and Space Company EADS N.V.
Le Carré, Beechavenue 130 -1321119 PR Schipol-Rijk
The Netherlands
www.eads.com

This document is also available
at the following addresses:
European Aeronautic
Defence and Space Company
EADS N.V.

EADS Annual Review 2006

EADS.COMEUROPEAN AERONAUTIC DEFENCE AND SPACE COMPANY EADS N.V.

European Aeronautic Defence

In France
37, boulevard de Montmorency
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In Germany
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In Spain
Avenida de Aragón 404
28022 Madrid – Spain

1

TAKE
A
LOOK
EADS
Annual Review
2006

… AT
THE
FULL
PICTUREAND SEE A COMPANY
IN TRANSFORMATIONThe complete EADS Annual Report Suite 2006 consists of:

ANNUAL REVIEW 2006

Book

1
Book

2
Book

3

TAKE
A
LOOK

Management & Responsibility

FINANCIALSTATEMENTSANDCORPORATEGOVERNANCE
2006

FINANCIAL STATEMENTS ANDCORPORATE GOVERNANCE 2006

BUSINESS,LEGALANDCORPORATERESPONSIBILITY
2006

BUSINESS, LEGAL AND
CORPORATE RESPONSIBILITY 2006

EADS
Annual Review
2006

2

The Full Picture: Transformation
The Business Year 2006
Inside EADS
Useful Information

Registration Document Part 1:
Risk Factors

Book

3

Net Assets Financial Position Results
Corporate GovernanceRegistration Document Part 2:(available on request)

Book

Information on EADS Activities
Corporate Social Responsibility
General Description of the Company
and its Share Capital
Entity Responsible for the Registration Document

The online version of theAnnual Report Suite 2006 is available atwww.reports.eads.com

Designed and produced by HGB Hamburger Geschäftsberichte
Printed by Kriechbaumer
Written by The Clerkenwell Consultancy
Photos: M. Abrahams, Airbus (Fixion-hcsgm), M. Lange, S. Marquardt

U SE F U L I N F O R M AT I O NFinancial Calendar

Full Year 2006 results release:
9 th March 2007
Annual General Meeting:4 th May 2007, Amsterdam, The Netherlands
First Quarter 2007 results release:10 th May 2007
Shareholders’ Information meeting:
24 th May 2007, Paris, France
First Half 2007 results release:
26 th July 2007
Third Quarter 2007 results release:
8 th November 2007

EADS
2006
AT A
GLANCEEADS GROUP

THE YEAR 2006 IN REVIEW

Investor Relations contact:
Toll-free telephone numbers:
France: 0 800 01 2001
Germany: 00 800 00 02 2002
Spain:
00 800 00 02 2002
Shareholders from other countries
can contact us at:+ 33 1 41 33 90 94

THE DIVISIONSKEY FIGURESEADS SHARESEADS GLOBAL FOOTPRINT

An e-mailbox is dedicatedto answering shareholders’ enquiries:
ir@eads.com

www.eads.com

EADS.COM
66

CONTENTS

Or visit our website at:

EADS GROUPEADS is a global leader in aerospace, defence andrelated services. The Group includes the aircraft
manufacturer Airbus, the world’s largest helicopter
supplier, Eurocopter, and Astrium, the European
leader in space programmes, from Ariane to Galileo.

CUTTING EDGETECHNOLOGY.
EADS is the major partner in the Euroﬁghter consortium, develops the A400M military transport aircraft
and holds a stake in the joint venture MBDA, theinternational leader in missile systems.

MAN AG E ME NT

THE FU LL PIC TU RE

THE BU SINE SS YE AR 2 0 0 6

INSID E E AD SUSEFUL I NFO R M ATI O NEADS International

Representative Ofﬁces

Latin America

South Asia and Paciﬁc

EADS
Tel + 33 1 42 24 24 24
Fax + 33 1 42 24 26 19

Western EuropeSão Paulo, Brazil
Tel + 55 11 3093 2800
Fax + 55 11 3093 2801

Canberra, Australia
Tel + 61 2 62 62 91 33
Fax + 61 2 62 62 91 36

Santiago de Chile, Chile
Tel + 56 2 278 78 78
Fax + 56 2 278 79 79

New Delhi, India
Tel + 91 11 4357 9003
Fax + 91 11 4357 9024

Mexico City, Mexico
Tel + 52 55 5281 02 90
Fax + 52 55 5281 32 36

Jakarta, Indonesia
Tel + 62 21 573 57 33
Fax + 62 21 573 59 23

Athens, Greece
Tel + 30 210 69 83 871
Fax + 30 210 69 83 870
Rome, Italy
Tel + 39 06 45 23 2901
Fax + 39 06 45 23 4006
Ankara, Turkey
Tel + 90 312 439 89 64
Fax + 90 312 439 70 07
London, United Kingdom
Tel + 44 207 845 8400
Fax + 44 207 845 8401

Middle East and Maghreb

Central and Eastern Europe

Cairo, Egypt
Tel + 20 2 794 86 71
Fax + 20 2 795 73 17

Warsaw, Poland
Tel + 48 22 627 05 28
Fax + 48 22 627 05 35
Moscow, Russia
Tel + 7 495 797 53 67
Fax + 7 495 797 53 66

North America
Ottawa, Canada
Tel + 1 613 230 39 02
Fax + 1 613 230 14 42

Abu Dhabi, UAE
Tel + 971 2 681 28 78
Fax + 971 2 681 10 27

Muscat, Oman
Tel + 968 24 601 922
Fax + 968 24 6028 45
Doha, Qatar
Tel + 974 411 0752
Fax +974 411 0784
Riyadh, Saudi Arabia
Tel + 966 1 46 53 456
Fax + 966 1 46 30 844

North Asia
Beijing, China
Tel + 86 10 646 11 266
Fax + 86 10 646 10 409

Kuala Lumpur, Malaysia
Tel + 60 3 2163 0233
Fax + 60 3 2163 0211
Singapore, Singapore
Tel + 65 67 37 50 77
Fax + 65 67 33 58 15
Bangkok, Thailand
Tel + 66 2 610 4300
Fax + 66 2 610 4301
Hanoi, Vietnam
Tel + 84 4 943 68 85
Fax + 84 4 943 68 72

AfricaJohannesburg,
South Africa
Tel + 27 11 256 79 00
Fax +27 11 256 79 11
Tripoli, Libya
Tel + 218 21 335 1026
Fax + 218 21 335 1257

Seoul, South Korea
Tel + 82 2 798 49 25
Fax + 82 2 798 49 27
Taipei, Taiwan
Tel + 886 2 2712 15 94
Fax + 886 2 2712 10 89

II.
E ADS AN N UAL R E V IE W 2 0 0 6

65

EADS GROUP
2006
Revenues

€m

2005

2004

34,206

31,761

€m

399

3)

2,852

2,432

€m

99 3)

1,676

1,203

2)

€

0.12

3)

2.11

1.50

Dividend per share

€

• 4)

0.65

0.50

1)

EBIT (Earnings before interest and taxes)
Net Income 2)
Earnings per share

39,434

Net cash position

€m

4,229

5,489

3,961

Order intake 5)€m69,01892,551

44,117

Order book 5)€m262,810253,235

184,288

116,805

113,210

110,662

2006

2005

2004

Employees

EADS SEGMENTS

Airbus
Revenues€m

25,19022,17920,224

Order book 5)€m210,115

201,963

136,022

€m

2,200

763

1,304

€m

20,337

20,961

19,897

€m

3,803

3,211

2,786

€m

11,042

9,960

9,117

Military Transport Aircraft
Revenues
Order book5)

Eurocopter
Revenues
Order book5)

Defence & Security
Revenues

€m

5,864

5,636

5,385

Order book 5)€m17,57018,50917,276Astrium
€m

3,212

2,698

2,592

Order book 5)€m12,263

10,931

11,311

€m

1,257

1,155

1,123

€m

2,292

2,128

1,079

Other Businesses 6)
Revenues
Order book5)

1)

Unless otherwise indicated, EBIT ﬁgures presented in this report are pre-goodwill impairment and exceptionals

2)

EADS continues to use the term Net Income. It is identical with Proﬁt for the period attributable to equity holders of the parent as deﬁned by IFRS Rules

3)

For 2006, EADS changed its accounting policy from the corridor approach to the equity approach, i.e. all actuarial gains and losses are recognised in Balance Sheetas pension provision thereby reducing equity. Therefore, those changes in actuarial gains and losses, which are recognised as expenses under the corridor
method, have to be reversed. In 2006, this change contributes € 45 million to EBIT, € 25 million to Net Income and € 0.03 to Earnings per share.

4)

To be decided by the AGM on 4th May 2007

5)

Contributions from commercial aircraft activities to EADS’ Order intake and Order book based on list prices

6)

ATR, EADS EFW, EADS Socata and EADS Sogerma are allocated to Other Businesses, which is not a stand-alone EADS DivisionE A D S AT A G L A N C E 2 0 0 6

III

CONTENTS

Revenues

THE YEAR 2006 IN REVIEWFEBRUARY
EADS inaugurated its Singapore Research & Technology Centre toextend the Group’s research organisation. It will manage and broker
projects for the Business Units in close cooperation with Singaporeanscientiﬁc institutions and, additionally, run research projects in its
own facilities. A further enlargement of the global R&T footprint
is expected for mid-2007, when EADS will establish a training andresearch and development centre in Qatar.

Columbus space laboratory

JUNE

JULY

Eurocopter received a further boost for its
NH90 in the form of an order for 43 latestgeneration transport helicopters. Then, at theend of the year, Spain conﬁrmed a contract
for 45 of their tactical transport (TTH)
version of the NH90. The ﬁrst three completed
NH90s were handed over to the German
Army at Eurocopter’s Donauwörth facility
in December 2006.

Airbus presents the A350XWB, its new Extra
Wide Body Family. The new family will consistof four passenger versions and one freighter,completing the Airbus long-range product forthe 21st century with the most modern andtechnologically advanced products. Increased
range and speed, enhanced passenger comfort
and the best economics will make theA350XWB a reference for the future. Despiteindustrial problems, Airbus received strong
backing for the A380 at the FarnboroughAirshow.

OCTOBER
Airbus reached an agreement with the Chinese
customer CASGC for the purchase of 150
A320 Family aircraft and a Letter of Intent for
20 A350XWB. This represents the largest single
transaction ever achieved by Airbus. Under a
Framework Agreement with a Chinese industry
consortium, Airbus will set up a Final AssemblyLine for the A320 Family in Tianjin.
EADS and its freighter conversion centre EFW(Elbe Flugzeugwerke) signed an agreement withthe leading Russian aircraft manufacturer Irkut,
preparing the foundation of a Joint Venture
responsible for the conversion of Airbus A320
Family aircraft into freighters.
A380 and “Red Arrows” from the Royal Air Force

8
IV

APRILMAY

The new EADS Air Refuelling Boom System
successfully completed the ﬁrst phase of its
ﬂight test programme. In only three years,
EADS has developed this ﬂy-by-wire boom
technology to supply the world’s mostadvanced tanker aircraft. During 2006, thesystem was installed in the ﬁrst out of ﬁve
A330 MRTTs (Multi-Role Tanker Transport)
to be delivered to the Royal Australian
Air Force.

At EADS Astrium in Bremen, the Columbus
space laboratory was made ready for its ﬁrst
ﬂight and shipped to the United States.
Engineers have spent approximately ten years
developing and building the multi-functional
Columbus for the International Space Station(ISS). It is scheduled for launch in autumn
2007 on board of a US Space Shuttle.

AUGUSTEADS received the contract to construct thedigital radio system for the German security
authorities and organisations (BOSNet). Within
the scope of this contract, EADS will act as aprime contractor and construct a nationwide
TETRA digital radio network by 2010. Earlier
in 2007, the German Ministry of Defence
gave its go-ahead for the development, testingand support of the unmanned signals
intelligence surveillance and reconnaissancesystem EuroHawk.

EuroHawk

DECEMBER

For the A380, a turbulent year 2006 ended withthe type certiﬁcation by the European and US
aviation authorities. This came after the successful completion of a stringent trial programme toensure the aircraft meets or even exceeds all
airworthiness criteria.
UH-72A Lakota

E A D S AT A G L A N C E 2 0 0 6

V

CONTENTSEADS North America delivered the US Army’sﬁrst UH-72A Light Utility Helicopter inColumbus, Mississippi. This marks the beginning of a major defence programme, with arequirement for up to 352 rotary-wing aircraft.
The ﬁrst delivery came three months aheadof schedule and six months after the selectionof EADS North America as the prime contractor
for the LUH programme.

THE DIVISIONSAIRBUS
Airbus is a leading commercial aircraft manufacturer. Its customer focus,
commercial know-how, technological leadership and manufacturing efﬁciency
consistently win it half of all orders for aircraft of 100 seats or more.

A350XWB

(€ m)

2006

2005

Variation

Revenues

25,19022,179

14%

- 572

2,307

–

Order intake

53,367

78,254- 32%

Order book210,115

201,963

4%

EBIT

In number of aircraft
Deliveries

434

378

15%

Order book

2,533

2,177

16%

MILITARY TRANSPORT AIRCRAFT
Military Transport Aircraft designs, manufactures and sells some of the world’s
most advanced transport aircraft. Products include heavy, medium and lighttransports, as well as Airbus military derivatives, which leverage all the efﬁcienciesof Airbus commercial aircraft.
A400M

(€ m)

2006

2005

Variation

Revenues

2,200

763

188%

75

48

56%

EBIT
Order intake

1,594

1,840

- 13%

Order book

20,337

20,961- 3%

EUROCOPTER
Eurocopter is the world’s leading helicopter manufacturer. It captures morethan 50% of sales for civil and parapublic helicopters and has a strongly growing
military business.

AS350 Ecureuil

(€ m)

2006

2005

Variation

Revenues

3,803

3,211

18%

257

212

21%

Order intake

4,885

3,522

39%

Order book11,042

9,960

11%

EBIT

10
VI

DEFENCE & SECURITY
Defence & Security is the main pole for EADS’ military and global security
activities. It has a wide range of platforms, including EADS’ role in Euroﬁghter,missile systems, defence communication systems, defence electronics
and services.
Euroﬁghter

(€ m)

2006

2005

Variation

Revenues

5,864

5,636

4%

EBIT

348

201

73%

Order intake

5,191

6,673

- 22%

Order book

17,57018,509- 5%

ASTRIUM
Astrium is Europe’s preeminent space group and the third largest worldwide.
It is the lead European supplier of satellites, launchers and space services. It is
playing a key role in Europe’s institutional space programmes.

Goce satellite

(€ m)

2006

2005

Variation

Revenues

3,212

2,698

19%

130

58

124%

EBIT
Order intake

4,354

2,322

88%

Order book

12,263

10,931

12%

OTHER BUSINESSES (not belonging to any Division)

Socata TBM 850

(€ m)

2006

2005

Variation

Revenues

1,257

1,155

9%

EBIT

- 288

-171

–

Order intake

1,469

1,871

- 21%

Order book

2,292

2,128

8%

Please refer to www.eads.com for further and more detailed information on EADS activities
E A D S AT A G L A N C E 2 0 0 6

VII

CONTENTSEADS bundles its activities in turboprop aircraft, general aviation and freighter
conversion, its aerostructure and aircraft seats business. Therefore, the Business
Units ATR, EADS EFW, EADS Socata and EADS Sogerma are allocated to
Other Businesses, which is not a stand-alone EADS Division.

KEY FIGURESREVENUES (€ m)
2006

39,434

2005

34,206

2004

31,761

Revenues grew by 15% to € 39.4 billion in 2006 (2005:€ 34.2 billion). This strong increase was supported by
all Divisions, in particular by Airbus along with
Eurocopter and Astrium.

EBIT (€ m)
2006

399

2005

2,852

2004

2,432

In 2006, EBIT was € 399 million (2005: € 2,852 million).
EBIT was substantially burdened by the impact of A380
delays, A350 related charges, exchange rate impacts,
high research and development expenses and by losses
at EADS Sogerma.

NET INCOME (€ m)
2006

99

2005
2004

1,676
1,203

Net income of € 99 million (2005: € 1,676 million),or € 0.12 per share (2005: € 2.11) mainly mirrors
the Group’s EBIT development.

FREE CASH FLOW (€ m)
2006

2,029

2005
2004

2,413
1,614

Free cash ﬂow including customer ﬁnancing remained highat € 2.0 billion (2005: € 2.4 billion). The increased
sell-down of customer ﬁnancing assets offset an unfavourable working capital development.

