1,681)(1,674)Foreign currency translation
adjustments

92

189

280

(77)

(161)

(235)

46

14,7493,991

18,740(8,113)(3,343) (11,455)

7,286

Balance at 31 December 201950

Airbus / Financial Statements 2019

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

The funding of the plans is as follows:
31 December
2019

2018

(In € million)

DBO

Plan assets

DBO

Unfunded pension plans

2,530

0

2,157

0

Funded pension plans (partial)

16,210(11,455)

13,250(8,933)

Total

18,740(11,445)

15,407(8,933)As of 31 December 2019, the change in ﬁnancial assumptions
mainly due to the further weakening of interest rates in Germany,
France, Canada and the UK resulted in a total net increase inpension liability of € 1,756 million.
In light of the prolonged decline in interest rates and without
any sign of change in this trend in a foreseeable future coupledwith experience gained over recent years, management
revised its demographic assumptions related to the behaviourof beneﬁciaries under the German pension plan. This resulted
in a net increase in pension liability of € 1,793 million as of
30 June 2019, shown as part of the total changes in actuarial
assumptions. These changes in accounting estimates have beenrecognised through other comprehensive income.

Plan assets

In 2019, the amount of contributions for retirement plans amountto € 1,674 million. This consists of:– payments made to the pension plans of the Company of€ 1,585 million (2018: € 1,278 million), mainly relating to theContractual Trust Arrangement in Germany of € 1,509 million(2018: € 1,159 million) as well as to the Company UK scheme€ 59 million (2018: € 104 million);– payments made to the participation in BAE Systems Pension
Scheme in the UK of € 89 million (2018: € 330 million).
Contributions of approximately € 1,040 million are expected tobe made in 2020.
The weighted average duration of the DBO for retirement plansand deferred compensation is 18 years at 31 December 2019(31 December 2018: 16 years).

Pension obligations by countries and type of beneficiaries
The split of the DBO for retirement plans and deferred compensation between active, deferred and pensioner members for themost signiﬁcant plans is as follows:
ActiveDeferredPensioner

Germany

54%

8%

38%

France

99%

0%

1%

UK

67%

14%

19%

Participation in BAE System Pension Scheme (Main Scheme)

61%

16%

23%

Canada

92%

0%

8%

2

Pension obligations sensitivity to main assumptions
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 2019:
Change in actuarial assumptions

Impact on DBO
Change at 31 December

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

2019

2018

21,013

17,037

Increase by 0.5%-point(1,807)(1,204)

Decrease by 0.5%-point

2,074

1,338

Increase by 0.25%-point

184

136

Decrease by 0.25%-point

(160)

(130)

Increase by 0.25%-point

443

316

Decrease by 0.25%-point

(425)

(302)

Increase by 1 year

629

428

Airbus / Financial Statements 201951

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

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.

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.

Plan assets allocation
The fair value of the plan assets for retirement plans and deferred compensation can be allocated to the following classes:
2019

2018

QuotedpricesUnquoted
prices1,095

0Rest of the world

429

0

Emerging markets

535

0

1,816

177

Corporates

1,828

Governments(In € million)

Total

QuotedpricesUnquoted
prices

Total

1,095

1,061

0

1,061

429

361

0

361

535

359

0

359

1,993

1,355

0

1,355

242

2,070

1,570

71

1,642

2,010

0

2,010

1,451

0

1,451

415

0

415

491

0

491

Equity securities
EuropeGlobal
Bonds

Pooled investments vehicles
Commodities

0

0

0

0

98

98

Hedge funds

0

265

265

0

269

269

Derivatives

0

58

58

0

207

207

Property

0

563

563

0

494

494

Cash and money market funds
OthersBalance at 31 December

1,875

58

1,933

1,103

96

1,199

0

1,296

1,296

0

976

976

10,003

2,659

12,662

7,751

2,211

9,962

The majority of funded plans apply broadly an asset-liability
matching framework. The strategic asset allocation of theplans takes into account the characteristics of the underlying
obligations. Investments are widely diversiﬁed, such that the
failure of any single investment would not have a material impact
on the overall level of assets. A large portion of assets in 2019consists of ﬁxed income and equity instruments, although theCompany also invests in property, commodities and hedge
funds. The Company reassesses the characteristics of thepension obligations from time to time or as required by theapplicable regulation or governance framework. This typicallytriggers a subsequent review of the strategic asset allocation.

Provisions by Countries
The amount recorded as provision for retirement plans can be allocated to the countries as follows:
Pension plans of the Company
Germany

FranceUK

CanadaParticipation in BAE
Systems Pension
Scheme in the UK

DBO

10,813

2,017

1,492

427

3,991

18,740(In € million)

Total

Plan assets

6,497

23

1,319

273

3,343

11,455

Recognised at
31 December 2019

4,317

1,994

173

154

648

7,286

DBO

8,660

1,756

1,205

311

3,475

15,407

Plan assets

4,646

23

1,083

189

2,992

8,933

Recognised at
31 December 2018

4,014

1,733

122

122

483

6,474

Contributions to Defined Contribution Plans
Employer’s contribution to state and private pension plans, mainly in Germany and France, are to be considered as deﬁned
contribution plans. Contributions in 2019 amounted to € 853 million (2018: € 811 million).

52

Airbus / Financial Statements 2019

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

31.2

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:
2019

2018

(In € million)

DBO

Plan assets

Total

DBO

Plan assets

Total

Balance at 1 January

1,630(1,032)

598

1,362

(150)

1,212

Service cost (including past service cost)

0

0

0

118

0

118

Interest cost

25

0

25

23

0

23

Interest income

0

(15)

(15)

0

(6)

(6)

Remeasurement: actuarial (gains) andlosses arising fromchanges in demographic assumptions

254

0

254

(2)

0

(2)

changes in financial assumptions

322

0

322

8

0

8

changes in experience adjustments

22

0

22

33

0

33

plan assets

0

(77)

(77)

0

44

44

Changes in consolidation, transfersand others

(44)

0

(44)

(20)

1

(19)

Benefits paid

(13)

0

(13)

(11)

0

(11)

Contributions

Balance at 31 December

80

(84)

(4)

119

(921)

(802)

2,275

(1,208)

1,067

1,630

(1,032)598

The funding of the plans is as follows:
31 December(In € million)

2019

2018

Provisions

1,067

598

Non-current and current other assets

Total

In the trust arrangements between the trust and the participatingcompanies a minimum funding requirement is stipulated for the
portion of the obligation, which is not protected by the pension
guarantee association or Pensions-Sicherungs Verein in case

0

0

1,067

598

2

of an insolvency of the subsidiaries concerned. Some portionsof the obligation must be covered with securities in the sameamount, while other portions must be covered by 115%.

Airbus / Financial Statements 201953

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

32.

Share-Based Payment

Share-based compensation — Until 2015, the Company
operated a Performance and Restricted Unit Plan or LTIP
which qualiﬁes as a cash-settled share-based payment planunder IFRS 2 “Share-based Payment”. The grant of the units
will not physically be settled in shares (except with regard to
the Company Executive Committee Members). For details of
the conversion of some Performance Units granted to Executive
Committee Members into equity-settled plans see “– Note 33.1:
Remuneration-Executive Committee”.
Since 2016, the Company operates a Performance Units andPerformance 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 the extent
to which the employees have rendered service to date. The fairvalue of each LTIP unit is determined using a forward pricing

32.1

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

LTIP

In the years 2014 and 2015, the Board of Directors of theCompany approved the granting of LTIP Performance andRestricted Units. Since 2016, it has approved a LTIP Performance
Units and Performance Share Plan.
Additionally, since 2019 it has approved exceptional grants underan Equity Pool as described above.
The Company hedges the share price risk inherent in the cashsettled LTIP units by entering into equity swaps where thereference price is based on the Airbus SE share price. To theextent that cash-settled LTIP units are hedged, compensation
expense recognised for these units will effectively reﬂect thereference price ﬁxed under the equity swaps. In order to avoid
any dilution of its current shareholders out of equity-settled
LTIP units, the Company performs share buybacks to meet its

obligations to its employees, following the decisions of the Boardof Directors and approval of the AGM.
In 2019, compensation expense for LTIPs (incl. Equity Pool)
including the effect of the equity swaps amounted to € 104 million(2018: € 69 million).
As of 31 December 2019, provisions of € 144 million (2018:€ 140 million) relating to LTIP have been recognised.
The life-time of the Performance and Restricted Units as well as
Performance Shares is contractually ﬁxed (see the description of
the respective tranche in the following table). For the units, themeasurement is next to other market data, mainly affected by
the share price as of the end of the reporting period (€ 130.48
as of 31 December 2019) and the life-time of the units.

The fair value of units and shares granted per vesting date is as follows (LTIP plan 2019):
Expected vesting date(In € per unit / share granted)

May 2023 – Performance Shares

54

Fair value of Performance Units and Shares
112.92

May 2023 – Performance Units

112.83

May 2024 – Performance Units

108.44

Airbus / Financial Statements 2019

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

The principal characteristics of the LTIPs as at 31 December 2019 are summarised below:

Grant date (1)LTIP 2014 (6)LTIP 2015 (7)LTIP 2016 (8)LTIP 2017

LTIP 2018

LTIP 201913 November
2014

29 October
2015

25 October
2016

30 October
2017

30 October
2018

29 October
2019

Performanceand Restricted Unit Plan
Units

Performance Restricted Performance Restricted

Performance Plan
Units

SharesUnits

SharesUnits

SharesUnits

SharesNumber ofunits granted (2) 1,114,9 62 291,420 926,398 240,972

615,792

621,198

421,638

425,702278,376

281,181247,508

247,508

Number ofunits/shares
granted throughEquity Pool (3)

0

0

1,762

1,762

1,898

1,898

6,664

6,664

0

0

Number of units
outstanding (4)00432,617436,694

402,925

406,989

281,306

284,111247,508

247,50800340,239 113,086

Total numberof eligible
beneficiaries

1,621

Vesting
conditions

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

Share priceper unit limited
at vesting dates
to (5)€ 94.90€ 112.62

Vesting dates

50%
in June 201850%
in June 201950%
in June 201950% expected
in July 2020

Number ofvested units

814,238 271,275

1,564

311,473

113,711

1,671€ 105.34

1,601-€ 147.62

1,626-€ 213.88

1,576-€ 244.12-

50% each
50% each
50% each
50% each
expected:
100%
expected:
100%
expected:
100%
expected:
100%
in May 2020 expected: in May 2021 expected in May 2022 expected in May 2023 expectedin May 2021 in May 2020 in May 2022 in May 2021 in May 2023 in May 2022 in May 2024 in May 2023
654

654

94

94

0

0

0

0

(1) Date, when the vesting conditions were determined.
(2) Based on 100% target performance achievement. A minimum of 50% of Performance Units will vest; 100% in case of on-target performance achievement; up to a maximum of
150% in case of overachievement of performance criteria. In case of absolute negative results (cumulative EBIT of the Company) during the performance period, the Board of
Directors can decide to review the vesting of the Performance Units including the 50% portion which is not subject to performance conditions (additional vesting condition).
(3) Mirroring the respective plan rules and regulations, but granted at a different date based on specific Board of Directors’ resolutions.
(4) Including shares granted through the Equity Pool, if applicable.
(5) 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 € 47.45 (for LTIP 2014), € 56.31 (for LTIP 2015), € 52.67 (for LTIP 2016),€ 73.81 (for LTIP 2017),€ 106.94 (for LTIP 2018) and € 122,06(for LTIP 2019).
(6) Based on performance achievement of 80% for Performance Units under LTIP 2014.
(7) Based on performance achievement of 75% for Performance Units under LTIP 2015.
(8) Based on performance achievement of 75% for Performance Units under LTIP 2016.

2

Additionally, the Board of Directors approved in 2019 the exceptional grant of 17,853 Restricted & Performance Units and 11,188
Restricted & Performance Shares under the Equity Pool with an average fair value of € 111.35. 9,357 Units and 2,692 shares havevested in 2019. As of 31 December 2019, the number of units outstanding is 8,496 Units and 8,496 shares.

32.2

ESOP

In 2019 and 2018, the Board of Directors approved a new ESOP
scheme. Eligible employees were able to purchase a ﬁxed numberof previously unissued shares at fair market value (5, 15, 30, 50 or
100 shares). The Company matched each ﬁxed number of shareswith a number of the Company free shares based on a determinedratio (4, 7, 10, 13 and 25 free shares, respectively). During acustody period of at least one year, employees are restricted fromselling the shares, but have the right to receive all dividends paid.
Employees who directly purchased the Airbus SE shares have, in
addition, the ability to vote at the Annual Shareholder Meetings.
The subscription price was equal to the closing price at the Paris
stock exchange on 13 February 2019 (2018: 14 February 2018)
and amounted to € 104.38 (2017: € 84.17). Investing through amutual fund led to a price which corresponds to the average
price at the Paris stock exchange during the 20 trading days
immediately preceding 13 February 2019 (2018: 14 February2018), resulting in a price of € 97.76 (2018: € 88.65).
In 2019, the Company issued and sold 1,332,840 ordinary shares(2018: 1,365,760) with a nominal value of € 1.00 each.
In 2019, the Company issued and distributed 451,452 matchingordinary shares (2018: 446,059) with a nominal value of € 1.00
each. Compensation expense (excluding social security
contributions) of € 47 million (2018: € 38 million) was recognisedin connection with ESOP.

Airbus / Financial Statements 201955

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

33.

Remuneration

33.1

Remuneration – Executive Committee

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

2019

2018

16.5

18.7

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

1.1

4.7

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

10.5

5.3

Termination benefits (1)

(0.4)

8.6

Other benefits

0.4

0.5

4.5

8.7

Post-employment benefit costs

Social charges(2)

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

Total expense recognised

2.4

2

35.0

48.5

(1) 2019 Termination benefits include the adjustment of the estimated amount accounted for in 2018 based on last information available and applicable law.
(2) Costs of benefits provided through applicable mandatory collective and social security plans are accounted for among social charges.

Salaries and Other Short-Term Benefits (Including Bonuses)
The amount of bonuses is based on estimated performance achievement as at the balance sheet date and difference between
previous year estimation and actual pay-out in the current year. Outstanding short-term beneﬁts (bonuses) at year-end 2019 for
Executive Committee Members based on estimated performance achievement at year-end was € 7.5 million (2018: € 9.3 million).

Post-Employment and Other Long-Term Benefits
The post-employment and other long-term beneﬁts deﬁned obligation for the Executive Committee, including the CEO, amounted
to € 29.8 million at 31 December 2019 (2018: € 61.6 million). The disclosed post-employment and other long-term beneﬁts reﬂect
the total outstanding balance for all Executive Committee Members in charge at the end of the respective balance sheet date.
In 2019, the deﬁned beneﬁt plan in France has been frozen, leading to a remeasurement of past service cost recognised as a proﬁtin the Proﬁt & Loss which mainly explains the decrease in the Post-employment beneﬁts costs between 2018 (€ 4.7 million) and2019 (€ 1.1 million).

Share-Based Remuneration (“LTIP Award”)
The share-based payment expenses result from not yet forfeited units granted to the Executive Committee Members under theCompany’s LTIP which are remeasured to fair value as far as they are cash-settled.
In 2019, the Members of the Executive Committee were granted 30,168 Performance Units (2018: 18,554) and 30,168 Performance
Shares (2018: 21,359) for LTIP 2019, the respective fair value of these Performance Units and Shares at the respective grant dates
was € 7.7 million (2018: € 3.8 million). As of 31 December 2019, provisions of € 15.4 million (2018: € 9.4 million) relating to LTIP havebeen recognised. The total number of outstanding Performance and Restricted Units amounted to 134,398 at 31 December 2019(2018: 189,260), granted to the current Members of the Executive Committee.
Until and including the plan 2015, based on the intention of the Board of Directors to increase the long-term commitment of Executive
Committee Members to the success of the Company, the Board has authorised the Executive Committee Members to opt for partial
conversion of the otherwise cash-settled LTIPs into share-settled plans at each grant date of any new LTIP, requiring a minimum
conversion rate into equity settlement of 25% of total granted Performance Units. At the conversion date, each Executive Committee
Member individually determined the split of equity and cash settlement for the formerly granted LTIP. After overall performanceassessment of each of the plans, the vesting dates as determined at the initial grant date apply to all cash-settled Performance
Units. However, units converted into equity settlement only vest at the last of the vesting dates of the respective plan.

56

Airbus / Financial Statements 2019

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

Performance Units granted to Executive Committee Members until 31 December 2015 are summarised below:
LTIP 2014

LTIP 2015

Total number of units granted

159,448

189,476

Number of cash-settled units

117,816

143,217

Number of equity-settled units
Date of conversion
Share price at date of conversion

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

33.2

41,632

46,25928 February 201528 February 2016

€ 55.33€ 59.78

Total Annual Remuneration (deﬁned as Base Salary and Annual
Variable Remuneration most recently paid) with respect toapplicable local legal requirements, if any.
Past LTIP awards may be maintained in full or prorated, insuch cases as in case of retirement or if a mandate is notrenewed by the Company without cause, prorata being basedon the presence in the Company during performance periods.
The vesting of past LTIP awards follows the plans’ rules andregulations and is not accelerated in any case. LTIP awards areforfeited for Executives who leave the Company on their own
initiative, but this is subject to review by the Board of Directors.
The termination beneﬁts include assumptions about all effective,
known or planned terminations to date.

Other Benefits
Other benefits include expenses for Executive Committee
Members’ medical, death and disability coverage, company
car and other usual facilities as applicable.

Remuneration – CEO

The total remuneration of the CEO and Executive Member of the Board of Directors, related to the reporting periods 2019 and2018, consists in the aggregation of (i) the remuneration of the former CEO in 2018 and up to 10 April 2019, date of the 2019 Annual
General Meeting, and (ii) the remuneration of the current CEO between the 10 April 2019 and the end of 2019.

2

It can be summarised as follows:
2019

2018

Base salary (1)1,392,045

1,500,000

Annual variable pay

1,436,250

2,167,500

Post-employment benefit costs(2,694,448)

1,136,706

1,627,061

1,203,767

0302,256(In €)

Share-based remuneration (“LTIP award”) (2)Termination benefits
Other benefits

54,423

61,144Social charges (3)797,766

12,205(1) For 2019, the base salary is composed of the prorated base salary paid to the former CEO (€ 420,455) and to the current CEO (€ 971,591).
(2) 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 32: Share-Based Payment”).
(3) Social charges depends on the applicable regulation to the CEO. In France, social charges comprise benefits accrued through mandatory collective and state plans such aspension, death and disability or medical coverage.

The following comments relate only to the current CEO. Because his mandate started on 10 April 2019, no comparison withprevious year is relevant.

Annual Variable Pay
The annual variable pay is based on estimated performance achievement as of the balance sheet date and the difference between
the previous year’s estimation and actual pay-out in the current year.

Airbus / Financial Statements 201957

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

Post-Employment Benefit Costs
Post-employment beneﬁt costs relate to the aggregated amount of current service and interest costs for deﬁned beneﬁt plan andcompany cost for contributions base plans.
Following the Board decision to move from deﬁned beneﬁt commitment to contributions based plans and in line with a new French
regulation, the CEO pension rights will be accrued through a deﬁned contributions plan from 1 January 2020, which will coexist
with the former deﬁned beneﬁt pension plan.
Until the end of 2019, the retirement beneﬁt of the CEO has been accrued through a deﬁned beneﬁt commitment. It consisted ofgranting a pension at retirement age equal to a percentage of the Base Salary depending on length in service in the Executive
Committee, including mandatory applicable collective and state pension plans. The accrued pension rights under this commitment
have been frozen at the end of 2019: the target percentage has therefore been ﬁxed and will no longer accrue. The frozen pension
rights remain unvested until the retirement date of the CEO. The pension rights arising from the Company’s deﬁned contribution
plan are deducted from the frozen deﬁned pension rights.
As of 31 December 2019, the deﬁned beneﬁt obligation related to the frozen deﬁned beneﬁt commitment amounts to € 9,167,371. Thisobligation has been accrued in the 2019 Consolidated Financial Statements and will be updated annually up to the retirement dateof the CEO considering additional service cost and future changes on economic assumptions or other factors like salary increase.
For the ﬁscal year 2019, the cost related to the CEO’s pension rights accrued under Company’s plans during the year represented
a net proﬁt of € 2,814,868 composed of an expense of € 812,005 and the effect of the freeze of the deﬁned beneﬁt commitment
leading to a release of provision of € 3,626,873.
The annual cost of pension rights accrued under applicable mandatory collective and state pension plans are accounted for amongsocial charges.

