Financial
Statements

2016

Financial
Statements

Financial Statements 2016 - AIRBUS ° 02 °

Financial
Statements
1

Airbus Group SE — IFRS Consolidated
Financial Statements

2

Notes to the IFRS Consolidated
Financial Statements

3

Airbus Group SE — IFRS Company
Financial Statements

4

Notes to the IFRS Company Financial
Statements

5

Other Supplementary Information
Including the Independent
Auditor’s Report

2016
Financial Statements 2016 - AIRBUS ° 03 °

Chapter

1

Financial Statements 2016 - AIRBUS ° 04 °

Financial Statements 2016

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

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

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

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

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

11

Financial Statements 2016 - AIRBUS ° 05 °1

Airbus Group SE — IFRS Consolidated Financial Statements

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

(In € million)

Note

2016

Revenues

10

66,58164,450

Cost of sales

10(61,317)(55,599)

Gross margin

10

5,264

8,851

(997)

(1,065)

Selling expenses

2015(1,726)(1,586)

Research and development expenses

11(2,970)(3,460)

Other income

13

2,689

474

Other expenses

13

(254)

(222)

Share of profit from investments accounted for under the equity method

12

231

1,016

Other income from investments

12

21

54

2,258

4,062

Administrative expenses

Profit before finance costs and income taxes
Interest income

247

183

Interest expense

(522)

(551)

(692)

(319)

Total finance costs

14

(967)

(687)

Income taxes

15

(291)

(677)

1,000

2,698

995

2,696

5

2

€

€

Other financial result

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

16

1.29

3.43

Diluted

16

1.29

3.42

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

Financial Statements 2016 - AIRBUS ° 06 °

Financial Statements 2016
Airbus Group SE — IFRS Consolidated Financial Statements

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

Note

2016

2015

1,000

2,698

(1,649)

761

(102)

(36)

15

365

(235)

(174)

222

35

(247)

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

(53)

368

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

(35)

(142)

(In € million)

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

(7)

1,112

Other comprehensive income, net of tax(1,902)(2,649)Total comprehensive income of the period

(902)

49

Income tax relating to items that may be reclassified

15

Attributable to:Equity owners of the parent

(917)

76

Non-controlling interests

15

(27)

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

1

Financial Statements 2016 - AIRBUS ° 07 °

Airbus Group SE — IFRS Consolidated Financial Statements

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

Note

2016

2015

Intangible assets

17

12,06812,555

Property, plant and equipment

18

16,913

17,127

5

66(In € million)

AssetsNon-current assets

Investment property
Investments accounted for under the equity method

7

1,608

1,326

Other investments and other long-term financial assets

19

3,655

2,492

Non-current other financial assets

23

976

1,096

Non-current other assets

24

2,358

2,166

Deferred tax assets

15

7,557

6,759

Non-current securities

34

9,897

9,851

55,03753,438Current assets
Inventories

20

29,68829,051

Trade receivables

21

8,101

7,877

Current portion of other long-term financial assets

19

522

178

Current other financial assets

23

1,257

1,402

Current other assets

24

2,576

2,819

Current tax assets
Current securities

34

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

6

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

1,110

860

1,551

1,788

10,143

6,590

54,94850,565

1,148

1,779

111,133

105,782

Financial Statements 2016
Airbus Group SE — IFRS Consolidated Financial Statements

Note(In € million)

2016

2015

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

773

785

Share premium

2,745

3,484

Retained earnings

4,987

6,316

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

(3)

(303)

3,657

5,966

Treasury shares
Non-controlling interests
Total equity(2)

(5)

7

32

3,652

5,973

Non-current liabilities
Non-current provisions

22

10,826

9,871

Long-term financing liabilities

34

8,791

6,335

Non-current other financial liabilities

23

13,313

14,038Non-current other liabilities

24

16,27914,993

Deferred tax liabilities

15

1,292

1,200

288

263

50,78946,700

6,143

5,209

Non-current deferred income
Current liabilities
Current provisions

22

Short-term financing liabilities

34

1,687

2,790

Trade liabilities(1)21

12,532

10,864Current other financial liabilities

23

5,761

5,021

Current other liabilities

24

27,53527,037

1,126

908

917

1,049

55,701

52,878991

231

Total liabilities(1)107,481

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

105,782

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

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

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

Financial Statements 2016 - AIRBUS ° 09 °1

Airbus Group SE — IFRS Consolidated Financial Statements

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

Note

(In € million)

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

2016

2015

995
5

2,696
2

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

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

(3,060)
72
(120)
731

(2,924)
78
(13)
127

(691)

(258)

182
192

1,731
34

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

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

3,483

(422)

6,677

7,099

34

10,160

6,677

34
6

10,143
17

6,590
87

9

■
■

■
■
■
■
■

■

■
■
■

6
6

■

■

■

7
6

34
34
32

32

Net increase (decrease) in cash and cash equivalents(1)Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

(1)

(1)

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

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

Financial Statements 2016 - AIRBUS ° 10 °

Financial Statements 2016
Airbus Group SE — IFRS Consolidated Financial Statements

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

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

CapitalShare
Note stock premium

AvailableCash
for-saleflow
Retained financial
assets hedges
earnings

Foreigncurrencytranslation Treasury
adjustments
shares

Noncontrolling Total
Total interests equity

Balance at
1 January 2015

785

4,500

2,989

670

(3,310)

1,435

(8)

7,061

18

7,079

Profit for the period

0

0

2,696

0

0

0

0

2,696

2

2,698

Other comprehensive
income

0

0

491

165

(3,554)278

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

0

0

3,187

165

(3,554)

278

0

76

(27)

49

Capital increase

32

3

115

0

0

0

0

0

118

24

142

Share-based payment(IFRS 2)

30

0

0

29

0

0

0

0

29

0

29

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

32

0

(945)

0

0

0

0

0

(945)

(3)

(948)

0

0

61

0

0

0

0

61

(5)

56

Equity transaction (IAS 27)
Equity component
convertible bond

32

0

0

53

0

0

0

0

53

0

53

Change in treasury shares

32

0

0

(3)

0

0

0

(484)

(487)

0

(487)

Cancellation of treasury
shares

(3)

(186)

0

0

0

0

189

0

0

0

Balance at
31 December 2015

785

3,484

6,316

835

(6,864)

1,713

(303)

5,966

7

5,973

Profit for the period

0

0

995

0

0

0

0

995

5

1,000

Other comprehensive
income00(1,383)

(65)

(289)

(175)

0 (1,912)

10(1,902)

Total comprehensive
income of the period

0

0

(388)

(65)

(289)

(175)

0

(917)

15

(902)