NET CASH POSITION (€ m)
2006

4,229

2005
2004

12
VIII

5,489
3,961

EADS’ net cash position stayed high at € 4.2 billion at
year-end 2006 (2005: € 5.5 billion). This was impacted
by the acquisition of BAE Systems’ 20% stake in Airbus(€ 2.75 billion) and dividend payments. Adjusted
for the one-off payment for the Airbus stake it has
again improved.

DEFENCE REVENUES (€ m)
10,039For the ﬁrst time, the combined revenues from EADS
defence businesses hit € 10.0 billion (2005: € 7.7 billion),driven by higher revenues in the Military Transport
Aircraft and Defence & Security Divisions, at Eurocopter
and at Astrium.

2006

262,810

2005

253,235

The EADS order book stood at € 262.8 billion at theend of 2006 (year-end 2005: € 253.2 billion). Thisorder book increase was achieved despite a € 17 billion
impact due to revaluation at a less favourable€ / USD exchange rate.

2006
2005

7,700

2004

7,695

ORDER BOOK (€ m)

2004

184,288

DEFENCE ORDER BOOK (€ m)
2006

52,933

2005

52,36349,075

2004

Defence activities continued to grow. The order book stoodat € 52.9 billion at year-end (compared with € 52.4 billion at
year-end 2005). Signiﬁcant breakthroughs were made, witha helicopter order from the US Army and a more diversiﬁed
product portfolio.

SELF-FINANCED RESEARCH AND DEVELOPMENT (€ m)
2006

2,458

2005

2,075

2004

2,126

EMPLOYEES BY BUSINESS SECTOR AT YEAR-END 2006 (%)
48.8
19.9
11.5
10.2
6.0

AirbusDefence & Security
Eurocopter
Astrium
HQ, Research andOther Businesses
3.6 Military Transport
Aircraft

During 2006, EADS increased its workforce by 3% toa total of 116,805 employees. The main drivers for thisfurther increase were Astrium and Eurocopter.

E A D S AT A G L A N C E 2 0 0 6

IX

CONTENTS

In 2006, EADS continued to spend more than its peers on
research and development, dedicating over 6% of revenues
to investment in innovation. EADS management isconvinced this is key to maintaining technological leadership and a competitive position.

EADS SHARESThe year was marked by strong volatility due mainly
to hedge fund activity, especially in the second
quarter. Speculative trading led to average volumes ofmore than twice those in 2005. After three years ofappreciation, EADS was the worst performer in both
the CAC 40 and the MDAX during 2006, with an
18% share price slide.
On the back of 2005’s strong momentum, the shareprice surged to an all-time peak of € 35.42 at the endof March, lifted by Airbus’s record commercial year,
the excellent 2005 performance and the apparently
positive outlook at the time.

Under question

Stabilisation
By July, after changes in top management that included
the appointments of Louis Gallois and Christian Streiff,
as well as the announcement of the new A350XWB,
the situation began to stabilise. This did not, however,diminish distrust among investors over the uncertainty regarding EADS’ ﬁnancial outlook, with a shareprice stuck at around € 22 – 23.
The unexpected purchase of 5.4% of the share capitalby the Russian state-owned bank Vneshtorgbank
through the summer fuelled further speculative sharetrading.

At the beginning of April, Lagardère and DaimlerChrysler
announced their decision to reduce their shareholdingin the Group by 7.5%, causing a temporary imbalancein supply and demand and an increase in the free ﬂoat.
Almost simultaneously, BAE Systems announced its
intention to sell its 20% stake in Airbus, provoking
market uncertainty.

Then, against the backdrop of a further A380 delay
announcement and, following a thorough review, theunveiling of the Power8 plan in early October, thesituation began to improve. Further clariﬁcation of
the management and, in early December, the resultsof the A400M programme review and the launchof the A350XWB slowly lifted some of the ﬁnancial
community’s doubts.

Then, confusion in the ﬁnancial community mounted
following the Thales-Alcatel Space partnership andnegative customer feedback about the A350 and theA340’s cost of operations. Over the two monthsof April and May, the share price lost approximately
20%, and not even the good ﬁrst quarter earnings
could alleviate these concerns.

Comforted by the continuous stream of orders for
Airbus, new investors focused on the Company’svalue and on its long-term prospects. They acquired
stakes in the capital, stabilising the share price andﬁlling the void left by investors focused on short-term
growth and performance. In December, the share pricerose by more than 15% to € 26.

On 13th June, delivery delays were suddenly announced for the A380. The following day, the EADS
share price dropped by more than 30% with a hugetrading volume of 68.5 million of shares – 8% of thecapital was exchanged during the day.

PROFILE
ISIN Code NL0000235190
Number of issued shares as of 31st December 2006: 815,931,524
Offer price on 10th July 2000: € 19 for institutional investors, € 18 for retail investors
High in 2006 on Paris Stock Market: € 35.42 on 27th March
Low in 2006 on Paris Stock Market: € 16.75 on 14th June

14
X

EADS

EADS

SHARE PRICE EVOLUTION AS OF 31st DECEMBER 2006 (CLOSE PRICE)
Base 100: 10th July 2000

EADS share price in €
36.0
32.4
28.8
25.2
21.6
18.0
14.4
10.8
7.2
3.6

200
180
160
140
120
100
80
60
40
20
J
2000

2001

2002

2003

2004

F

M

A

2005

M

J

J

A

S

O

N

D

2006

EADS
CAC 40MSCI World Aero/Defence (in €, adjusted daily USD/€ rate)

For more detailed information please refer to:

www.ﬁnance.eads.com
or write us:

ir@eads.com

SHAREHOLDER STRUCTURE AS OF 31st MARCH 2007
DaimlerChrysler 1) 3)
SOGEADE 1) 2): Lagardère and French state holding company SOGEPASEPI (Spanish state holding company)
Institutional, retail and employee ownershipplus shares held out of the contractual partnership by French state
1.06% Treasury shares (without economic or voting rights)

22.46%
29.95%
5.48%
41.05%E A D S AT A G L A N C E 2 0 0 6

XI

CONTENTS

1) On 4th April 2006, DaimlerChrysler AG and Lagardère SCA announced the entry into simultaneoustransactions aiming at reducing their respective stakes in EADS by 7.5% each in coordinated steps.
2) On 6th April 2006, Lagardère issued mandatory exchangeable bonds. The EADS shares deliverable atthe maturity of the bonds will represent a maximum of 7.5% of the share capital of EADS. At the last
maturity date of the bonds – in 2009 – the SOGEADE stake will be in line with DaimlerChrysler
AG’s stake.
3) Independently of the 2006 movements, on 9th February 2007, DaimlerChrysler reached an agreementwith a consortium of private and public-sector investors by which it will reduce its shareholding in EADS
by 7.5% indirectly. This movement will not affect the voting rights of DaimlerChrysler.

EADS GLOBAL FOOTPRINT16XIIEUROPE
Revenue:

Change compared
to previous year:€ m 17,176+ 27%

NORTH AMERICA
Revenue:

Change compared
to previous year:€ m 9,425+ 4%

ASIA-PACIFIC
Revenue:

Change compared
to previous year:€ m 7,857+ 2%

43 % OF GROUP REVENUESEADS leverages Europe’s capabilities and competitiveness. The transformationof Airbus will lead to a renewal of the European spirit in our industry. On
the defence side, EADS’ future growth will be strongly supported by theongoing ramp-up of truly European programmes such as the A400M transport
aircraft, NH90 and Tiger helicopters or the Euroﬁghter combat aircraft. Allinternationalisation efforts are designed to open up the most attractive
markets while the Group continues to develop its industrial base in Europe.

24 % OF GROUP REVENUES

The pace and breadth of EADS North America’s business activities has
increased. The Group achieved an important step in its US growth strategy
when it was selected as prime contractor for the LUH military helicopter
programme. The company is also actively competing for two major military
programmes. Together with strong US partners, EADS North America
is offering the world’s most advanced tanker aircraft to the US forces andcompeting for the Joint Cargo Aircraft programme.

20 % OF GROUP REVENUES

Within Asia-Paciﬁc, the region with the highest growth potential, countries
like China, India and South Korea are of high priority for EADS’ global
development. In joint projects such as the EC 175 the KHP helicopter
development or the set-up of an A320 Family Final Assembly Line in China,
EADS has teamed with high-quality local partners combining industrial
capabilities with market know-how. To become a committed citizen inthese key markets is a prerequisite for participating in their growth.

Revenue:

Change compared
to previous year:€ m 4,976+ 28%

Widespread business successes in other growth regions provide the basis
for EADS’ further internationalisation. In the military transport aircraftbusiness, the Group has a strong position in the Latin American market.
South Africa is a partner in the A400M programme, and EADS continuously
broadens its cooperation with the very capable Russian aerospace industry,both in the freighter conversion business and in research and development.

E A D S AT A G L A N C E 2 0 0 6

XIII

CONTENTSREST OF THE WORLD 13 % OF GROUP REVENUES

EADS
2006
AT A GLANCE

18

ANNUAL REVIEW 2006

The complete
EADS Annual Report Suite 2006
consists of two more books:

2 MANAGEMENT & RESPONSIBILITY
2
4
6
8
10
12

Letter from the Chairmen of the Board
Chief Executive Ofﬁcers’ Statement
The CEOs in Dialogue
Corporate Governance
Organisational Structure
Executive Committee

14 THE FULL PICTURE:
TRANSFORMATION

Book

2

FINANCIALSTATEMENTSANDCORPORATEGOVERNANCE
2006

2
Book

FINANCIAL STATEMENTS ANDCORPORATE GOVERNANCE 2006
Registration Document Part 1:
Risk Factors
Net Assets Financial Position Results

28 THE BUSINESS YEAR 2006
30
34
38
40
42
44
46

Markets and Perspectives
AirbusPower 8
Military Transport Aircraft
Eurocopter
Defence & Security
Astrium

Corporate GovernanceBook

48 INSIDE EADS
50
52
54
56

Research & Technology
Sourcing
Human Resources
Corporate Social Responsibility

60 USEFUL INFORMATION
Glossary
Addresses
Financial Calendar

3
Book

BUSINESS, LEGAL AND
CORPORATE RESPONSIBILITY 2006
Registration Document Part 2:(available on request)
Information on EADS Activities
Corporate Social Responsibility
General Description of theCompany and its Share Capital
Entity Responsible for
the Registration Document

The online version of theAnnual Report Suite 2006 is available atwww.reports.eads.com

CONTENTS

62
64
66

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BUSINESS,LEGALANDCORPORATERESPONSIBILITY
2006

M A N AG E M E N T

Letter from the Chairmen of the Board

Dear shareholders,
Looking back, there can be no doubt that 2006 was a critical year for EADS.
Events within the Company during the past year have given cause to reﬂect
on the quality of the supervision over its main subsidiary Airbus and to ask criticalquestions about its management or, more deeply, about its organisational
structure. Shareholders have asked critical questions, stakeholders have done
so too, as have observers from different areas of society.
The symptoms have become apparent: vital data regarding our key subsidiary
Airbus and our critically important A380 programme were not appropriately
assessed by Airbus and thus not reported with the necessary accuracy and timeliness, nor was the Company prepared in due time for the competitive challenges.
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This failure has hampered the ability of Corporate Management
and the Board to steer the Company in the right direction andled to deplorable consequences.

Change needed to pave the way for continuity
EADS’ corporate governance has been in place since the foundation of the Company in 2000. For many years, EADS exceeded its
targets and outperformed its competitors and created jobs and it
created value. The Company’s governance supported this, whilesafeguarding sovereignty issues that are a distinctive feature of ourindustry – an industry central to our national economies throughits positive contributions to technology, exports and of course
employment. EADS’ governance successfully fostered the combined interests of the Company’s shareholders and its stakeholders.
Despite these achievements, the Board had to address the root
causes of the deﬁciencies that surfaced in 2006. The Board tookwide-ranging decisions to improve the governance model.
Of prime importance were the decisions taken by the Board
concerning the management of the Company.
Based on a recommendation from the strategic shareholders, theBoard appointed Louis Gallois, a long-standing member of theBoard of EADS and an experienced manager also in the ﬁeld of
aerospace, as one of the two Chief Executive Ofﬁcers. Together
with the other Chief Executive Ofﬁcer Thomas Enders, he istasked to lead the company into a better future.
No doubt the two CEOs have a lot of challenges ahead of them,and the entire Board is supporting their efforts to succeed inevery possible way.
To increase integration and reduce complexity, the Board
appointed Louis Gallois to act concurrently as Airbus CEO.
To support Mr. Gallois in his dual function, Hans Peter Ring,
the EADS Chief Financial Ofﬁcer, was also appointed CFO
of Airbus, and Fabrice Brégier, the former CEO of Eurocopter,
was appointed Chief Operating Ofﬁcer of Airbus.
In parallel, the Board charged a working group composed ofexperts, including the Chief Technical Ofﬁcer, and outsiders
familiar with our industry, to study the root causes of the
A380 delay. These included an extremely challenging timeline
for the development, type certiﬁcation and production ramp-up
plans and an insufﬁcient Airbus integration which revealed
that the previous system of four national companies and clear
accountabilities had not been adequately replaced within an

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integrated model to ensure the same level of control. Furthermore, there had been a lack of integration with regard toprocesses and tools (e.g. digital design tools) at different Airbus
locations, and the high level of customisation to accommodate
customer requirements had resulted in immense complexity
and a slow learning curve.
As a consequence, with the full support of EADS’ top management and the entire Board, the Airbus management initiatedthe Power8 programme to cope with the challenges in the market
place, above all the negative impact of the USD-Euro exchange
rate development, declining market prices, and the lower costs inother countries along with the high costs at Airbus facilities.
The restructuring became even more pressing as a result of
expected losses in income and cash caused by the A380 delay
and the urgent need to develop the A350 Family programme.
On top of all of this, a series of measures that add momentum
to the integration effort is being cascaded down the entire
organisation in EADS and Airbus.

Core shareholders’ commitment
The Board discussed in detail the effects which a reduced
dividend might have on the capital market and on the ongoing
Power8 programme. Due to the diverging positions, the Board
could not come to a common proposal, which leaves the decisionon the cash distribution and its amount to the proposal byshareholders from the free ﬂoat at the Annual General Meeting.
In a move that had been indicated by the core shareholders andtherefore long expected by the markets, the EADS industrial
co-shareholders sold a part of their equity stakes in 2006 and early
2007. This increased the free ﬂoat and thus also the weight of
EADS in various stock indices.
The core shareholders of EADS demonstrated their commitment
to the Company’s long-term perspectives by supporting the launchof the A350XWB programme, which promotes EADS’ long-term
market and technology leadership.
We know that EADS is facing tough challenges; the Board haslaunched strong actions to allow the Group to overcome them. We
will strongly support the management to put EADS back on track.

Manfred Bischoff
ChairmanLeft: Manfred Bischoff
Right: Arnaud Lagardère

Arnaud Lagardère
ChairmanEA DS A NNUA L RE VIE W 2 0 0 6

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M A N AG E M E N T

Chief Executive Ofﬁcers’ Statement

Dear shareholders, customers, suppliers and employees,
Challenges spark off change and renewal. Accordingly, you see EADS engaged
in a far-reaching transformation process.
This Annual Report gives you the full picture. It shows you the great progress
EADS has achieved at Eurocopter, in the space and the defence and security
businesses. But it also depicts the challenges Airbus is facing – challenges that
already strongly impacted last year’s overall performance.

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Strong fundamentals …

For the ﬁrst time, EADS did not deliver what it had promised. The
Company’s 2006 ﬁnancial results are disappointing. Revenues grewas expected, to € 39.4 billion, but EBIT dropped to € 399 million.
The disappointment is also apparent in the stock price, which underwent a year of sharp swings and has suffered from the degraded
outlook and the risks brought about by the crisis.

We can nonetheless rely on strong fundamentals. First, we can draw
on the extraordinary commitment and ambition of our employees
and management. Then, in 2006, EADS achieved again a bookto-bill ratio considerably over one – Airbus booked 824 new orders,roughly two years’ worth of production. And with over 600 units,
Eurocopter registered a record order intake. Now, turning the hugeorder book into sustained proﬁts and customer satisfaction is the
top priority. Once again, delivery is the challenge.
Proﬁtability doubled at our Space business and satellite orders
increased. Divisions such as Eurocopter, Astrium and Defence havedone their homework over the past years, and can now make alarger contribution to EADS’ ﬁnancial stability.