Share-Based Remuneration
The table below gives an overview of the interests of the CEO, under the various LTIPs of the Company:
Granted Date
Performance Units and Shares
Revaluation

LTIP 2014 (1)LTIP 2015 (1)LTIP 2016 (1)LTIP 2017 (1)LTIP 2018 (1)LTIP 2019

12,64010,656

11,392

8,808

8,416

11,060

80%

75%

75%

100%

100%

100%

10,112

7,992

8,544

8,808

8,416

11,060in cash

7,584

2,997

0

0

0

0

in shares

2,528

0

0

0

0

0

in cash

0

2,997

4,272

4,404

4,208

5,530

in shares

0

1,998

4,272

4,404

4,208

5,530

May 2022

May 2023

Performance Units and Shares revalued
Vested in 2019

Outstanding 2019

Vesting scheduleCash-settled units
Equity-settled units

For vesting dates, see “– Note 32.1: LTIP”
June 2019

June 2020

May 2020

May 2021(1) 2014 to 2018 awards were granted before the appointment of the CEO and could vest during the CEO’s mandate.

Vesting of all Performance Units and Performance Shares granted to the CEO is subject to performance conditions.
As of 31 December 2019, provisions of € 1,896,787 relating to LTIP have been recognised. The pay-out from vested cash-settled
LTIP in 2019 was € 697,383 (excl. social charges).

Termination Benefits
The termination beneﬁt applicable to the CEO is described in the Company’s Remuneration policy.

Other Benefits
As stipulated in the Company’s Remuneration Policy, the beneﬁts offered to the CEO are similar to the beneﬁts granted to otherexecutives of the Company and comprise, among other matters, medical, death and disability coverage (both through the Frenchsocial security system and mandatory collective Company’s plans), a company car and usual facilities. Costs of beneﬁts provided
through applicable mandatory collective and social security plans are accounted for among social charges. The monetary valueof other beneﬁts provided to the CEO in 2019 amounted to € 33,802.
The Company has not provided any loans to, advances to and guarantees on behalf of the CEO.

58

Airbus / Financial Statements 2019

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

33.3

Remuneration – Board of Directors

The remuneration of the Non-Executive Members of the Board of Directors was as follows:
2019

2018

Fixum (1)AttendanceFees (2)Denis Ranque

210,000

Victor Chu (3)100,000(In €)

AttendanceFees (2)Total

210,000

75,000285,000

72,37650,000122,376

Total

Fixum (1)101,000

311,000

107,000

207,000

Non-Executive Board Members

Jean-Pierre Clamadieu(4)114,176

105,000

219,176

72,37650,000122,376

Ralph D. Crosby, Jr.

100,000

108,500

208,500

100,000

75,000175,000

Lord Drayson (5)120,000

105,000

225,000

114,475

55,000169,475

Catherine Guillouard (6)127,265

95,500222,765

120,000

75,000

195,000

Hermann-Josef Lamberti

122,735

77,500200,235

130,000

65,000

195,000

María Amparo Moraleda Martínez

130,000

105,000

235,000

127,238

65,000192,238

Claudia Nemat

100,000

74,500174,500

100,000

75,000175,000

100,000

102,000

202,000

72,37655,000127,376

80,00065,000145,000

80,00050,000130,000

00027,90010,00037,90000036,27010,00046,27000027,90010,00037,9001,304,176

1,046,000

2,350,176

1,290,910

720,000

2,010,910

René Obermann(7)

Carlos Tavares

Former Non-Executive Board Members
Hans-Peter Keitel (8)Sir John Parker(8)Jean-Claude Trichet (8)Total(1) Fixum includes a base fee for Board membership and Committee membership within the Audit Committee, the Remuneration, Nomination and Governance Committee (“RNGC”)
and/or the Ethics & Compliance Committee (“E&C”) as the case may be. The fixum for the year 2019 was paid 50% in July 2019 and 50% in January 2020. The fixum for theyear 2018 was paid 50% in January 2018 and 50% in July 2018.
(2) 2019 attendance fees include the board attendance fees and the ones in relation to Audit Committee, RNGC and E&C Committee meetings. The Board attendance fees related
to the first semester 2019 were paid in July 2019, those related to the second semester 2019 were paid in January 2020. The Committee attendance fees related to full year 2019were paid in January 2020.
(3) Member of the Board of Directors and the Audit Committee since 11 April 2018.
(4) Member of the Company Board of Directors and the RNGC since 11 April 2018. Member of the E&C Committee since 10 April 2019.
(5) Member of the E&C Committee since 11 April 2018.
(6) Chair of the Audit Committee since 10 April 2019.
(7) Member of the Board of Directors and the Audit Committee since 11 April 2018. Member of the E&C Committee since 30 July 2019.
(8) Member of the Company Board of Directors until 11 April 2018.

Airbus / Financial Statements 2019259

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

2.7 Capital Structure and Financial Instruments
34.

Total Equity

34.1

Equity Attributable to Equity Owners of the Parent

The Company’s shares are exclusively ordinary shares with a par value of € 1.00. The following table shows the development of
the number of shares issued and fully paid:(In number of shares)

Issued as at 1 January
Issued for ESOP2018

776,367,881

774,556,062

1,784,292

1,811,819

Issued for convertible bond

5,020,942-

Issued at 31 December

783,173,115

776,367,881

Treasury shares

Outstanding at 31 December

Holders of ordinary shares are entitled to dividends and to one
vote per share at general meetings of the Company.
Equity attributable to equity owners of the parent (including
purchased treasury shares) amounts to € 5,975 million (2018:€ 9,724 million) representing a decrease of € -3,749 million. This isdue to a net loss for the period of € -1,362 million and a decreasein other comprehensive income, principally related to a changein actuarial gains and losses of € -2,345 million and the markto market revaluation of the hedge portfolio of € -1,048 million,
a dividend payment of € -1,280 million (€ 1.65 per share), partly
compensated by the decrease of € 1,318 million in the valuation of
the puttable liability relating to ACLP (see “– Note 37.2: “Carrying
Amounts and Fair Values of Financial Instruments”).
Capital stock comprises the nominal amount of shares
outstanding. The addition to capital stock represents thecontribution for exercised options by employees of €1,784,292(2018: € 1,811,819) in compliance with the implemented ESOPs
and the conversion of € 5,020,942 in relation to the convertible
bond issued in July 2015 redeemable in shares.
Share premium mainly results from contributions in kind in
the course of the creation of the Company, cash contributions
from the Company’s initial public offering, capital increases andreductions due to the issuance and cancellation of shares.
Retained earnings include mainly the loss for the period and thechanges in other comprehensive income from remeasurementsof the deﬁned beneﬁt pension plans net of tax which amounts to€ -2,345 million in 2019 (2018: € -569 million), and cash dividend
payments to Airbus SE shareholders.
On 10 April 2019, the AGM decided to distribute a gross amountof € 1.65 per share, which was paid on 17 April 2019. For theﬁscal year 2019, the Company’s Board of Directors proposes acash distribution payment of € 1.80 per share.

60

2019

Airbus / Financial Statements 2019

(862,610)(636,924)

782,310,505

775,730,957

Treasury shares represent the amount paid or payable for own
shares held in treasury. During 2019, the number of treasury
stock held by the Company increased to 862,610 compared to636,924 as of 31 December 2018. No shares were sold backto the market nor cancelled (2018: 0 shares).
On 10 April 2019, the AGM of the Company authorised the Boardof Directors, for a period expiring at the AGM to be held in 2020,
to issue shares and to grant rights to subscribe for shares in the
Company’s share capital for the purpose of:– ESOPs and share-related LTIPs, provided that such powers
shall be limited to an aggregate of 0.14% of the Company’s
authorised share capital (see “– Note 32: 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 36.3:
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 10 April 2019, the AGM authorised the Board of
Directors for an 18-month period to repurchase up to 10% of
the Company’s issued share capital at a price per share notless than the nominal value and not more than the higher ofthe price of the last independent trade and the highest current
independent bid on the trading venues of the regulated marketof the country in which the purchase is carried out.
Furthermore, the AGM authorised both the Board of Directors
and the CEO, with powers of substitution, to establish the exact
number of the relevant shares to be cancelled.

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

34.2

Non-Controlling Interests

The non-controlling interests (“NCI”) from non-wholly owned subsidiaries increased to € 15 million as of 31 December 2019(2018: € -5 million). These NCI do not have a material interest in the Company’s activities and cash ﬂows.

35.

Capital Management

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

Long-term rating

Outlook

Short-term ratingStandard and Poor’s

A+

StableA-1+

Moody’s Investors Services

A2

StableP-1

Fitch Rating (unsolicited)

A-

Positive

F-1

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

The Average Capital Employed for the Company is deﬁned as
the average of the annual opening and closing positions of Fixed
Assets plus Net Operating Working Capital plus Operating Cashless Other Provisions.
Financial value is created if proﬁts relative to the Company’s
Capital Employed exceed the Company’s cost of capital. Valuecan be measured by comparing RoCE to the WACC. A three year
plan for a value creation ambition is constructed annually, and iscomposed of (i) RoCE, (ii) EBIT, and (iii) Free Cash Flow, which isdeﬁned as Cash provided by operating activities and Cash used
for investing activities less Change of securities, Contribution
to plan assets for pensions, realised Treasury swaps and bankactivities.

2

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

Airbus / Financial Statements 201961

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

36.

Net Cash

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

2019

2018
9,413

Cash and cash equivalents

9,314

Current securities

2,302

2,132

Non-current securities

11,066

10,662Gross cash position

22,682

22,207

Short-term financing liabilities(1,959)(1,463)Long-term financing liabilities(8,189)(7,463)

Total

12,534

13,281

The net cash position on 31 December 2019 amounted to€ 12,534 million (2018: € 13,281 million), with a gross cash
position of € 22,682 million (2018: € 22,207 million).
Derivative instruments recognised on the Company’s Statementof Financial Position consist of (i) instruments that are enteredinto as hedges of the Company’s operating activities or interest
result, and (ii) embedded foreign currency derivatives that arise

36.1

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

Cash and Cash Equivalents

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

2019

2018

Bank account and petty cash

1,649

1,862

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

7,014

6,576

Short-term securities (at fair value through OCI)

652

984

OthersTotal cash and cash equivalents
Recognised in disposal groups classified as held for sale

Recognised in cash and cash equivalents

(1)

6

9,314

9,428

0

15

9,314

9,413

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

36.2

Securities

The majority of the Company’s securities consist of debt
securities and are classiﬁ ed at fair value through OCI (see“– Note 37.2: Carrying Amounts and Fair Values of Financial
Instruments”).
The Company’s securities portfolio amounts to € 13,368 millionand € 12,794 million as of 31 December 2019 and 2018,
respectively. The security portfolio contains a non-current
portion of € 11,066 million (2018: € 10,662 million), and a current
portion of € 2,302 million (2018: € 2,132 million).
Included in the securities portfolio as of 31 December 2019 and2018, respectively, are corporate and government bonds bearing
either ﬁxed rate coupons (€ 12,908 million nominal value; 2018:62

Airbus / Financial Statements 2019

€ 12,152 million) or ﬂoating rate coupons (€ 188 million nominal
value; 2018: € 504 million), foreign currency funds of hedge
funds (€ 0 million nominal value; 2018: € 0 million) and foreign
currency funds of ﬁxed income funds (€ 5 million fair value; 2018:€ 10 million).
When the Company enters into securities lending or otherﬁnancing activities that involve the pledging of securities as
collateral, the securities pledged continue to be recognised on
the balance sheet. As of 31 December 2019, securities for an
amount of € 145 million were pledged as collateral for borrowings
from banks (2018: € 63 million).

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

36.3

Financing Liabilities

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

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

31 December(In € million)

2019

2018

Bonds and commercial papers

6,491

6,659

Liabilities to financial institutions

244

267

Loans

156

229

1,298

307

0

1

8,189

7,463

106

86

Lease liabilities
Others (1)Total long term financing liabilities
Liabilities to financial institutions
Loans

127

70

Lease liabilities

262

23

Others (1)

1,464

1,284

Total short term financing liabilities

1,959

1,463

Total

10,1488,926(1) Included in “others” are financing liabilities to joint ventures.

Long-term financing liabilities, mostly comprising of bonds
and lease liabilities, increased by € +726 million to € 8,189 million(2018: € 7,463 million), mainly due to the application of IFRS 16(see “– Note 2: Accounting Policies”). It was partly offset by theconversion of the convertible bond issued on 1 July 2015 for
an amount of € 500 million. The conversion price was € 99.54
per ordinary share.
Short-term financing liabilities increased by € +496 million to€ 1,959 million (2018: € 1,463 million). The increase in short-term
ﬁnancing liabilities is mainly related to the application of IFRS 16.

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
volume of € 3 billion. The Company established in April 2015 a
US$2 billion commercial paper programme which has been
increased to US$3 billion in April 2016. As of 31 December 2019,
there were no outstanding amounts under this US commercial
paper. The commercial paper issuance activity was limited during
the course of 2019.

2

The Company has issued several euro-denominated bonds
under its EMTN programme and three stand-alone US dollardenominated bonds on the US institutional market under Rule
144A. It has also issued a euro-denominated exchangeablebonds into Dassault Aviation shares. Furthermore, the Company
has long-term US dollar-denominated loans outstanding with theDevelopment Bank of Japan (“DBJ”).

Airbus / Financial Statements 201963

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

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

Principal
amount31 December(In million)

2019

Coupon Effective
Issuance or interest interest
date
rate
rate

2018

Maturity
date

Additional features

US$ 1,000

896

848

Apr 2013

2.70%

2.73%

Apr 2023

Interest rate swapped
into 3M Libor +0.68%

EMTN 10 years€ 1,000

1,049

1,038

Apr 2014

2.375%

2.394%

Apr 2024

Interest rate swapped
into 3M Euribor +1.40%

EMTN 15 years

€ 500

555

523

Oct 2014

2.125%

2.194%

Oct 2029

Interest rate swapped
into 3M Euribor +0.84%

EMTN 10 years

€ 600

617

594

May 2016

0.875%

0.951%

May 2026

Interest rate swapped
into 3M Euribor

EMTN 15 years

€ 900

940

865

May 2016

1.375%

1.49%

May 2031

Interest rate swapped
into 3M Euribor

Jul 2022

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

US$ Bond 10 years

Convertible bond
7 years

€ 500

0

477

Jul 2015

0.00%

1.386%

Exchangeable bonds
5 years€ 1,078

1,068

1,061

Jun 2016

0.00%

0.333%Jun 2021

Exchangeable into
Dassault Aviation sharesissued at 103.75%

US$ Bond 10 years

US$ 750687

632

Apr 2017

3.15%

3.16%

Apr 2027

Interest rate swapped
into 3M Libor +0.87%

US$ Bond 30 years

US$ 750680

621

Apr 2017

3.95%

4.02%

Apr 2047

Interest rate swapped
into 3M Libor +1.61%

6,491

6,659

Jan 2011

3M
US-Libor+1.15%Jan 2021

Interest rate swapped
into 4.76% fixed

Bonds

DBJ 10 years

US$ 300

89

87

Others261

266

Liabilities tofinancial institutions

350

353

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

Balance at
31 December
2018

IFRS 16ImpactBalance at
1 January
2019

Cash
flows

Foreignexchange
movements Others (1)Balance at
31 December
2019

Bonds and commercial papers

6,659

0

6,659

(168)

0

0

0

6,491

Liabilities to financial institutions

353

0

353

0

0

(3)

0

350

Loans

299

0

299

106

(60)

(62)

0

283

Finance lease liabilities

330

1,352

1,682

(294)

0

172

0

1,560

Others

1,285

0

1,285

196

0

(17)

0

1,464

Total

8,926

1,352

10,278

(160)

(60)

90

0

10,148(1) Included in “other assets and liabilities and others” in the Statements of Cash Flows.

64

Changes inscope

Airbus / Financial Statements 2019

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

37.

Information about Financial Instruments

37.1

Financial Risk Management

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

Market Risk
Foreign exchange risk — Foreign exchange risk arises when
future commercial transactions or ﬁrm commitments, recognised
monetary assets and liabilities and net investments in foreign
operations are denominated in a currency that is not the entity’sfunctional currency.
The Company manages a long-term hedge portfolio withmaturities of several years covering its net exposure to US
dollar sales, mainly from the commercial activities of Airbus.
This hedge portfolio covers a large portion of the Company’s
ﬁrm commitments and highly probable forecasted transactions.
Most of the Company’s revenue is denominated in US dollars,
while a major portion of its costs is incurred in euro and to a lesser
extent in other foreign currencies. Consequently, to the extent
that the Company does not use ﬁnancial instruments to hedge
its exposure resulting from this currency mismatch, its proﬁts
will be affected by changes in the €/US$ exchange rate. As theCompany intends to generate proﬁts primarily from its operations
rather than through speculation 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, as of 30 June
2018, the Company adopted a new hedge strategy to hedge its
net exposure (US dollar revenue less US dollar cost) resulting
from commercial aircraft deliveries of speciﬁc aircraft types.
The strategy more closely aligns hedge accounting with risk
management activities.
Under the new strategy the foreign exchange derivatives usedas hedging instruments are designated as a hedge of a portionof the cash ﬂows received for each of a number of deliveries of a
speciﬁc aircraft type that are expected to occur in a given monthand hence will allow the hedge result to move along with thehedged deliveries in the event of a shift in deliveries.

If such a shift in hedged deliveries occurs, hedge ineffectivenesswill arise to the extent the maturities of the hedging instrument
and the expected timing of the hedged cash ﬂows are no longer
perfectly aligned. In order to minimise such ineffectiveness theCompany will close the timing gap by rolling over hedges to new
maturities, using foreign exchange swap contracts.
In addition, the Company will designate the risk of changes inthe spot element as the hedged risk in order to eliminate theineffectiveness resulting from changes in forward points between
different maturities. The forward element will be accounted for
as a cost of hedging similar to the time value of options.
Until 30 June 2018 the Company typically hedged firmly
committed sales in US dollar using a “ﬁrst ﬂow approach”. Under
that approach, the foreign currency derivatives the Company
entered into were designated as a hedge of the ﬁrst US dollar
inﬂows received from the customer at aircraft delivery in a given
month. The strategy implied that only a portion of the expected
monthly customer payments made at aircraft delivery were
hedged and that a reduction of monthly cash inﬂows as a resultof postponements or order cancellations had no impact on
the effectiveness of the hedge as long as the actual gross US
dollar cash inﬂows received at aircraft delivery in a particularmonth exceeded the portion designated as being hedged in thatmonth. According to the prospective application requirement of
IFRS 9, the fair values of the legacy portfolio in place at inceptionof the new strategy continue to be assigned to the previous
ﬁ rst ﬂ ow hedge regime and remain in the hedge reserve in
OCI, to be recognised in proﬁt and loss only at maturity of theoriginally hedged cash ﬂows (unless those cash ﬂows are nolonger expected to occur).
As a result of prospective application, the hedging instruments
designated under the new strategy had a non-zero fair value athedge inception, which might create some small ineffectiveness.