Capital increase

32

2

58

0

0

0

0

0

60

0

60

Share-based payment(IFRS 2)

30

0

0

31

0

0

0

0

31

0

31

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

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

(4)

0

0

38

0

0

0

0

38

(23)

15

0

0

(2)

0

0

0

(511)

(513)

0

(513)

Cancellation of treasury
shares

(14)

(797)

0

0

0

0

811

0

0

0

Balance at
31 December 2016

773

2,745

4,987

770 (7,153)

1,538(3) 3,657

(5)

3,652

Equity transaction (IAS 27)
Change in treasury shares

32

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

Financial Statements 2016 - AIRBUS ° 11 °1

Chapter

2

Financial Statements 2016 - AIRBUS ° 12 °

Financial Statements 2016

Notes to the IFRS
Consolidated Financial
Statements
2.1 Basis of Presentation

15

2.2 Airbus Structure20

2.3 Segment Information

26

2.4 Airbus Performance29

2.5 Operational Assets and Liabilities

35

2.6 Employees Costs and Benefits48

2.7 Capital Structure and Financial Instruments

61

2.8 Other Notes

79

2.9 Appendix “Simplified Airbus Structure Chart” 83

Financial Statements 2016 - AIRBUS ° 13 °2

Notes to the IFRS Consolidated Financial Statements

CONTENTS
2.1 Basis of Presentation

15

20.

Inventories

40

1.

The Company

15

21.

Trade Receivables and Trade Liabilities

40

2.

Signiﬁcant Accounting Policies

15

22.

3.

Key Estimates and Judgements

17

Provisions, Contingent Assets
and Contingent Liabilities

41

4.

Change in Accounting Policies
and Disclosures

18

Other Financial Assets andOther Financial Liabilities

43

2.2 Airbus Structure

20

5.

Scope of Consolidation

20

6.

Acquisitions and Disposals

20

7.

Investments Accounted for under
the Equity Method

23.
24.

Other Assets and Other Liabilities

44

25.

Sales Financing Transactions

44

2.6 Employees Costs and Benefits

48

26.

Number of Employees

48

23

27.

Personnel Expenses

48

Related Party Transactions

26

28.

Personnel-Related Provisions

48

29.

Post-Employment Beneﬁts

48

2.3 Segment Information

26

30.

Share-Based Payment

54

9.

Segment Information

27

31.

Remuneration

57

2.4 Airbus Performance

29

10.

Revenues, Cost of Sales and Gross Margin29

2.7 Capital Structure and Financial
Instruments

11.

Research and Development Expenses

30

32.

Total Equity

61

12.

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

33.

Capital Management

62

30

34.

Net Cash63

13.

Other Income and Other Expenses

30

35.

Information about Financial Instruments

66

14.

Total Finance Costs

31

15.

Income Tax

31

16.

Earnings per Share

34

8.

2.5 Operational Assets and Liabilities 35
17.

Intangible Assets

35

18.

Property, Plant and Equipment

37

19.

Other Investments and Other LongTerm Financial Assets

61

2.8 Other Notes

79

36.

Litigation and Claims

79

37.

Auditor Fees

82

38.

Events after the Reporting Date82

2.9 Appendix “Simplified Airbus
Structure Chart”

83

39

Financial Statements 2016 - AIRBUS ° 14 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.1 Basis of Presentation

2.1 Basis of Presentation
1.

The Company

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

the Annual General Meeting due to be held on 12 April 2017.
Therefore, the Company together with its subsidiaries will bereferred to as “Airbus” and no longer as “the Group”. As aconsequence, the segment formerly known as Airbus will now
be referred to as “Airbus Commercial Aircraft”; there are nochanges to the segment reporting in 2016. The Company islisted on the European stock exchanges in Paris, Frankfurt
am Main, Madrid, Barcelona, Valencia and Bilbao. The IFRS
Consolidated Financial Statements were authorised for issue
by the Company’s Board of Directors on 21 February 2017.
They are prepared and reported in euro (“€”) and all values arerounded to the nearest million appropriately.

Signiﬁcant Accounting Policies

Basis of preparation — Airbus’ Consolidated Financial
Statements are prepared in accordance with International
Financial Reporting Standards (“IFRS”), issued by theInternational Accounting Standards Board (“IASB”) as endorsedby the European Union (“EU”) and with Part 9 of Book 2 of theNetherlands Civil Code. When reference is made to IFRS, thisintends to be EU-IFRS. The Consolidated Financial Statements
have been prepared on a historical cost basis, unless otherwise
indicated.
Airbus describes the accounting policies applied in each of theindividual notes to the ﬁnancial statements and avoids repeating
the text of the standard, unless this is considered relevant tothe understanding of the note’s content. The most signiﬁcantaccounting policies are set out below:
Revenue recognition — Revenue is recognised to the extent
that it is probable that the economic beneﬁt arising from theordinary activities of Airbus will ﬂow to Airbus, that revenue
can be measured reliably and that the recognition criteria, foreach type of revenue-generating activity (sales of goods andservices and construction contracts), have been met. Revenue
is measured at the fair value of the consideration received or
receivable.
Revenues from the sale of commercial aircraft arerecognised when the aircraft is delivered, risks and rewards ofownership have been transferred to the customer and revenues
can be measured reliably except for launch customer contracts(see “Revenue from construction contracts”). Revenues fromsales of aircraft (and related cost of sales) always include theengine component. Customers will generally beneﬁ t from a
concession from the engine manufacturer, negotiated directly
between the customer and the engine manufacturer. Whenreliable information exists, the engine prices considered in ourrevenues (and cost of sales) reﬂect the effect of the concessions.
Revenue from construction contracts — Construction
contract accounting is applied for military programmes, space
projects as well as for launch customer contracts in the civil
aircraft business if customers have signiﬁcantly inﬂuenced thestructural design and technology of the aircraft type under thecontract. As a result of certain airline customers’ increasing
involvement in the development and production process of theA350 XWB programme, Airbus applies IAS 11 “Construction
contracts” to a ﬁxed number of launch customer contracts of theA350 XWB programme. When the outcome can be estimatedreliably, revenues and contract costs are recognised as revenue
and expensed respectively by reference to the percentage ofcompletion of the contract activity at the end of the reporting
period (“PoC method”). Contract revenues include the purchaseprice agreed with the customer considering escalation formulas,contract amendments and claims and penalties when assessed
as probable. The PoC method used depends on the contract.
The method is based either on inputs (i.e. costs incurred fordevelopment contracts) or outputs (i.e. contractually agreed
technical milestones, delivered units).