A focus on integration… underscore the Company’s overall momentum

Analysing the root causes of the A380 programme delays, we cameto the conclusion that the degree of integration achieved to date –both within Airbus and across the Group – is by no means sufﬁcient.
With the Board of Directors, we undertook an unprecedented
revision of our operations and organisation.

We will continue our profound internationalisation drive. In
2006, this produced major steps like the agreement to establish aﬁnal assembly line for the A320 in China and the strengthened
helicopter cooperation with both South Korea and China. On
the US defence market, we have witnessed a true breakthrough,being awarded for the ﬁrst time ever a prime contractor role,with the UH-72A Lakota helicopter programme.

Concretely, EADS and Airbus now share the same Chief Executive
and the same Chief Financial Ofﬁcer. The Company Headquarters
is being further streamlined. And innovation efforts now areorganised into a network, lead by an entity which we call
“EADS Innovation Works”.

Power 8 – a must
Goal number one is to restore conﬁdence. This certainly will not
happen overnight, and will require considerable efforts, but it will
put EADS back on the path to industry leadership.
Power 8 – the comprehensive business re-engineering and competitiveness programme launched at Airbus – clearly lies at the very
heart of this venture. We know the plan entails tough measures,
yet there is no room for hesitation, nor is there another option.
The task is concurrently to:• Improve Airbus’s industrial set-up;• Master the development and delivery of three key programmes –the A380, the A350XWB and the A400M; and• Decrease our exposure to the Dollar exchange rate.

Left: Thomas Enders
Right: Louis Gallois

These successes demonstrate that even while we concentrate on
getting the Company back on track, we are successfully pursuing
growth opportunities. Once the necessary operational adjustments
are completed, we will redouble the energy and resources that we
focus on dynamic and proﬁtable strategic business areas.
We are here to tell our customers, shareholders, and employeesthat they can count on a more integrated, more efﬁcient and more
effective EADS. We will make it your company of choice.

Thomas Enders
Chief Executive Ofﬁcer

Louis Gallois
Chief Executive Ofﬁcer

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M A N AG E M E N T

In Dialogue

Ever since the true scale of Power 8
became visible, stakeholders have voiced
their concerns – be it politicians, unions,employees. How did you deal with this ?
Louis Gallois I had a very clear understanding of mymission right from the outset. To put it bluntly, as CEO of
EADS and Head of Airbus, my mission is to restore thecompetitiveness of Airbus and safeguard Group proﬁtability.
In a duopoly, the two players have to be on equal footing,or the duopoly will not endure. Of course, there are always
ups and downs on one side or the other, but the overall
parity has to be assured. Given the challenges the company

is facing, there is no alternative to a tough restructuring andintegration programme. By making it absolutely clear to everyone
that Power 8 is necessary for us to succeed, I am sure people
will understand and commit to its goals.

What about the employees’ role in all this ?
Thomas Enders In fact, they play a pivotal role – and they havea great responsibility when it comes to making all the integration
efforts work. For sure, we are demanding a lot of them in thesechallenging times.
Louis Gallois I have placed a particular emphasis on keeping
Work Councils and employees’ representatives informed about
where we are going. I think that is only fair when the Company
is facing tough times.

Are you able to impose what is needed froman entrepreneurial point of view ?
Thomas Enders No company can act without taking its environment into account. And of course we do take our stakeholders’concerns seriously. That is why Louis and I have always insisted onfair and equal burden sharing. Yet, EADS is a company run onentrepreneurial principles. We want people to invest in EADS.
In other words, ﬁnancial markets can expect us to run the Company
in a way that is appealing for investors – investors that look forlong-term value.

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T H E B U S I N E S S Y EA R 2006

During EADS’ recent turbulences, thequestion of whether the Company’s
particular structure is part of the solution
or part of the problem has been raised
again and again.
Thomas Enders I will not pretend that our structure is ideal.
But, given the constraints we’re operating under, it’s working
quite well and it is evolving. Just look at the structural side of
the EADS/Airbus integration. That’s deﬁnitely progress. And
there will be more in the future, we are adaptive. Neither ourmanagement structure nor our corporate governance is carved
in stone.
Louis Gallois Indeed, being responsible for the managementof this Company we have to act within the rules set by the shareholders. Paradoxically enough, these rules have proved usefulrecently, as they provided a close link to all the public and politicalstakeholders in order to push forward with the integration andre-engineering efforts. However, as the Company’s needs evolve
it will be logical to revert over time to a more classical structure.

What are your strategic objectives ?
Thomas Enders Firstly, to push ahead with our internationalisation strategy and to strengthen our partnership in various partsof the world. But our operational improvement programmes, aswell as our newly deﬁned innovation plans, are also truly strategic
for me.
Louis Gallois Apart from that, I am convinced that we have toboost our position in the services businesses. As we are such a
successful player in the platforms business, we should also strive
to service our own products, accompanying them through their
entire life cycle. There is a huge business potential to be tapped,
I am sure. So we will evaluate our options very closely.

Many people fear that the internationalisationof EADS will entail a weakening of industrial
assets here in Europe.
Louis Gallois There is no reason to doubt our strong Europeanroots. To become more international doesn’t mean to transfer
activity or know-how but to leverage on local footprints to capture

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local growth and to access new ﬁnancial or technological resources.
It is true that our internationalisation does expose us to more intensecompetition but it also means more markets and more customers.
We have to think of globalisation not as a risk but as an opportunity.
Thomas Enders I fully agree. Competition will intensify– because “the world is ﬂat,” to quote T. Friedman’s famous book –and hence we’ll also have to intensify our innovation efforts. Thisis exactly what we’re doing, throughout the entire Group. The
creation of our corporate “Innovation Works” last year testiﬁes tothat. Our industrial base in Europe will remain strong as long as
Europe remains an important market, and as long as our European
technology and innovation base remains world class.

Against this background – can you give us
an outlook on your recruitment policy ?
Louis Gallois We will always need excellent engineers. To build
up our capacity for new business needs, we need people readyfor a changing world. People with a transversal approach capable ofmanaging a programme, capable of monitoring the ﬁnancials, andwho enjoy working with colleagues from other nations.
Thomas Enders As a more and more global company, we arelooking for top talents everywhere. We have expanded our recruiting efforts to markets like Russia, India and China, in line withestablishing new engineering centres around the globe. Personally,
I think for young people there is hardly a more exciting place towork than EADS.

M A N AG E M E N T

Corporate Governance2006 has been a critical year for EADS. The Board has taken action
to address the root causes of the deﬁciencies that have surfaced andmade wide-ranging decisions to improve the governance model.

SHAREHOLDER STRUCTURE AS OF 31st MARCH 2007
22.46%
29.95%
5.48%
42.11%

1.06%

DaimlerChrysler 1) 3)
SOGEADE 1) 2) : Lagardère and Frenchstate holding company SOGEPASEPI (Spanish state holding company)
Institutional, retail and employee
ownership plus shares held out of thecontractual partnership by French state
Treasury shares(without economic or voting rights)

1)

On 4th April 2006, DaimlerChrysler AG and Lagardère SCA announced the entry into
simultaneous transactions aiming at reducing their respective stakes in EADS by 7.5% eachin coordinated steps.

2)

On 6th April 2006, Lagardère issued mandatory exchangeable bonds. The EADS sharesdeliverable at the maturity of the bonds will represent a maximum of 7.5% of the share capitalof EADS. At the last maturity date of the bonds – in 2009 – the SOGEADE stake will be in linewith DaimlerChrysler AG’s stake.

3)

Independently of the 2006 movements, on 9th February 2007, DaimlerChrysler reached
an agreement with a consortium of private and public-sector investors by which it will reduce
its shareholding in EADS by 7.5% indirectly. This movement will not affect the voting rightsof DaimlerChrysler.

The Board of Directors met ten times during 2006 and wasregularly informed of developments through reports from the
Chief Executive Ofﬁcers (CEOs), including rolling forecasts
and strategic and operational plans. The average attendance rate
at meetings was 95%.
Following a detailed review of the A380 production and delivery
programme, Airbus informed the Board on 13th June that theaircraft’s delivery schedule for 2006 to 2009 had been revised. The
Board immediately disclosed the new schedule and its ﬁnancial
impact, making a further disclosure on 3rd October 2006.
Management was strengthened and streamlined. On 2nd July
2006, the Board appointed Louis Gallois as Co-CEO of EADS,
replacing Noël Forgeard, and appointed Christian Streiff as new
President and CEO of Airbus. Both became Members of the
Executive Committee. In a further change to the management
structure, Louis Gallois was additionally appointed Airbus
President and CEO on 9th October, following Christian Streiff’s
resignation. EADS’ non-Airbus Divisions report to Co-CEO
Thomas Enders. On 31st October, the Board appointed EADS
Chief Operating Ofﬁcer (COO) Finance, Hans Peter Ring,
additionally as Airbus Chief Financial Ofﬁcer. Also on thatdate, Fabrice Brégier was appointed COO of Airbus andLutz Bertling CEO of Eurocopter. Both are Members of the
Executive Committee.
Topics discussed at the Board meetings included: strategy(including merger & acquisition strategy relating to acquiring
BAE Systems’ stake in Airbus); major business issues such as
the A380 recovery plan and the Power8 programme; the A350
industrial launch decision and Airbus future product strategy;
reviews of the EADS Unmanned Aerial Vehicle and A400M
programmes; the review of EADS Sogerma’s future strategy;
approval or postponement of operational plans; reorganisation
topics; budgets; the Group’s ﬁnancial results and forecasts;ﬁnancial optimisation; and implementation of an ethics alert
system. The Board also discussed personnel and humanresources issues.

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Members of the Board of Directors
as of 5th April 2007
Manfred Bischoff *Chairman of EADS (until 5th April 2007)

The Audit Committee met ﬁve times during 2006, reviewing the2005 results, 2006 half-year results and quarterly ﬁnancial reviews.
The Remuneration and Nomination Committee met ﬁve times tomake recommendations to the Board regarding major appointments.
Additionally, it reviewed the following topics: compensation policy,
the new Executive Committee Members’ salaries, 2005 bonus
payments, the long-term incentive plan and the 2006/07 employee
share ownership plan. It also reviewed Executive Committee
Members’ salaries for 2006.
In line with the Board’s policy of more thoroughly assessing its
performance every three years, an independent and internationally
reputable consulting ﬁrm was commissioned in late 2006. In thecourse of the evaluation, the external consultant held individual
meetings with all EADS Directors (Executive and non-Executive).
While recognising the unique shareholding structure, the review
concluded that the Board has been working as a cohesive entity,
in an open, constructive and interactive atmosphere. Board
members emphasised that decisions are always taken in EADS’best interests.

For more detailed information pleaserefer to Corporate Governance section at:www.eads.com

or to Book

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FINANCIALSTATEMENTSANDCORPORATEGOVERNANCE
2006

2
Book

FINANCIAL STATEMENTS ANDCORPORATE GOVERNANCE 2006
Registration Document Part 1

Rüdiger Grube*
Chairman of EADS (from 5th April 2007)
Member of the Management Board of DaimlerChrysler
Arnaud Lagardère
Chairman of EADSGeneral Partner and Chief Executive Ofﬁcer of Lagardère

Thomas Enders
Chief Executive Ofﬁcer of EADS
President of the German Association of the
Aerospace Industries – BDLILouis Gallois
Chief Executive Ofﬁcer of EADS
President and Chief Executive Ofﬁcer of Airbus
Jean-Paul Gut
Chief Operating Ofﬁcer for Marketing, Strategy
and Global Development of EADSMember of the Board of Directors of Arjil Commanditée-Arco
Hans Peter Ring
Chief Operating Ofﬁcer for Finance of EADS
Chief Financial Ofﬁcer of Airbus
Member of the Supervisory Board and Shareholder Committeeof M+W Zander – D.I.B Facility Management GmbH
François David
Chairman and Chief Executive Ofﬁcer of Coface
Juan Manuel Eguiagaray Ucelay
Director of the Service of Studies of the Fundación Alternativas
Michael Rogowski
Chairman of the Supervisory Board of J.M. Voith AG* On 5th April 2007, the EADS Board of Directors appointed Rüdiger Grube
to join Arnaud Lagardère as Chairman of the Board of Directors to succeed
Manfred Bischoff with immediate effect. Dr. Bischoff resigned after having
taken over a new responsibility as Chairman of the Supervisory Board ofDaimlerChrysler AG.
Two additional Members of the Board of Directors, Michel Pébereau andBodo Uebber, will be proposed for appointment during the Annual General
Meeting, to be held on 4th May 2007, with immediate effect as from theend of such meeting.

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Organisational Structure
as of 5th April 2007

Board of Directors

Chief Executive Ofﬁcers

Chief Operating Ofﬁcers

Group Functions

Chairmen

EADS North America

Manfred Bischoff */Rüdiger Grube *Arnaud Lagardère

Ralph D. Crosby Jr.

Thomas Enders
Louis Gallois
Jean-Paul Gut
Hans Peter Ring
François David
Juan Manuel Eguiagaray
Michael Rogowski

CEOs

Finance

Human Resources

Thomas Enders

Hans Peter Ring

Jussi Itävuori

Louis Gallois

Chief Technical Ofﬁcer
Jean Botti

Marketing,
Strategy and Global
Development

Corporate Secretary
Laurence Dors

Jean-Paul Gut

Legal Affairs
Peter Kleinschmidt

Corporate Communications
Christof Ehrhart
Executive Committee Member* On 5th April, 2007, the EADS Board of Directors appointed Rüdiger Grube to join Arnaud Lagardère as Chairman of the Board of
Directors to succeed Manfred Bischoff with immediate effect. Dr. Bischoff resigned after having taken over a new responsibility as
Chairman of the Supervisory Board of DaimlerChrysler AG.
Two additional Members of the Board of Directors, Michel Pébereau and Bodo Uebber, will be proposed for appointment during theAnnual General Meeting to be held on 4th May 2007, with immediate effect as from the end of such meeting.

The Board actively shapes the Group’s mission and strategic priorities, which are implemented under
the leadership of the Chief Executive Ofﬁcers (CEOs), who provide the impetus for major
operational initiatives. Group Functions and the Divisions operate under the leadership of the CEOs.

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Political Affairs
Denis Verret (FR)
Christoph Hoppe (GE)Emiliano Mata (SP)M A N AG E M E N T

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DivisionsOperating Companies

AirbusGIE ATREADS Sogerma

Louis Gallois (CEO)Fabrice Brégier (COO)

Filippo Bagnato

Cédric Gautier

Elbe Flugzeugwerke(EADS EFW)
Andreas Sperl

Military Transport Aircraft
Francisco Fernández Sáinz

Eurocopter

EADS Socata

Lutz Bertling

Stéphane Mayer

Astrium

Astrium Satellites

François Auque

Antoine Bouvier

Astrium SpaceTransportation

Astrium Services
Eric Béranger

Evert Dudok
Alain Charmeau

Defence Electronics

MBDA

Euroﬁghter

Bernhard Gerwert

Marwan Lahoud

Aloysius Rauen

Military Air Systems

Defence andCommunications
Systems

Defence & Security
Stefan Zoller

Johann Heitzmann

Hervé Guillou

The ﬁve Divisions – Airbus, Military Transport Aircarft, Eurocopter,
Defence & Security and Astrium – serve the speciﬁc needs of theirrespective customers, while the Group Functions enhance the Company
offering through information exchange, technology sharing and working
practice synergies. This allows for maximum generation of value.
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Executive Committee

THOMAS ENDERSCHIEF EXECUTIVE OFFICER OF EADS

Mr. Enders joined MBB/DASA AG in 1991. After several years in the company’s marketing
sector, he became Corporate Secretary of DASA AG in 1995. From 1996, he was in charge ofCorporate Strategy & Technology and in 2000, with the creation of EADS, he became theHead of Defence & Security Division. In June 2005, he was appointed Chief Executive Ofﬁcer
of EADS. Mr. Enders holds degrees from the University of Bonn and UCLA.

JEAN-PAUL GUT
CHIEF OPERATING OFFICER FOR MARKETING,STRATEGY AND GLOBAL DEVELOPMENT OF EADS

Since 1983, Mr. Gut has held various executive positions in the ﬁeld ofexport and international operations for Matra Défense and the LagardèreGroup. In 1998, Mr. Gut integrated the Lagardère Group Management
Board and was responsible for International Operations and theHigh Technology sector. In 2000, he was appointed Head of
EADS International and, in 2005, EADS Chief Operating
Ofﬁcer. He graduated from the IEP of Paris.