2

Another source of ineffectiveness is the counterparty credit risk
inherent in the hedge portfolio. As such, credit risk is absent fromthe hedged cash ﬂows. However, since netting arrangements arein place with all the hedge counterparties and the Company hasa policy of trading with investment grade counterparties only, thecredit risk arising from its hedging instruments, and associatedchanges in credit risk, have historically been negligible and are
expected to remain so.
The Company also hedges its expected foreign currency
exposure arising from US dollar or pound sterling cash outﬂows
in the commercial aircraft business on a ﬁrst outﬂow basis,though to a much lesser extent than US dollar cash inﬂows.
In military aircraft and non-aircraft businesses, the Company
hedges inﬂows and outﬂows in foreign currencies from ﬁrmly
committed or highly probable forecast sales and purchase
contracts. Here, foreign currency derivatives are typicallycontracted in lower volumes; they may be accounted forusing a ﬁ rst ﬂ ow approach or are designated as hedgesof speciﬁ c agreed milestone payments. The amount of the
expected flows to be hedged can cover up to 100% of
the equivalent of the net US dollar exposure at inception.

Airbus / Financial Statements 201965

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

The coverage ratio considers the variability in the range ofpotential outcomes taking into account macroeconomic
movements affecting spot rates and interest 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, the Company may use rollover strategies,
usually involving foreign exchange swaps.
For all foreign currency hedges of future cash ﬂ ows which
qualify for hedge accounting under IFRS 9, the Company uses
the cash ﬂ ow hedge model, which requires (i) recognising
the effective portion of the fair value changes of the hedging
derivatives in equity (within OCI) and (ii) recognising the effectof the hedge in proﬁ t or loss when the hedged cash ﬂ ows
affect proﬁt or loss.
In addition, the Company hedges currency risk arising fromﬁnancial assets or liabilities denominated in currencies otherthan the euro, including foreign currency receivable andpayable accounts, as well as foreign currency denominatedfunding transactions or securities. The Company applies hedge
accounting if a mismatch in terms of proﬁt or loss recognitionof the hedging instrument and hedged item would otherwise
occur. Frequently, however, the currency-induced gains orlosses of the hedging instrument and the hedged item matchin terms of proﬁt or loss recognition (“natural hedge”), so nohedge accounting is required. Sometimes such gains or losses
may end up in different sections of the income statement (suchas operating proﬁt for the hedged item and ﬁnancial result for
the hedging instrument). If so, the Company may choose topresent the gains or losses of both the hedging instrument
and the hedged item in the same income statement line item
if certain formal requirements are met.
As hedging instruments, the Company primarily uses foreign
currency forwards, foreign currency options and to a minor
extent non-derivative ﬁnancial instruments. A hedge ratio of
1:1 is applied by the Company.
The Company also has foreign currency derivative instruments
which are embedded in cer tain purchase contracts
denominated in a currency other than the functional currencyof any substantial party to the contract, principally in US
dollar and pound sterling. If such embedded derivatives are
required to be accounted for separately from the host purchase
contract, related gains or losses are generally recognised inother ﬁnancial result. However, if the embedded derivatives
qualify for hedge accounting, the Company might choose to
designate them as a hedging instrument in a hedge of foreign
currency risk, in which case they are accounted for under the
cash ﬂow hedge model as described above.
Interest rate risk — The Company uses an asset-liability
management approach with the objective to limit its interest raterisk. It 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 typesof interest rate derivatives, such as interest rate swaps andinterest rate futures contracts, in order to minimise risks andﬁnancial impacts.

66

Airbus / Financial Statements 2019

The vast majority of related interest rate hedges qualify forhedge accounting, and most of them are accounted for under
the fair value hedge model. As a result, both the fair valuechanges of these derivatives and the portion of the hedged
items’ fair value change that is attributable to the hedged
interest rate risk are recognised in proﬁt and loss, where they
offset to the extent the hedge is effective.
A few interest rate swaps that have been entered into as ahedge of certain of the Company variable rate debt (see “–Note 35.3: Financing Liabilities”) are accounted for under the
cash ﬂow hedge model. Related fair value gains are recognisedin OCI and reclassiﬁed to proﬁt or loss when the hedged interest
payments affect proﬁt or loss.
The Company invests in ﬁnancial instruments such as overnight
deposits, certiﬁcates of deposits, commercial papers, othermoney market instruments and short-term as well as mediumterm bonds. For its ﬁnancial instruments portfolio, the Company
has an Asset Liability Management Committee in place thatmeets regularly and aims to limit the interest rate risk on a fairvalue basis through a value-at-risk approach, from which resultsa hedge ratio that is however not actively steered.
Commodity price risk — The Company is exposed to risk
relating to ﬂuctuations in the prices of commodities used in
the supply chain. It manages these risks in the procurement
process and to a certain extent uses derivative instruments
in order to mitigate the risks associated with the purchaseof raw materials. To the extent that the gains or losses of thederivative and those of the hedged item or transaction do notmatch in terms of proﬁt or loss, the Company applies cash
ﬂow hedge accounting to the derivative instruments, with ahedge ratio of 1:1.
Equity price risk — The Company is to a small extent invested
in equity securities mainly for operational reasons. Its exposure
to equity price risk is hence limited. Furthermore, it is exposed
under its LTIP to the risk of the Company share price increases.
The Company limits these risks through the use of equity
derivatives that qualify for hedge accounting and have been
designated as hedging instruments in cash ﬂow hedges, witha hedge ratio of 1:1.
Sensitivities of market risks — The approach used to measure
and control market risk exposure of the Company’s ﬁnancial
instrument portfolio is, amongst other key indicators, the valueat-risk model (“VaR”). The VaR of a portfolio is the estimatedpotential loss that will not be exceeded over a speciﬁed periodof time (holding period) from an adverse market movement witha speciﬁed conﬁdence level. The VaR used by the Company
is based upon a 95% conﬁdence level and assumes a ﬁ veday holding period. The VaR model used is mainly based on
the so-called “Monte-Carlo-Simulation” method. The model
generates a wide range of potential future scenarios for market
price movements by deriving the relevant statistical behaviourof markets for the portfolio of market data from the previous
two years and observed interdependencies between different
markets and prices.
The Company’s VaR computation includes the Company’s
ﬁnancial debt, short-term and long-term investments, foreign
currency forwards, swaps and options, commodity contracts,ﬁnance lease receivables and liabilities, foreign currency tradeliabilities and receivables and contract assets.

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

Although VaR is an important tool for measuring market risk,
the assumptions on which the model is based give rise to some
limitations, including the following:– a ﬁve-day holding period assumes that it is possible to hedge
or dispose of positions within that period. This is considered
to be a realistic assumption in almost all cases but may not
be the case in situations in which there is severe market
illiquidity for a prolonged period;– a 95% conﬁdence level does not reﬂect losses that may occur
beyond this level. Even within the model used there is a 5%
statistical probability that losses could exceed the calculated
VaR;– the use of historical data as a basis for estimating the statisticalbehaviour of the relevant markets and ﬁnally determining

the possible range of future outcomes out of this statisticalbehaviour may not always cover all possible scenarios,
especially those of an exceptional nature.
The Company uses VaR amongst other key ﬁgures in order todetermine the riskiness of its ﬁnancial instrument portfolio andin order to optimise the risk-return ratio of its ﬁnancial asset
portfolio. Further, its investment policy deﬁnes a VaR limit for the
total portfolio of cash, cash equivalents and securities. The total
VaR as well as the different risk-factor speciﬁc VaR ﬁgures ofthis portfolio are measured and serve amongst other measures
as a basis for the decisions of the Company’s Asset Liability
Management Committee.

A summary of the VaR position of the Company ﬁnancial instruments portfolio at 31 December 2019 and 2018 is as follows:

Total VaR

Equityprice VaR

Currency
VaR

Commodity
price VaR

Interest rate
VaR

Foreign exchange hedges for forecast transactions
or firm commitments

643

0

643

0

179

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

113

34

78

0

71

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

51

0

41

0

27

Commodity contracts

3

0

0

3

0

(In € million)

31 December 2019

5

5

1

0

0

Diversification effectEquity swaps

(249)

(4)

(177)

0

(121)

All financial instruments

566

35

586

3

156

Foreign exchange hedges for forecast transactions
or firm commitments

711

0

716

0

88

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

82

28

70

0

34

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

21

0

20

0

19

Commodity contracts

3

0

0

3

0

31 December 2018

Equity swaps

8

8

1

0

0

Diversification effect

(182)

(6)

(147)

0

(48)

All financial instruments

644

31

659

3

93

2

The decrease of the total VaR as of 31 December 2019 is mainly attributable to a strong decrease of market volatilities, inparticular in €/$. The Company uses its derivative instruments entirely for hedging purposes. As a result, the respective market
risks of these hedging instruments are – depending on the hedges’ actual effectiveness – offset by corresponding opposite
market risks of the underlying forecast transactions, assets or liabilities. Under IFRS 7, the underlying forecast transactions
do not qualify as ﬁnancial instruments and are therefore not included in the tables shown above. Accordingly, the VaR of theforeign exchange hedging portfolio in the amount of € 643 million (2018: € 711 million) cannot be considered as a risk indicator
for the Company in the economic sense.

Airbus / Financial Statements 201967

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

Liquidity Risk
The Company’s policy is to maintain sufficient cash andcash equivalents at any time to meet its present and futurecommitments as they fall due. It manages its liquidity by holding
adequate volumes of liquid assets and maintains a committed
credit facility (€ 3.0 billion as of 31 December 2019 and 2018) inaddition to the cash inﬂow generated by its operating business.
The Company continues to keep within its asset portfolio thefocus on low counterparty risk. In addition, it maintains a setof other funding sources, and accordingly may issue bonds,
notes and commercial papers or enter into security lending

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

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

Carrying
amountContractual
cash flows< 1 year

1 year 2 years

2 years 3 years

3 years 4 years

4 years 5 years> 5 years(26,828)(28,307)(17,306)(1,718)(484)(1,293)(1,310)(6,196)31 December 2019Non-derivative financial liabilities
Derivative financial liabilities

Total(3,994)(6,160)(1,559)(1,540)(1,442)

(998)

(519)

(102)

(30,822)(34,467)(18,868)(3,258)(1,923)(2,291)(1,829)(6,298)(28,302)(29,843)(20,541)(429)(1,452)(726)(1,075)(5,620)31 December 2018
Non-derivative financial liabilities
Derivative financial liabilities

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

(868)

(492)

(157)

(81)

(31,057)(34,322)(22,347)(1,504)(2,320)(1,218)(1,232)(5,701)

Non-derivative ﬁnancial liabilities included in the table above comprise ﬁnancing liabilities as presented in “– Note 37.2: 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, which amount to € -4,277 million at 31 December
2019 (€ -4,577 million at 31 December 2018) are not included.

Lease Liabilities
The maturity analysis of lease liabilities, based on contractual undiscounted cash ﬂows is as follows:(In € million)

Not later than 1 year

(262)

Later than 1 year and not later than 5 years(768)

Later than 5 years(606)

Total undiscounted lease liabilities at 31 December 2019

(1,636)

Lease liabilities included in the statement of financial position at 31 December 2019

(1,560)Current
Non-current(262)(1,298)Credit Risk
The Company is exposed to credit risk to the extent of nonperformance by either its customers (e.g. airlines) or its
counterparts with regard to ﬁnancial instruments or issuers ofﬁnancial instruments for gross cash investments. However, it
has policies in place to avoid concentrations of credit risk andto ensure that credit risk is limited.
As far as central treasury activities are concerned, credit risk
resulting from ﬁnancial instruments is managed by the Company.
In order to ensure sufﬁcient diversiﬁcation, a credit limit system
is used.

68

Airbus / Financial Statements 2019

The Company monitors the performance of the individual
ﬁnancial instruments and the impact of market developments on
their performance and takes appropriate action on foreseeable
adverse development based on pre-deﬁned procedures andescalation levels.
Sales of products and services are made to customers after
having conducted appropriate internal credit risk assessment.
In order to support sales, primarily at Airbus, Airbus Helicoptersand ATR, the Company may agree to participate in customer
ﬁnancing, on a case-by-case basis either directly or throughNotes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments

guarantees provided to third parties. In determining the amountand terms of the ﬁnancing transaction, the Company takes
into account the airline’s credit rating and economic factors
reﬂecting the relevant ﬁnancial market conditions, together withappropriate assumptions as to the anticipated future value ofthe ﬁnanced asset.
The booked amount of ﬁnancial assets represents the maximum
credit exposure. The credit quality of ﬁnancial assets can beassessed by reference to external credit rating (if available) orinternal assessment of customers’ creditworthiness e.g. airlines
by way of internal risk pricing methods.
For further information relating to gross credit risk and impairment
see “– Note 37.7: Impairment Losses”.

37.2

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.
Its ﬁnancial liabilities include trade liabilities, obligations towards
ﬁnancial institutions, issued bonds and refundable advancesfrom European Governments. All purchases and sales of ﬁnancial
assets are recognised on the settlement date according tomarket conventions.
Financial assets at amortised cost — This category comprises
assets that are held for collection of contractual cash ﬂows where
those cash ﬂows represent solely payments of principal andinterest. It includes trade receivables.

Financial assets at fair value through OCI — This categorycomprises:(i) equity investments that are not held for trading. With the
exception of dividends received, the associated gains andlosses (including any related foreign exchange component)
are recognised in OCI. Amounts presented in OCI are notsubsequently transferred to profit and loss on derecognitionof the equity investment nor in the event of an impairment;(ii) debt instruments where contractual cash flows are solely
payments of principal and interest, and that are held both forsales and collecting contractual cash flows. Changes in their fairvalue other than impairment losses and foreign exchange gains
and losses on monetary items are recognised directly within
AOCI. Upon disposal of such financial assets, the cumulative
gain or loss previously recognised in equity is recorded aspart of other income (other expenses) from investments in theConsolidated Income Statement for the period. Interest earnedon the investments are presented as interest income in theConsolidated Income Statement using the effective interest
method. Dividends earned on investment were recognised
as other income (other expenses) from investments in theConsolidated Income Statement when the right to the payment
had been established.
Financial assets at fair value through proﬁt or loss — This
category comprises all other ﬁnancial assets (e.g. derivative
instruments) that are to be measured at fair value (including equity
investments for which the Company did not elect to presentchanges in fair value in OCI).
The Company assigns its ﬁnancial instruments into classes
based on their balance sheet category.

2

Airbus / Financial Statements 201969

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

The following table presents the carrying amounts and fair values of ﬁnancial instruments by class and by IFRS 9 measurement
category as of 31 December 2019:
Financial assets
and liabilities atamortised cost

Financial
instruments
total

Fair value
through profit
or loss

Fair value
through OCI

Amortised
cost

Fair
value

Book
value

Fair
value

Equity investments (1)

1,125

1,390

0

0

2,516

2,516

Customer financing(In € million)

AssetsOther investments and otherlong-term financial assets

350

0

0

0

350

350

Other loans

0

0

2,036

2,036

2,036

2,036

Trade receivables

0

0

5,674

5,674

5,674

5,674

Contract assets

0

0

1,258

1,258

1,258

1,258

Other financial assets
Derivative instruments
Non-derivative instruments
Securities

1,440

0

0

0

1,440

1,440

0

0

1,653

1,653

1,653

1,653

0

13,3680013,36813,368Cash and cash equivalents

7,014

652

1,648

1,648

9,314

9,314

Total

9,929

15,41012,26912,26937,60937,60900(6,491)(6,696)(6,491)(6,696)

Liabilities
Financing liabilities
Bonds and commercial papers
Liabilities to financial institutions
and others

00(2,096)(2,098)(2,096)(2,098)Finance lease liabilities

00(1,560)(1,560)(1,560)(1,560)(3,994)00

0(3,994)(3,994)

Other financial liabilities
Derivative instruments
European Governments’ refundable
advances (2)00(4,277)(4,277)(4,277)(4,277)

Others0(1,014)

(859)

(859)

(1,873)(1,873)

Trade liabilities

Total

0

0

(14,808)(14,808)(14,808)(14,808)(3,994)(1,014)(30,091)(30,298)(35,099)(35,306)(1) Other than those accounted for under the equity method.
(2) The European Governments’ refundable advances of € -4,277 million are measured at amortised cost. Fair values cannot be reliably measured because their risk sharing natureand the uncertainty of the repayment dates give rise to a broad range of reasonable fair value estimates and make it impossible to reasonably assess the probabilities of the various
estimates within the range. This may change and reliable fair value measures become available as the related programmes approach the end of production.

70

Airbus / Financial Statements 2019

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

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

Fair value
through profit
or loss

Fair value
through OCI

Equity investments (1)

1,202

1,065

Customer financing

510

0(In € million)

Amortised
cost

Financial
instruments
total

Fair
value

Book
value

Fair
value

0

0

2,267

2,267

0

0

510

510

AssetsOther investments and otherlong-term financial assets

Other loans

0

0

1,523

1,523

1,523

1,523

Trade receivables

0

0

6,078

6,078

6,078

6,078

Contract assets

0

0

854

854

854

854

1,317

0

0

0

1,317

1,317

0

0

1,602

1,602

1,602

1,602

Other financial assets
Derivative instruments
Non-derivative instruments
Securities

012,7940

012,794

12,794

Cash and cash equivalents

6,576

984

1,853

1,853

9,413

9,413

Total

9,605

14,843

11,91011,91036,35836,358

Bonds and commercial papers

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

Liabilities to financial institutions
and others

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

Finance lease liabilities (2)

0

0

(330)

(330)

(330)

(330)

(2,755)000(2,755)(2,755)

Liabilities
Financing liabilities

Other financial liabilities
Derivative instruments
European Governments’refundable advances (3)00(4,577)(4,577)(4,577)(4,577)

Others0(2,300)

(839)

(839)

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

Total

0

0

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

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

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, the Company determines fair values byusing generally accepted valuation techniques on the basisof market information available at the end of the reporting
period. Derivative instruments are generally managed on thebasis of the Company’s net exposure to the credit risk of eachparticular counterparty and fair value information is provided to
the Company’s key management personnel on that basis. For
these derivative instruments, the fair value is measured basedon the price that would be received to sell a net long position, ortransfer a net short position, for a particular credit risk exposure
as further described below.
Depending on the extent the inputs used to measure fair values
rely on observable market data, fair value measurements may behierarchised according to the following levels of input:– Level 1: quoted prices (unadjusted) in active markets for
identical assets and liabilities;– Level 2: inputs other than quoted prices that are 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;

Airbus / Financial Statements 201971

Notes to the IFRS Consolidated Financial Statements /2.7 Capital Structure and Financial Instruments– Level 3: inputs for the asset or liability that are not basedon observable market data – fair values measured based on
Level 3 input rely to a signiﬁcant extent on estimates derived
from the Company’s own data and may require the use ofassumptions that are inherently judgemental and involve
various limitations.

The fair values disclosed for ﬁnancial instruments accounted forat amortised cost reﬂect Level 2 input. Otherwise, the Company
determines mostly fair values based on Level 1 and Level 2 inputs
and to a lesser extent on Level 3 input.

The following table presents the carrying amounts of the ﬁnancial instruments held for the three levels of the fair value hierarchy
as of 31 December 2019 and 2018, respectively:
2019(In € million)

2018

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

1,988

0

528

2,516

1,778

0

489

2,267

0

1,224

216

1,440

0

1,152

165

1,317

13,3680013,368

12,7940

012,794

Financial assets measured at fair value
Equity instruments
Derivative instruments
Securities (1)Customer financing

0

0

350

350

0

0

510

510

7,014

652

0

7,666

6,576

984

0

7,560

22,370

1,876

1,094

25,34021,148

2,136

1,164

24,448Derivative instruments

0(3,974)(20)(3,994)0(2,729)(26)(2,755)

Other financial liabilities

00(1,014)(1,014)00(2,300)(2,300)0(3,974)(1,034)(5,008)0(2,729)(2,326)(5,055)

Commodity
swap
agreements

Total

Cash equivalents

Total
Financial liabilities measured at fair value

Total(1) Reclassified from Level 2 to Level 1.