Financial Statements 2016 - AIRBUS ° 15 °2Notes to the IFRS Consolidated Financial Statements
2.1 Basis of Presentation

Whenever the outcome of a construction contract cannot be
estimated reliably – for example during the early stages of acontract or during the course of a contract’s completion –all related contract costs that are incurred are immediately
expensed and revenues are recognised only to the extent of
those costs being recoverable (the “early stage”, also called“zero proﬁt margin” method of accounting) (see “– Note 3: Key
Estimates and Judgements”).
Provision for loss making contracts — Airbus records
provisions for loss making contracts when it becomes probablethat the total contract costs will exceed total contract revenues.
Before a provision for loss making contracts is recorded, therelated assets under construction are written-off. Loss making
sales contracts are identiﬁed by monitoring the progress of thecontract as well as the underlying programme and updating
the estimate of contract costs, which requires signiﬁcant andcomplex assumptions, judgements and estimates related toachieving certain performance standards as well as estimates
involving warranty costs (see “– Note 3: Key Estimates andJudgements”, “– Note 10: Revenues, Cost of Sales and Gross
Margin” and “– Note 22: “Provisions, Contingent Assets andContingent Liabilities”).
Research and development expenses — Research anddevelopment activities can be either contracted or self-initiated.
The costs for contracted research and development activities,
carried out in the scope of externally ﬁnanced research anddevelopment contracts, are expensed when the related
revenues are recorded.
The costs for self-initiated research are expensed whenincurred. The costs for self-initiated development arecapitalised when:
the product or process is technically feasible and clearlydeﬁned (i.e. the critical design review is ﬁnalised);■adequate resources are available to successfully complete
the development;■
the beneﬁ ts from the assets are demonstrated (a market
exists or the internal usefulness is demonstrated) and thecosts attributable to the projects are reliably measured;■
Airbus intends to produce and market or use the developed
product or process and can demonstrate its proﬁtability.
■

Income tax credits granted for research and development
activities are deducted from corresponding expenses or from
capitalised amounts when earned.
Development costs which are capitalised, are recognised
either as intangible assets or, when the related development
activities lead to the construction of specialised tooling for
production (“jigs and tools”), or involve the design, construction
and testing of prototypes and models, as property, plant andequipment. Capitalised development costs are generally
amortised over the estimated number of units produced. If
the number of units produced cannot be estimated reliably,
capitalised development costs are amortised over theestimated useful life of the internally generated intangible asset.
Amortisation of capitalised development costs is recognisedin cost of sales.
Inventories are measured at the lower of acquisition cost
(generally the average cost) or manufacturing cost and net
realisable value. Manufacturing costs comprise all costs thatare directly attributable to the manufacturing process, such as
direct material and labour, and production related overheads(based on normal operating capacity and normal consumptionof material, labour and other production costs), including
depreciation charges. Net realisable value is the estimatedselling price in the ordinary course of the business less theestimated costs to complete the sale. Inventories include workin progress arising under construction contracts for whichrevenues are recognised based on output methods.
Transactions in foreign currency, i.e. transactions incurrencies other than the functional currency of an Airbus
entity, are translated into the functional currency at the foreignexchange rate prevailing at the transaction date. Monetary
assets and liabilities denominated in foreign currencies at theend of the reporting period are remeasured into the functional
currency at the exchange rate in effect at that date. Except
when deferred in equity as qualifying cash flow hedges(see “– Note 35: Information about Financial Instruments”),
these foreign exchange remeasurement gains and losses arerecognised, in line with the underlying item:in the proﬁ t before ﬁ nance costs and income taxes if thesubstance of the transaction is commercial (including sales
ﬁnancing transactions); and■in the ﬁnance costs for ﬁnancial transactions.
■Non-monetary assets and liabilities denominated in foreign
currencies that are stated at historical cost are translated
into functional currency at the foreign exchange rate ineffect at the date of the transaction. Translation differenceson non- monetary financial assets and liabilities that aremeasured at fair value are reported as part of the fair value
gain or loss. However, translation differences of non-monetaryfinancial assets measured at fair value and classified
as available-for- sale are included in Accumulated othercomprehensive income (“AOCI”).
Hedge accounting — Most of Airbus’ revenues aredenominated in US dollar (“US$”), while a major portion of its
costs are incurred in euro. Airbus is signiﬁcantly exposed to therisk of changes in US$/€ exchange rates. Furthermore, Airbus is
exposed, though to a much lesser extent, to foreign exchange
risk arising from costs incurred in currencies other than the euro
and to other market risks such as interest rate risk, commodity
price and equity price risk.
In order to manage and mitigate those risks, Airbus enters into
derivative contracts. Airbus applies cash ﬂow hedge accounting
to its derivative contracts whenever the relevant IFRS criteria
can be met. Hedge accounting ensures that derivative gains

Financial Statements 2016 - AIRBUS ° 16 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.1 Basis of Presentation

or losses are recognised in proﬁ t or loss (mainly as part of
the revenue) in the same period that the hedged items ortransactions affect proﬁt or loss.

which do not qualify for hedge accounting are accounted forat fair value through proﬁt and loss, any related gains or losses
being recognised in ﬁnancial result.

The major portion of Airbus’ derivative contracts is accounted forunder the cash ﬂow hedge model. The fair value hedge model isused only for certain interest rate derivatives. Derivative contracts

Airbus’ hedging strategies and hedge accounting policies
are described in more detail in “– Note 35: Information about
Financial Instruments”.

3.

Key Estimates and Judgements

The preparation of Airbus’ Consolidated Financial Statements
requires the use of estimates and assumptions. In preparing
these ﬁ nancial statements, management exercises its best
judgement based upon its experience and the circumstancesprevailing at that time. The estimates and assumptions are
based on available information and conditions at the end of
the ﬁnancial period presented and are reviewed on an ongoingbasis. Key estimates and judgements that have a signiﬁcant
inﬂuence on the amounts recognised in Airbus’ Consolidated
Financial Statements are mentioned below:

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

Revenue recognition on construction contracts — The
PoC method is used to recognise revenue under construction
contracts. This method places considerable importance on
accurate estimates at completion as well as on the extent ofprogress towards completion. For the determination of the
progress of the construction contract signiﬁ cant estimates
include total contract costs, remaining costs to completion,
total contract revenues, contract risks and other judgements.

Estimates and judgements are subject to change basedon new information as contracts and related programmes
progress. Furthermore, the complex design and manufacturing
processes of Airbus’ industry require challenging integrationand coordination along the supply chain including an ongoingassessment of suppliers’ assertions which may additionallyimpact the outcome of these monitoring processes(see “– Note 10: Revenues, Cost of Sales and Gross Margin”
and “– Note 22: Provisions, Contingent Assets and Contingent
Liabilities” for further information).