FRANÇOIS AUQUE
HEAD OF ASTRIUM

Mr. Auque joined Aerospatiale as Chief Financial Ofﬁcer in 1991, after
a career with the Suez Group and the French Cour des Comptes. He
held various top management functions within Aerospatiale and Matra
until becoming Chief Financial Ofﬁcer of Aerospatiale Matra together
with Managing Director for satellites. Since 2000, he has been Chief
Executive Ofﬁcer of the EADS Space Division. Mr. Auque graduatedfrom HEC, from the IEP of Paris, and is an alumnus of the ENA.

LUTZ BERTLINGHEAD OF EUROCOPTER

Since 1988, Mr. Bertling has held various positions at
Braunschweig University and DaimlerChrysler Rail Systems. In
1999, he joined the Military Aircraft business of DASA as Vice
President, Augsburg Plant and Aerostructure Programs. Since 2003,
he has worked in Eurocopter, becoming Chief Executive Ofﬁcer ofEurocopter Deutschland in April 2006 and Head of Eurocopter
Division in October 2006. Mr. Bertling studied Engineering at
Braunschweig University and holds a PhD.

JEAN BOTTICHIEF TECHNIC AL OFFICER

Mr. Botti started his career in 1978 as product engineer for Renault France.
From 1989 on, he worked in the United States for General Motors, before
becoming Chief Technologist and subsequently Business Line Executive of
the Powertrain business at Delphi. In May 2006, he was appointed Chief TechnicalOfﬁcer of EADS. Mr. Botti holds a degree from INSA Toulouse, an MBA fromCentral Michigan University and a PhD from the Conservatoire des Arts et Métiers.

FABRICE BRÉGIERCHIEF OPERATING OFFICER OF AIRBUS

Mr. Brégier joined Matra Défense in 1993 as Chairman of the Apache MAW andEurodrone GIEs. In 1996, he was appointed Director for the stand-off activities of Matra
BAe Dynamics before becoming Chief Executive Ofﬁcer (CEO) of MBD in 1998 and of
MBDA in 2001. Since April 2003, he has been President and CEO of Eurocopter and a
Member of the EADS Executive Committee. In October 2006, he was appointed
Chief Operating Ofﬁcer of Airbus.

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LOUIS GALLOISCHIEF EXECUTIVE OFFICER OF EADS AND HEAD OF AIRBUS

From 1972, Mr. Gallois worked in various posts for different French ministries, before
becoming Chairman and Chief Executive Ofﬁcer of SNECMA and subsequently, in 1992,
Chairman and Chief Executive Ofﬁcer of Aerospatiale. Since 1996, he has been Chairman of
SNCF. In 2006, he was appointed Chief Executive Ofﬁcer of EADS and also of Airbus.
Mr. Gallois graduated from HEC in Economic Sciences and is an alumnus of the ENA.

HANS PETER RINGCHIEF OPERATING OFFICER FOR FINANCE OF EADSAND CHIEF FINANCIAL OFFICER OF AIRBUS

Mr. Ring began his career at MBB in 1977 and was appointed Head of Controllingat its missiles business in 1987. From 1992, he was Chief Financial Ofﬁcer(CFO) and Board member of Dornier Luftfahrt. In 1996, he was appointed
Senior Vice President of Controlling of DASA and, subsequently, of
EADS. Within EADS, he was appointed CFO in 2002 and COO in2005. In 2007, he additionally became Airbus CFO. Mr. Ringholds a degree in business administration.

STEFAN ZOLLER
HEAD OF DEFENCE & SECURIT Y

Mr. Zoller joined DASA in 1996 as the President’s Chief of Staff and
Chief Executive Ofﬁcer of the company. Previously, he held various
management positions within DaimlerChrysler, Dornier and Senstar/
Canada. Since 2000, he has held top management positions within
EADS’ defence business and was appointed Head of the Defence &Security Division in 2005. Mr. Zoller graduated from the University
of Tübingen and holds a PhD in company law.

JUSSI ITÄVUORIHEAD OF HUMAN RESOURCES

Mr. Itävuori joined EADS in September 2001. Previously, heworked for KONE Corporation from 1982, where he was appointed
Head of Human Resources and member of the Executive Committeeof KONE Elevators in 1989. In 1995, he was appointed member ofthe Executive Committee and Head of Human Resources of KONE
Corporation. Mr. Itävuori graduated from the Vaasa School of
Economics, Finland, and served as a pilot in the air force.

FRANCISCO FERNÁNDEZ SÁINZHEAD OF MILITARY TRANSPORT AIRCRAFT

Mr. Fernández Sáinz joined CASA in 1971 as a Stress Engineer. Between
1975 and 2002, he held various positions such as Engineering Development
Director, Vice President of Engineering, Executive Vice President Programs
and, ﬁnally, as Airbus España General Manager. Since 2002, he has been Head of theMilitary Transport Aircraft Division. Mr. Fernández Sáinz holds an MBA from ICADE
and is a Senior Aeronautical Engineer.

RALPH D. CROSBY JR.
HEAD OF EADS NORTH AMERIC A

Mr. Crosby has been Chairman and Chief Executive Ofﬁcer of EADS North America
since 2002. He is EADS’ senior US executive and Chief Executive of the company
operating all the Group’s US subsidiaries. Previously, Mr Crosby was President of theIntegrated Systems sector at Northrop Grumman Corporation. Mr. Crosby holds degrees
from the US Military Academy, the Graduate Institute of International Studies in
Geneva and Harvard University.
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T H E F U L L P I C T UR E

TRANSFORMATION.

14

IT’S
ABOUT
MOVINGWe are working hard to renew our industrial processes
and to capitalise on the excellence of our products,
technology, workforce and suppliers. These are thefoundations that will propel EADS back to a path of
proﬁtable growth.

ON.

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T H E F U L L P I C T UR E

WE ARE
CURRENTLY FACINGNEW CHALLENGES.
THROUGH OUR
UNITED EFFORTS WE
WILL OVERCOME THEM.
Fundamental changes are being made. We are accelerating
the integration of our Divisions; improving our industrial
processes; sharpening the focus of our technology innovation;and continuing to build our international presence.
INTEGRATION will reach far deeper than before, creating acommon purpose across the Group. We have taken concrete
and radical steps. Airbus is now wholly owned by EADS. Functions
such as Finance, Human Resources, Research & Technology andSourcing are being integrated, enabling new efﬁciencies andfaster reactions. Last year’s shocks have prompted a renewed
focus on how integration can make the Group stronger.
16

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IMPROVEMENT of our industrial model is a matter ofurgency. Every Division has initiatives to reduce costs, improveindustrial efﬁciency and ensure delivery on-quality, on-speciﬁcation, on-cost and on-time. The most important and visible is
the Airbus Power 8 reorganisation programme that will speed up
development times, maximise cash and cut costs.
INNOVATION enables us to set the technology standard
that others must follow. We have a record of doing this, as we
did through “ﬂy-by-wire” aircraft controls or “all-weather” helicopters, to name a few examples. By centralising responsibility forthe entire EADS Research & Technology budget, we are putting
greater resources behind developing new technologies alignedwith the Group’s strategic growth areas, aiming for higher returns
on investment at the end of the innovation pipeline.
INTERNATIONALISATION remains important to our longterm growth. Through our Global Industrial Development
function, EADS is actively seeking to become an integral part ofthe leading aerospace and defence growth markets worldwide.
Being active in these markets will also give EADS access to thebest technology and specialist know-how available.
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18

HARD

WORK

CLEAR

20

FOCUS

T H E F U L L P I C T UR E

22

process
in
g
in
h
c
u
ﬁnal reto

EADS is more than just Airbus and Airbus is more than just theA380. At year-end 2006, every Division was a market leader
in its sector, with a strong product portfolio. The commercial
appeal and technical excellence of the A380 is undisputed, as
recent repeat orders from the major long-haul airlines haveshown. They have no doubt of this plane’s importance to their
future proﬁtability. In defence, Euroﬁghter is one of the mosttechnically advanced ﬁghter planes. In helicopters, Eurocopter
consistently captures the greatest market share worldwide.

LOOK AT ALL SIDESOF THE STORY.
And Astrium is one of the leading space organisations globally.
Behind all of this is the EADS workforce. Employees acrossEurope and elsewhere represent a unique and invaluable complementary collection of aerospace and defence industry skills.
They are committed and dependable, the heart and soul of theGroup. And our customers are loyal. Increasingly, they view
EADS as a partner for success. They tell us what products andservices they will need in the future, and together we develop
them. Finally, EADS is ﬁnancially strong, planning ahead tomaintain its conservative balance sheet structure.
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T H E F U L L P I C T UR E

CONTINUE
TO ASK
QUESTIONS ...
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WHERE
DO OURSTRENGTHS
LIE?

INSIDE EA DS

USEF UL INF ORMAT ION“Our customers beneﬁt
from the quality of ourhelicopters, the unmatchedmission capabilities weoffer to them, our international presence andour determination to lead the ﬁeld for innovation. That’s why we are the market leader.“Lutz Bertling, Head of Eurocopter

WHERE
CAN WE
IMPROVE?
“We have to make our research andtechnical culture highly disciplined andfocused to become the pace-setter ininnovative customer solutions.”
Jean Botti,
Chief Technical Ofﬁcer

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T H E F U L L P I C T UR E

ActionAfter the difﬁculties of 2006, EADS has a clear set ofobjectives. Firstly, to resolve the challenges that crystallised
during the year. Secondly, we aim to achieve renewed growth.
The issues are clear. Difﬁculties surrounding industrialisationof the A380 double-decker weighed heavily on EBIT for
2006, and created a weighty ﬁnancial burden that is likely toaffect the Group for many years to come. Added to this, alarge proportion of our revenues – almost 90% in the case of
Airbus – are booked in US dollar, a currency which has lost
40% of its value since the launch of the A380 programme.
This gives us a distinct competitive disadvantage, both now
and in the future. Finally, it became clear that we would haveto speed up aircraft development times in order to bring the
new A350XWB next-generation, medium-capacity aircraft
into production sufﬁciently swiftly. While these issues centre
on Airbus, all ﬁve Divisions are taking action to solve them.

26

We have moved swiftly to restructure and integrate Airbus. The Power 8
restructuring has been designed and launched. Between now and 2010,
it aims to save € 5 billion in cash, and from 2010 onwards, to achieve annual
cost savings of € 2 billion. This will restore Airbus’s competitiveness. It will
do so by maximising cash, speeding up new aircraft development, sustaining
technological progress at the rate and level that is now necessary, cutting
costs and improving our efﬁciency. In particular, Power 8 will help to ﬁnancethe A350XWB product development programme. But improvement measures
are not limited to Airbus. Across the wider Group, we are redoubling ourefforts to increase integration. The functions of Finance, Research & Technology,
Sourcing and Human Resources are being centralised, creating greater control,
coordination and economies of scale. We have frozen all management salaries
and will cut stafﬁng levels at Group headquarters by 10% by the end of 2007.
These economies will not be popular, but they are essential. Above all, EADS
now has a singular purpose that reaches across all of its Divisions. From now
on, our motto will be “no surprises, no hiding, no dreaming”. We need tobreak down outdated thinking habits, streamline the organisation, and combat
the national issues that once were taboo. We are going to shape EADS into a
truly integrated enterprise. With the help of Power 8 and integration, we will
strengthen EADS’ leading role in international markets. Stated more succinctly,
we are steering the right course.

... ANDANTICIPATETOMORROW’SNEEDS.

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T H E BU S I N E S S YE A R 20 0 6

THE BUSINESS YEAR

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2006
Two contrasting observations emerge from the review
of 2006. The ﬁrst is the overall vitality of the Group as
measured by signiﬁcant market accomplishments in all
Divisions. The second is an urgent need to implement
Power8 and overhaul the Airbus business.

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T H E BU S I N E S S YE A R 20 0 6

Markets and Perspectives
A strong global economy lifted commercial aerospace activity. Defence
and security procurement continued to rise as governments replaced
ageing equipment and countered new threats.

environmental

The airline industry is making
performance of paramount importance. Both leading aircraft
manufacturers are investing heavily in research and development
to improve their technologies.

networked

Interoperable andsystems enable
close to real-time decisions. Only large defence and security
companies have the range of capabilities to act as prime contractors
6,5
for these complex systems.

consolidation,
10,0Across the space industry,
7,8
through both mergers and alliances, is continuing. Commercial
space companies are becoming increasingly high proﬁle.

30

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A319

Airlines, especially those in the United States, have adapted tohigh jet fuel prices by increasing fuel efﬁciency per seat. They
have reduced weight by introducing paperless cockpits and lighter
ﬂight carts, and cutting back on in-ﬂight phones and magazines.
Fuel economy has been improved by, for example, lowering cruise
speeds, using just one engine to taxi at airports and carefulcargo distribution.

Commercial aviation
For commercial aviation, 2006 was another strong year, second
only to 2005. Airlines ordered 1,882 1) aircraft, more than mostanalysts forecasted, and the global order backlog has now reached
its highest level ever, with 4,988 units. Consequently, both
Airbus and Boeing are ramping up production.

LCCs are continuing to play a major part in air transport’s recovery.
Their low fares have stimulated trafﬁc, and their lean operating
models have provided a catalyst for transforming the way airlines
operate. LCCs’ new aircraft portfolios give them a competitive edge
over legacy/network airlines, in terms of both fuel and maintenancecosts. Network airlines have reacted by cutting maintenance costs,
but LCCs have made greater cuts. LCC trafﬁc market share inEurope and the United States respectively was 26% and 29% in 2006.
In Asia it was about 10%.

Environmentally friendly aircraft
Trafﬁc growth was robust, with world scheduled trafﬁc growing
by about 5% 2), slightly above the annual average. Over the six years
since 2000, trafﬁc has expanded by approximately 30%, supported
by buoyant economic growth (approximately 3.9% in 2006), theemergence of Low Cost Carriers (LCCs) and increased
liberalisation.
Developing countries, in particular, are transforming their airline
industries, expanding both aircraft numbers and related services.
China (~10% GDP – Gross Domestic Product – growth in 2006)
and India (~8% in 2006) are experiencing huge aviation growth,and large economies such as Russia and Brazil have tremendous
potential.

Improving ﬁnancial performance
Globally, the airline industry was at its most proﬁtable for several
years. Net losses fell to an estimated USD 500 million 3) (2005:
USD 3.2 billion loss). This was due to lower-than-expected jet fuelprices, fare increases and better airline productivity combinedwith record load factors of almost 76% and lower non-fuel costs.

In order to meet airlines’ demands for more efﬁcient and environmentally friendly planes, Airbus and Boeing launched new andupgraded models during 2006. Wishing to participate in the Kyoto
Protocol’s initiative to reduce emissions, the airline industry ismaking environmental performance of paramount importance. Bothleading aircraft manufacturers are investing heavily in research anddevelopment to improve their technologies.
Looking forward from 2006 to 2025, world passenger trafﬁc
is expected to grow by 4.8% per annum and freight trafﬁc by 6% 4).
World airlines will require the delivery of 22,663 new passenger
aircraft (with a capacity over 100 seats) and freighters, worth
approximately USD 2.6 trillion (current list prices). This represents
over 1,100 new aircraft deliveries on average per year. The world
ﬂeet (passenger and freight) will almost double, growing fromover 17,000 aircraft to nearly 33,500.

1)

Data for Airbus and Boeing; does not include Bombardier and Embraer
According to the International Civil Aviation Organisation’s initial estimate
According to the International Air Transport Association
4)
Airbus Global Market Forecast, November 2006
2)
3)

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T H E BU S I N E S S YE A R 20 0 6

Infantry man of the future

Defence and Security
Globally, defence expenditure is estimated to have continued to growby more than 2% in 2006, to approximately USD 1,200 billion 5).
US defence spending continued to grow at the fastest rate, and there
were pockets of expansion in Asia and the Middle East. Spendingin Europe was ﬂat.
The US President’s request for a 2008 total defence budget of
USD 647 billion, the largest in history, demonstrates the huge
size of the United States military commitment. While themajority of this increase pays for troops on the ground in Iraq
and Afghanistan, there is a sizeable commitment for modernising military equipment.
By contrast, Europe’s total defence budget remains less than€ 200 billion 6), and the continent spends far less than the UnitedStates on equipment procurement and on research and development. Asian countries such as India are modernising ageing
defence forces, and high oil prices are supporting high levels ofspending in the Middle East.
Homeland security is a growing market, although it remains
smaller than defence. In the ﬁve years since 9/11 this sector has
expanded rapidly, with both technology and services in demand
from government and private sectors alike. EADS estimates that
global homeland security procurement reached USD 55 billion 7)
in 2006, a sizeable increase on our 2005 estimate.