The development of ﬁnancial instruments of Level 3 is as follows:

Derivatives

Participations

Customerfinancing

Total

Written put
options on
NCI interests

0

478

770

1,248

0

(3)

(3)

Business combination

198

0

0

198

(2,247)0(2,247)

Profit or loss

25

0

(260)

(235)

0

(67)

(67)

Equity

0

23

0

23

0

0

0

(58)

(12)

0

(70)

0

44

44

0

0

0

0

(53)

0

(53)

(In € million)

Balance at 1 January 2018

Settlements
ReleaseBalance at 31 December 2018

165

489

510

1,164

(2,300)(26)(2,326)

Business combination

0

0

0

0

0

0

0

Profit or loss

51

0

(160)

(109)

0

(12)

(12)

Equity

0

39

0

39

1,286

0

1,286

Settlements

0

0

0

0

0

18

18

Others

0

0

0

0

0

0

0

216

528

350

1,094

(1,014)(20)(1,034)

Balance at 31 December 2019

The ﬁnancial liabilities measured at fair value and classiﬁed
as Level 3 consist mainly of the written put options on noncontrolling interests (“NCI puts”) relating to ACLP (see “— Note 7:
Acquisitions and Disposals”). The fair value of these NCI puts
are derived from a discounted cash ﬂow analysis using the latest
operating plan and a projection over the life-time of the A220
programme.

72

Airbus / Financial Statements 2019

In addition a post-tax WACC of 7.5% is used to discount theforecasted cash ﬂows, taking into account the speciﬁcities ofthe programme (2018: 6.95%).
The decrease in the fair value of the NCI puts reﬂects the latest
projections on funding needs, ramp-up phasing and market
projections.

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

Financial Assets Designated at Fair Value through Profit or Loss
The following types of ﬁnancial assets held at 31 December 2019 and 2018, respectively, are designated at fair value through proﬁt
or loss:(In € million)

Nominal amount at
initial recognition at
31 December 2019

Fair value at
31 December
2019

Nominal amount at
initial recognition at
31 December 2018

Fair value at
31 December
2018

7,009

7,009

5,415

5,416

5

5

9

9

7,014

7,014

5,424

5,425

Designated at fair value through profit
or loss at recognition
Money market funds (accumulating)Foreign currency funds of fixed income funds

Total

The Company manages these assets and measures their performance on a fair value basis.
In addition, the Company invests in non-accumulating money market funds, which pay interest on a monthly basis. The fair valueof those funds corresponds to their nominal amount at initial recognition date amounting to € 1,316 million (2018: € 1,159 million).

Fair Value Measurement Method
The Company uses the following methods to measure fair values:

Derivatives — The fair values of derivative instruments reﬂect
quoted market prices, where available, but in most cases are
determined using recognised valuation techniques such as
option-pricing models (e.g. Black & Scholes model) 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 ofmarket data. Furthermore, to the extent that these instruments are
subject to master netting arrangements and similar agreements
and managed on the basis of net credit exposure, their fairvalues reﬂect credit and debit value adjustments based on the
net long or net short position that the Company has with eachcounterparty. Except for certain short-term commodity contracts
and derivatives presented in the Level 3 section above, derivative
fair values are measured based on Level 2 input.

Equity instruments — The fair values of listed equity instruments
reﬂect quoted market prices. For non-listed equity investments
for which quoted market prices are not available, the Company
determines the fair values using valuation methods such as net
asset values, discounted cash ﬂow method or a comparable
valuation technique.
Customer ﬁnancing assets and other loans — The carrying
amounts reﬂected in the annual accounts are used as a proxyfor fair value.
Contract assets, trade receivables and other receivables —The carrying amounts reﬂected in the annual accounts are used
as reasonable estimates of fair value because of the relatively
short period between the receivables’ origination and theirmaturity.

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

Securities — The fair values of securities reﬂect their quoted
market price at the end of the reporting period.
Cash and cash equivalents — include cash in hand, cash inbanks, checks, ﬁxed deposits as well as commercial papers
and money market funds. The carrying amounts reﬂected in theannual accounts are used as reasonable estimates of fair value
because of the relatively short period between the originationof the instrument and its maturity or due date. The fair valueof commercial papers is determined based on Level 2 input
by discounting future cash ﬂows using appropriate interest
rates. The fair values of money market funds are determined byreference to their quoted market price.

2

Trade liabilities and current other ﬁnancial liabilities — For
the same reason as trade receivables, carrying amounts areused as reasonable fair value approximations for trade liabilities
and current other ﬁnancial liabilities.

The following interest rate curves are used in the determination of the fair value in respect of the derivative ﬁnancial instruments asof 31 December 2019 and 2018:31 December
2019

2018

2019

(0.36)(0.30)

1.93

1 year

(0.28)(0.19)

1.94

5 years(0.20)

0.14

1.68

10 years

0.13

0.76

1.85

2.73

€

(Rate in %)6 months

2018

2019

2.95

0.90

1.05

3.10

1.01

1.29

2.60

0.88

1.31

1.02

1.44

US$

2018
£

Airbus / Financial Statements 201973

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

37.3

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 andpayment 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 collateral continue 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 effectof master netting agreements and collateralised borrowings on the Company’s ﬁnancial position, separately for ﬁnancial assets
and ﬁnancial liabilities that were subject to such agreements as of 31 December 2019 and 2018, respectively:
Related amounts not
set off in statementof financial positions

Grossamounts
recognisedGrossamounts
recognised
set off inthe financial
statements

Net amounts
presented in
the financial
statements

Financial
instruments

Cashcollateral
received

Net amountFinancial asset

831

0

831

(789)

0

42

Financial liabilities

3,560

0

3,560

(789)

0

2,771

(In € million)

31 December 201931 December 2018
Financial asset

1,186

0

1,186

(872)

0

314

Financial liabilities

2,726

0

2,726

(872)

0

1,854

37.4

Notional Amounts of Derivative Financial Instruments

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

2 years

3 years

4 years

5 years> 5 years

Total

23,543

18,108

16,95911,656

6,450

1,632

78,348Foreign exchange options

1,745

2,884

0

0

0

0

4,629

Foreign exchange swap contracts

4,054

0

0

0

0

0

4,054

Net forward sales contracts

20,843

18,496

13,540

6,173

1,098

71

60,221

Foreign exchange options

1,642

4,048

1,467

0

0

0

7,157

0

2,473

0

0

0

0

2,473

(In € million)

31 December 2019
Net forward sales contracts

31 December 2018

Foreign exchange swap contracts

The following table sets out the notional amount of foreign exchange hedges in place as of 31 December 2019 relating to thecommercial activities of Airbus, and the average euro converted rates applicable to corresponding EBIT.
2020

2021

2022

2023

2024+

Total

25,442

23,691

20,721

14,944

12,35097,148

€/US$

1.20

1.23

1.23

1.24

1.27

1.23

£/US$

1.37

1.36

1.35

1.40

N/A

1.37

(In $ million)

Total hedges
Forward rates

In 2019 new hedge contracts of US$ 40.6 billion (2018: US$ 19.0 billion) were added at an average rate of 1.20 US$/€(2018: 1.25 US$/€).

74

Airbus / Financial Statements 2019

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

As of 31 December 2019, the total hedge portfolio with maturities up to 2026 amounts to US$ 97.1 billion (2018: US$ 81.9 billion)
and covers a major portion of the foreign exchange exposure expected over the period of the operative planning. The averageUS$/€ hedge rate of the US$/€ hedge portfolio until 2026 amounts to 1.23 US$/€ (2018: 1.24 US$/€) and for the US$/£ hedge
portfolio until 2023 amounts to 1.37 US$/£ (2018: 1.40 US$/£).
(In £ million)

Total hedges

2020

2021

2022

2023

2024+

Total

36

135

182

164

79

596

1.03

0.90

0.89

0.90

0.91

0.91

Forward rates€/£

During the course of the year 2019, €/£ hedges were implemented in order to cover the GBP exposure of the company.
The notional amounts of interest rate contracts are as follows:
Remaining period
1 year

2 years

3 years

4 years

5 years

6 years

Interest rate contracts

7

162

4

890

1,000

0

600

2,735

5,398

Interest rate future contracts

0

0

0

0

0

0

0

0

0

Interest rate contracts

939

7

172

4

1,048

1,000

600

1,200

4,970

Interest rate future contracts

215

0

0

0

0

0

0

0

215

(In € million)

7 years > 7 years

Total

31 December 201931 December 2018

Please also refer to “– Note 36.3: 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 2019

25

36

20

12

3

96

31 December 2018

36

19

14

10

3

81

(In € million)

2

The notional amounts of equity swaps are as follows:
Remaining period
1 year

2 years

3 years

4 years> 4 years

Total

31 December 2019

37

32

23

9

0

101

31 December 2018

49

37

27

9

0

123

(In € million)

Airbus / Financial Statements 201975

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

37.5

Derivative Financial Instruments and Hedge Accounting Disclosure

The following table presents the reconciliation of AOCI, net of tax, resulting from cash ﬂow hedge accounting as of 31 December
2019 and 31 December 2018:31 December
2019

2018
Hedge reserve(In € million)

Opening balance
Foreign exchange contracts
OthersChanges in fair values
Foreign exchange contracts
OthersAmount reclassified to profit or loss (matured hedges)
Foreign exchange contracts

1,473

(776)

3,527

3,825

7

7

3,534

3,832

(1,894)

(799)

(2)

(1)

(1,896)

(800)

(207)

(4)

0

0

Amount classified to profit or loss (inefficiency)

(207)

(4)

Tax impact

(383)

(779)

Closing balance

2,521

1,473

Others

The following table presents the amounts relating to items designated as hedging instruments and hedge ineffectiveness for
cash-ﬂow hedges as of 31 December 2019:
Carrying values

OCI
Other changes
in value of thehedge reserve

Hedge
inefficiency
recordedin financial
result (1)Amounts
reclassified
from hedge
reserve to
profit and loss

Asset

Liability

Changes in valuesof the hedging
instrument

Net forward sales contracts

848(3,787)

699

2,824

(208)

(1,895)

Foreign exchange options

19

(58)

(1)

2

0

1

Embedded Derivatives

0

(18)

14

0

0

0

0

(3)

0

0

0

0

Commodity swap risk

9

(10)

(4)

0

0

(2)

Equity swap risk

20

0

0

0

0

0

896

(3,876)

707

2,826

(208)

(1,896)(In € million)

Foreign currency risk

Interest rate risk

Total(1) It includes the financial expense of € 112 million on hedge ineffectiveness (see “– Note 11: Revenue and Gross Margin”).

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

OCI
Other changes
in value of thehedge reserve

Hedge
inefficiency
recordedin financial
resultAmounts
reclassified
from hedge
reserve to
profit and loss

Asset

Liability

Changes in valuesof the hedging
instrument

Net forward sales contracts

868(2,410)

2,749

807

(4)

(791)

Foreign exchange options

21

(28)

9

252

0

0

Embedded Derivatives(9)(In € million)

Foreign currency risk

0

(16)

6

0

0

Interest rate risk

0

(3)

(5)

0

0

0

Commodity swap risk

10

(17)

4

0

0

(1)

Equity swap risk

Total

76

Airbus / Financial Statements 2019

19

(4)

9

0

0

0

918

(2,478)

2,771

1,059

(4)

(801)

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

37.6

Net Gains or Net Losses

The Company’s net gains or net losses recognised in proﬁt or loss in 2019 and 2018, respectively, are as follows:
2019

2018

(212)

(104)

Designated on initial recognition

228

(254)

Financial assets at amortised cost

(155)

(30)

(In € million)

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

Financial assets at fair value through OCI (previously available-for-sale)26

2Financial liabilities measured at amortised cost

5

1,360

Net gains of € 403 million (2018: net gains of € 329 million) are recognised directly in equity relating to ﬁnancial assets at fair value.
Interest income from ﬁnancial assets or ﬁnancial liabilities through proﬁt or loss is included in net gains or losses.

37.7

Impairment Losses

Loss allowances — For its portfolio of debt instruments including
bonds, term deposits and commercial papers, the Company
measures loss allowances at an amount that represents credit
losses resulting from default events that are possible within thenext 12 months, unless the credit risk on a ﬁnancial instrument
has increased signiﬁcantly since initial recognition. In the eventof such signiﬁcant increase in credit risk the Company measuresloss allowances for that ﬁnancial instrument at an amount equal
to its life-time excepted losses, i.e. at an amount equal to the
excepted credit losses that result from all possible default events
over the excepted life of that ﬁnancial instrument.
The Company applies the low credit risk exemption allowing
the Company to assume that there is no signiﬁcant increasein credit risk since initial recognition of a ﬁnancial instrument,

if the instrument is determined to have low credit risk at thereporting date. Similarly, the Company has determined that its
trade receivables and contract assets generally have low credit
risk. The Company applies the simpliﬁed approach permitted by
IFRS 9 of measuring expected credit losses of trade receivables
and contract assets on a life-time basis from initial recognition.
Investment grade instruments — The Company considers
a signiﬁcant increase in credit risk to have occurred, if there isa downgrade by four notches such that the instrument moves
into a high yield bucket as a direct result of the downgrade. With
respect to instruments that were high yield at initial recognition,
a downgrade by four notches is considered as a signiﬁcant
increase in credit risk.

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

Total

At 1 January 2019

3.49

1.13

0

4.62

Change in financial assets

0.01(0.69)

0(0.68)

Change in risk parameters

0.67(0.17)

00.50

At 31 December 2019

4.17

0.27

0

4.44

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

Total

3.36

0

0

3.36

(In € million)(In € million)

At 1 January 2018
Change in financial assets

0.07

0.75

0

0.82

Change in risk parameters

0.06

0.38

0

0.44

At 31 December 2018

3.49

1.13

0

4.62

Airbus / Financial Statements 2019277

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

The following table breaks down the gross carrying amount of loans and receivables as of 31 December 2019 and 2018,
separately showing those that are impaired, renegotiated or past due:(In € million)

Renegotiated/
Not not past
past due/not
Gross Past due ≤due impaired impaired 3 months

Past due> 3 and ≤6 months

Past due
Past due> 6 and ≤ > 9 and ≤9 months 12 months

Past due >12 months Impairment

Total

31 December 2019
Tradereceivables

4,461

113

458

231

165

100

64

478

(396)

5,674

Contract
assets

1,266

0

0

0

0

0

0

0

(8)

1,258

Others

2,499

7

531

174

26

31

56

588

(231)

3,681

Total

8,226

120

989

405

191

131

120

1,066

(635)

10,613

179

229

317

300

98

84

400

(175)

6,079

31 December 2018
Tradereceivables

4,647

Contract
assets

856

0

0

0

0

0

0

0

0

856

Others

2,410

2

191

81

43

37

62

503

(204)

3,125

Total (1)

7,913

181

420

398

343

135

146

903

(379) 10,060(1) Customer financing loans and finance leases are valued at fair value through profit and loss. Hence, no impairment applies.

The management believes that the unimpaired amounts that are past due are still collectible in full, based on historic payment
behaviour and analysis of customer credit risk, including underlying customers’ credit ratings if they are available.
The following impairment losses on ﬁnancial assets are recognised in proﬁt or loss in 2019 and 2018, respectively:(In € million)

2019

2018

Other loans

(33)

(32)

Trade receivables

(167)

(40)

Contract assets

(6)

0

(206)

(72)

Total

78

Airbus / Financial Statements 2019

Notes to the IFRS Consolidated Financial Statements /2.8 Other Notes

2.8 Other Notes
38.

Litigation and Claims

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

WTO
Although the Company is not a party, the Company is supporting
the European Commission in litigation before the WTO. Following
its unilateral withdrawal from the 1992 EU-US Agreement
on Trade in Large Civil Aircraft, the US lodged a request on
6 October 2004 to initiate proceedings before the WTO. On thesame day, the EU launched a parallel WTO case against the US
in relation to its subsidies to Boeing.
Following a series of interim WTO panel decisions, in May 2018
the WTO held that the EU achieved compliance in respect ofthe majority of the subsidies at issue but considered that someremaining obligations required adjustments. The Company andthe EU took corrective actions that were reviewed by a WTO
panel. The decision of that panel is currently being appealed.
In the meantime, the US requested authority to impose
countermeasures worth US$ 11.2 billion per year, commensuratewith its estimate of the adverse effects caused by the EU subsidies.
The WTO did not agree with the US estimate and authorised the
US to impose US$ 7.5 billion in annual countermeasures. The
United States Trade Representative (“USTR”) imposed tariffs ona range of imports to the US from the EU including 10% on theimportation of large civil aircraft from the EU. Those tariffs went
into effect on 18 October 2019.

The tariffs could have a material impact on the financial
statements, business and operations of the Company. At thisstage it is too early to determine the full extent of any ﬁnancial
impact on the Company. Duties on the importation of Airbus
products into the US could result in (i) increased costs for theaerospace and airline industries as well as other industries that
rely on air transport, (ii) weakening demand for new aircraft andnegatively affecting the ﬁnancial condition of air carriers andlessors, (iii) decisions to defer, reject or reschedule the deliveryof new aircraft or limit the routes upon which new aircraft will
be used, (iv) increased costs to consumers, (v) retaliation by
the EU with its own import duties to be applied to US products,
and/or (vi) damage to the Company’s business or reputation via
negative publicity adversely affecting the Company’s prospects
in the commercial market place.
Several years of proceedings also identiﬁed signiﬁcant unlawful
support to Boeing. In its most recent decision on the matter
in March 2019, the WTO found that the steps by the US toaddress US subsidies to Boeing were inadequate. The WTO
Appellate Body also found that additional US federal and state
programmes, such as the Foreign Sales Corporation (“FSC”)
and Washington State tax reductions constitute illegal subsidies.
Consequently, the EU initiated its request for the authorisation ofannual countermeasures amounting to up to US$ 12 billion andpublished a preliminary list of products from the US on which the
EU may take countermeasures, which includes US aircraft. The
actual amount of duties to which the EU may be entitled will be
determined at the conclusion of WTO arbitration proceedings.
The imposition of equivalent or greater tariffs on aircraft imports
into Europe is likely.

2

Exact timing of further steps in the WTO litigation process issubject to further rulings and to negotiations between the US
and the EU.

GPTIn August 2012, the UK Serious Fraud Ofﬁce (“SFO”) announced
that it had opened a formal criminal investigation in relation to
GPT Special Project Management Ltd (“GPT”), a subsidiary
operating in Saudi Arabia that the Company acquired in 2007. The
investigation relates to issues initially raised by a whistleblower
concerning contractual arrangements originating prior to GPT’s
acquisition and continuing thereafter. The Company has engaged
with the SFO throughout and continues to actively cooperatewith the investigation.

Eurofighter Austria
In 2017, the Austrian Federal Ministry of Defence raised criminal
allegations against Airbus Defence and Space GmbH andEuroﬁghter Jagdﬂugzeug GmbH for wilful deception and fraudin the context of the sale of the Euroﬁghter aircraft to Austria andrespective damage claims. After the Austrian Federal Ministryof Defence raised its criminal allegations, the Austrian public

Airbus / Financial Statements 201979

Notes to the IFRS Consolidated Financial Statements /2.8 Other Notes

prosecutor opened investigations against Airbus Defence andSpace GmbH, Euroﬁghter Jagdﬂugzeug GmbH and former andcurrent employees of the two entities including related to thecorresponding offset obligations. The Company has ﬁled several
submissions to the Austrian public prosecutor in response to
the allegations of deception in the procurement of Euroﬁghter
combat aircraft made by the Austrian Defence Minister. The
Company is cooperating fully with the authorities.