The management of the operating Divisions continually review
all estimates involved in such construction contracts and adjusts
them as necessary (see “– Note 21: Trade Receivables andTrade Liabilities” for further information).
Provisions — The determination of provisions, for example forcontract losses, warranty costs, restructuring measures andlegal proceedings is based on best available estimates. Lossmaking contracts are identiﬁed by monitoring the progress ofthe contract as well as the underlying programme and updating
the estimate of contract costs, which also requires signiﬁcantjudgement related to achieving certain performance standards
as well as estimates involving warranty costs. Depending on thesize and nature of Airbus’ contracts and related programmes,
the extent of assumptions, judgements and estimates in thesemonitoring processes differs. In particular, the introductionof commercial or military aircraft programmes (such as
the A350 XWB and the A400M) or major derivative aircraft
programmes particularly involves an increased level of estimatesand judgements associated with the expected development,
production and certiﬁ cation schedules and expected cost
components.

Employee beneﬁts — Airbus accounts for pension and otherpost-retirement beneﬁts in accordance with actuarial valuations.
These valuations rely on statistical and other factors in order toanticipate future events. The actuarial assumptions may differ
materially from actual developments due to changing market
and economic conditions and therefore result in a signiﬁcantchange in post-retirement employee beneﬁt obligations andthe related future expense (see “– Note 29: Post-Employment
Beneﬁts”).
Legal contingencies — Airbus companies are parties tolitigations related to a number of matters as described in“– Note 36: Litigation and Claims”. The outcome of these matters
may have a material effect on the ﬁnancial position, resultsof operations or cash ﬂows of Airbus. Management regularly
analyses current information about these matters and provides
provisions for probable cash outﬂows, including the estimateof legal expenses to resolve the matters. Internal and externallawyers are used for these assessments. In making the decision
regarding the need for provisions, management considers thedegree of probability of an unfavourable outcome and the ability
to make a sufﬁciently reliable estimate of the amount of loss.

Financial Statements 2016 - AIRBUS ° 17 °2

Notes to the IFRS Consolidated Financial Statements
2.1 Basis of Presentation

The ﬁling of a suit or formal assertion of a claim against Airbus
companies or the disclosure of any such suit or assertion, does
not automatically indicate that a provision may be appropriate.
Income taxes — Airbus operates and earns income in numerous
countries and is subject to changing tax laws in multiple
jurisdictions within these countries. Signiﬁcant judgements arenecessary in determining the worldwide income tax liabilities.
Although management believes that it has made reasonableestimates about the ﬁ nal outcome of tax uncertainties, noassurance can be given that the ﬁnal tax outcome of thesematters will be consistent with what is reﬂected in the historicalincome tax provisions. At each end of the reporting period,
Airbus assesses whether the realisation of future tax beneﬁts
is probable to recognise deferred tax assets. This assessment
requires the exercise of judgement on the part of managementwith respect to, among other things, beneﬁts that could be
realised from available tax strategies and future taxable income,as well as other positive and negative factors. The recorded

4.

amount of total deferred tax assets could be reduced, throughvaluation allowances recognition, if estimates of projected futuretaxable income and beneﬁts from available tax strategies arelowered, or if changes in current tax regulations are enacted
that impose restrictions on the timing or extent of Airbus’ ability
to utilise future tax beneﬁts. The basis for the recoverability testof deferred tax assets is the same as Airbus’ latest ﬁve year
operative planning also taking into account certain qualitative
aspects regarding the nature of the temporary differences.
Qualitative factors include but are not limited to an entity’s
history of planning accuracy, performance records, businessmodel, backlog, existence of long-term contracts as well as thenature of temporary differences (see “– Note 15: Income Tax”).
Other subjects that involve assumptions and estimates arefurther described in the respective notes (see “– Note 6:
Acquisitions and Disposals”, “– Note 17: Intangible Assets” and“– Note 21: Trade Receivables and Liabilities”.

Change in Accounting Policies and Disclosures

The accounting policies applied by Airbus for preparing its 2016 year-end Consolidated Financial Statements are the same asapplied for the previous year. Amendments and improvements to standards effective on 1 January 2016 have no impact on theConsolidated Financial Statements.

New, Revised or Amended IFRS Standards and Interpretations Issued but not yet Applied
A number of new or revised standards, amendments and improvements to standards as well as interpretations are not yet effective
for the year ended 31 December 2016 and have not been applied in preparing these Consolidated Financial Statements andearly adoption is not planned:
IASB effective date forannual reporting periods
beginning on or afterEndorsement status

IFRS 9 “Financial instruments”

1 January 2018

Endorsed

IFRS 15 “Revenue from contracts with customers”

1 January 2018

Endorsed

Clarifications to IFRS 15 “Revenue from contracts with customers”

1 January 2018

Not yet endorsedStandards and amendments

Amendments to IFRS 10 and IAS 28 “Sale or contribution of assets between
an investor and its associate or joint venture”-

Not yet endorsed

Amendment to IAS 7 “Disclosure initiative”

1 January 2017

Not yet endorsed

Amendments to IFRS 2 “Classification and measurement of share-based
payment transactions”

1 January 2018

Not yet endorsed

IFRIC 22 “Foreign currency transactions and advance consideration”

1 January 2018

Not yet endorsed

IFRS 16 “Leases”

1 January 2019

Not yet endorsed

IFRS 9 “Financial Instruments”
IFRS 9, published in July 2014, replaces the existing guidance in
IAS 39 “Financial instruments: recognition and measurement”.
IFRS 9 includes revised guidance on the classiﬁ cation andmeasurement of ﬁnancial instruments, including a new expectedcredit loss model for calculating impairment on ﬁnancial assets,

and the new general hedge accounting requirements. It also
carries forward the guidance on recognition and derecognitionof ﬁnancial instruments from IAS 39.
An assessment of the materiality of IFRS 9 impact on Airbus’
Financial Statements is currently being performed.