Growth for solutions to modern threats
The main driver of new procurement in defence and security
remains the necessary replacement of ageing platforms – especiallywith the types of equipment suited to countering threats fromrogue states and terrorists. This is spurring long-term growth forsupport aircraft (tankers and transport), mission aircraft including
Unmanned Aerial Vehicles (UAVs), helicopters, combat ships
and light armoured vehicles (incorporating complex electronic
mission equipment).
Military and civil customers want complete integrated and interoperable systems. This is because multinational forces work together
abroad, while homeland security is increasingly undertaken byboth military and civil organisations. Interoperable and networked
systems enable close to real-time decisions and actions, based on
a common operational picture. Only large defence and security
companies have the range of capabilities to act as prime contractors
for these complex systems.
Procurement methods are becoming increasingly innovative. Governments are beginning to demand more complex service solutions
from defence and security contractors in areas ranging from airborne
refuelling to secure satellite communications. To be competitive,
contractors have to provide high-performance equipment and services,
as well as innovative contract schemes and life cycle solutions.

Expect more consolidation
Both the move towards integrated systems and new procurement
methods are encouraging consolidation. For several years, scale
has been becoming more important, and defence companies havesought opportunities to build and ﬁll their portfolios. They havealso looked at buying into new regional markets in order to gain
market access. In particular, acquisition activity is expected in
the United Kingdom, Europe’s largest defence market, following
a shift towards stronger focus on development and retention ofnational capabilities.

5)
6)

32

7)

Teal Group
European Defence Agency, December 2006
Civitas, November 2006

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GDP GROWTH BY COUNTRY(CAGR * 2005 – 2007 IN %)France2.4

Germany

1.7

Spain

3.2

UK

2.7

Russia

6.5
10.0

China
7.8

India
2.4

Japan

3.2

USA

Space

* CAGR: Compound Average Growth Rate – a measure of average growth rateover a number of years
Source: IMF

Commercial satellite activity continued to recover in 2006. As
telecommunications companies’ proﬁts have started to grow following several years of ﬂat revenues, they are increasing their investments in satellite capacity. Twenty-three commercial satellites werelaunched during the year, and 27 contracts were awarded. This
compares with 22 launches in 2005 and just 14 in 2004.
For commercial launcher companies, price pressures eased signiﬁcantly. Russian launcher companies, which previously had extremelycompetitive pricing, announced rapid price inﬂation and component
delays. This was due to apparent increases in raw material costs
and restructuring within the Russian industry.

FUEL BURNT PER PASSENGER / PER 100 KILOMETERS(FUEL/RTK * IN %)- 60 % since 1960

0

0

-5

-5

-10

-10

-15

-15

Consolidation

-20

-20

Across the space industry, consolidation, through both mergers andalliances, is continuing. The world’s largest remote-sensing company,
GeoEye, has been formed following the merger of Orbimage andSpace Imaging; Astrium Satellites and Indian Space Research
Organisation have formed an alliance to build small commercial
telecommunications satellites; Thales Group has agreed to acquire
Alcatel’s 67% stake in satellite manufacturer Alcatel Alenia Spaceand 33% stake in satellite ground services provider Telespazio;
and United Launch Alliance has been created through the mergerof Boeing and Lockheed Martin’s government launch services
operations.

-25

-25

Commercial space companies are becoming increasingly high proﬁle.
Bigelow Aerospace launched its ﬁrst inﬂatable space module as ademonstrator for future space structures. Space Adventures, thespace tourism company, sent its fourth paying customer into space,and offered future customers “space walks”.

3 liters / passenger / 100 km

-30
1990

1995

2000

2005

* RTK – Revenue Tonne Kilometres: RTK is a measure of overall airline volume. It is
calculated by multiplying the number of tonnes of revenue load (passengers,
baggage, freight and mail) by the ﬂight stage distanceSource: Airbus

INVESTMENT PER SOLDIER – EQUIPMENT PROCUREMENT
AND R & D (€)
Germany

18,250Spain

19,678

FranceUKUSA25,83950,627
95,476

Source: EDA (November 2006)

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T H E BU S I N E S S YE A R 20 0 6

(€ m)

2006

2005

Variation

Revenues

25,19022,179

14%

- 572

2,307

–

EBIT
Order intake

53,367

78,254- 32%

Order book210,115

201,963

4%

In number of aircraft
Deliveries

434

378

15%

Order book

2,533

2,177

16%

AirbusAirbus had its best year ever for deliveries. Following theA380 delays, and to improve competitiveness, it launched
the Power8 reorganisation plan.

34

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A320transform the Airbus business model and to develop a global
network of partners. It will allow Airbus to devote its resources tocore activities and to eliminate inefﬁciencies within its current
structure. The programme aims to achieve full industrial integrationof Airbus by establishing a new industrial organisation, withtransnational Centres of Excellence replacing the existing national
structures. This transformation will happen progressively over
several years, accompanying the further extension of Airbus’s
global footprint.
In spite of commercial successes, 2006 was a disappointing year
for Airbus. The complexity and the risks in some programmes, andin particular, production difﬁculties encountered for the A380
led to delays in its projected delivery schedule, with the ﬁrst A380
currently scheduled for delivery in October 2007. The resulting
costs and charges associated with these delays will impose a signiﬁcant burden on future ﬁnancial performance. This increases thepressure for cost savings due to the weak dollar rate and additional
development costs for future programmes.
Despite these setbacks, the A380 double-decker achieved certiﬁcation, conﬁrming its technical soundness. And Airbus launched
the A350XWB (Extra Wide Body) series, its new medium capacity
long-range aircraft that will enter service in 2013. The aircraft is a
response to market demand, and will be extremely efﬁcient andenvironmentally advanced. The A350XWB will be the ﬁrst
programme to beneﬁt strongly from the very beginning from theturnaround plan Power8. Airbus will assign large work packages
to tier-one suppliers in return for a better distribution of future
investment, risks and opportunities. Fifty percent of aerostructure
work will be outsourced to risk-sharing partners (€ 1.8 billion nonrecurring cost and € 600 million associated capital expenditures).
This is about twice as much as in earlier programmes.
In response to challenges ahead, Airbus launched the Power8 plan.
This turnaround plan will enable Airbus to face the substantial
challenges of US dollar weakness, increased competitive pressure
and the ﬁnancial burden related to the A380 delays, and also tomeet its other future investment needs. This programme aims to

Airbus management will implement cost reduction and cash
generating measures leading to EBIT contributions of € 2.1 billion
from 2010 onwards and an additional € 5 billion of cumulative
cash ﬂow from 2007 to 2010.

Commercial results
Airlines continued to order large numbers of aircraft to meet
future demand for air travel and to replace ageing ﬂeets with more
efﬁcient aircraft. 2006 was Airbus’s second best year ever in termsof orders and its best ever for deliveries. Airbus has a record
backlog, improving visibility for the next ﬁve years at very highproduction rates. Airbus has now delivered more than 4,500
aircraft.
Airbus delivered a record 434 aircraft (378 in 2005). This led torevenues of € 25.2 billion, representing a 14% increase compared to2005 (€ 22.2 billion). The Division’s EBIT was supported by strong
sales volumes, a favourable aircraft mix and a higher contribution
from the sell-down of customer ﬁnancing assets. But after allowing
for the ﬁnancial impact of the A380 issues, A350 related charges,
increased research and development costs and less attractive dollar
hedges, Airbus ﬁnally reported an EBIT loss of € -572 million(2005: € 2,307 million). The EBIT also includes a € 352 million
provision for A400M contingencies to deal with risk and technicalchallenges in the Airbus work share.

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A380 and A318
in ﬂight

Airbus’s A330/A340 Family also had a good year, with 134 ﬁrm
orders from 17 customers, including seven new ones – a 5% increase over 2005. The A330 Family has now received more than
600 ﬁrm orders, a strong endorsement of this environmentallyfriendly, long-range twin engine aircraft, which is the recurrent
leader in the medium to extended range category. However, theA340 suffered from its lack of fuel efﬁciency as a four engine
aircraft.

A300-600

With 824 new gross orders (790 net orders), Airbus achieved
44% market share. Airbus’s backlog stands at 2,533 aircraft, thehighest volume ever reached by a manufacturer. With an increaseof 16% over last year, Airbus now has 51% of all outstandingorders.
China and India’s fast growing aviation industries ordered large
numbers of wide body and single aisle aircraft. Airbus and the
China Aviation Supplies Import and Export Group Corporation(CASGC) signed their second contract, the aircraft industry’s
largest ever single transaction, for 150 A320 Family aircraft and a
Letter of Intent for 20 A350XWBs. Sales to India included both
single-aisle and wide body aircraft, with orders for 43 single-aisle
aircraft from Indian Airlines, ten A320s from GoAir and ﬁve
ultra long-range A340-500s from Kingﬁsher.
A large part of the year’s sales tally was for Airbus’s highly
popular Single-Aisle Family, with a total of 673 orders taken from47 customers, including 20 new ones. Low cost carriers ordered
212 A320 Family aircraft. Leasing companies also showed theirconﬁdence, with eight leading lessors ordering 64 single-aisle and50 wide body aircraft.

36

The A350XWB, Airbus’s latest aircraft and the most modern
medium-capacity long-range aircraft, received a good initial response.
Launched in October 2006, the A350XWB received two ﬁrm orders
and 40 commitments in 2006, and also had 100 ﬁrm orders and82 commitments remaining for the former A350 aircraft.
In spite of its industrial difﬁculties, major airlines gave their backing
to the A380, demonstrating their conﬁdence in the double-decker
and its importance to their business models. Singapore Airlines
and Qantas placed new orders for nine and eight aircraft, respectively. However, FedEx cancelled its order for ten A380 freighters.
At year-end, the A380 had 166 orders and commitments from
15 customers. The ﬁrst plane is scheduled for delivery to Singapore
Airlines in October 2007.
The corporate jetliner market was robust. A 59% market share madethe Airbus Corporate Jetliner family market leader for the third year
running. 15 customers, including 13 new ones, ordered 21 aircraft,comprising 20 single-aisle aircraft and one A330.
Including the A350XWB Family, Airbus now has a total of
16 models, and has sold 7,097 aircraft to 250 customers.

Programme milestones
While the A380 remained in the limelight throughout the year,
concluding with type certiﬁcation in December, the year was
also marked by a continuous and steady production ramp-up of
the other Airbus aircraft families and the industrial launch of
the A350XWB.

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A380 cockpit

A380
Both Airbus and the aviation industry passed a signiﬁcant historical
milestone when the A380 received joint European Aviation Safety
Agency (EASA) and Federal Aviation Administration (FAA) Type
Certiﬁcation on 12th December 2006. This conﬁrmed the A380’s
technical excellence.
The certiﬁcation covered the Rolls-Royce Trent 900 poweredversion of the A380 – certiﬁcation of the Engine Alliance powered
variant is expected by the end of 2007.
A comprehensive industrial recovery plan was introduced toprepare for the second half 2007 ramp-up of deliveries, drawing
on the best tools and methodologies from across Airbus.
A320
In response to strong demand for A320 Family aircraft, Airbus
plans a steady production ramp-up programme from its rate of
30 aircraft per month achieved in 2006, to 32 in early 2007, rising
to 34 in early 2008 and to 36 at the end of 2008 – the highest
production rate for any commercial airliner.
A330/A340 Family
The programme maintained a high output of 7.5 aircraft permonth, which will increase to eight per month by early 2008.
The A330-200F freighter, the only modern solution for the
mid-size freighter market, received authorisation to offer
during the year.

International alliances
Airbus is forming industrial and research partnerships withinternational leaders in specialist ﬁelds. In 2006, Airbus signed
agreements with organisations in China, Russia, Poland, Japan,
South Africa and Turkey.
Airbus signed an important framework agreement in China,
outlining establishment of an A320 Family ﬁnal assembly line.
Aircraft assembly is planned to start in 2009, with the aim of
producing four aircraft a month by 2011.

In Russia, Airbus is progressively implementing a long-term
co-operation programme in the areas of research and technology,
engineering, aircraft component manufacturing and materialpurchase.

Environment
Through innovation, Airbus is taking steps to minimise theenvironmental impact of its products and activities. Airbus hasa leading role in the “Clean Sky” joint technology initiative,
which aims to reduce CO 2 emissions by 50%, NO X emissions
by 80% and perceived external noise levels by 50% by theyear 2020.
Airbus has also now achieved ISO 14001 certiﬁcation at all of
its European plants, preparing the way for corporate certiﬁcationin 2007.

OUTLOOK
In 2007, Airbus will steadily ramp up its single-aisle and wide body longrange production lines, and is expected to deliver between 440 and
450 aircraft.
The ﬁrst A380 will be delivered to Singapore Airlines, and the recovery
plan fully implemented to prepare for 2008 deliveries. Development
and industrialisation of the A350XWB Family will also be a top priority,
as new customer orders are placed for this aircraft type. 2007 is a
crucial year for Airbus. Successful implementation of Power8 is essential to regain competitiveness and will lead to the company’s complete
reorganisation.
Overall, Airbus will strive to restore conﬁdence among its customers
and other stakeholders.

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Power8The Power8 turnaround programme will restore Airbus’s
competitiveness. Its eight modules will reduce costs andstreamline the industrial organisation.

POWER 8 – 8 MODULES TO COVER KEY TARGETS

SPEED UP A/C
DEVELOPMENT

MAXIMISE CASH

Develop Faster1

Focus onOperations

CUT COSTS

2

Smart Buying

3

Lean Manufacturing

45

Focus on
Structure

38

Reduce Overhead Costs

Maximise Cash

6

Restructure Industrial Set-up

7

Streamline Final Assembly Lines

8

Focus on Core Business Activities

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remaining 5,000 are Airbus employees, where reductions will beachieved through both natural attrition and negotiated voluntary
severance and schemes in each country concerned. At this stage,
no forced redundancies are considered.
5

Maximise CashThis module targets the reduction of ﬁnancial working
capital and the tight control of cash in all operations.
6

Customer First
There will be a renewed emphasis on customers’ interests.
Airbus aims to serve its clients with higher levels of reliability
and quality, as well as better customer service.

1

Develop Faster

Development time for new aircraft will be reduced fromseven and a half years to six. Robust development processes willbe established with risk-sharing partners to secure these cycle time
reductions, as well as the required aircraft maturity at entry into
service. The module also aims to improve engineering productivity
by 15%.
2

Smart Buying

Through smart buying, Airbus will reduce the supply costbase. It will reshape and consolidate the supply base by building a
network of risk-sharing partners and streamlining its logistics
organisation.
3

Lean Manufacturing

Airbus will further integrate manufacturing and associatedengineering and will ensure the deployment of consistent, lean
production principles across all plants. Management targets a
16% productivity increase by 2010.
4

Reduce Overhead Costs

The Airbus management proposes a progressive headcountreduction of 10,000 positions over four years, comprising 3,200
in France, 3,700 in Germany, 400 in Spain, 1,600 in the United
Kingdom and 1,100 in the Airbus central entity in Toulouse.
Approximately 5,000 of these positions are temporary or on-site
sub-contractors, where reductions have already begun. The

Restructure Industrial Set-up

In line with the goal of focusing on its core business,
Airbus will reorganise its industrial structure. Airbus is considering industrial partnerships at its plants in Filton, Meaulte andNordenham, in order to facilitate their transition from metallic
to composite design and manufacturing technology. With respect
to its sites in Laupheim, St. Nazaire-Ville and Varel, Airbus willconsider several options, including their sale to key suppliers,
management buy-outs or combinations with nearby sites.
7

Streamline Final Assembly Lines

A number of measures are being implemented to further
increase the efﬁciency of the Final Assembly Lines (FAL). Toulouse
will see a further capacity enhancement of the long-range FAL,
as the A350XWB will be assembled and will receive its interior
furnishing in Toulouse. In Hamburg, a third A320 Family FAL
is being set up with immediate effect. It will have full “type”
ﬂexibility, and be able to cope with additional demand for A320s
when production exceeds 14 per month. Hamburg will also perform ﬁnal assembly of the New Single-Aisle Family. Furthermore,in order to allow parts to be ﬁtted in the most logical place tooptimise the overall cycle time, some upstream preparatory cabin
installation work for the A380 and the A320 assembled in Toulouse
will be transferred from Hamburg to Toulouse. Nevertheless,cabin installation remains in Hamburg and A380 deliveries will
be performed both from Hamburg and Toulouse.
8

Focus on Core Business Activities

On the engineering and manufacturing side, Airbus will
focus on business activities that are either critical for the integrity
and safety of the aircraft or vital for technological and commercial
differentiation. These activities include overall aircraft and cabinarchitecture, systems integration, as well as the design, assembly,
installation, equipping, customisation and testing of major andcomplex components, or manufacturing of new technology parts.