Investigation by the UK SFO, France’s
PNF, US Departments of Stateand Justice and Related Commercial
Litigation
The Company reached ﬁnal agreements (“the agreements”) with
the French Parquet National Financier (“PNF”), the UK Serious
Fraud Ofﬁce (“SFO”), and the US Department of Justice (“DoJ”)
resolving the authorities’ investigations into allegations of bribery
and corruption, as well as with the US Department of State(“DoS”) and the DoJ to resolve their investigations into inaccurate
and misleading ﬁlings made with the DoS pursuant to the US
International Trafﬁc in Arms Regulations (ITAR). The agreements
were approved and made public on 31 January 2020.
Under the terms of the agreements, the Company has agreed
to pay penalties of € 3,597,766,766 plus interest and costs to
the French, UK and US authorities. This is recognised in the
Company’s 2019 accounts. The settlements with each authority
are as follows: PNF € 2,083,137,455, the SFO € 983,974,311,
the DoJ € 526,150,496 and the DoS € 9,009,008 of which€ 4,504,504 may be used for approved remedial compliancemeasures.
Under the terms of the Convention Judiciaire d’Intérêt Public(“CJIP”) with the PNF, the Company has an obligation to submit
its compliance programme to targeted audits carried out by
the Agence Française Anticorruption (“AFA”) over a period of
three years.
Under the terms of the Deferred Prosecution Agreement (“DPA”)
with the SFO, no independent compliance monitor will be
imposed on the Company in light of the continuing monitorshipto be conducted by the AFA.
Under the terms of the DPA with the DoJ, no independent
compliance monitor will be imposed on Airbus under theagreement with the DoJ, but the Company will periodically reporton its continuing compliance enhancement progress during
the three year term of the DPA and carry out further reviews asrequired by the DoJ.
The agreements result in the suspension of prosecution fora duration of three years whereupon the prosecutions will be
extinguished if the Company complies with their terms throughout
the period, including the payment of penalties.
Under the terms of the Consent Agreement with the DoS, the
DoS has agreed to settle all civil violations of the ITAR outlinedin the Company’s voluntary disclosures identified in theConsent Agreement, and the Company has agreed to retain an
independent export control compliance ofﬁcer, who will monitor
the effectiveness of the Company’s export control systems andits compliance with the ITAR for a duration of three years.

80

Airbus / Financial Statements 2019

Any breach of the terms of the agreements by the Company
could lead to rescission by the authorities of the terms of theagreements and reopening of the prosecutions. Prosecution
could result in the imposition of further monetary penalties orother sanctions including additional tax liability and could havea material impact on the ﬁnancial statements, business andoperations of the Company.
In addition to any pending investigation in other jurisdictions,the factual disclosures made in the course of reaching theagreements may result in the commencement of additional
investigations in other jurisdictions. Such investigations could
also result in (i) civil claims or claims by shareholders against theCompany, (ii) adverse consequences on the Company’s ability
to obtain or continue ﬁnancing for current or future projects,(iii) limitations on the eligibility of group companies for certain
public sector contracts, and/or (iv) damage to the Company’sbusiness or reputation via negative publicity adversely affecting
the Company’s prospects in the commercial market place.
Airbus will continue to cooperate with the authorities in the future,
pursuant to the agreements and to enhance its strong Ethics &Compliance culture within the Company.
Several consultants and other third parties have initiatedcommercial litigation and arbitration against the Company
seeking relief. The agreements reached with authorities maylead to additional commercial litigation and arbitration against
the Company and tax liability in the future, which could havea material impact on the ﬁnancial statements, business andoperations of the Company.

ECA Financing
The Company and the ECAs reached agreement on a process
under which it is able to make applications for ECA-backed
ﬁnancing for its customers across the Company on a case-bycase basis.

Other Investigations
The Company is cooperating fully with the authorities in a
judicial investigation in France related to Kazakhstan. In thisspirit, the Company asked to be interviewed by the investigating
magistrates and has been granted the status of “assisted
witness” in the investigation.
On 17 September 2019, the Company self-reported toGerman authorities potentially improper advance receipt
and communication of conﬁdential customer information by
employees of Airbus Defence and Space GmbH. The information
concerned relates to two future German government procurement
projects in the programme line Communications, Intelligenceand Security. The self-disclosure by the Company follows an
ongoing internal review with the support of an external law ﬁrm.
Both the German Ministry of Defence and the Munich publicprosecutor announced their intention to open an investigation
into the matter. The Company will continue to fully cooperatewith relevant authorities. The investigation could have an impact
on Airbus Defence and Space GmbH’s ability to participate in
future public procurement projects in Germany and may haveother legal consequences.

Notes to the IFRS Consolidated Financial Statements /2.8 Other Notes

Other Disputes
In the course of a commercial dispute, the Company received
a statement of claim by the Republic of China (Taiwan) alleging
liability for refunding part of the purchase price of a large contract
for the supply of missiles by subsidiary Matra Défense S.A.S.,

39.

which the customer claims it was not obliged to pay. An arbitralaward was rendered on 12 January 2018 with a principal amountof € 104 million plus interest and costs against Matra Défense
S.A.S. Post-award proceedings are currently underway.

Auditor Fees

With reference to Section 2:382a (1) and (2) of the Netherlands Civil Code, the following fees for the ﬁnancial year 2019 have been
charged by EY to the Company, its subsidiaries and other consolidated entities:(In € thousand)

2019

2018

Audit of the financial statements

11,61812,098220

244

Tax services

1,037

766

Other non-audit services

1,726

1,245

14,601

14,353

Other audit engagements

Total

Other audit ﬁrms have audit fees related to audit process, certiﬁcation and examination of individual and consolidated accountsof € 6 million in 2019 (2018: € 6 million).

40.

Events after the Reporting Date

On 31 January 2020, the Company reached ﬁnal agreementswith the French Parquet National Financier (PNF), the U.K.
Serious Fraud Ofﬁce (SFO) and the U.S. Department of State(DoS) (see “– Note 38: Litigation and Claims”).
The UK formally exited the EU on 31 January 2020. From
1 February, both parties enter the “transition period” during
which the EU and UK will negotiate additional relationshiparrangements. The transition period runs until 31 December
2020 (see “– Note 5: Brexit”).
The Company i s monitoring the situation regarding
the Coronavirus and evaluating any potential impacts to
production and deliveries, and will try to mitigate via alternativeplans where necessary. There is no impact as of 31 December
2019.

On 12 February 2020, the Company and IQ have agreed toacquire Bombardier’s remaining stake in ACLP. This brings theirholdings to 75% and 25% respectively. As part of this transaction,
Airbus, via its wholly owned subsidiary Stelia Aerospace, hasalso acquired the A220 and A330 work package production
capabilities from Bombardier in Ville Saint-Laurent, Quebec.
Airbus will pay a total consideration of $ 0.6 bn, of which $ 0.5
bn would be paid on closing. With this transaction Bombardieris released of its future funding capital requirement to ACLP.
The Company is assessing the impacts of the transaction on
its 2020 ﬁnancial statements.

Airbus / Financial Statements 2019

2

81

82

Airbus / Financial Statements 201950%*

ArianeGroup

MBDA(France)

37,5%*

Airbus Defence
and Space SAS(France)

11,29%ATR GIE(France)50%*

Computadoras,Redese Ingenieria, S.A.
(Spain)Airbus Defence
and Space, S.A.
(Spain)For further information, please refer to the Company’s website.

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

MBDA Group

Ariane Group

95,96%

Airbus DS Holding
SAS(France)

Airbus Defence
and Space Holding
France SAS(France)

Airbus Helicopters

45%

Elbe
FlugzeugwerkeGmbH(Germany)

99,99%

4,04%

88,71%

Airbus Defence
and Space GmbH
(Germany)

Airbus Defence and Space

Airbus Defence
and Space
Litmited(UK)

Airbus Helicopters
DeutschlandGmbH(Germany)

Airbus Helicopters(France)

Airbus Helicopters
España, S.A.
(Spain)Airbus Group
Inc.
(USA)

Airbus Americas
Inc.
(USA)

Premium Aerotec
GmbH(Germany)

Airbus Operations
GmbH(Germany)

Stelia Aerospace(France)

Airbus SAS(France)

Airbus Helicopters
UK Limited(UK)

Airbus Canada
LimitedPartnership(Canada)50,01%*

4,22%*

95,78%

Airbus Operations
Limited(UK)

AirbusOperations, S.L.
(Spain)Airbus Operations
SAS(France)(The Netherlands)

AIRBUS SE

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

2.9 Appendix “Simpliﬁed Airbus Structure”

Notes to the IFRS Consolidated Financial Statements /2

Airbus / Financial Statements 201983

Chapter

3
84

Airbus / Financial Statements 20193

Airbus SE
IFRS Company
Financial Statements
IFRS Company Income Statement
for the years ended 31 December 2019 and 201886

IFRS Company Statement of Comprehensive Income
for the years ended 31 December 2019 and 201886

IFRS Company Statement of Financial Position
at 31 December 2019 and 201887

IFRS Company Statement of Cash Flowsfor the years ended 31 December 2019 and 201888

IFRS Company Statement of Changes in Equity
for the years ended 31 December 2019 and 201889

Airbus / Financial Statements 201985

Airbus SE – IFRS Company Financial Statements /IFRS Company Income Statement
for the years ended 31 December 2019 and 2018
(In € million)

Note

2019

Operating income
Operating expenses

2018

159

393

(3,845)

(270)

34

46

Gain (loss) on disposal of investments

8

1

(369)

Total operating result

5

Income from investments(3,650)(200)

Interest income

202

233

Interest expense

(176)

(195)

Other financial result

(36)

(33)

Total financial result

6

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

Profit (loss) for the period

(10)

5

(3,660)

(195)

(5)

(32)

(3,665)(227)

7

IFRS Company Statement of Comprehensive Income
for the years ended 31 December 2019 and 2018
2019

2018

(3,665)(227)

Change in fair value of financial assets

143

(59)

Change in fair value of cash flow hedges

01

Other comprehensive income, net of tax

143

(58)

(3,522)(285)(In € million)

Profit (loss) for the period
Other comprehensive income
Items that will be reclassified to profit or loss:

Total comprehensive income for the period

86

Airbus / Financial Statements 2019

Airbus SE – IFRS Company Financial Statements /IFRS Company Statement of Financial Position
at 31 December 2019 and 2018
(In € million)

Note

2019

2018

AssetsNon-current assets
Investments in subsidiaries and associates

8

16,96016,797Long-term financial assets

9

1,794

1,468

Non-current other financial assets

9

3,066

1,882

0

1

Non-current other assets
Deferred tax assets

7

0

12

Non-current securities

13

10,811

10,47332,631

30,63332

165

Current assets
Trade receivables
Short-term financial assets

9

44

240

Current other financial assets

9

1,777

1,912

Current accounts Airbus companies

9

8,574

8,013

85

85

Current other assets
Current securities

13

2,255

2,073

Cash and cash equivalents

13

8,129

7,886

Total assets

20,896

20,37453,52751,007

Equity and liabilities
Stockholders’ equity

12

Capital stock

784

777

Share premium

3,555

2,941

Retained earnings

5,204

6,636

Legal reserves

174

31

Treasury shares

(82)

(51)

(3,665)

(227)

5,970

10,106

13

6,580

6,746

Non-current other financial liabilities

9

2,898

2,015

Deferred tax liabilities

7

34

0

9,512

8,761

Result of the year3

Non-current liabilities
Long-term financing liabilities

Current liabilities
Short-term financing liabilities

13

0

0

Current accounts Airbus companies

932,51030,175Current other financial liabilities

9

1,793

1,906

3,742

58

Current other liabilities

Total equity and liabilities

38,04532,13953,52751,007

Airbus / Financial Statements 201987

Airbus SE – IFRS Company Financial Statements /IFRS Company Statement of Cash Flowsfor the years ended 31 December 2019 and 2018
2019

2018

(3,665)(227)

Interest income

(202)

(233)

(In € million)

Note

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

Interest expense

236

195

Interest received

176

260

Interest paid

(175)

(139)

Tax (income) expense

544

Result on disposals of assets(1)0

Depreciation and amortisation

0

0

(72)

39

Valuation adjustments
Change in income tax assets, income tax liabilities and provisions for income tax
Dividends received
Change in current and non-current provisions
Change in other operating assets and liabilities

0

(12)

(34)

(45)

(1)

1

3,813

(553)

Trade receivables

185

(134)

Trade liabilities

35

(425)

Other assets and liabilities and others
Cash provided by (used for) operating activities

3,593

6

80

(670)

(164)

(270)

Investing activities
Acquisitions of subsidiaries, joint ventures, businesses and non-controlling interests(net of cash)

8

Payments for long-term financial assets

(449)

(532)

Proceeds from long-term financial assets

306

1,935

34

45

Payments for investments in securities(2,687)(1,874)

Proceeds from disposals of securities

2,361

1,845

Cash provided by (used for) investing activities

(599)

1,149

0

0

0

(2,180)

Dividends received

Financing activities
Increase in financing liabilities
Repayment of financing liabilities
Change in current accounts Airbus companies

1,901

(326)

Cash distribution to Airbus SE shareholders(1,280)(1,161)

Changes in capital

138

117

Changes in Treasury shares

(31)

(49)

Cash provide by (used for) financing activities

728(3,599)Effect of foreign exchange rate changes on cash and cash equivalents

34

(32)

243

(3,152)

7,886

11,038

8,129

7,886

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

88

Airbus / Financial Statements 201913

Airbus SE – IFRS Company Financial Statements /IFRS Company Statement of Changes in Equity
for the years ended 31 December 2019 and 2018
Legal reserves (1)(In € million)

Balance at 1 January 2018

Capital
stock

Share
premium

Retainedearnings

Financialassets atfair value

Cash flow
hedgesTreasurysharesTotalequity

775

2,826

7,753

90

(1)

(2)

11,441

Profit for the period

0

0

(227)

0

0

0

(227)

Other comprehensive income

0

0

0

(59)

1

0

(58)

Total comprehensive income for the period

0

0

(227)

(59)

1

0

(285)

Capital increase

2

115

0

0

0

0

117

Share-based payments (IFRS 2)

0

0

43

0

0

0

43

Cash distribution to Airbus SE shareholders

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

Change in treasury shares

0

0

0

0

0

(49)

(49)

Balance at 31 December 2018

777

2,941

6,408

31

0

(51)

10,106

Profit for the period

00(3,665)000(3,665)

Other comprehensive income

0

0

0

143

0

0

143

Total comprehensive income for the period

00(3,665)143

00(3,522)

Capital increase

7

614

0

0

0

0

621

Share-based payments (IFRS 2)

0

0

76

0

0

0

76

Cash distribution to Airbus SE shareholders

00(1,280)000(1,280)Change in treasury shares

0

0

0

0

0

(31)

(31)

784

3,555

1,539

174

0

(82)

5,970

Balance at 31 December 2019(1) The distribution of legal reserves is restricted by Dutch law.

3

Airbus / Financial Statements 201989

Chapter

4
90

Airbus / Financial Statements 2019

4

Notes to the
IFRS Company
Financial Statements
4.1

Basis of Presentation

93

4.2

Company Performance

95

4.3

Operational Assets and Liabilities

97

4.4

Employees

100

4.5

Capital Structure and Financial Instruments

100

4.5

Other Notes

109

Airbus / Financial Statements 201991

Notes to the IFRS Company Financial Statements /Contents /4.1

Basis of Presentation

93

4.4

Employees

100

1.
2.
3.
4.

The Company
Signiﬁcant Accounting Policies
Key Estimates and Judgements
Related Party Transactions

93
93
94
94

11.

Number of Employees

100

4.5

Capital Structure
and Financial Instruments

100

4.2

Company Performance

95

5.
6.
7.

Total Operating Result
Total Financial Result
Income Tax

95
95
96

12.
13.
14.

Total Equity
Cash, Securities and Financing Liabilities
Information about Financial Instruments

100
102
104

4.5

Other Notes

109

4.3

Operational Assets and Liabilities

97

15.
16.

Audit Fees
Events after the Reporting Date

109
109

8.

Investments in Subsidiaries, Associates
and Participations
Financial Assets and Financial Liabilities
Commitments and Contingencies

97
99
100

9.
10.

92

Airbus / Financial Statements 2019

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

The Company

The Company’s principal activity is acting as a holding andmanagement company for the subsidiaries of Airbus SE, the“Company”, a listed company in the form of a European public
limited-liability company (Societas Europaea), legally seated in
Amsterdam (current registered ofﬁce at Mendelweg 30, 2333
CS Leiden, The Netherlands) and registered at the Dutch

2.

Commercial Register (Handelsregister) in The Hague under
number 24288945. The Company is listed on the European
stock exchanges in Paris, Frankfurt am Main, Madrid, Barcelona,
Valencia and Bilbao. The IFRS Financial Statements wereauthorised for issue by the Company’s Board of Directors on
12 February 2020.

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 Netherlands Civil Code.
They are prepared and reported in euro (“€”) and all values arerounded to the nearest million appropriately. Due to rounding,numbers presented may not add up precisely to the totals
provided and percentages may not precisely reﬂect the absolute
ﬁgures.
In the Company Financial Statements of Airbus SE, unlessotherwise disclosed, the same accounting principles have been
applied as set out in the Notes to the Consolidated Financial
Statements, except for the valuation of the investments aspresented under investments in subsidiaries and associates in
the Company Financial Statements. These policies have been
consistently applied to all years presented.
In the Company Financial Statements, the investments in
subsidiaries and associates are recorded at acquisition cost.
In the Company Statement of Income, dividends received frominvestments are recorded as dividend income.

Due to this application, the Company equity and net result are notequal to the consolidated equity and net result. A reconciliationof the total shareholders’ equity and proﬁt for the period ispresented in Note 12 “Total Equity” to the Company Financial
Statements.
The Company Financial Statements have been prepared on ahistorical cost basis, except for the equity instruments, securities
and derivative instruments that have been measured at fair value.
Regarding the application of new, revised or amended IFRS
issued and applying from January 1, 2019 and issued but
not yet applied please refer to Note 4 “Change in Accounting
Policies and Disclosure” of the Group’s Consolidated Financial
Statements. The implementation of IFRS 16 and IFRIC 23 has had
no signiﬁcant impact on the ﬁnancial statement of the company.
In addition, no material changes are expected in the Company
Financial Statements of Airbus SE from the implementation of
the new standards not yet applied. Further information about
Share-Based Payments and Employee Stock Ownership
Plans (ESOP) is presented in Note 32 and information about
Remuneration is presented in Note 33 of the Consolidated
Financial Statements.

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 2019 and have not been applied in preparing these Consolidated Financial Statements and early
adoption is not planned:
IASB effective date for annual reporting
periods beginning on or afterStandards and amendments

Endorsement status

Amendments to References to the Conceptual Framework in IFRS

1 January 2020

Endorsed

Amendments to IFRS 3: Definition of a Business

1 January 2020

Not yet endorsed

Amendments to IAS 1 and IAS 8: Definition of Material

1 January 2020

Endorsed

Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark Reform”

1 January 2020

Not yet endorsed

IFRS 17 “Insurance Contracts”

1 January 2021

Not yet endorsed

The information with regard to Capital Management is disclosed
in Note 33, further information about Litigation and Claims refers
to Note 38 and Events after the Reporting Date are disclosed
in Note 40 of the Group’s Consolidated Financial Statements.

4

Unless reference is made to the accounting policies describedin the Consolidated Financial Statements, the main accounting
policies applied in the preparation of these Company Financial
Statements are described in each accounting area. These
accounting policies have been consistently applied to all ﬁnancial
years presented, unless otherwise stated.

Airbus / Financial Statements 201993

Notes to the IFRS Company Financial Statements /3.

Key Estimates and Judgements

The preparation of the Company Financial Statements requires
the use of estimates and assumptions. In preparing these
Financial Statements, management exercises its best judgement
based upon its experience and the circumstances prevailing atthat 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 ongoing basis.

4.

The details regarding the use of estimates and judgements aredescribed in Note 3 “Use of Estimates and Judgements” of theConsolidated Financial Statements.
Key accounting estimates and judgements affecting theassessment and measurement of impairment are includedin Note 8 “Investments in Subsidiaries, Associates andParticipations” of the Company Financial Statements.

Related Party Transactions

Key Management PersonnelIntercompany Transactions

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

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

The following table discloses the related party intercompany transactions in 2019 and 2018:(In € million)

Rendering of services, dividend income
and interest income
Purchases of services, investment charge
and interest expenses

Transactions
with subsidiaries
2019

Transactions
with associates
2019

Transactions
with subsidiaries
2018

Transactions
with associates
2018

233

39

501

61

(185)

(2)

(256)

(3)

Receivables at 31 December

10,316

96

9,791

95

Payables at 31 December(35,365)(1,011)(33,056)(965)

Hedge relationships receivables
as of 31 December

3,761

0

3,793

0

Hedge relationships payables
as of 31 December

(793)

0

(3,921)0

For further information about granted guarantees to subsidiaries please refer to Note 10 “Commitments and Contingencies” of theCompany Financial Statements.