Financial Statements 2016 - AIRBUS ° 18 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.1 Basis of Presentation

IFRS 15 “Revenue from Contracts with Customers”
On May 2014, the IASB issued IFRS 15 which establishes asingle comprehensive framework for determining when torecognise revenue and how much revenue to recognise. IFRS 15
will replace the current revenue recognition standards IAS 18“Revenue” and IAS 11 “Construction contracts” and related
interpretations when it becomes effective.
Airbus has completed an initial qualitative assessment of thepotential impact of the adoption of IFRS 15 on its consolidated
ﬁnancial statements.
Revenue recognition should depict the transfer of control of thegoods and services to the customer. IFRS 15 will require Airbus to
identify the different performance obligations it assumes under acontract, and account for them separately based on their relative
stand-alone selling prices. For all contracts, including long-term
construction contracts currently accounted for under the PoC
method, Airbus will only be able to recognise revenue oncecertain conditions providing evidence that control of a goodor service has transferred to the customer are met. IFRS 15
introduces three criteria among which control is transferred overtime and as a result revenue could be recognised over time:(i) customer simultaneously receives and consumes thebenefits provided by the entity’s performance as the entity
performs;(ii) the entity’s performance creates or enhances an asset thatthe customer controls as the asset is created or enhanced;(iii) the entity’s performance does not create an asset withalternative use to the entity and the entity has enforceable
right to payment to performance completed to date.
The current signiﬁ cant accounting policies (see “– Note 2:
Signiﬁcant Accounting Policies”) will be impacted by IFRS 15,
as follows:
Sales of commercial aircraft – Revenue will be recognised
once the customer is controlling the aircraft. In most of thecases, the physical delivery of the aircraft results in the transfer
of control to the customer. Airbus does not expect any change
in the timing of the revenue recognition of commercial aircraft.

The assessment of the impact on the measurement of therevenue is still ongoing speciﬁcally on the concessions granted
by some of Airbus’ suppliers to Airbus’ customers and on
potential impact of signiﬁcant ﬁnancing component.
Construction contracts – This notion is not maintained under
IFRS 15. Airbus has been analysing its major construction
contracts (see “– Note 2: Signiﬁcant Accounting Policies”) andmay conclude for some of them that the criteria stated under
the criteria (ii) and/or (iii) criteria above are not fulﬁlled. In suchcase, revenue and related production costs will be recognised
at the delivery of each separate performance obligation insteadof over the contract using a single margin.
In certain circumstances, the standard considers work inprogress to be controlled by the customer, in which case it would
be inappropriate for an entity to recognise work in progressas an asset on its balance sheet. As a result, Airbus will use amethod which will reﬂect the over time transfer of control whensold assets have no alternative use to the ﬁnal customer. The
assessment of the quantitative impact of the implementationof the new revenue standard is still ongoing.
Transition – Airbus plans to adopt IFRS 15 in its consolidated
ﬁnancial statements for the year ending 31 December 2018,using the retrospective approach.
The implementation of IFRS 15 will generate more extensive
disclosures in the ﬁnancial statements (i.e. backlog based oncontract transaction price).

IFRS 16 “Leases”
IFRS 16 introduces a single, on-balance lease sheet accounting
model for lessees. A lessee recognises a right-of-use asset
representing its right to underlying asset and a lease liability
representing its obligation to make lease payments.
Airbus does not expect signiﬁcant change on current ﬁnancial
leases and on the current accounting recognition of its actual
leases when Airbus is acting as a lessor.
The assessment of the materiality of IFRS 16 impact on
operating leases on Airbus’ Financial Statements is currently
being performed.

Financial Statements 2016 - AIRBUS ° 19 °2Notes to the IFRS Consolidated Financial Statements
2.2 Airbus Structure

2.2 Airbus Structure
5.

Scope of Consolidation

Consolidation — Airbus’ Consolidated Financial Statements
include the ﬁnancial statements of Airbus Group SE and allmaterial subsidiaries controlled by Airbus. Airbus’ subsidiaries
prepare their ﬁnancial statements at the same reporting dateas Airbus’ Consolidated Financial Statements (see Appendix“Simpliﬁed Airbus Structure Chart”).
Subsidiaries are entities controlled by Airbus including so-called
Structured Entities (“SE”) which are created to accomplish anarrow and well-defined objective (see “– Note 25: Sales
Financing Transactions”). They are fully consolidated from thedate control commences to the date control ceases.
The assessment of the control of SE is performed in three steps.
In a ﬁrst step, Airbus identiﬁes the relevant activities of the SE(which may include managing lease receivables, managing thesale or re-lease at the end of the lease and managing the saleor re-lease on default) and in a second step, Airbus assesses
which activity is expected to have the most signiﬁcant impact
on the SE’s return. Finally, Airbus determines which party or
parties control this activity.
Airbus’ interests in equity-accounted investees compriseinvestments in associates and joint ventures. Investments inassociates and in joint ventures are accounted for using theequity method and are initially recognised at cost.
The ﬁnancial statements of Airbus’ investments in associates
and joint ventures are generally prepared for the same reporting
period as for the parent company. Adjustments are made where
necessary to bring the accounting policies and accounting
periods in line with those of Airbus.

PERIMETER OF CONSOLIDATION
31 December

Number of companies

2016

2015

Fully consolidated entities

244

262
53

Investments accounted for using the equity method:■in joint ventures52■

in associates

23

19

319

334

Total

For more details related to unconsolidated and consolidated SE, please see “– Note 25: Sales Financing Transactions”.

6.

Acquisitions and Disposals

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

using appropriate valuation techniques which are generally
based on a forecast of the total expected future net cash
flows.

The determination of the fair value of the acquired assets
and the assumed liabilities which are the basis for themeasurement of goodwill requires significant estimates.
Land, buildings and equipment are usually independently
appraised while marketable securities are valued at market
prices. If any intangible assets are identified, depending on
the type of intangible asset and the complexity of determining
its fair value, Airbus either consults with an independent
external valuation expert or develops the fair value internally,

These evaluations are linked closely to the assumptions madeby management regarding the future performance of theassets concerned and the discount rate applied.
Loss of control, loss of joint control, loss of significant
influence — Upon loss of control of a subsidiary, the assets
and liabilities and any components of Airbus’ equity related
to the subsidiary are derecognised. Any gain or loss arisingfrom the loss of control is recognised within other income
or other expenses in the Consolidated Income Statement.

Financial Statements 2016 - AIRBUS ° 20 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.2 Airbus Structure

If Airbus retains any interest in the previous subsidiary, suchinterest is measured at fair value at the date the control is lost.
Assets and liabilities of a material subsidiary for which a loss ofcontrol is highly probable are classiﬁed as assets and liabilities
held for sale when Airbus has received sufﬁ cient evidence
that the loss of control will occur in the 12 months after theclassiﬁcation. These assets and liabilities are presented after
elimination of intercompany transactions.
When the loss of signiﬁcant inﬂuence or the loss of joint control
of an investment accounted under the equity method is highly
probable and will occur in the coming 12 months, this associate
or joint venture is classiﬁed as an asset held for sale.
Sale of investment in an associate or joint venture — Anygain or loss arising from the disposal of investment accounted
for under the equity method is recognised within share of proﬁt
from investments accounted for under the equity method.