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2005

Variation

Revenues

2,200

763

188%

75

48

56%

Order intake

1,594

1,840

- 13%

Order book

20,337

20,961- 3%

EBIT

REVENUES BY MARKETS(in % of external revenues)
3% Civil
97% Defence

Military Transport Aircraft
Passing several important milestones for the new A400M
heavy transport aircraft boosted revenues. Medium and lightaircraft retained their market leadership.

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CN-235 Coast Guard

The Division focused mainly on managing the industrial processesof its two new aircraft programmes, both of which are at importantstages. The A330 Multi-Role Tanker Transport (MRTT) with the
new refuelling system and boom is scheduled to enter into service
in 2009. The A400M’s ﬁrst delivery is also foreseen for 2009.
Orders for medium and light aircraft conﬁrmed EADS CASA’sworldwide leadership in this market segment.
Revenues expanded substantially to € 2.2 billion (€ 763 million
in 2005) and EBIT grew to € 75 million (€ 48 million in 2005),
primarily reﬂecting the achievement of all contractual and internal
A400M milestones planned for 2006, as well as the effect of ashift in 2006 of revenue recognition associated with a 2005
A400M internal industrial milestone.
The order book was stable, ﬁnishing the year slightly lower at€ 20.3 billion (€ 21.0 billion in 2005). The Malaysian contract for
four A400Ms was booked during the year. The medium andlight aircraft business won orders for 20 new aircraft, including
twelve C-295 medium-weight transport and maritime patrolaircraft for the Portuguese air force. This was the ﬁrst contract fora maritime patrol aircraft based on the C-295 platform. Finland,
Poland and Spain also ordered C-295s, and a contract with the
US Company L-3 was signed for two CN-235s. Korea ordered
one C-212 maritime patrol aircraft.
The Spanish Ministry of Defence (MoD) ordered the conversionof six CN-235 military transports into maritime patrol aircraftwith FITS mission control. Additionally, two CN-235s with FITS
are being modernised for the Irish MoD.

A400M passes industrial milestones
The A400M passed ﬁve industrial contractual milestones, including
the one shifted from 2005. Airbus produced the ﬁrst A400M wing
ever made almost entirely from composite materials, and the ﬁrst
horizontal tail plane was delivered by EADS CASA to the Final
Assembly Lines (FAL).
EADS has conducted an internal technical assessment to validate
the current programme status and ensure transparency to thecustomer. This concluded that the programme was on schedule but
highlighted a number of signiﬁcant challenges. There are currently
a total of 192 A400M orders, with 180 from the European launchcountries, eight from South Africa and four from Malaysia.

The ﬁrst of the ﬁve A330s for modiﬁcation into MRTT advanced
tanker aircraft with booms, for the Royal Australian Air Force,
were received by EADS CASA in Madrid during June 2006. Work
started on conversion of the ﬁrst tanker. The ﬁrst ﬂight tests of
the new refuelling boom were successfully completed. Boom
conﬁguration includes ﬂy-by-wire controls and an automatic load
alleviation system, offering the boom a larger refuelling envelope
and better control. EADS will be at the forefront of ﬂight refuelling
technology.
The ﬁrst CN-235 multi-mission aircraft for the US Coast Guard’s
Deepwater programme was delivered. A Lockheed Martin and
EADS CASA partnership was awarded a contract for up to 36
aircraft, with the ﬁrst three aircraft ordered from EADS CASA
for medium-range surveillance maritime patrol.

OUTLOOK
The balance of the Division’s revenues will change over the next few
years as the new A400M and A330 MRTT aircraft start to be delivered
and future orders are won. While medium and light aircraft will continue
to account for a signiﬁcant percentage of revenues, economic performance will be driven by new aircraft programmes.
There are currently a number of export campaigns underway. Negotiations are being carried out with Saudi Arabia for an order of three
MRTT tanker aircraft. The Division expects 2007 will see the AirTanker
consortium, of which it is a member, receive an order from the UK
government for the Future Strategic Aircraft programme covering
14 A330 MRTTs.
MTA has been selected to supply 50 C-212s for Brazil’s Air Force in anindustrial collaboration that will include the establishment of a FAL in
Brazil. Contract negotiations could be ﬁnalised in 2007.
Teaming with Northrop Grumman, EADS is bidding to supply the
US Air Force’s new-generation KC-30 refuelling tanker based on an
A330 MRTT with boom. Also in the United States, in partnership with
Raytheon, it is proposing the C-295 aircraft for the Joint Cargo Aircraft
contract, which is expected to be awarded in 2007.

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Revenues

3,803

3,211

18%

257

212

21%

Order intake

4,885

3,522

39%

Order book11,042

9,960

11%

EBIT

REVENUES BY MARKETS(in % of external revenues)
46% Civil
54% Defence

Eurocopter
Delivery of a record 381 helicopters fuelled strong revenue growth.
At the same time, Eurocopter’s large, state-of-the-art product range
lifted its order book to a new high.

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NH90 quality control

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EC 145Eurocopter achieved a record order-increase, yet again capturing
the largest share of the global civil and parapublic helicopter
market. This was due to the product range’s performance andthe Division’s presence in all the major international helicopter
markets. Recognising that Eurocopter’s orders and deliveries
are now 50% bigger than they were three years ago, management
expanded the workforce and reorganised the company.
Revenues rose by 18% to € 3.8 billion (2005: € 3.2 billion), as theindustrial ramp-up progressed on schedule and 381 helicopters weredelivered (334 in 2005). EBIT expanded by 21% to € 257 million(2005: € 212 million).

In South Korea, the development contract for production of thecountry’s ﬁrst military utility helicopter was signed, and work began
during the summer, both in France and Korea. In Russia, Eurocopter
Vostok was inaugurated to market products and services.

Some 615 helicopters were ordered, worth an aggregate of€ 4.9 billion (compared with a total order value of € 3.5 billion
in 2005). At the end of December 2006, the order book reached a
new high of € 11 billion (€ 10 billion in 2005). Notably, 79% oforders were exports or from outside the home countries of Germany,
France and Spain. Military helicopters accounted for 53% of orders.
Customer services also attracted a large number of orders.

Following huge growth, Eurocopter recruited more than 1,200
people and introduced the “Vital” improvement programme. With
customer satisfaction the top priority, speciﬁc measures were introduced to enhance industrial efﬁciency, promote internationalisationand increase research and development.

In the civil and parapublic market, Eurocopter conﬁrmed its
position as market leader with 52% market share. High oil andgas prices, growth of the global economy and a strong demand
from emergency medical services (EMS) all contributed to theyear’s record orders.

Progress in defence
Importantly, Eurocopter broke into the US defence market. The
US Army selected Eurocopter to provide its next-generation Light
Utility Helicopter (LUH). A total of 42 UH-72As, a customised
version of the EC 145 medium-weight, multi-mission helicopter,
were ordered during 2006. The US Army requires up to 352
aircraft, with a potential value of USD 2 billion.
The ﬁrst three NH90 helicopters were delivered to Germany. The
NH90 is a new medium-weight, multi-role military helicopterthat offers high performance and low operating and maintenancecosts. New Zealand ordered nine and Australia ordered 34 of the
MRH90 variant. Four hundred NH90s have now been ordered.
The ongoing development activities on mission equipment have
led to an additional shift of planned delivery dates.

OUTLOOK
In 2007, Eurocopter’s main challenge will be to build on its commercial
success by managing the industrial ramp-up. Additionally, it will seek tostrengthen its position in key markets.
Management plans to hire another 500 people in 2007, to continue
developing its industrial facilities in France and Germany, and to
set up brand new industrial bases in Albacete, Spain and Columbus,
Mississippi, US.
Recognising that much of the helicopter market’s future growth potential comes from outside Europe, and that its global supply chain must
continue to be optimised, Eurocopter will seek to expand its industrial
footprints in major international markets while continuing to strengtheninternational helicopter development programmes.
In order to enhance the performance of its global offer, Eurocopter willcontinue to modernise and improve its existing range of products andassociated services. In parallel, it will build the foundations for a strategic
breakthrough in Helicopter technology.
Continuing the momentum of 2006, further growth in revenues is
expected in 2007.

Extensive international presence
Eurocopter has an extensive and growing international footprint.
In December 2006 it created Eurocopter China in Shanghai in orderto strengthen the commercial footprint and to better serve customers. According to the previous year’s agreement, the co-development programme of a new seven-ton helicopter, the EC 175,
jointly with AVIC II, the state-owned aviation company, achieved
its ﬁrst milestone in December 2006. Eurocopter has 45% ofChina’s rapidly growing civil/parapublic market.
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2005

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Revenues

5,864

5,636

4%

348

201

73%

Order intake

5,191

6,673

- 22%

Order book

17,57018,509- 5%

EBIT

REVENUES BY MARKETS(in % of external revenues)
3% Civil
97% Defence

Defence & Security
Balanced progress across the Division vindicated its strategy.
Streamlining initiatives improved programme performance andgenerated an increased EBIT.

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Professional Mobile Radio systems(PMR)

The recently acquired digital radio network business compensatedfor most of the deconsolidation incurred by the sale of the German
missile business LFK. Return on Sales improved to 5.9% compared
to 3.6% the year before. Furthermore, the year’s streamlining
initiatives and goals were met, contributing to the efﬁciency gains.
The Division also moved major programmes and projects into the
production phase.
Revenues increased to € 5.9 billion (€ 5.6 billion in 2005) due
chieﬂy to increased Euroﬁghter ramp-up production and new digitalradio network contracts. Since inception the Euroﬁghter GmbHconsortium has delivered 114 of these high-performance, multirole combat aircraft as of the end of 2006. Completion of the saleof the German missile business LFK to MBDA impacted theDivision’s revenues (€ -132 million), as LFK was 100% consolidated(MBDA consolidated 50%). EBIT has increased to € 348 million(€ 201 million in 2005) due to operational improvement and an
LFK capital gain (€ 111 million). Additionally, restructuring costs(€ -74 million) and change of perimeter effects compensated thelower costs related to UAV (Unmanned Aerial Vehicle) development.
After acquiring LFK, MBDA has secured its position as the world’s
largest missile company. MBDA received orders from the French
and German defence ministries respectively for 250 SCALP naval
cruise missiles and 680 PARS 3 Long-Range precision ﬁre-andforget weapon systems. Substantial revenue contributions camefrom Storm Shadow, Brimstone, Taurus, Aster and MICA moving
into production phases. MEADS development is progressing.
The previous year’s restructuring initiatives improved programme
performance across all Business Units – Military Air Systems (MAS),
Defence and Communications Systems (DCS), Defence Electronics(DE) and MBDA. In 2006, management began concentrating the
MAS activities in Manching, near Munich, and consolidating theDivision’s Munich headquarters. Additionally, the Division’s
French activities began concentrating in Elancourt, and MBDA
has centralised its location in the Paris region.

The Division strengthened its position in coastal and maritime
surveillance, in particular through the joint acquisition ofAtlas Elektronik with ThyssenKrupp, and the acquisition of
SOFRELOG.
Progress was made in the development of a European Advanced
Unmanned Aerial Vehicles (UAV) programme. First ﬂights werecompleted for the Medium Altitude Long Endurance UAV for
the French government and a next-generation UAV technology
demonstrator in Spain. Additionally, Germany agreed to acquirea High Altitude Long Endurance UAV.

OUTLOOK
Growth in promising business areas – including UAVs, electronics, securecommunications, large system integration, command & control systems
and maritime solutions – offers the prospect of a more balanced revenue portfolio in the future, while platforms and missiles will continue tobe the main pillars of Defence & Security revenues. Built through bothinternal development and recent acquisitions, the Division’s businesses
are becoming yet more competitive and well placed.
In particular, the Division is experiencing growing demand for integrated
global security systems, which is allowing it to expand beyond its traditional home markets. Additionally, there are Euroﬁghter export campaigns
in a number of countries within Europe and abroad.
The strong order backlog, coupled with improvement programmes andbetter business performance, should lead to steady increases in EBIT
despite the expected ﬂattening in home-market defence budgets.

Building capabilities in growth markets
From a strategic perspective this was a signiﬁcant year, as management continued to build capabilities in future growth areas forboth defence and security.
DCS’s Professional Mobile Radio digital radio business received
more than 20 orders for secure communications networks. Amongthese, the German public safety authorities’ BOSNet contract
was the most signiﬁcant.

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Revenues

3,212

2,698

19%

130

58

124%

Order intake

4,354

2,322

88%

Order book

12,263

10,93112%EBIT

REVENUES BY MARKETS(in % of external revenues)
68% Civil
32% Defence

Astrium
Astrium achieved solid proﬁtable growth in a more favourable
business environment. A higher order book level ensures further
revenue increase in the years ahead.

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Manufacturing of satellite solar panel

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Ariane 52006 was a good year for Astrium’s three lines of products:
launchers, satellites and services. The military communications
satellite services business line grew revenues and won newcontracts. Margins expanded due to both substantial cost reduction
and the Division’s strong position as prime contractor for muchof Europe’s space industry.
Revenues increased to € 3.2 billion (€ 2.7 billion in 2005), with all
three Business Units contributing. EBIT more than doubled to€ 130 million from € 58 million in 2005, as cost improvements andﬁrm pricing boosted margins.
Both launchers and satellites captured substantial slices of theirrespective markets. Consequently, the order book increased to€ 12.3 billion at year-end, compared with € 10.9 billion at the endof 2005.
In order to present its main customers in Europe and elsewhere witha united and more visible brand, the Division changed its namefrom EADS SPACE to EADS Astrium. This branding initiative
was not accompanied by any operational management changes.
Building on the success of recent cost and process improvement
measures, further programmes were introduced. Speciﬁc initiatives
were started to pool resources, trigger better services to customers
and reduce costs. A further initiative aims to increase Research andDevelopment spending in order to pave the way to further growth.
Beyond this, there are additional on-going efﬁciency programmeswith milestones and targets to be achieved.

Ariane 5 reliability
The Astrium Space Transportation Business Unit holds a 30.5%
stake in Arianespace, which conﬁrmed its position as the number
one satellite launch services provider worldwide. The Ariane 5
launcher’s record for reliability, at a time when competinglaunchers have experienced accidents, led it to win 12 orders,
representing approximately 45% of the open market.
Other highlights within Astrium Space Transportation included
delivery of the Columbus space laboratory to the European
Space Agency (ESA). This is the European research module for
the International Space Station, a combined US and European
governmental project due for launch in late 2007. Additionally,
the M51 ballistic missile ordered by the Délégation Générale pourl’Armement, France’s defence procurement agency, had its ﬁrst
fully successful ﬂight.

Satellite upsurge
The Astrium Satellites Business Unit won a creditable share of
new satellite orders in a year when there was a modest upsurge inorders globally. There were 27 commercial orders worldwide,compared with 24 in 2005. Astrium won seven of these campaigns,
as well as the two main ESA orders.
The newest of the three Business Units, Services, continued to
expand its operations of secure military communications satellites.
Germany’s Ministry of Defence formally ordered the Satcom
BW system, and the ﬁrst Skynet 5 satellite, for the UK Ministryof Defence, is ready for launch.

OUTLOOK
Astrium entered 2007 with its largest ever order book and the beneﬁts
of both technical and commercial innovation over the past ﬁve years
beginning to be experienced, along with the full effect of ﬁve years ofindustrial restructuring. Both the Ariane 5 ECA ten-ton satellite launcher
and Eurostar 3000 modular satellite have recently entered production
and have proved their reliability in the market place. Astrium Services
has also proved the validity of its business model of building and operating military communications satellites.
The Division is maintaining its capacity for innovation by increasing
Research and Development spending. Technical support contracts willsustain technical capabilities in the launcher and missiles areas.
Meanwhile, improvement initiatives to reduce costs and improve technical processes will bring further progress.
The positive trend in revenues and EBIT is expected to continue withfurther increases in proﬁtability.

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EADS
Our shared functions are leading a renewed push
for integration across the Group. They are acting
as agents of change throughout our Divisions,
turning strategy into reality and delivering the senseof common purpose that is driving us forward.

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Research & Technology
The appointment of a Chief Technical Ofﬁcer has invigorated theinnovation process, and technology development is becoming moreclosely aligned with Group strategy.