94

Airbus / Financial Statements 2019

Notes to the IFRS Company Financial Statements /4.2 Company Performance5.

Total Operating Result(In € million)

Operating income
Corporate services rendered to Airbus companies
Operating expenses

2019

2018

159

393

159

393

(3,844)

(270)

(45)

(119)

(3,799)(151)

Income from investments

34

46

Dividends received from Airbus companies

34

46

Impairment reversal

00Expense from investments

1

(369)

Service fees charged by Airbus companies
Administrative expenses

Gain (loss) on disposal of investments

Total operating result

1

(369)

(3,650)(200)

Administrative expenses increased by € 3,648 million to € 3,799 million (2018: € 151 million), mainly due to the ﬁnal agreements
reached with the French Parquet National Financier (PNF), the U.K. Serious Fraud Ofﬁce (SFO) and the U.S. Department of State(DoS). For further information, see “– Note 38: Litigation and Claims” of the Consolidated Financial Statements.

6.

Total Financial Result
2019

2018

Interest result (1)2638Interest income from securities measured at fair value through OCI

8796(In € million)

Interest income from securities measured at fair value through P&L

26

15

Interest income on financial assets measured at amortised cost

89

122

Interest expense on financial liabilities measured at amortised cost

(176)

(195)

Other financial result

(36)

(33)

Option liability exchangeable bond

31

33

Change in fair value measurement of financial assets

(79)

(44)

12

(22)

(10)

5

Other

Total financial result

4

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

Airbus / Financial Statements 201995

Notes to the IFRS Company Financial Statements /7.

Income Tax

The Company is tax registered in the Netherlands. The Company
is heading a ﬁscal unity, which also includes Airbus Finance B.V.
and Airbus Defence and Space Netherlands B.V. and therefore
the Company is severally and jointly liable for income tax liabilitiesof 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 and liabilities
and the tax base of assets and liabilities, are calculated using
the substantively enacted tax rates expected to apply when they
are realised or settled. Deferred tax assets are recognised if it isprobable that they will be realised.

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

Current tax expense

2019

2018

0

0

Deferred tax expense

(5)

(32)

Total

(5)

(32)

The following table shows reconciliation from the theoretical income tax expense using the Dutch corporate tax rate to the reported
income tax expense:2019(In € million)

2018

Profit before income taxes(3,660)(195)

Corporate income tax rate

25.0%

25.0%

Expected income for income taxes

915

42

Non-deductible final agreements reahed with PNF, SFO and DoS

(899)

0

Non-taxable income from investment and associates

(10)

(80)

Option liability exchangeable bond

7

7

Income from other companies within the fiscal unity

(1)

(1)

Impairment of deferred tax stock

0

12

Other non-deductible expenses and tax-free incomes

(17)

(13)

Reported tax (expense)

(5)

(32)

The ﬁrst tranche of tax loss carry forwards (€ 22 million) will expire by the end of 2027.
Deferred income taxes as of 31 December 2019 are related to the following assets and liabilities:

1 January 201931 December 2019
Deferredtax
assetsDeferredtax
liabilities

Deferredtax
assetsDeferredtax
liabilities

OCI

OthersDeferredtax benefit(expense)

Securities

0

(8)

(41)

0

0

0

(50)

Financial instruments

0

(1)

0

0

(5)

0

(6)

Net operating loss and tax loss
carry forwards

21

0

0

0

1

22

0

Deferred tax assets (liabilities)
before offsetting

21

(9)

(41)

0

(4)

22

(56)

Set-off

(9)

9

0

0

0

(22)

22

Net deferred tax assets (liabilities)

12

0

(41)

0

(4)

0

(34)

(In € million)

96

Other
movements

Movement
throughincomestatement

Airbus / Financial Statements 2019

Notes to the IFRS Company Financial Statements /Deferred income taxes as of 31 December 2018 are related to the following assets and liabilities:

1 January 2018

Other
movements

Movement
throughincomestatement

31 December 2018
Deferredtax
assetsDeferredtax
liabilities

Deferredtax
assetsDeferredtax
liabilities

OCI

OthersDeferredtax benefit(expense)

Securities

0

(31)

22

0

0

0

(9)

Financial instruments

0

(9)

0

0

8

0

(1)

Net operating loss and tax loss
carry forwards

62

0

0

0

(41)

21

0

Deferred tax assets (liabilities)
before offsetting

62

(40)

22

0

(33)

21

(9)

Set-off

(40)

40

0

0

0

(9)

9

Net deferred tax assets (liabilities)

22

0

22

0

0

12

0

(In € million)

Details of deferred tax recognised cumulatively in equity are as follows:
31 December
2019(In € million)

2018

Financial instrument at fair value through OCI

(50)

(9)

Total

(50)

(9)

4.3 Operational Assets and Liabilities
8.

Investments in Subsidiaries, Associates and Participations
Subsidiaries

Associates

Participations

Total

15,362

21

1,193

16,576

Additions

200

0

22

222

Share-based payments (IFRS 2)

43

0

0

43

Fair value changes through profit or loss

0

0

(44)

(44)

Other adjustments

0

0

0

0

(In € million)

Balance at 1 January 2018

Balance at 31 December 2018

15,60521

1,171

16,797

Additions

164

0

2

166

Share-based payments (IFRS 2)

76

0

0

76

Fair value changes through profit or loss

0

0

(79)

(79)

15,84521

1,094

16,960

Balance at 31 December 2019

Airbus / Financial Statements 2019497

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.

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 amount thatwould have been determined had no impairment loss beenrecognised in prior years.

The participations are stated at fair value with changes in fairvalue recognised in Proﬁt and Loss.

The annual impairment test performed in 2019 led to no
impairment charge (2018: € 0 million).

For the purpose of impairment testing all consolidated
subsidiaries are allocated to cash generating units (“CGU”) in a
way they are monitored for internal management purposes. At
each balance sheet date, the Company reviews whether there isan indication that a CGU to which its investments in subsidiaries
and associated companies belong to are impaired.
An indication for impairment of the investments in subsidiaries
and associated companies may include, respectively,
management’s downward adjustment of the strategic planor a signiﬁcant decrease in the share price of a publicly listedcompany. Further indications for impairment of its investments
may include other areas where observable data indicates that
there is a measurable decrease in the estimated future cash
ﬂows. These determinations require signiﬁcant judgement. In
making this judgement, management evaluates, among otherfactors, the ﬁnancial performance of and business outlook for
its investments, including factors such as industry and sector
performance, changes in technology and operational andﬁnancing cash ﬂow.
If any indication for impairment exists, the recoverable amount of
the investments is estimated in order to determine the amount,
if any, of the impairment loss. An investment is impaired if
its recoverable amount is lower than its carrying value. The
recoverable amount is deﬁned as the higher of an investment’s
fair value less costs to sell and its value in use.
The determination of the investment’s value in use is basedon calculations using pre-tax cash ﬂow projections based on
ﬁnancial budgets approved by management covering a ﬁve-year
period. Cash ﬂows beyond the ﬁve-year period are extrapolatedusing estimated growth rates. The discounted cash ﬂow method
is used to determine the recoverable amount of a CGU to which
its investments in subsidiaries and associated companies
belong. 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 therecoverable value of the CGU are the expected future labour
expenses, future interest rates, future exchange rates to translate
into euro the portion of future US dollar and pound sterling which
are not hedged and the estimated growth rate of terminal values.
If the recoverable amount of an investment is estimated to be lessthan its carrying amount, the carrying amount of the investment
is reduced to its recoverable amount. Any impairment loss isrecognised immediately in the Income Statement.

98

Airbus / Financial Statements 2019

Change of Investments in Subsidiaries
On 1 March 2019, Airbus SE acquired 100% of the shares in
Lalux SE, a Société anonyme de Réassurance for a total amountof € 81 million. On 29 July 2019, Lalux SE has been merged
into Aero Ré SA.
On 15 July 2019, Airbus SE entered into a partnership agreement
to establish a corporate venture capital fund, dubbed Airbus
Venture Fund III. The capital contribution of Airbus SE is€ 26 million.
On 13 December 2019, Airbus SE contributes its 100% subsidiary
DADC Luft-und Raumfahrt Beteiligung GmbH to its subsidiary
Airbus Defence and Space GmbH. In return for this contribution,
Airbus SE received additional shares in Airbus Defence andSpace GmbH for an equivalent amount.
On 29 November 2019, Airbus SE made a further capital
contribution of € 35 million into Airbus Group Proj B.V.
During the year 2019, Airbus SE made further capital contributions
into Airbus Ventures Fund II for a total amount of € 23 million(2018: € 35 million).
On 6 February 2018, Airbus SE internally acquired 49.10% of
the share in Aero Ré SA for a total amount of € 9 million. On
17 December 2018, Airbus SE made a capital contribution of€ 25 million into Aero Ré SA.
On 26 July 2018, Airbus SE made a further capital contributionof € 200 million into Airbus Bank GmbH.
On 26 September 2018, Airbus DS Holding B.V. has been
merged into Airbus SE with retroactive reﬂect on 1 January 2018.
The impact of this merge in the ﬁnancial statement of Airbus SE
is a loss of € 369 million mainly due to the irrecoverability of IC
loan and current accounts. Airbus SE is the new stakeholder of
Airbus Defence and Space Netherland BV and Airbus Defence
and Space Limited, and increase is stake in Airbus SAS and
Airbus Defence and Space GmbH.
On 4 December 2018, Airbus SE contributed its 100% subsidiary
Airbus Helicopters Holding SAS to its subsidiary Airbus SAS
for a total amount of € 991 million. In return for this contribution,
Airbus SE received additional shares in Airbus SAS for anequivalent amount.
During the year 2018, Airbus SE made further capital contributions
into Airbus Group Ventures Fund for a total amount of € 35 million.

Notes to the IFRS Company Financial Statements /INFORMATION ON PRINCIPAL INVESTMENTS OF THE COMPANY
2019

2018
%

100.00(1)

100.00Company

Head office

Aero Ré S.A.

Bertrange (Luxembourg)
Taufkirchen (Germany)

88.02

74.29

Airbus Defence and Space GmbH

100.00100.00Airbus Defence and Space Limited

Stevenage (UK)100.00100.00Airbus Defence and Space Netherlands B.V.

Leiden (Netherlands)

100.00100.00Airbus Defence and Space S.A.

Madrid (Spain)

100.00100.00Airbus Bank GmbH

Munich (Germany)

100.00100.00Airbus Finance B.V.

Leiden (Netherlands)

100.00100.00Airbus Group Limited.

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

Leiden (Netherlands)

95.78

95.78

Airbus S.A.S.

Toulouse (France)

0.00

100.00DADC Luft-und Raumfahrt Beteiligungs GmbH

Taufkirchen (Germany)

9.90

9.89

Dassault Aviation S.A.

Paris (France)

0.00

100.00OOO “EADS”

Moscow (Russia)

100.00100.00Premium Aerotec GmbH

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

9.

Financial Assets and Financial Liabilities

Financial assets at 31 December 2019 and 2018 are as follows:
31 December(In € million)

2019

2018

Long-term loans Airbus companies (1)

1,794

1,468

0

0

Positive fair values of derivative financial instruments

Long-term loans external

3,066

1,882

Non-current financial assets

4,860

3,350

Positive fair values of derivative financial instruments

1,777

1,912

Current portion long-term loans Airbus companies

44

240

Current accounts Airbus companies

(1)

8,574

8,013

Current financial assets

10,395

10,165

Total

15,255

13,516(1) The receivables from and liabilities to subsidiaries include mainly transactions in connection with the cash pooling in Airbus SE. Terms and conditions are in agreement with theprevailing market environment.

4

Financial liabilities at 31 December 2019 and 2018 are as follows:
31 December(In € million)

2019

2018

Negative fair values of derivative financial instruments

2,898

2,015

Non-current financial liabilities

2,898

2,015

Negative fair values of derivative financial instruments

1,793

1,906

Current accounts Airbus companies (1)32,51030,175Current financial liabilities

34,30332,081

Total

37,201

34,096(1) The receivables from and liabilities to subsidiaries include mainly transactions in connection with the cash pooling in Airbus SE. Terms and conditions are in agreement with theprevailing market environment.

Airbus / Financial Statements 201999

Notes to the IFRS Company Financial Statements /10.

Commitments and Contingencies

Off-Balance Sheet Commitments
Airbus SE issued guarantees on behalf of Airbus companies
in the amount of € 7,040 million (2018: € 5,898 million). The
commitments of these companies to third parties mainly relate
to their operating business as described in Note 20 “Property,
Plant and Equipment”, Note 27 “Sales Financing Transactions”
and Note 37 “Information about Financial Instruments” of theConsolidated Financial Statements.
On 8 December 2015, Airbus SE entered into a partnershipagreement to establish a corporate venture capital fund, dubbed
Airbus Group Ventures, as well as a technology and business
innovation center in Silicon Valley with a total commitment
amount of US$ 150 million. On 25 November 2015, a firstinvestment of US$ 5 million has been made into this fund. During
the year 2019, Airbus SE made further capital contributions into
Airbus Ventures Fund II for a total amount of US$ 28 million (total
capital contribution 31 December 2018: € 74 million).
On 1 April 2019, Airbus SE entered into a partnership agreementwith effective date 1 July 2019 to establish a venture capitalfund, dubbed Airbus Ventures Fund III, with a total commitment
amount of US$ 100 million. On 28 August 2019, a ﬁrst investment
of US$ 5 million has been made into this fund. During theyear 2019, Airbus SE made further capital contributions into
Airbus Ventures Fund III for a total amount of US$ 21 million.

4.4 Employees
11.

Number of Employees

The average number of the persons employed by the Company in 2019 was 1 (2018: 2). The employees are situated in the Netherlands.

4.5 Capital Structure and Financial Instruments
12.

Total Equity

Airbus SE’s shares are exclusively ordinary shares with a par value of € 1.00. The following table shows the development of thenumber of shares issued and fully paid:(In number of shares)

Issued as at 1 January
Issued for ESOP

2019

2018

776,367,881

774,556,062

1,784,292

1,811,819

Issued for convertible bond

5,020,9420Issued as at 31 December

783,173,115

776,367,881

Treasury shares(862,610)(636,924)

Outstanding as at 31 December

782,310,505

775,730,957

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.
Capital stock comprises the nominal amount of shares
outstanding. The addition to capital stock represents thecontribution for exercised options by employees of € 1.784.292(in 2018: € 1.811.819) in compliance with the implemented stock100

Airbus / Financial Statements 2019

option plans and the Employee Stock Ownership Plans (“ESOP”)
and the conversion of € 5.020.942 in relation to the convertible
bond issued in July 2015 redeemable in shares.

Notes to the IFRS Company Financial Statements /Share premium mainly results from contributions in kind in thecourse of the creation of Airbus, cash contributions from theInitial Public Offering, capital increases and reductions due tothe issuance and cancellation of shares.

Authorisations Granted by
the Shareholders’ General Meetingof Airbus SE Held on 10 April 2019

Retained earnings include mainly the proﬁt of the period andcash dividend payments to Airbus SE shareholders.

On 10 April 2019, the Annual General Meeting (“AGM”) of theCompany authorised the Board of Directors, for a period expiring
at the AGM to be held in 2020, to issue shares and to grantrights to subscribe for shares in the Company’s share capitalfor the purpose of:– ESOPs and share-related LTIPs, provided that such powers
shall be limited to an aggregate of 0.14% of the Company’s
authorised share capital (see “– Note 32: 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 36.3:
Financing Liabilities”).

On 10 April 2019, the Shareholders’ General Meeting decided
to distribute a gross amount of € 1.65 per share, which was
paid on 17 April 2019. For the ﬁscal year 2019, the Company’s
Board of Directors proposed at the Annual General Meeting of
Shareholders that the Loss for the period of € 3,665 million asshown in the income statements for the ﬁnancial year 2019 is
to be added to retained earnings and that a payment of a grossamount of € 1.80 per share shall be made to the shareholders
out of retained earnings.
Legal reserves includes:– change from ﬁnancial assets at fair value (see Note 13.2
“Carrying Amounts and Fair Values of Financial Instruments”);– change in fair value of derivatives designated as cash ﬂow
hedges (see Note 13.2 “Carrying Amounts and Fair Valuesof Financial Instruments”).
According to Dutch law, the OCI is considered to be a Legal
Reserve and therefore distribution is restricted.
Treasury shares represent the amount paid or payable for own
shares held in treasury. During 2019, the number of treasury
stock held by the Company increase to 862,610 compared to636,924 as of 31 December 2018. No shares were sold back to
the market nor cancelled in 2019 (in 2018: 0 shares).

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 10 April 2019, the AGM authorised the Board of
Directors for an 18 months period to repurchase up to 10% of
the Company’s issued share capital at a price per share notless than the nominal value and not more than the higher ofthe price of the last independent trade and the highest current
independent bid on the trading venues of the regulated marketof the country in which the purchase is carried out.
Furthermore, the AGM authorised both the Board of Directors
and the CEO, with powers of substitution, to establish the exact
number of the relevant shares to be cancelled.

Reconciliation Consolidated to Company Equity and Net Income
The difference between the total shareholders’ equity according to the Consolidated Financial Statements and Company’s Financial
Statements as at 31 December 2019 and 2018 is as follows:(In € million)

2019

2018

Consolidated equity

5,975

9,724

697

(103)

OCI – Restatement of investments from Consolidated to Company Financial Statements
Retained Earnings – Restatement of investments from Consolidated to Company Financial Statements

(916)

(486)

Retained Earnings – Valuation investments at historical cost

1,487

2,071

Retained Earnings – Impairment of financial assets(1,273)(1,099)Company’s equity

5,970

10,106The difference between the net income according to the Consolidated Financial Statements and Company’s Financial Statements
for the year ended 31 December 2019 and 2018 is as follows:(In € million)

2019

Consolidated net income(1,362)

3,054

Income from investments according to Consolidated Financial Statements(2,303)(3,007)

Income from investments according to Company Financial Statements

34

46

Loss on / Impairment of financial assets

(31)

(369)

Other valuation differences

(3)

49

(3,665)(227)

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

4

2018

Airbus / Financial Statements 2019101

Notes to the IFRS Company Financial Statements /13.

Cash, Securities and Financing Liabilities

13.1

Net Cash
31 December
2019(In € million)

2018

Cash and Cash equivalents

8,129

7,886

Current Securities

2,255

2,073

Non-Current Securitries

10,811

10,473Gross Cash position

21,19520,432

Short-term financing liabilities(6,580)(6,746)Long-term financing liabilities

0014,615

13,686

Total

13.2

Cash and Cash Equivalents

Cash and cash equivalents are composed of the following elements:
31 December
2019(In € million)

2018

Bank accounts and petty cash

463

326

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

7,014

6,576

Short-term securities (at fair value through OCI)

652

984

8,129

7,886

Total cash and cash equivalents

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

13.3

Securities
31 December(In € million)

2019

2018

Current securities at fair value through OCI

2,255

2,073

Non-current securities at fair value through OCI

10,811

10,1350338

13,066

12,546

Non-current securities at fair value through profit or loss

Total securities

Included in the securities portfolio as of 31 December 2019 and2018, respectively, are corporate and government bonds bearing
either ﬁxed rate coupons (€ 12,586 million nominal value; 2018:102

Airbus / Financial Statements 2019

€ 12,067 million) or ﬂoating rate coupons (€ 121 million nominal
value; 2018: € 479 million).