6.1

Acquisitions

On 9 March 2016, Airbus Commercial Aircraft acquired 100% of
the shares of the Navtech Inc. Group (“Navtech”), a leading
global provider of ﬂight operations solutions, and has recognised
goodwill of € 104 million. The one year window period for thecompletion of the purchase price allocation will end on 9 March2017.
Navtech provides aviation services with a suite of flight
operations products, aeronautical charts, navigation datasolutions, ﬂight planning, aircraft performance and crew planningsolutions. Navtech generates annual revenues of approximately
US$ 40 million and employs over 250 employees, mainly basedin Waterloo (Canada) and in Hersham and Cardiff (UK).
There were no material acquisitions in 2015.

6.2

Disposals

On 17 June 2015, Airbus Commercial Aircraft signed anagreement with Singapore-based ST Aerospace Ltd. (“STA”)
to offer passenger-to-freighter (“P2F”) conversion solutions for
its A320 and A321 aircraft. Elbe Flugzeugwerke’s (“EFW”),
Dresden (Germany), assets and liabilities were classiﬁed as
disposal groups held for sale as of 31 December 2015. On
4 January 2016, STA acquired an additional 20% of the sharesby way of a contribution in kind and a capital increase to EFW,
and consequently, Airbus lost the control of EFW. Airbus
retains 45% of the shares of EFW with signiﬁcant inﬂuence.
Airbus Commercial Aircraft has recognised in other income a€ 19 million gain during the year.
On 2 June 2016, Airbus DS Holding SAS (France) and Astrium
International Holdings B.V. (Netherlands), as beneﬁciaries, anda French private equity ﬁrm, Apax Partners, closed the saleof the business communications entities. The assets andliabilities of these entities were previously classiﬁed as disposalgroups held for sale. The gain resulting from this transaction of€ 146 million was recognised in other income (reported in Airbus
Defence and Space Division).
On 25 March 2015, Airbus sold 1,612,407 Dassault Aviation
shares, corresponding to 17.5% of the Dassault Aviation’s sharecapital, of which 460,688 shares (5%) were sold to Dassault
Aviation for € 980 per share and 1,151,719 shares (12.5%) weresold to institutional investors at € 1,030 per share. On 14 April
2015, Airbus sold an additional 115,172 shares (1.25%) toinstitutional investors at € 1,030 per share.
As of 31 March 2015, the remaining equity investment in
Dassault Aviation with the carrying amount of € 1,320 million
was classified as an asset held for sale (reported in“Other / HQ / Conso.”) as Airbus intends to pursue market
opportunities to sell the remainder of this investment. Prior
to the reclassification, the carrying amount included theAirbus interest in Dassault Aviation’s ﬁrst quarter 2015 result
and a negative catch-up on 2014 of € -119 million.
In 2015, Airbus recognised € 748 million (€ 697 million in share of
proﬁt from investments accounted for under the equity methodand € 51 million in other income) representing the net capitalgain on partial disposal after transaction costs.
On 14 June 2016, Airbus Group SAS sold approximately
1.33 million shares in Dassault Aviation, around 62% toinstitutional investors and 38% to Dassault Aviation, at a
price of € 950 per share. The total gain on these transactions
amounted to € 528 million recognised in other income (reported
in “Other / HQ / Conso.”).
The remaining investment, representing 10% of Dassault
Aviation’s share capital, is now classiﬁed as other investments
and measured at fair value (see “– Note 19: Other Investments
and Other Long-Term Financial Assets”). The resulting gainof € 340 million is recognised in other income (reported in“Other / HQ /Conso.”). Previously, the investment in Dassault
Aviation was classiﬁed as asset held for sale.
The Company also issued bonds exchangeable in Dassault
Aviation shares (see “– Note 34: Net Cash”). In the event of
exchange in full of the bonds, Airbus will have fully disposed of
its Dassault Aviation stake.
On 14 January 2015, Airbus and Safran completed the ﬁrst phaseof the integration process of Airbus Safran Launchers (“ASL”)
enabling the entity to become operational. Coordination andprogramme management of the civil activities of the launcher
business as well as relevant participations were transferred
to ASL.
Airbus received 50% of issued shares in ASL initially recognisedat € 56 million as at-equity investment. The loss of control inthe business resulted in a capital gain of € 49 million, which isreported in Airbus Defence and Space Division in other income.

Financial Statements 2016 - AIRBUS ° 21 °2

Notes to the IFRS Consolidated Financial Statements
2.2 Airbus Structure

On 16 June 2015, ASL, the French state and the Centre
National d’Études Spatiales (“CNES”), the French space
agency, reached an agreement to transfer CNES’s stake in
Arianespace to ASL, which was authorised on 20 July 2016
by the European Commission. On 12 August 2015, ASL wasawarded the Ariane 6 development contract by the European
Space Agency (“ESA”).

Airbus and Safran ﬁnalised the respective contribution balance
sheet in the third quarter 2016 in alignment with the provisionof the Master Agreement. On 31 December 2016, the transferof the 34.68% of CNES’s stake in Arianespace to ASL wascompleted. ASL holds 74% of the shares of Arianespace. Thischange in the shareholder mix at Arianespace ﬁ nalises thecreation of a new launcher governance in Europe.

On 20 May 2016, Airbus and Safran signed the second phaseof the Master Agreement enabling the joint venture to be
fully equipped for all design, development, production andcommercial activities related to civil and military launchers andassociated propulsion systems. During the second phase,
Safran and Airbus integrated within the joint venture all theremaining contracts, assets and industrial resources, related
to space launchers and associated propulsion systems.
On 30 June 2016, Airbus contributed the second phaseassets and liabilities in exchange for shares issued by Airbus
Safran Launchers Holding, and also sold additional assets
in exchange for € 750 million in cash. Airbus participation in
ASL accounted for at-equity amounts to € 677 million. The
loss of control in the business resulted in a capital gain of€ 1,175 million recognised in other income (reported in Airbus
Defence and Space Division).

The allocation of the purchase price is currently ongoing at
ASL level and is expected to be ﬁnalised during the one year
window period ending on 30 June 2017. As a result of thispreliminary allocation, € 7 million depreciation expense net oftax was recognised during the year 2016.

6.3

On 20 August 2015, Airbus Defence and Space GmbH,
Rohde & Schwarz GmbH und Co. KG, Thales Electronic
Systems GmbH and Northrop Grumman Litef GmbH soldtheir shares in Elektroniksystem und Logistik GmbH (“ESG”)
to E-Sicherheitsbeteiligungen GmbH. Airbus recognised a€ 59 million gain in share of proﬁt from investments accounted
for under the equity method, which is reported in Airbus Defence
and Space Division. The assets and liabilities of this company
were classiﬁed as held for sale as at 31 December 2014.
On 1 October 2015, Airbus sold its shares in its fully owned
subsidiary Cimpa SAS to Sopra Steria Group. The € 72 million
gain on this disposal is recognised in other income.