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Research on
Virtual Reality

Following the appointment of a Chief Technical Ofﬁcer (CTO)
in April 2006, innovation, and particularly technologicalinnovation, has been strengthened with greater focus being put
on aligning the Group’s Research & Technology (R &T) withthe company’s business strategy.
The CTO position has been assigned authority through a new placeon the EADS Executive Committee and now has responsibility
for the entire R &T budget across all Divisions. This budget will
increasingly be aimed at supporting the Group’s strategic growthpriorities.
The CTO is also introducing measures to ensure that each Division beneﬁts fully from technologies developed in the others. For
example, the greatest expertise in composite aircraft structures
resides within Airbus, whereas the best sensor technology resides
in Defence & Security.
The reﬁned R &T strategy builds upon the Group’s growing pace ofinnovation. EADS ﬁled almost 800 new patents in 2006, up from
more than 300 in 2001. Additionally, the number of patented
inventions owned grew to more than 5,000 in 2006, up from morethan 4,000 in 2001.

Aligning R&T with Group strategy
The CTO has started to better align the EADS technology portfoliowith the Group’s business strategy by re-balancing the R &T
budget in favour of the growth areas in the business. He aims todeliver more shareholder value through a stringent, leading-edge
R &T portfolio that enables ﬂawless introduction of new technologies on future products, with strong returns on investment
at the end of the innovation pipeline.
Key growth technologies have been identiﬁed and allocated“protected” budgets. These technologies include fully composite
fuselages, secure communications and software, enhanced vision
for all-weather helicopters and synthetic-world modelling, toname but a few.
Behind these new goals there is a new management structure for
R &T. The EADS Executive Technical Council (ETC) is responsible
for ensuring that top-down technology strategy is implemented
through the Divisions and Business Units. Headed by the CTO
and made up of the technical directors of the Divisions, the ETC
meets regularly to formulate future strategies and to identify
synergies. The ETC ensures that a balance is maintained between
the top-down strategic guidance and the bottom-up expertise,creativity and responsibility.

The Corporate Technical Capabilities function (reporting to theCTO) is in charge of the corporate R &T production facilities thatguarantee the Group’s technical innovation potential with a focus
on the long-term horizon.
Global Innovation Networks (GINs) have been established for eachof the ﬁve major research ﬁelds in order to advance technology
ﬁelds of major importance to the Group and to ensure that relevant
information is shared across the Divisions. An experienced
executive will manage each GIN.

New roles
The CTO has a wide role. In addition to R &T, he is responsible forGroup transversal technical processes, such as Systems Engineeringand common tools for Product Lifecycle Management. He also
carries out speciﬁc technical assessments on behalf of the Chief
Executives and the Executive Committee. The responsibility forcorporate Information Management (IM) has been passed from
Finance to the CTO’s organisation. He plans to harmonise designand engineering tools such as computer-aided design software
across the Group and its suppliers in order to improve Group
integration.
He also intends to foster a culture of innovation. Consequently,
R &T and Human Resources are building the “EADS Expert
Initiative” to identify technical experts and to offer them career
opportunities similar to those of managers. In further initiatives
an EADS Innovation Hall of Fame is being created. This will
acknowledge and honour those responsible for generating
the highest number of patents (“The Great Inventors”), those
who are most effective in bringing inventions to the business(“The Great Innovators”) and workers with unique skills (“TheGreat Craftsmen”).

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Sourcing
EADS is creating closer relationships with major suppliers, increasing
global sourcing and integrating procurement across Divisions to enhance
efﬁciency and its market positions.

SOURCING PORTFOLIO
39 %
23 %
14 %
12 %
12 %

SOURCING BY REGION
77 %
21 %
2%

TOTAL SOURCING VOLUME IN 2006: € 34 BILLION

52

EuropeNorth America
Rest of World

Systems & Equipment
Indirect Material
Structure and Airframe
Production Material
Product-related Services

SOURCING BY CURRENCIES
51 %
41 %
7%
1%

EUR
USD
GBP
Other Currencies

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A380 engines

Sourcing is playing an important role in improving EADS’ businessmodel, reﬁning its activities as part of the drive to increase Group
efﬁciency and integration while reducing cost and risk. It is taking
action to secure supplies, manage costs and supplier performance,
reduce exposure to the dollar and expand its presence in strategic
countries.
There are three broad initiatives. The Group is beginning a processof developing its supply base towards forging closer relationships
with key suppliers. It is increasing sourcing from strategicallyimportant countries outside Europe. And further measures arebeing taken to foster stronger and more efﬁcient coordinationof activities across the Divisions.

countries and support EADS in seeking new revenues from growing
economies. This will also mitigate exposure to dollar weakness andhelp to reduce costs associated with labour intensive production.

Speciﬁc steps were taken towards these goals in the 2006 ﬁnancial
year, and efforts will intensify in 2007.

Country sourcing ofﬁces are being installed in China and India, withfurther locations under consideration. A substantial number ofsourcing missions to priority countries have improved awarenessand knowledge of sourcing opportunities.

Closer relationships

Sourcing integration

During 2006, EADS began to review its supply base in terms ofwhat it buys, where and how. It intends to form closer relationships
with a limited number of tier-one suppliers, giving them more
responsibility for managing larger contributions, including suppliers
lower in the chain. This allows EADS to focus on its core activities
and to form stronger relationships with a smaller number of key
suppliers.

Coordination of procurement activities across the Divisions has
increased in a number of ways.

These suppliers will be selected for their expertise and provenperformance, as well as their ability and commitment to EADS’
business interests. This includes sharing risks arising from the end
customer market. They will, for example, be expected to invest in
developing tomorrow’s technology, products and systems, to help
reduce dollar exposure and to support EADS in accessing newmarkets.

By leveraging purchasing power across EADS, the Lead Buyers
again made considerable cost reductions, in line with their targets.
EADS is now preparing to increase their powers through Joint
Procurement by going beyond aggregation of demand towards
demand management and harmonisation. Shared Services in
Procurement are being investigated in order to increase efﬁciency.

As a step towards strengthening collaboration with key suppliers,
Supplier Councils and the EADS Procurement Network werestarted in 2006 and are systematically enhancing cooperation andnetworking with suppliers. They aim to improve the efﬁciencyof the supply chain, to secure consistency for selected key elements
of EADS’ procurement strategy, and to optimise processes throughsharing best practices.

Internationalisation
The Group intends to increase sourcing from outside Europe.
Currently, approximately one fourth of the value of all sourcing isfrom outside Europe, but this is expected to grow to 35% withina decade. As well as increasing access to essential technologies
and commodities, this will expand sourcing volumes from Asian

To better integrate sourcing within EADS, the Chief Procurement
Ofﬁcers Council was established. This is a forum for Chief
Procurement Ofﬁcers from all ﬁve Divisions and the Headquarterto discuss all topics of interest with more than one Division.

Reﬂecting the greater integration of sourcing, EADS started to rollout a common e-sourcing platform across the Group. The common
platform, which hosted more than 4,500 electronic calls for tenderin 2006, will support joint procurement activities and leveragesynergies regarding infrastructure, supplier databases, templates
and transparency.
Looking forward to 2007, EADS will begin to reduce the numberof tier-one suppliers. It will also continue to seek sourcing opportunities outside its home markets and to leverage Group purchasing
power. At the same time, the procurement functions will further
develop capabilities, processes and tools.

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Human Resources
Human Resources (HR) is improving integration throughthe further development of common policies, processes,
programmes and shared services.

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Helicopter manufacturing

HR integration
The common EADS HR Board, consisting of the Divisional HR
directors and Group Head of HR, has been driving further integration of HR activities in EADS by introducing common IS platforms, common programmes, tools, processes and shared services.
Common HR objective-setting and project review processes havebeen established with the Divisions, and formal double-reportinglines direct from the Divisions to the Group HR Head have beenformalised during the year. The HR Community has organised
common events to foster functional integration and sharing best
business practices between Divisions.

The EADS “Shared College” has been created to share common
training programmes across the EADS Divisions and to pool
resources, ensuring that the best technical expertise is shared acrossthe Group.

Social process

Leadership development, talent & executive management

Both EADS and its Divisions have active European Works Council
structures in place. These different forums allow the possibility
for proactive social dialogue between employee representatives andmanagement. An important challenge of the year was the preparation of the communication process and start of dialogue with theEuropean Works Council and with the Trade Union representatives
about the Airbus Power 8 programme, wider restructuring acrossthe Group and implementation of shared services. These discussions
are conducted in a proactive and coordinated manner on EADS’Divisional and National level.

The Corporate Business Academy (CBA) programmes for development of management and leadership skills have been performed
for an even wider number of participants. The EADS Executive
Education Centre of Villepreux is fully operational. In addition tobasic management and leadership training, CBA also provides
strategic platforms for management to study topics such as internationalisation through Action Learning Expeditions to China andIndia.

e-HR and shared services
HR Shared Services has undergone further development anddeployment, providing services such as payroll and time management in all four main EADS countries and for all Divisions. In
January 2007, HR Shared Services provided payslips with a single
IS platform for 110,000 employees. Shared Service development
is an important part of HR re-engineering and transformation
processes. A common e-recruiting platform was deployed in orderto provide a single source and harmonised recruitment tool for
the Group. Further e-HR developments have been launched to be
fully deployed in 2008, e.g. performance & development cycle,
competency-management and learning-management systems.

Competency management & development
To secure the availability, right-time recruitment, training andretaining of people for future business needs, several initiatives
have been launched. The “EADS Expert Policy” has been implemented across the whole Company. This initiative improves theidentiﬁcation and recognition of technical experts, and offers themcareer opportunities similar to those of managers. EADS Divisions
have piloted several initiatives, such as the mapping of individual
skills, professional certiﬁcation processes, identiﬁcation of long-termcompetency needs and systems of classiﬁcation of competencies tobe able to ensure that EADS Divisions are better able to anticipate
the availability and need for technical competencies in the long term.

A new “Group Leadership Model” has been introduced for all
EADS to be the basis for common leadership training programmes
and common tools, such as 360° assessment. Additionally, anannual round of potential and development discussions, followed
by development conferences, were carried on to promote executives’ and senior managers’ career development. A new mentoring
programme has been piloted successfully. Internal mobility ofmanagers and executives has also been promoted.

Employer image
In early 2006, EADS was ranked one of Europe’s most admired
employers among engineering students, being ranked number 1 inFrance, number 8 in Germany and number 4 for overall Europe(Trendence & Universum surveys). HR participated in 40 national
and international recruitment fairs and exhibitions in 2006 acrossEurope as well as in China and Singapore, and was also involvedin various initiatives to support women choosing technical careers.

Looking to 2007
Looking forward, HR will deploy the EADS “Leadership” principles
across the Group to ensure development of a common management
culture. And the development of key competencies will be furthered.
More job rotations will be encouraged. The dialogue with the Works
Councils and Trade Unions around potential Airbus and EADS
reorganisations will be active. Overall, HR will continue to progress
towards the goals identiﬁed in 2006 and to improve the quality ofits delivery and support.

EA DS A NNUA L REVIE W 2 0 0 6

55

INS IDE E A D S

Corporate
Social Responsibility
EADS continued to strengthen its CSR framework in 2006, introducing initiatives to build on and reinforce those of previous years.
The Group is strongly committed to meeting its social and ethicalresponsibilities. This is more important than ever in challenging times.

Environm
ent
al c
are

growth
nable
stai
Su

ENVIRONMEN
TCBusiness ethics

EC
ON
OM
I

EADS
SUSTAINABLE
DEVELOPMENT

Co
or

at

cit

ee

rp
e

i ze

n sh

ip

loy
mp h i pesyer
E mp l o l a t i o nre

SOCIAL56

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T H E B U S I N E S S Y E A R 2006

I N S I D E E AD SUSEF UL INF ORMAT ION

For more detailed information on EADS CSR
policies and related practises, please refer to:

Book

3

BUSINESS,LEGALANDCORPORATERESPONSIBILITY
2006

3
Book

BUSINESS, LEGAL AND
CORPORATE RESPONSIBILITY 2006
Registration Document Part 2

Regaining conﬁdence in sustainability
While the events of 2006 raised questions, EADS remains
committed to a sustainable and balanced relationship withstakeholders. The entire Group is committed to the principles
and values in its Code of Ethics, as well as to its Corporate
Social Responsibility (CSR) policies.

Creating the foundations for further CSR challenges
In 2006, EADS started new initiatives to strengthen the foundations of its CSR framework.
The Group strengthened its export control policies and procedures.
To support the reshaped corporate technology ofﬁce, EADS
continued to establish programmes of cooperation with universities
and scientiﬁc organisations to draw on competencies wherever they
exist. Furthermore, a sourcing network was created to deﬁne tools
aimed at cascading down and monitoring CSR requirements inthe supply chain. From a strategic perspective, EADS reviewed its
compliance activities and processes. In addition to its well established internal compliance processes, EADS is considering further
developing its compliance approach by creating a comprehensive
Group-wide compliance organisation. Given the speciﬁc context
of Airbus restructuring and of the evolution of the EADS organisation, the already well established social dialogue procedures
have been reinforced.

Incorporating CSR policies into daily business
Some evidence showed that CSR policies are increasingly embeddedin the way EADS conducts its business. From an environmental
perspective, the number of ISO 14001/EMAS certiﬁed sites grewfrom 29 to 52. And a survey conducted by Novethic and Service
Central de Prévention de la Corruption named EADS as one of
only seven companies in the French CAC 40 Index meeting international ethical standards.

EA DS A NNUA L REVIE W 2 0 0 6

57

INS IDE E A D S

Julia Kempe, researcher at the
University of Paris, won in 2006 a
scientists’ prize co-sponsored by
the EADS Corporate Foundation

The prize, which is co-sponsored by the EADS Corporate Foundation and the French Ministry of Higher Education and Researchis intended to reward female scientists for exceptional achievements.
Its purpose is also to encourage young women to embark on
scientiﬁc careers. While the reward is a cash sum of € 10,000, its
real value is the associated prestige.

Successful career as a scientist

Social Responsibility by encouraging
female scientists
Julia Kempe: Winner of the 2006 Irène Joliot-Curie Prize
For Julia Kempe, prizes are no rarity. Over time, this former
student of one of East Germany’s special schools for gifted children
has collected many well-deserved distinctions for her research incomputer science. These have been awarded by well-known
academic institutions and government bodies from across theworld.
But the Irène Joliot-Curie Prize, which she won last November
as the best young female researcher of 2006, is one of the mostprestigious. It is dedicated to encouraging young women inscience – a cause that is close to her heart.
“I think the Irène Joliot-Curie Prize is one of several things thatwould help a woman overcome her own doubts,” says Kempe.
She adds: “Seeing other women being successful helps. There
should be more outreach activities and events for women. I think
women still need a lot more encouragement.”

Aged 33, Kempe has worked or studied at many of the world’s
leading faculties in the ﬁeld of computer science. She is currently a
researcher at the University of Paris in Orsay, but has previously
attended leading universities in Australia, Austria, France, Israel
and the United States.
Kempe’s studies began when she was selected at the age of 11 to
study mathematics and physics in East Germany. She remarks thatbeing female was no disadvantage; her potential was regarded asexactly the same as that of her male classmates. At the age of 17,
however, one year after the Berlin Wall fell, she moved withher parents to Austria. There, women were not expected to study
mathematics or sciences. France, she observes, is far moreegalitarian.

Mixity to work better
Yet there are still relatively few women in the classes she teaches
at the university. “I do not know why this is the case,” she says.
“Maybe it is the lack of role models. When I see young women
I always try to show them that they have their place in researchand that mixity creates better working environment.”
Kempe’s work focuses on the emerging ﬁeld of quantum computing. She develops quantum algorithms which should ultimately
lead to the ﬁrst quantum computer. If this is achieved, it will leadto far more powerful computers than those of today.
Meanwhile, this most recent prize may help her career to progressin practical ways. “One of the previous winners told me at theawards ceremony that all of her colleagues were aware of thisprize,” she says. “I do not think it helped in the sense that she got
promoted but it made her life a little easier. She said the real
hurdle in a woman’s career was when it came to getting a leadership
position.”