Notes to the IFRS Company Financial Statements /13.4

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 borrowing received fromjoint ventures and other parties.
The Company has received several euro-denominated loans and one US dollar-denominated loan from Airbus Finance B.V. (“AFBV”).
It has also issued a convertible bond in euro and euro-denominated exchangeable bonds into Dassault Aviation shares and 2
stand-alone US dollar-denominated bonds on the US institutional market under Rule 144A. Furthermore, the Company has longterm US dollar-denominated loans outstanding with the Development Bank of Japan (“DBJ”). The terms and repayment schedulesof these bonds and loans are as follows:
Carrying amountPrincipal
amount31 December
2018

Couponor interest
rate

Effective
interest
rate(in million)

2019

Maturity
date

Additional features

Loans from Airbus Finance B.V.
AGFBV 10 years (EMTN)€ 1,000€ 1,048€ 1,038

2.40%

2.45%

Apr. 2024

Interest rate swapped
into 3M Euribor +1.40%

AGFBV 15 years (EMTN)

€ 500

€ 555

€ 523

2.15%

2.24%

Oct. 2029

Interest rate swapped
into 3M Euribor +0.84%

AGFBV 10 years (EMTN)

€ 600

€ 617

€ 594

0.91%

0.95%

May 2026

Interest rate swapped
into 3M Euribor

AGFBV 15 years (EMTN)

€ 900

€ 940

€ 866

1.41%

1.49%

May 2031

Interest rate swapped
into 3M Euribor

US$ 1,000

€ 896

€ 848

2.72%

2.80%

Apr. 2023

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

US$ 100

€ 89

€ 87

3M US-Libor+1.15%

4.84%

Jan. 2021

Interest rate swapped
into 4.76% fixed

€ 500

€0

€ 477

0.00%

1.39%

July 2022

Convertible into Airbus SE
shares at € 99.54 per share

AGFBV US$ Loan 10 years

Loans from financial institutions
DBJ 10 years

Bond
Convertible bond 7 years€ 1,078€ 1,068€ 1,061

0.00%

0.33%

June 2021

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

US$ Bond 10 years

US$ 750

€ 687

€ 632

3.15%

3.16%

Apr 2027

Interest rate swapped
into 3M Libor +0.87%

US$ Bond 30 years

US$ 750

€ 680

€ 621

3.95%

4.02%

Apr 2047

Interest rate swapped
into 3M Libor +1.61%€ 6,580€ 6,746€ 6,580€ 6,746

0€0Exchangeable bond 5 years

Total
thereof non-current
financing liabilities
thereof current financing
liabilities

4Long-term financing liabilities, mainly comprising bonds and liabilities to ﬁnancial institutions, decreased by € 166 million to€ 6,580 million (2018: € 6,746 million). The decrease in long-term ﬁnancing liabilities is mainly related to the conversion of theconvertible bond issued on 1 July 2015 for an amount of € 500 million into 5,020,942 shares. The conversion price was € 99.54
per ordinary share. The conversion rate was 99.96%.
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 a maximum
volume of € 2 billion, increased in 2013 to a maximum volume of € 3 billion. The Company established in April 2015 a US$ 2 billion
commercial paper programme which has been increased to US$ 3 billion in April 2016. As of 31 December 2019, there were no
outstanding amounts under those commercial paper. The commercial paper issuance activity was limited during the course of 2019.

Airbus / Financial Statements 2019103

Notes to the IFRS Company Financial Statements /Reconciliation of liabilities arising from ﬁnancing liabilities:
Non-cash movements
Balance at
1 January
2019

Cash flows

Bonds and commercial papers

2,791

0

88

Liabilities to financial institutions

87

0

0

Loans from Airbus Finance B.V.

3,868

0

Total

6,746

0

(In € million)

Fair value
Foreignthroughexchange
profit or loss movements

OthersBalance at
31 December
2019

25

(469)

2,435

2

0

89

168

17

3

4,056

256

44

(466)

6,580

OthersBalance at
31 December
2018

59

14

2,791

Non-cash movements
Balance at
1 January
2018

Cash flows

2,750

0

Liabilities to financial institutions

1,715(1,680)

7

46

0

87

Loans from Airbus Finance B.V.

4,300

(500)

24

40

3

3,868

Total

8,765

(2,180)

(1)

(144)

18

6,746

(In € million)

Bonds and commercial papers

(32)

14.

Information about Financial Instruments

14.1

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.

104

Fair value
Foreignthroughexchange
profit or loss movements

Airbus / Financial Statements 2019Market Risk
Foreign exchange risk — The Company manages along-term 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’ ﬁrm commitments and highly probable forecast
transactions. As explained above, owing to the Company’s backto-back approach, its own exposure to foreign 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 informationon the risk management and hedging strategies used by theGroup 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 operational reasons.
The Company’s exposure to equity price risk is hence limited.
Furthermore, Airbus is exposed under its long-term incentive plan
(LTIP) to the risk of Airbus’ share price movements. In order tolimit these risks for the Company, the Company enters into equity
derivatives that reference the Airbus SE share price.

Notes to the IFRS Company Financial Statements /Sensitivities of market risks — the approach used tomeasure and control market risk exposure within the Group’s
ﬁnancial instrument portfolio is amongst other key indicators
the value-at-risk (“VaR”). For information about VaR andthe approach used by the Company to assess and monitor
sensitivities of market risks please refer to section 35.1 “Financial
Risk Management” of the Notes to the Consolidated Financial
Statements.

The Company is part of the 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 2019 and 31 December 2018 is
as follows:

Total VaR

Equityprice VaR

Currency
VaR

Interest
rate VaR

Foreign exchange hedges

41

0

41

1

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

51

34

42

36

Equity swaps

3

3

0

0

(In € million)

31 December 2019

Diversification effect

(48)

(2)

(76)

(1)

All financial instruments

47

35

7

36

Foreign exchange hedges

35

0

35

0

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

52

34

35

24

Equity swaps

3

3

0

0

31 December 2018

Diversification effect

(51)

(2)

(68)

0

All financial instruments

39

35

2

24

The increase in the total VaR compared to 31 December 2018 is mainly attribuable to Interest Rate due to IR curve change andmodelisation Update. The exposure increase despite a decrease of market volatilitiy on EUR/USD. The derivative instruments
entered into with external counterparties are passed on a 1:1 basis to Airbus entities. As a result, the respective market risks of theexternal 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 tosection 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
amountContractual
cash flows< 1 year

1 year2 years

2 years3 years

3 years4 years

4 years5 years> 5 years

31 December 2019Non-derivative financial liabilities(6,580)(7,773)(125)(1,291)(124)(1,015)(1,100)(4,118)Derivative financial liabilities(4,691)(6,188)(1,741)(1,804)(1,421)

(862)

(298)

(62)

(11,271)(13,961)(1,866)(3,095)(1,545)(1,877)(1,398)(4,180)Total

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

(48)

(48)

(1212)

(547)

(921)

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

(856)

(427)

(160)

(80)

(10,667)(12,534)(2,133)(1,208)(2,068)(974)(1,081)(5,070)Total

Airbus / Financial Statements 2019105

Notes to the IFRS Company Financial Statements /Credit Risk
The Company is exposed to credit risk to the extent of nonperformance by its counterparts with regard to financial
instruments or issuers of financial instruments for grosscash investments. However, it has policies in place to avoid
concentrations of credit risk and to ensure that credit risk islimited.
As far as central treasury activities are concerned, credit risk
resulting from ﬁnancial instruments is managed by the Company.
In order to ensure sufﬁcient diversiﬁcation, a credit limit system
is used.

The Company measures loss allowances at an amount that
represents credit losses resulting from default events that are
possible within the newt 12 months, unless the credit risk ona ﬁnancial instrument has increased signiﬁcantly since initialrecognition, as described in section 37.7 “Impairment losses” of
the Notes to the Consolidated Financial Statements. In 2019, anamount of € 31 million of impairment losses on ﬁnancial assets
is recognised in proﬁt and loss (2018: € 0 million).

14.2

Carrying Amounts and Fair
Values of Financial Instruments

Sales of products and services are made to customers after
having conducted appropriate internal credit risk assessment.

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 37.1 “Financial
Risk Management” of the Notes to the Consolidated Financial
Statements for more information.

The booked amount of ﬁnancial assets represents the maximum
credit exposure. The credit quality of ﬁnancial assets can beassessed by reference to external credit rating (if available) orinternal assessment of customers’ creditworthiness by way ofinternal risk pricing methods.

The Company classiﬁes its ﬁnancial assets in one of the following
categories: (i) at fair value through OCI, (ii) at fair value throughproﬁt and loss and (iii) at amortised cost. Classiﬁcation depends
on the Company’s business model for managing the ﬁnancial
assets and the contractual terms of the cash ﬂows.

In 2019, the total receivables, neither past due nor impaired
amount to € 33 million (in 2018: € 250 million).

The Company assigns its ﬁnancial instruments (excluding its
at-cost investments, which are outside the scope of IFRS 9“Financial Instruments”) into classes based on their category inthe statement of ﬁnancial position.

The Company monitors the performance of the individual
ﬁnancial instruments and the impact of market developments on
their performance and takes appropriate action on foreseeable
adverse development based on pre-deﬁned procedures andescalation levels.

The following table presents the carrying amounts and fair values of ﬁnancial instruments by class and by IFRS 9 measurement
category as of 31 December 2019:(In € million)

Fair value
through profit
or loss

Fair value
through OCI

Financial assets
and liabilities atamortised cost

Financial
instruments
total

Amortised
cost

Book
value

Fair
value

Fair
value

AssetsOther investments and long-term financial assets
Equity instruments
Loans
Trade receivables

1,094

0

0

0

1,094

1,094

0

0

1,838

1,895

1,838

1,895

0

0

32

32

32

32

4,843

0

0

0

4,843

4,843

0

0

8,574

8,574

8,574

8,574

0

13,06600

13,066

13,066

7,014

652

463

463

8,129

8,129

12,951

13,718

10,907

10,96437,576

37,633

2,517

Other financial assets
Derivative instruments
Current account Airbus companies
Securities
Cash and cash equivalents

Total
Liabilities
Financing liabilities
Issued bonds and commercial papers

0

0

2,435

2,517

2,435

Liabilities to financial institutions and others

0

0

89

90

89

90

Internal loans payable

0

0

4,056

4,180

4,056

4,180

4,691

0

0

0

4,691

4,691

Other financial liabilities
Derivative instruments
Current accounts Airbus companies

Total

106

Airbus / Financial Statements 201900

32,51032,51032,51032,5104,691

039,09039,29743,781

43,988

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

Financial assets
and liabilities atamortised cost

Financial
instruments
total

Fair value
through profit
or loss

Fair value
through OCI

Amortised
cost

Fair
value

Book
value

Fair
value

1,171

0

0

0

1,171

1,171

0

0

1,708

1,739

1,708

1,739

0

0

165

165

165

165

3,794

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

Total

3,794

0

0

0

3,794

0

0

8,013

8,013

8,013

8,013

338

12,2080012,546

12,546

6,576

984

326

326

7,886

7,887

11,87913,192

10,212

10,24335,28335,315

0

0

2,813

2,832

2,813

2,832

Liabilities
Financing liabilities
Issued bonds and commercial papers
Liabilities to financial institutions and others

0

0

87

88

87

88

Internal loans payable

0

0

3,846

3,950

3,846

3,950

Other financial liabilities
Derivative instruments
Current accounts Airbus companies

Total

3,921

0

0

0

3,921

3,921

0

0

30,17530,17530,17530,1753,921

036,92237,04540,84240,966

Fair Value Hierarchy
For further details please refer to Note 37.2 “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 2019 and 2018, respectively:
31 December 2019(In € million)

31 December 2018

Level 1

Level 2

Total

Level 1

Level 2

Total

1,094

0

1,094

1,171

0

1,171

Financial assets measured at fair value
Equity instruments

0

4,843

4,843

0

3,794

3,794

13,0660

13,066

12,546

0

12,546

7,014

652

7,666

6,577

984

7,561

21,174

5,495

26,66920,294

4,778

25,072

0

0

0

0

0

0

Derivative instruments

0(4,691)(4,691)0(3,921)(3,921)Other financial liabilities

0

0

0

0

0

0

0

(4,691)(4,691)0(3,921)(3,921)

Derivative instruments
Securities
Cash equivalents

Total
Financial liabilities measured at fair value

Total

Airbus / Financial Statements 20194107

Notes to the IFRS Company Financial Statements /Financial Assets Designated at Fair Value through Profit or Loss
The following types of ﬁnancial assets held at 31 December 2019 and 2018, respectively, are designated at fair value through proﬁt
or loss:(In € million)

Nominal amount at
initial recognition at
31 December 2019

Nominal amount at
initial recognition at
31 December 2018

7,014

6,577

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

0

338

7,014

6,915

Securities

Total

The company manages these assets and measures their performance on a fair value basis.

14.3

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
2019 and 31 December 2018, respectively:Grossamounts
recognised(In € million)Grossamounts
recognised
set off inthe financial
statements

Related amounts not
set off in the statementof financial position

Net amounts
presented in
the financial
statements

Financial
instruments

Cashcollateral
received

Net amount

31 December 2019
Financial assets

4,538

0

4,538

(1,480)0

3,058

Financial liabilities

4,295

0

4,295

(1,480)02,815

31 December 2018
Financial assets

3,799

0

3,799

(879)

0

2,920

Financial liabilities

3,829

0

3,829

(879)

0

2,950

14.4

Notional Amounts of Derivative Financial Instruments

The notional amount of interest rate contracts are as follows, speciﬁed by year of expected maturity:
Remaining period
1 year

2 years

3 years

4 years

5 years

Interest rate contracts

0

0

0

890

Interest rate future contracts

0

0

0

0

0

0

0

215

0

0

(In € million)

6 years

7 years> 7 years

Total

1,000

0

600

2,735

5,225

0

0

0

0

0

0

1,048

1,000

600

1,200

3,848

0

0

0

0

0

215

31 December 201931 December 2018
Interest rate contracts
Interest rate future contracts

The notional amounts of equity swaps are as follows:
Remaining period
1 year

2 years

3 years

4 years> 4 years

Total

31 December 2019

37

32

23

9

0

101

31 December 2018

49

37

27

9

0

122

(In € million)

108

Airbus / Financial Statements 2019

Notes to the IFRS Company Financial Statements /14.5

Derivative Financial Instruments and Hedge Accounting Disclosure

The following table presents the amounts relating to items designated as hedging instruments and hedge ineffectiveness as of
31 December 2019 under IFRS 9:
December
2019

2018

Carrying values

Carrying values

Asset

Liability

Asset

Liability

Net forward sales contracts

0

0

0

0

Foreign exchange options

0

0

0

0

236

0

66

95

0

0

0

0

(In € million)

Foreign currency risk

Interest rate risk
Commodity swap risk
Equity swap risk

Total

14.6

0

0

0

0

236

0

66

95

Net Gains or Net Losses

The Company’s net gains or net losses recognised in proﬁt or loss in 2019 and 2018, respectively are as follows:
December2019(In € million)

2018

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

(144)

(51)

Designated on initial recognition

(18)

(39)

Financial assets at amortised cost

69

35

Financial assets at fair value through OCI

26

68

Financial assets at fair value through profit or loss

(81)

(42)

Financial liabilities measured at amortised cost

7

(10)

(141)

(39)

Total

4.5 Other Notes
15.

Audit Fees

4

Fees related to professional services rendered by the Company’s auditor, Ernst & Young Accountants LLP, for the ﬁscal year 2019were € 1,505 thousand (in 2018: € 680 thousand). These fees relate to audit services only.

16.

Events after the Reporting Date

On 31 January 2020, the Company reached ﬁnal agreements with the French Parquet National Financier (PNF), the U.K. Serious
Fraud Ofﬁce (SFO) and the U.S. Department of State (DoS) (see “– Note 38: Litigation and Claims”).
The UK formally exited the EU on 31 January 2020. From 1 February, both parties enter the “transition period” during which the
EU and UK will negotiate additional relationship arrangements. The transition period runs until 31 December 2020.

Airbus / Financial Statements 2019109

Chapter

5
110

Airbus / Financial Statements 2019

5

Other Supplementary
Information Including
the Independent
Auditor’s Report

Airbus / Financial Statements 2019111

Other Supplementary Information Including the Independent Auditor’s Report/

Other Supplementary Information
1.

Appropriation of Result

Articles 30 and 31 of the Articles of Association provide that the Board of Directors shall determine which part of the result shallbe attributed to the reserves. The General Meeting of Shareholders may dispose of a reserve only upon a proposal of the Board of
Directors and to the extent it is permitted by law and the Articles of Association. Dividends may only be paid after adoption of theannual accounts from which it appears that the shareholders’ equity of the Company is more than the amount of the issued andpaid-in part of the capital increased by the reserves that must be maintained by law.
It will be proposed at the Annual General Meeting of Shareholders that the Loss for the period of € 3,665 million as shown in theincome statements for the ﬁnancial year 2019 is to be added to retained earnings and that a payment of a gross amount of € 1.80
per share shall be made to the shareholders out of retained earnings.

2.

Independent Auditor’s Report

To: the General Meeting of Shareholders of Airbus SE

Report on the Audit of the Financial Statements 2019 included in the Annual Report
Our Opinion
We have audited the ﬁnancial statements 2019 of Airbus SE (the Company), based in Amsterdam.
In our opinion the accompanying ﬁnancial statements give a true and fair view of the ﬁnancial position of Airbus SE as at 31 December
2019, and of its result and its cash ﬂows for 2019 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 2019;– the following statements for 2019: the consolidated and Company income statement, the consolidated and Company Statementsof Comprehensive Income, changes in equity and cash ﬂows;– the notes comprising a summary of the signiﬁcant accounting policies and other explanatory information.

Basis for our Opinion
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities underthose standards are further described in the “Our responsibilities for the audit of the ﬁnancial statements” section of our report.
We are independent of Airbus SE in accordance with the EU Regulation on speciﬁc requirements regarding statutory audit ofpublic-interest entities, the “Wet toezicht accountantsorganisaties” (Wta, Audit ﬁrms supervision act), the “Verordening inzake deonafhankelijkheid van accountants bij assurance-opdrachten” (ViO, Code of Ethics for Professional Accountants, a regulation withrespect to independence) and other relevant independence regulations in the Netherlands. Furthermore we have complied withthe “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.

Our Audit Approach
Our Understanding of the Business
The Company is a global leader in aeronautics, space and related services. The Company is structured in segments and we tailoredour group audit approach accordingly. We paid speciﬁc attention in our audit to a number of areas driven by the operations of thegroup and our risk assessment. We refer to the key audit matters for those areas.
We start by determining materiality and by identifying and assessing the risks of material misstatement of the ﬁnancial statements,
whether due to fraud, non-compliance with laws and regulations or error in order to design audit procedures responsive to thoserisks, and in order to obtain audit evidence that is sufﬁcient and appropriate to provide a basis for our opinion. The risk of notdetecting 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.

112

Airbus / Financial Statements 2019

Other Supplementary Information Including the Independent Auditor’s Report /Materiality
Materiality
Benchmark applied
Explanation€ 347 million (2018: € 292 million)
5% of the EBIT Adjusted [as defined in chapter 5 of the report of the Board of Directors]
We consider EBIT Adjusted as the most appropriate benchmark as it best aligns with the expectationsof those charged with governance at Airbus and of users of the Company’s financial statements.

We have also taken into account misstatements and/or possible misstatements that in our opinion are material for the users of the
ﬁnancial statements for qualitative reasons.
We agreed with the Audit Committee of the Board of Directors (“the Audit Committee”) that misstatements in excess of € 15 million
that are identiﬁed during the audit would be reported to them, as well as smaller misstatements that in our view must be reported
on qualitative grounds.

Our Focus on Fraud and Non-Compliance with Laws and Regulations
Our Responsibility
Although we are not responsible for preventing fraud or non-compliance and cannot be expected to detect non-compliance withall laws and regulations, it is our responsibility to obtain reasonable assurance that the ﬁnancial statements, taken as a whole, arefree from material misstatement, whether caused by fraud or error. Our audit has been performed with a high, but not absolute,level of assurance, which means we may not detect all material errors and fraud during our audit.
Non-compliance with laws and regulations may result in ﬁnes, litigation or other consequences for the company that may have amaterial effect on the ﬁnancial statements.