Assets and Disposal Groups Classiﬁed as Held for Sale

As of 31 December 2016, Airbus accounted for assets anddisposal groups of assets classified as held for sale in theamount of € 1,148 million (2015: € 1,779 million). Disposal groupof liabilities classified as held for sale as of 31 December
2016 amount to € 991 million (2015: € 231 million). The assets
and disposal groups classiﬁed as held for sale are related tothe defence electronics companies and Atlas Elektronik GmbH(“Atlas”).

business, a leading global provider of mission-critical sensors,
integrated systems and services for premium defence andsecurity applications mainly based in Ulm (Germany). Suchdivestment is part of the strategic review of the Airbus Defence
and Space business portfolio. The transaction is expected to
be closed within 12 months of the date of the agreement. The
assets and liabilities relative to this disposal group have beenclassiﬁed as held for sale since 31 March 2016.

On 18 March 2016, Airbus reached an agreement with afﬁliates
of KKR & Co. L.P. (the acquirer) to sell its defence electronics

On 20 December 2016, Airbus signed a sale purchase agreement
to sell to Thyssen Krupp its 49% stake in Atlas.

The assets and disposal group of assets and liabilities classiﬁed as held for sale consist of:
31 December

2016

2015

Non-current financial assets

13

1,253

Other non-current assets

354

269

Inventory

428

75

Trade receivables

247

84

Other assets

89

11

Cash and cash equivalents

17

87

1,148

1,779

559

69

Non-current financial liabilities

60

Trade liabilities

85

0

Other liabilities

341

162

Disposal group of liabilities classified as held for sale

991

231

(In € million)

Assets and disposal group of assets classified as held for sale
Provisions

Financial Statements 2016 - AIRBUS ° 22 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.2 Airbus Structure

6.4

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

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

2016

2015

Total selling price received by cash and cash equivalents

2,273

277

Cash and cash equivalents included in the disposed subsidiaries

Total

(15)

(23)

2,258

254

The aggregate cash ﬂow from disposals of subsidiaries and assets and disposals groups classiﬁed as held for sales in 2016 results
mainly from the completion of the creation of ASL, the sale of Dassault Aviation shares and the sale of business communication
entities.
The aggregate cash ﬂow from disposals of subsidiaries and assets and disposals groups classiﬁed as held for sales in 2015 results
mainly from the sale of CIMPA, the partial sale of Dassault Aviation share and the completion of the ﬁrst phase of the creation of ASL.

7.

Investments Accounted for under the Equity Method

31 December(In € million)

2016

2015

Investments in joint ventures

1,437

1,264

Investments in associates

Investments accounted for under the equity method

7.1

171

62

1,608

1,326

Investments in Joint Ventures

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

Airbus’ interest in equity on investee at beginning of the year
(1)

2016

2015

1,264

885

595

179

Result from continuing operations attributable to Airbus

182

243

Other comprehensive income attributable to Airbus

(93)

46

Dividends received during the year

(195)

(89)

Reclassification as asset held for sale

(198)

0

Deconsolidation of investment

(112)

0

New joint ventures

(6)

0

1,437

1,264

OthersCarrying amount of the investment at 31 December(1) In 2016, it includes the impact of the completion of the second phase of the ASL creation (see “– Note 6: Acquisitions and Disposals”).

Airbus’ individually material joint ventures are ASL, Paris (France), MBDA S.A.S., Paris (France), and GIE ATR, Blagnac (France),as parent companies of their respective groups. These joint venture companies are not publicly listed.

Financial Statements 2016 - AIRBUS ° 23 °2

Notes to the IFRS Consolidated Financial Statements
2.2 Airbus Structure

ASL is a 50% joint venture between Airbus and Safran. ASL isthe head company in a group comprising several subsidiaries
and afﬁliates, all leading companies in their ﬁelds, such as: APP,
Arianespace, Cilas, Eurockot, Eurocryospace, Europropulsion,
Nuclétudes, Pyroalliance, Regulus, Sodern and Starsem.
ASL inherits a rich portfolio of products and services, enabling
it to deliver innovative and competitive solutions to numerous
customers around the world.

GIE ATR is manufacturing advanced turboprop aircraft. It isa 50% joint venture between Alenia Aermacchi, a Leonardo(formerly Finmeccanica) group company and Airbus. Both Alenia
Aermacchi and Airbus provide airframes which are assembled
by GIE ATR in France. The members of ATR GIE are legally
entitled to the whole beneﬁts and are liable for the commitmentsof the Company. GIE ATR is obliged to transfer its cash to eachmember of the joint venture.

Airbus held a 37.5% stake in MBDA at 31 December 2016 and2015, which is a joint venture between Airbus, BAE Systems
and Leonardo (formerly Finmeccanica). MBDA offers missile
systems capabilities that cover the whole range of solutions
for air dominance, ground-based air defence and maritime
superiority, as well as advanced technological solutions forbattleﬁeld engagement.

Atlas was a joint venture of Thyssen Krupp and Airbus (which at
31 December 2015 held a 49% stake). As of 31 December 2015,
it was also considered an individually material joint venture.
Following the signature of the sale purchase agreement, itsremaining equity investment has been reclassiﬁed as asset held
for sale (see “– Note 6: Acquisitions and Disposals”).

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

MBDA

GIE ATR(In € million)

2016

2015

2016

2015

2016

2015

Revenues

2,227

1,215

2,955

2,875

1,651

1,760

(35)

0

(92)

(86)

(18)

(50)

Interest income

2

0

8

2

0

1

Interest expense

(2)

0

(3)

(15)

(3)

(2)

Depreciation and amortisation

Income tax expense

(40)

5

(66)

(74)

(3)

0

Profit from continuing operations

102

(8)

213

218

331

340

Other comprehensive income

(4)

0

(215)

65

14

16

356

Total comprehensive income (100%)

98

(8)

(2)

283

345

Non-current assets

5,324

229

2,339

2,010

147

94

Current assets

5,518

1,652

6,425

5,384

814

639

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

797

21

1,890

1,420

7

5

526

11

1,357

1,249

98

111

35

0

7

9

0

0

6,511

1,669

7,119

5,811

407

159

333

10

122

26

0

0

Total equity (100%)

3,805

201

288

334

456

463

Equity attributable to equity owners of the parent

3,797

201

288

334

456

463

8

0

0

0

0

0

Non-controlling interests

ASL

MBDA

(In € million)