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INSIDE EADSUSEF UL INF ORMAT ION

PAMELA: new dimension inenvironmental care
Pioneering integrated life cycle management of aircraft
More than 6,000 aircraft are due to reach end of life over the next
20 years and the question of how to deal with these old aircraft ina way that keeps our environmental footprint minimal cannot be
avoided.
Airbus tackles this major environmental issue with an innovative
project to experiment state-of-the-art procedures in deconstructing
and recycling the vast majority of valuable materials and components, eliminating any potential hazards that could adversely affectenvironment or public safety.
The project is called PAMELA (standing for Process for Advanced
Management of End-of-Life Aircraft) and is located at Tarbes airport,
in southwestern France. The purpose is to establish a benchmark
for environmental best practices for recycling and re-using 85 to
95% of an aircraft.
All the practicalities of dismantling, recycling and re-using arebeing tested on an old A300 that started to be taken apart in
February 2006. Completion of the whole process is scheduledby year end.
PAMELA is also about learning how to design aircraft that will
be easy to dismantle. As such, it will contribute to setting new
standards in sustainable management of aircraft, paving the way
for other initiatives to follow. “We want to create a centre of
excellence from which knowledge can be further disseminated,”
explains Bruno Costes, Airbus Director Environmental Affairs,Industrial Coordination.
PAMELA is part of the European Commission’s LIFE programme. Under Airbus’s leadership, the project brings together
SITA France, EADS Sogerma Services, EADS Innovation Works
and the Préfecture des Hautes Pyrénées. Aircraft knowledge isthus combined with the long-standing expertise of SITA France
in sorting and processing waste.
“The engineers in our design ofﬁces already do take into accountthe environmental parameters right from the early stages of thedesign process, thanks to an effective Environment Management
System,” says Costes.

Dismantling and deconstruction of the A300
is well underway. Initially, the preliminary
decommissioning phase involves draining theaircraft of dangerous ﬂuids and decontamination.
This is important for making the process safeand environmentally friendly. Disassembling anddismantling the various parts (engines, pylons,landing gear, avionic boxes, ﬂight controls,
batteries and hydraulic pumps) can then be
performed.

All of these parts are transferred to a dedicatedbuilding for material separation. Aluminium
alloys, steel, copper, titanium and other metals
are sorted into separate containers for processing
through appropriate dedicated circuits. Plastics
are handled similarly. While there are few
composites in this type of aircraft, research
is currently being conducted to further develop
treatments for these materials and to promote
innovative ways of recycling them.

The lessons learned will be used in the early design of thenext generation of aircraft to facilitate end-of-life management.
“Working with experts in recycling enables us to incorporateeven more eco-friendly parts in the design of our aircraft, thereby
improving the whole environmental performance over the entire
aircraft lifecycle,” concludes Costes.
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USEFUL60

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T H E B U S I N E S S Y E A R 2006

INSIDE EA DSU S E FU L I N FO R MATI O N

INFORMATIONEA DS A NNUA L REVIE W 2 0 0 6

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U SE F U L I N F O R M AT I ON

Glossary

B
C

BOSNetDigital radio network for security
authorities and organisations (BOS)in Germany

CAGR
Compound Average Growth Rate –a measure of average growth rate over anumber of years
CBA
The EADS Corporate
Business Academy
C4ISR
Command, Control, Communication,
Computers, Surveillance and Intelligence
Systems for defence forces

DE

Deepwater
A comprehensive US Coast Guard
modernisation programme for acquiring
new aircraft and surveillance systems

FITS
Fully Integrated Technical System – core of
a complex weapon system that ranges frommaritime surveillance to the most complete
conﬁgurations of antisubmarine warfare

EASA
The European Aviation Safety Agency –responsible for the advancement, safety
and regulation of civil aviation

Fly-by-wire
An aircraft control system relying onelectronics rather than mechanical linkages

ESA
European Space Agency
ESOP
Employee Share Ownership Programme

Corporate GovernanceThe control and monitoring of a company
to ensure that management acts in theinterests of stakeholders, no undue risks
are taken and relevant legislation iscomplied with

Expert Initiative
Joint initiative of R & T (Research andTechnology) and HR (Human Resources)
to identify technical experts and offer
them career opportunities similar to thoseof managers

CSR
Corporate Social Responsibility –the responsibility of a company towards
its employees, the environment, itscustomers and the wider community

62

FAL
Final Assembly LineEBIT
Earnings Before Interest and Taxes –EADS uses EBIT pre-goodwill impairment
and exceptionals as a key indicator of its
economic performance

Clean Sky
Research programme plan for greener
generation of European Air Transport.
Its purpose is to demonstrate and validate
the technological breakthroughs that arenecessary to reach the environmental
goals set by the Advisory Council for
Aeronautics Research in Europe.

CRC
EADS Corporate Research Centre

F

FAA
The US Federal Aviation Authority –responsible for the advancement, safety
and regulation of civil aviationETC
EADS Executive Technical Council,
responsible for top-down implementationof technology strategy through Divisions
and Business Units

G

GDP
Gross Domestic Product – a measure ofan economy’s output
Global security
State security designed for bordersecurity, crisis management and large
event protection

H
I

Hedge
A way of insuring against adverse foreignexchange rate ﬂuctuations

Innovation WorksEADS innovation efforts are now organised into a network, led by an entity called“EADS Innovation Works”

MAN AGEM ENT

THE F U L L P I C T U R E

T H E B U S I N E S S Y E A R 2006

ISO
International Organization for Standardization – a global network that identiﬁes
what International Standards are requiredby business, government and society,develops them in partnership with thesectors that will put them to use, adopts
them by transparent procedures basedon national input and delivers them tobe implemented worldwide

KL

Kyoto Protocol
The United Nations agreement underwhich countries can commit to reduce
their emissions of carbon dioxide andﬁve other greenhouse gases

LIFE
Financial Instrument For the Environment –a European ﬁnancial programme forsupporting the development and implementation of European policy on theenvironment and sustainable development.
LCC
Low Cost Carrier
LUH
US Army programme for Light Utility
Helicopters

INSIDE EA DSMU S E FU L I N FO R MATI O N

MEADSMedium Extended Air Defence System –a ground-based air defence system
MoD
Current abbreviation for Ministry of
DefenceR

R&D
Research and Development – all activities
related to the evolution of new products
and services
RTK
Revenue Tonne Kilometres – a measure ofoverall airline volume. It is calculated bymultiplying the number of tonnes ofrevenue load (passengers, baggage, freightand mail) by the ﬂight stage distance.

MRTT
Multi-Role Tanker Transport aircraft

N
P

R&T
Research & Technology – all activities inthe ﬁeld of research and generic technologies
not directly attributable to products, anddesigned to maintain or expand knowledgeor the technological baseNASA
National Aeronautics and Space
Administration – the US space agency
NATO
North Atlantic Treaty OrganisationS

PAMELA
Process for Advanced Managementof End of Life Aircraft – led by Airbus,
the project associates SITA France,
EADS Sogerma, EADS Innovation Works
and the Préfecture des Hautes Pyrénées andaims to establish a benchmark for theenvironmentally friendly recycling andre-use of 85% to 95% of an aircraft
Power8Turnaround programme to restore
Airbus’s competitiveness
PPP
Public Private Partnership

Single-aisle aircraft
Aircraft with one aisle, such as
the Airbus A320 Family
SIP
Stock Incentive Plan
SOP
Stock Option PlanU

UAVUnmanned Aerial Vehicle

PRM
Programme Risk Management

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U SE F U L I N F O R M AT I ON

Addresses

EADS Headquarters

AirbusEuropean Aeronautic Defence
and Space Company EADS N.V.
Le Carré
Beechavenue 130 –132
1119 PR Schiphol-Rijk
The Netherlands
Tel + 31 20 655 4800

Airbus1, Rond-point Maurice
Bellonte
31707 Blagnac
FranceTel + 33 5 61 93 33 33

Military Transport Aircraft
Head Ofﬁces
In France:
EADS
37, Boulevard de Montmorency
75781 Paris cedex 16
FranceTel + 33 1 42 24 24 24
In Germany:
EADS
81663 Munich
GermanyTel + 49 89 607 0
In Spain:
EADS
Avenida de Aragón 404
28022 Madrid
Spain
Tel + 34 915 85 7000

EADS North America
EADS North America, Inc.
1616 North Ft. Myer Drive,
Suite 1600
Arlington, VA 22209
USA
Tel + 1 703 236 3300

EADS Military Transport
AircraftAvenida de Aragón 404
28022 Madrid
Spain
Tel + 34 91 585 70 00

Other Businesses

Defence Electronics
Wörthstrasse 85
89077 Ulm
GermanyTel + 49 731 392 0

EADS Sogerma
Aéroport International
20, Avenue Georges Barrès
33700 Mérignac
FranceTel + 33 5 56 55 40 00

MBDA
11, The Strand
London WC2N 5HR
UK
Tel + 44 20 7451 6000

Eurocopter
Eurocopter
Aéroport International deMarseille-Provence
13725 Marignane cedex
FranceTel + 33 4 42 85 85 85

Defence & Security
Defence & Security
Landshuter Strasse 26
85716 Unterschleissheim
GermanyTel + 49 89 3179 0
EADS Military
Air Systems
81663 Munich
GermanyTel + 49 89 607 0Euroﬁghter
Am Söldnermoos 1785399 Hallbergmoos
GermanyTel + 49 811 800

64

Defence andCommunications Systems
Landshuter Strasse 26
85716 Unterschleissheim
GermanyTel + 49 89 3179 0

EADS EFW
Grenzstrasse 101109 Dresden
GermanyTel + 49 351 8839 0

EADS Socata
Aéroport deTarbes-Lourdes-Pyrénées
65290 Louey
FranceTel + 33 5 62 41 77 88

Astrium
Astrium
6, rue Laurent Pichat
75216 Paris cedex 16
FranceTel + 33 1 77 75 8000
Astrium Satellites
31, rue des Cosmonautes
31402 Toulouse cedex 4
FranceTel + 33 5 62 19 62 19
Astrium SpaceTransportation
Hünefeldstrasse 1–528199 Bremen
GermanyTel + 49 421 539 0
66, Route de Verneuil,
78133 Les Mureaux cedex
FranceTel + 33 1 39 06 12 34
Astrium Services
6, rue Laurent Pichat
75216 Paris cedex 16
FranceTel + 33 1 77 75 8000

ATR Avions de Transport
Régional
1, Allée Pierre Nadot
31712 Blagnac cedex
FranceTel + 33 5 62 21 62 21

EADS GROUPEADS is a global leader in aerospace, defence andrelated services. The Group includes the aircraft
manufacturer Airbus, the world’s largest helicopter
supplier, Eurocopter, and Astrium, the European
leader in space programmes, from Ariane to Galileo.

CUTTING EDGETECHNOLOGY.
EADS is the major partner in the Euroﬁghter consortium, develops the A400M military transport aircraft
and holds a stake in the joint venture MBDA, theinternational leader in missile systems.

MAN AG E ME NT

THE FU LL PIC TU RE

THE BU SINE SS YE AR 2 0 0 6

INSID E E AD SUSEFUL I NFO R M ATI O NEADS International

Representative Ofﬁces

Latin America

South Asia and Paciﬁc

EADS
Tel + 33 1 42 24 24 24
Fax + 33 1 42 24 26 19

Western EuropeSão Paulo, Brazil
Tel + 55 11 3093 2800
Fax + 55 11 3093 2801

Canberra, Australia
Tel + 61 2 62 62 91 33
Fax + 61 2 62 62 91 36

Santiago de Chile, Chile
Tel + 56 2 278 78 78
Fax + 56 2 278 79 79

New Delhi, India
Tel + 91 11 4357 9003
Fax + 91 11 4357 9024

Mexico City, Mexico
Tel + 52 55 5281 02 90
Fax + 52 55 5281 32 36

Jakarta, Indonesia
Tel + 62 21 573 57 33
Fax + 62 21 573 59 23

Athens, Greece
Tel + 30 210 69 83 871
Fax + 30 210 69 83 870
Rome, Italy
Tel + 39 06 45 23 2901
Fax + 39 06 45 23 4006
Ankara, Turkey
Tel + 90 312 439 89 64
Fax + 90 312 439 70 07
London, United Kingdom
Tel + 44 207 845 8400
Fax + 44 207 845 8401

Middle East and Maghreb

Central and Eastern Europe

Cairo, Egypt
Tel + 20 2 794 86 71
Fax + 20 2 795 73 17

Warsaw, Poland
Tel + 48 22 627 05 28
Fax + 48 22 627 05 35
Moscow, Russia
Tel + 7 495 797 53 67
Fax + 7 495 797 53 66

North America
Ottawa, Canada
Tel + 1 613 230 39 02
Fax + 1 613 230 14 42

Abu Dhabi, UAE
Tel + 971 2 681 28 78
Fax + 971 2 681 10 27

Muscat, Oman
Tel + 968 24 601 922
Fax + 968 24 6028 45
Doha, Qatar
Tel + 974 411 0752
Fax +974 411 0784
Riyadh, Saudi Arabia
Tel + 966 1 46 53 456
Fax + 966 1 46 30 844

North Asia
Beijing, China
Tel + 86 10 646 11 266
Fax + 86 10 646 10 409

Kuala Lumpur, Malaysia
Tel + 60 3 2163 0233
Fax + 60 3 2163 0211
Singapore, Singapore
Tel + 65 67 37 50 77
Fax + 65 67 33 58 15
Bangkok, Thailand
Tel + 66 2 610 4300
Fax + 66 2 610 4301
Hanoi, Vietnam
Tel + 84 4 943 68 85
Fax + 84 4 943 68 72

AfricaJohannesburg,
South Africa
Tel + 27 11 256 79 00
Fax +27 11 256 79 11
Tripoli, Libya
Tel + 218 21 335 1026
Fax + 218 21 335 1257

Seoul, South Korea
Tel + 82 2 798 49 25
Fax + 82 2 798 49 27
Taipei, Taiwan
Tel + 886 2 2712 15 94
Fax + 886 2 2712 10 89

II.
E ADS AN N UAL R E V IE W 2 0 0 6

65

U SE F U L I N F O R M AT I ON

Financial Calendar

Full Year 2006 results release:
9 th March 2007
Annual General Meeting:4 th May 2007, Amsterdam, The Netherlands
First Quarter 2007 results release:10 th May 2007
Shareholders’ Information meeting:
24 th May 2007, Paris, France
First Half 2007 results release:
26 th July 2007
Third Quarter 2007 results release:
8 th November 2007

EADS
2006
AT A
GLANCEEADS GROUP

THE YEAR 2006 IN REVIEW

Investor Relations contact:
Toll-free telephone numbers:
France: 0 800 01 2001
Germany: 00 800 00 02 2002
Spain:
00 800 00 02 2002
Shareholders from other countries
can contact us at:+ 33 1 41 33 90 94

THE DIVISIONSKEY FIGURESEADS SHARESEADS GLOBAL FOOTPRINT

An e-mailbox is dedicatedto answering shareholders’ enquiries:
ir@eads.com

www.eads.com

EADS.COM
66

CONTENTS

Or visit our website at:

… AT
THE
FULL
PICTUREAND SEE A COMPANY
IN TRANSFORMATIONThe complete EADS Annual Report Suite 2006 consists of:

ANNUAL REVIEW 2006

Book

1
Book

2
Book

3

TAKE
A
LOOK

Management & Responsibility

FINANCIALSTATEMENTSANDCORPORATEGOVERNANCE
2006

FINANCIAL STATEMENTS ANDCORPORATE GOVERNANCE 2006

BUSINESS,LEGALANDCORPORATERESPONSIBILITY
2006

BUSINESS, LEGAL AND
CORPORATE RESPONSIBILITY 2006

EADS
Annual Review
2006

2

The Full Picture: Transformation
The Business Year 2006
Inside EADS
Useful Information

Registration Document Part 1:
Risk Factors

Book

3

Net Assets Financial Position Results
Corporate GovernanceRegistration Document Part 2:(available on request)

Book

Information on EADS Activities
Corporate Social Responsibility
General Description of the Company
and its Share Capital
Entity Responsible for the Registration Document

The online version of theAnnual Report Suite 2006 is available atwww.reports.eads.com

Designed and produced by HGB Hamburger Geschäftsberichte
Printed by Kriechbaumer
Written by The Clerkenwell Consultancy
Photos: M. Abrahams, Airbus (Fixion-hcsgm), M. Lange, S. Marquardt

and Space Company EADS N.V.
Le Carré, Beechavenue 130 -1321119 PR Schipol-Rijk
The Netherlands
www.eads.com

This document is also available
at the following addresses:
European Aeronautic
Defence and Space Company
EADS N.V.

EADS Annual Review 2006

EADS.COMEUROPEAN AERONAUTIC DEFENCE AND SPACE COMPANY EADS N.V.

European Aeronautic Defence

In France
37, boulevard de Montmorency
75781 Paris cedex 16 – France
In Germany
81663 Munich – Germany
In Spain
Avenida de Aragón 404
28022 Madrid – Spain

1

TAKE
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EADS
Annual Review
2006