Our audit Response Related to Fraud Risks
In order to identify and assess the risks of material misstatements of the ﬁnancial statements due to fraud, we obtained anunderstanding of the entity and its environment, including the entity’s internal control relevant to the audit and in order to design
audit procedures that are appropriate in the circumstances. As in all of our audits, we addressed the risk of management overrideof internal control. We do not audit internal control per se for the purpose of expressing an opinion on the effectiveness of thecompany’s internal control.
We considered available information and made enquiries of relevant executives, Directors (including internal audit, legal, compliance,
human resources and regional Directors) and the Ethics and Compliance Committee. As part of our process of identifying fraud risks,
we evaluated fraud risk factors with respect to ﬁnancial reporting fraud, misappropriation of assets and bribery and corruption inclose co-operation with our forensic and legal specialists. As the Company is a global company, operating in multiple jurisdictions,
we considered the risk of bribery and corruption. We refer to our Key Audit Matters for more details.
We evaluated the design and the implementation and, where considered appropriate, tested the operating effectiveness of internal
controls that mitigate fraud risks. In addition, we performed procedures to evaluate key accounting estimates for management
bias in particular relating to important judgement areas and signiﬁcant accounting estimates as disclosed in Note 3 to the ﬁnancial
statements. We have also used data analysis to identify and address high-risk journal entries.
We incorporated elements of unpredictability in our audit. We considered the outcome of our other audit procedures and evaluatedwhether any ﬁndings were indicative of fraud or non-compliance. If so, we re-evaluate our assessment of fraud risk and its resulting
impact on our audit procedures.

Our Audit Response Related to Risks of Non-Compliance with Laws and Regulations
We assessed factors related to the risks of non-compliance with laws and regulations that could reasonably be expected to havea material effect on the ﬁnancial statements from our general industry experience, through discussions with the management
board, reading minutes, inspection of internal audit and compliance reports and performing substantive tests of details of classesof transactions, account balances or disclosures.
We also inspected lawyers’ letters and correspondence with regulatory authorities and remained alert to any indication of (suspected)
non-compliance throughout the audit. Finally we obtained written representations that all known instances of non-compliance withlaws and regulations have been disclosed to us. We refer to our Key Audit Matters for more details.

5

Going Concern
In order to identify and assess the risks of going concern and to conclude on the on the appropriateness of management’s use of
the going concern basis of accounting, we consider based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast signiﬁcant doubt on the company’s ability to continue as a going concern. If weconclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures inthe ﬁnancial statements or, if such disclosures are inadequate, to modify 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.
Airbus / Financial Statements 2019113

Other Supplementary Information Including the Independent Auditor’s Report/

Scope of the Group Audit
Airbus SE is at the head of a group of entities. The ﬁnancial information of this group is included in the Consolidated Financial
Statements of Airbus SE.
The entities are grouped into three business segments: Airbus, Airbus Helicopters and Airbus Defence and Space. The audit of
the three segments is performed jointly by EY and KPMG. The audit of the entities in scope is performed by either EY or KPMG
network ﬁrms.
Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the groupaudit. In this respect we have determined the nature and extent of the audit procedures to be carried out for group entities. Decisivewere the size and/or the risk proﬁle of the group entities or operations. On this basis, we selected group entities for which an audit
or review had to be carried out on the complete set of ﬁnancial information or speciﬁc items.
Our group audit focused mainly on signiﬁcant group entities where they are of signiﬁcant size, have signiﬁcant risks to the Company
associated with them or are considered for other reasons.
In total our audit procedures represent 92% of total consolidated revenue and 88% of total consolidated assets. The remaining
8% of revenues, and 12% of total assets result from entities, none of which individually represents more than 1% of revenues.
For those entities, we performed, amongst others, analytical procedures to corroborate our assessment that the ﬁnancial statements
are free from material misstatements.
We executed an audit plan that includes participation in risk assessment and planning discussions, setting the direction of
the group audit work (including instructions to the divisional and entity auditors), reviewing and discussing the planned audit
approach, obtaining an understanding of the ﬁnancial reporting process and performing procedures on the group consolidation,
participating in the evaluation of key accounting topics, reviewing the ﬁnancial statements and participating in meetings with the
management of the Company and its business segments. In our audit instructions, we also included targeted audit proceduresthat address the A220, A350, A380, A400M programmes as well as the risk of non-compliance with laws and regulations. We
furthermore executed ﬁle reviews at EY network teams and KPMG. We involved several EY specialists to assist the audit team,including specialists from our tax, actuarial, treasury and compliance departments.
By performing the procedures mentioned above at group entities, together with additional procedures at group level, we have beenable to obtain sufﬁcient and appropriate audit evidence about the Company’s ﬁnancial information to provide an opinion about
the Consolidated Financial Statements.

General Audit Procedures
Our audit further included among others:– performing audit procedures responsive to the risks identiﬁed, and obtaining audit evidence that is sufﬁcient and appropriate toprovide a basis for our opinion;– evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by management;– 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.

Our Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most signiﬁcance in our audit of the ﬁnancial
statements. We have communicated the key audit matters to the Audit Committee. The key audit matters are not a comprehensive
reﬂection of all matters discussed.
This year the settlement agreements reached with the French Parquet National Financier (PNF), the UK Serious Fraud Ofﬁce (SFO)
and the US Department of Justice (DoJ) and U.S. Department of State (DoS) were considered as a separate key audit matter
considering the signiﬁcance of the settlements and the importance of appropriate disclosure of rights and obligations in the ﬁnancial
statements regarding these settlements.
The key audit matter “The acquisition of CSALP” which was included in our last year’s auditor’s report, is not considered a key
audit matter for this year as it related to a one off transaction.
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.

114

Airbus / Financial Statements 2019

Other Supplementary Information Including the Independent Auditor’s Report /Settlement agreements reached with PNF, SFO, DoJ and DoS(Reference is made to the disclosures on Note 38 “Litigations and Claims” and Note 40 “Events after the Reporting Date”
of the financial statements)
Risk

Since 2016, the Company was under investigation by the French Parquet National Financier (PNF), the UK Serious
Fraud Office (SFO), the US Department of Justice (DoJ) and the U.S. Department of State (DoS) for, amongst others,
alleged irregularities concerning third party consultants. The Company reported since then in its financial statementsthat the outcome of these investigations could have a material effect on the Company’s financial position.
In January 2020, the Company has reached final agreements with the French Parquet National Financier (PNF),
the UK Serious Fraud Office (SFO) and the US Department of Justice (DoJ) resolving the authorities’ investigations
into allegations of bribery and corruption, as well as with the U.S. Department of State (DoS) and the DoJ to resolve
their investigations into inaccurate and misleading filings made with the DoS pursuant to the U.S. International Trafficin Arms Regulations (ITAR). Under the Agreements, the Company agreed to pay penalties of € 3,598 million, and tocomply with certain obligations including monitoring of its anti-corruption and export control programmes for a periodof three years. Prosecution will be discontinued if the Company complies with the terms of the agreement throughout
this period, which it has committed to doing.
Considering the significance of the settlements and the appropriate disclosure of rights and obligations in the financial
statements regarding the settlements, we considered this as a key audit matter.

Our audit
approach

We have inspected the settlement agreements between the Company, PNF, SFO, DoJ and DoS and have discussed
the Agreements with management, Audit Committee and the internal and external lawyers. We assessed whether thefinancial consequences as set out in the settlement agreements are appropriately accounted for and disclosed in
the financial statements.

Litigation and claims and risk of non-compliance with laws and regulations(Reference is made to the disclosures on Note 3 “Key Estimates and Judgements”, Note 24 “Provisions, Contingent Assets
and Contingent Liabilities” and Note 38 “Litigations and Claims” of the financial statements)
Risk

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 a material effect on the Company’s
result and its financial position.
A part of the Company’s business is characterised by competition for individually significant contracts with customers
which are often directly or indirectly associated with Governments. The process associated with these activities issusceptible to the risk of non-compliance with laws and regulations. In addition, the Company operates in a numberof territories where the use of commercial intermediaries is normal practice. Certain entities of the group remain
under investigation by various law enforcement agencies for amongst others alleged irregularities concerning third
party consultants. Breaches of laws and regulations in these areas can lead to fines, penalties, criminal prosecution,commercial litigation and restrictions on future business.

Our audit
approach

We planned and designed our audit approach to this area in conjunction with our in-house forensic specialists.
We evaluated the tone set by management and the Board of Directors and the Company’s approach to managing
this risk.
We assessed the overall control environment and evaluated and tested the Company’s policies, procedures and controls
to identify and assess possible non-compliance. Furthermore we tested the selection process of intermediaries,
related contractual arrangements, payments to intermediaries and the company’s responses to suspected breachesof policy and non-compliance.
We made inquiries of the Board of Directors and the Audit Committee, as well as the Company’s internal and external
legal advisors as to the areas of potential or suspected breaches of law and regulations relating to bribery, including
the status of ongoing investigations. To corroborate the results of those inquiries we vouched information received
with objective evidence, third parties and we reviewed related documentation.
We maintained a high level of vigilance to possible indications of significant non-compliance with laws and regulations
relating to bribery and corruption whilst carrying out our other audit procedures. Accompanied by our own legal
advisors we met on several occasions with the Company’s external counsel to obtain their views about the status ofongoing investigations as well as their potential impact on the financial statements. We furthermore tested journals
and other transactions with unusual characteristics using amongst other data-analytics tools.
For (threatened) litigation cases and claims, we gained additional assurance by comparing management’s position
to the assessment from external parties such as external lawyers in those cases where a high amount of judgement
is involved.
We assessed that the disclosure in the financial statements reflects the current status of the investigations
regarding suspected breaches of law or regulations in accordance with accounting standards. We also assessed
the appropriateness of the contingent liability disclosure in the financial statements.

Airbus / Financial Statements 2019

5115

Other Supplementary Information Including the Independent Auditor’s Report/

Revenue recognition(Reference is made to the disclosures on Note 2 “Significant Accounting Policies”, Note 3 “Key Estimates and Judgements”,
Note 10 “Segment Information” and Note 11 “Revenue and Gross Margin” of the financial statements)
Risk

The Group revenue recognition is complex due to its wide range of activities (sale of commercial aircraft andhelicopters, sale of military aircraft and helicopters, sale of space systems and services), its various types of contracts
including non-standard clauses and the duration of some contracts including long-term development activities.
Recognition of revenue includes significant judgement and estimates including whether the contracts contain multiple
performance obligations which should be accounted for separately and including the determination of the mostappropriate method for revenue recognition of these performance obligations. This comprises the identification ofpotential variable considerations reducing the consideration received, allocation of this consideration to the different
performance obligation and assessing if the performance obligations are satisfied over time or at a point in time.
In particular the amount of revenue and profit recognised in a year for performance obligations satisfied at a point
in time is dependent on the transfer of control and for performance obligations satisfied over time on the assessmentof the stage of completion of performance obligations as well as estimated total revenues and estimated total costs.

Our audit
approach

Our audit procedures included, amongst others, assessing the appropriateness of the Company’s accounting
policies related to revenue recognition according to IFRS 15 “Revenue from contracts with customers”. In addition
we evaluated the design and implementation and where considered appropriate tested the operating effectiveness ofinternal controls related to the completeness, accuracy and timing of the revenue recognised. We selected individual
revenue transactions to assess proper identification of the performance obligations in the contracts and allocationof the consideration amongst the performance obligation (such as the A400M contract and space contracts), thecompleteness and valuation of the variable considerations (including constraints applied, if applicable) includedin the transaction price (notably for A400M contract and residual value guarantee in the sale of some commercial
aircrafts) and the timing of transfer of control. In order to evaluate the significant judgements and estimates madeby management, we read supporting contractual agreements, met with sales representatives and programme
teams to understand the nature of the various obligations to be rendered under the contract and discuss specificclauses that could prevent transfer of control (mostly for the sales of commercial aircrafts), obtained evidence oftransfer of control such as proof of delivery, examined computation of for progression of costs and assessed thereasonableness of the actual and estimated cost to complete included in the cost-to-cost method for performanceobligation recognised over time (notably for A400M development, Tiger and Eurofighter contracts and some bordersecurity and space contracts).
Finally we determined that the appropriate disclosures were made in the financial statements.

Estimations with respect to the contract margin for the accounting of onerous contracts and the assessmentof the contract margin recognised for the significant over-time contracts.
(Reference is made to the disclosure on Note 2 “Significant Accounting Policies”, Note 3 “Key Estimates and Judgements”, Note 11“Revenue and Gross Margin” and Note 24 “Provisions, Contingent Assets and Contingent Liabilities” of the financial statements)
Risk

The Group owns a large portfolio of long-term contracts for which it needs to assess the contract margin in order torecord a provision for onerous contract if the margin at completion is expected to be negative and the margin for eachperformance obligation satisfied over time to record the associated revenue and costs.
Provisions for onerous contracts such as for the A400M are recognised when it becomes probable that the present
value of unavoidable costs of fulfilling the obligations under the contract exceeds the present value of economic
benefits expected to be received under the contract.
The determination of these contract margins and provisions for onerous contracts is based on available best estimatesand requires management’s significant judgement and assumptions associated with estimated revue and costs atcompletion of the programme, the technical development achievement and certification schedules, production plan(including assumptions on ramp up), performance guarantees as well as key risks such expected outcome fromongoing negotiations with customers, penalties for delay or non-compliance.

Our audit
approach

We evaluated the design and implementation and where considered appropriate tested the operating effectiveness ofinternal controls for accounting for onerous contracts and for the assessment of the contract margin.
We also performed substantive procedures on individually significant programmes, including discussions with theprogramme team including the Head of Programme. Furthermore we evaluated management’s assumptions in thedetermination of amongst others the stage of completion of a project, estimates to complete for both revenue andcosts and any provisions for onerous 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, paid specificattention to technical and market developments, including export opportunities, delivery plan and certification
schedules.
We challenged management’s assumptions by discussing and reviewing correspondence with customers, considered
the accuracy and consistency of similar estimates made in previous years and corroborated the assumptions with thelatest contractual information. For over-time contracts and performance obligations we performed detailed testing of
cost incurred and audited the correct application of margin at completion.
Finally we determined that the appropriate disclosures were made in the financial statements.

116

Airbus / Financial Statements 2019

Other Supplementary Information Including the Independent Auditor’s Report /Recoverability of assets related to significant programmes(Reference is made to the disclosures on Note 2 “Significant Accounting Policies”, Note 19 “Intangible Assets” and Note 20 “Property,
Plant and Equipment” of the financial statements)
Risk

Capitalised development costs, intangible assets and jigs and tools relate mainly to the key programmes, such as theA220, A330, A350, A380, A400M, H160 and H175.
Estimates of the future cash flows and the appropriate discount rates are necessary to determine if an impairmentof assets has to be recognised. In addition to the risk of contract cancellations, significant costs or loss of revenue
may be incurred in connection with remedial actions required to correct any performance issue detected. Owing to
the inherent uncertainty involved in forecasting future costs and interpreting contractual and commercial positions
in determining impairments, this is a key audit area. Updates to these provisions can have a significant impact on the
Company’s result and financial position.

Our audit
approach

We evaluated the design and implementation and where considered appropriate tested the operating effectiveness ofinternal controls for identifying and recording impairments. We also performed substantive audit procedures including
inquiry of the programme controller and Head of Programmes and corroboration with other audit evidence.
We evaluated the impairment tests performed by testing the integrity of the management’s impairment model. We
assessed management’s assumptions for the discount rate and the determination of the forecasted revenue to berealised, cost to be incurred (including any contractual penalties) and the expected gross margin, including performing
sensitivity to evaluate the impact of changing some assumptions such as the discount rate or key business parameters(price, growth rate for instance).
Finally we determined that the appropriate disclosures were made in the financial statements.

Valuation of derivative financial instruments(Reference is made to Note 37 “Information about Financial Instruments” of the financial statements)
Risk

The Company operates in a business environment that is exposed to currency volatility. A significant portion of theCompany’s revenue is denominated in US dollars, while a major part of its costs is incurred in Euro and, to a lesser
extent, in Pounds Sterling. In response to these risks the Company uses financial instruments (mainly currency
forwards) to mitigate the exposure to changes in market rates. There is a high inherent risk of error in the Company’s
Consolidated Financial Statements, both in the valuation of the financial instruments and in the presentation anddisclosure in the financial statements.
The magnitude of the Company’s hedge portfolio and potentially significant changes in the exchange rate of the US
dollar versus the Euro could have a significant impact on the consolidated equity of the Company via the “mark tomarket” valuation of the hedge portfolio.

Our audit
approach

For the audit of the financial instruments we used specialists who tested the controls around the Company’s central
treasury system, independently calculated the valuation of the treasury portfolio (by sample) and tested the applicationof the hedge accounting rules and the resulting accounting treatment. In this process we also assessed the delivery
profile used as a basis to the hedge accounting effectiveness test.
We obtained counterparty confirmation of the outstanding financial instruments to verify the existence and ownership.
Based on a sample of derivative financial instruments we assessed that the valuation of the financial instruments iswithin a pre-defined tolerable variance threshold and no material exceptions were noted.
The results of our procedures relating to management’s accounting for derivative financial instruments in the 2019financial statements were satisfactory and we determined that the appropriate disclosures were made in the financial
statements.

5
Airbus / Financial Statements 2019117

Other Supplementary Information Including the Independent Auditor’s Report/

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 including the remuneration report (we refer to www.airbus.com for the board report);– 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 and Section 2:135b 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 Section 2:135b sub-Section 7 of
the Dutch Civil Code and the Dutch Standard 720. The scope of the procedures performed is substantially less than the scope of
those performed in our audit of the ﬁnancial statements.
The Board is responsible for the preparation of the other information, including the Report of the Board of Directors in accordancewith Part 9 of Book 2 of the Dutch Civil Code and other information as required by Part 9 of Book 2 of the Dutch Civil Code andthe remuneration report in accordance with Section 2:135b of the Dutch Civil Code.

Report on other Legal and Regulatory Requirements
Engagement
We were appointed by the Annual General Meeting of Shareholders as auditor of Airbus SE on 28 April 2016, as of the audit for
the year 2016 and have operated as statutory auditor since that date.

No prohibited Non-Audit Services
We have not provided prohibited non-audit services as referred to in Article 5 (1) of the EU Regulation on speciﬁc requirements
regarding statutory audit of public-interest entities.

Description of Responsibilities for the Financial statements
Responsibilities of the Board of Directors and Audit Committee for the Financial Statements
The Board of Directors is responsible for the preparation and fair presentation of the ﬁnancial statements in accordance with
EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code. Furthermore, the Board of Directors is responsible for such internal control as
management determines is necessary to enable the preparation of the ﬁnancial statements that are free from material misstatement,
whether due to fraud or error.
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 engagement in a manner that allows us to obtain sufﬁcient and appropriate audit
evidence for our opinion.
Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material errors
and fraud during our audit.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to inﬂuence the economic decisions of users taken on the basis of these ﬁnancial statements. The materiality affects
the nature, timing and extent of our audit procedures and the evaluation of the effect of identiﬁed misstatements on our opinion.
We have exercised professional judgement and have maintained professional scepticism throughout the audit, in accordance with
Dutch Standards on Auditing, ethical requirements and independence requirements. Our audit approach section above includes
an informative summary of our responsibilities and the work performed as the basis for our opinion.

118

Airbus / Financial Statements 2019

Other Supplementary Information Including the Independent Auditor’s Report /Communication
We communicate with the Audit Committee regarding, amongst other matters, the planned scope and timing of the audit andsigniﬁcant audit ﬁndings, including any signiﬁcant ﬁndings in internal control that we identify during our audit.
In this respect we also submit an additional report to the Audit Committee in accordance with Article 11 of the EU Regulation
on speciﬁc requirements regarding statutory audit of public-interest entities. The information included in this additional report isconsistent with our audit opinion in this auditor’s report.
We provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence,and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards.
From the matters communicated with the Audit Committee, we determine the key audit matters:
those matters that were of most signiﬁcance in the audit of the ﬁnancial statements. 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, 12 February 2020
Ernst & Young Accountants LLP
signed by A.A. van Eimeren

5
Airbus / Financial Statements 2019119Produced by Labrador
www.labrador-company.com

Contact Airbus at:
2 rond-point Dewoitine
BP 9011231703 Blagnac Cedex
FranceAirbus SE
Mendelweg 302333 CS Leiden
The Netherlands