2016

2015

Airbus’ interest in equity on investee

1,899

101

255

0

(1,479)(49)

Goodwill
PPA adjustments, net of tax

2016

GIE ATR

2015

2016

2015

108

125

228

232

282

282

0

0

0

0

0

0

Fair value adjustments and modifications
for differences in accounting policies

0

0

(14)

(13)

0

0

Elimination of downstream inventory

2

(1)

0

0

(4)

0

677

51

376

394

224

232

Carrying amount of the investment
at 31 December

Financial Statements 2016 - AIRBUS ° 24 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.2 Airbus Structure

The development of these investments is as follows:
ASL(In € million)

2016

MBDA

GIE ATR

2015

2016

2015

2016

2015

Airbus’ interest in equity on investee at beginningof the year

51

0

394

306

232

118

Result from continuing operations attributable to Airbus

38

(4)

80

84

166

170

Other comprehensive income attributable to Airbus

(2)

0

(82)

28

7

8

Dividends received during the year

0

0

(16)

(24)

(177)

(64)

590

55

0

0

0

0

0

0

0

0

(4)

0

677

51

376

394

224

232

Changes in consolidation
OthersCarrying amount of the investment
at 31 December

Airbus’ share of contingent liabilities of MBDA as of 31 December 2016 is € 455 million (2015: € 399 million).

7.2

Investments in Associates

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

2016

2015(1)
77

Airbus’ interest in equity on investee at beginning of the year

62

Result from continuing operations attributable to Airbus

49

40

Other comprehensive income attributable to Airbus

(27)

(29)

Dividends received during the year

(10)

(10)

Disposal of shares

(3)

(16)

Changes in consolidation(2)1000Carrying amount of the investment at 31 December

171

62

(1) In 2015, excluding the individually material investment in Dassault Aviation, reclassified during the year to assets held for sale (see “– Note 6: Acquisitions and Disposals”).
(2) In 2016, it includes the change in consolidation method of EFW.

The cumulative unrecognised comprehensive loss amounts for these associates to € -108 million and € -117 million as of
31 December 2016 and 2015, respectively (thereof € +9 million for the period).

2

Financial Statements 2016 - AIRBUS ° 25 °Notes to the IFRS Consolidated Financial Statements
2.3 Segment Information

8.

Related Party Transactions(In € million)

Sales of goods
and services
and otherincomePurchases ofgoods andservices andother expense

Receivables
due as of
31 December

Payablesdue as of
31 December

Otherliabilities /Loans
received as of
31 December

2016
Total transactions with associates
Total transactions with joint ventures

11

55

4

9

85

1,904

488

1,213

203

815

2015
Total transactions with associates
Total transactions with joint ventures

7

40

96

4

79

1,771

121

1,850

14

544

Transactions with unconsolidated subsidiaries are immaterial
to Airbus’ Consolidated Financial Statements.
A part of the shares in Dassault Aviation was sold back to
Dassault Aviation during 2016 and 2015 (for more details, see“– Note 6: Acquisitions and Disposals”).
As of 31 December 2016, Airbus granted guarantees of€ 152 million to Air Tanker group in the UK (2015: € 503 million).

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

2.3 Segment Information
Airbus operates in three reportable segments which reﬂect theinternal organisational and management structure according to
the nature of the products and services provided.
Airbus Commercial Aircraf t (formerly Airbus) —Development, manufacturing, marketing and sale ofcommercial jet aircraft of more than 100 seats; aircraft
conversion and related services; development, manufacturing,marketing and sale of regional turboprop aircraft and aircraftcomponents.
■
Airbus Helicopters — Development, manufacturing,marketing and sale of civil and military helicopters; provisionof helicopter related services.
■■

Airbus Defence and Space — Military combat aircraft
and training aircraft; provision of defence electronics and of
global security market solutions such as integrated systems
for global border security and secure communications
solutions and logistics; training, testing, engineering and otherrelated services; development, manufacturing, marketingand sale of missiles systems; development, manufacturing,marketing and sale of satellites, orbital infrastructures andlaunchers; provision of space related services; development,
manufacturing, marketing and sale of military transport aircraft
and special mission aircraft and related services.

Financial Statements 2016 - AIRBUS ° 26 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.3 Segment Information

9.

Segment Information

The following table presents information with respect to Airbus’ business segments. As a rule, inter-segment transfers are carriedout on an arm’s length basis. Inter-segment sales predominantly take place between Airbus Commercial Aircraft and Airbus
Defence and Space and between Airbus Helicopters and Airbus Commercial Aircraft. The holding function of Airbus, the Airbus
Group Bank and other activities not allocable to the reportable segments, combined together with consolidation effects, aredisclosed in the column “Other / HQ / Conso.”.
Airbus uses EBIT as a key indicator of its economic performance.
Business segment information for the year ended the 31 December 2016 is as follows:(In € million)

Total revenues
Internal revenues

AirbusCommercial
Airbus
Aircraft Helicopters
49,237

6,652

AirbusDefenceTotal
and Space segments
11,85467,743

Other /
HQ /Conso.

Consolidated

57

67,800

(646)

(448)

(118)

(1,212)(7)(1,219)

Revenues

48,591

6,204

11,736

66,531

50

66,581

Profit before finance costs
and income taxes (EBIT)

1,543

308

(93)

1,758

500

2,258

thereof:■depreciation and amortisation(1,568)

(183)

(483)

(2,234)(60)(2,294)■

research and development expenses(2,147)

(327)

(332)

(2,806)(164)(2,970)■■share of profit from investments
accounted for under the equity method
additions to other provisions

185

6

41

232

(1)

231

1,395

693

3,700

5,788

311

6,099

Interest result(275)

Other financial result(692)

Income taxes(291)

Profit for the period

1,000Business segment information for the year ended the 31 December 2015 is as follows:(In € million)

AirbusCommercial
Airbus
Aircraft Helicopters

AirbusDefenceTotal
and Space segments

Other /
HQ /Conso.

Consolidated

Total revenues

45,854

6,786

13,08065,720296

66,016

Internal revenues

(764)

(633)

(163)

(1,560)(6)(1,566)

Revenues

45,0906,153

12,91764,160290

64,450

Profit before finance costs
and income taxes (EBIT)

2,287

427

736

3,450

612

4,062

thereof:■depreciation and amortisation(1,608)

(159)

(654)

(2,421)(45)(2,466)■

research and development expenses(2,702)

(325)

(344)

(3,371)(89)(3,460)■■share of profit from investments
accounted for under the equity method

179

4

159

342

674

1,016

additions to other provisions

897

616

2,009

3,522

263

3,785

Interest result(368)

Other financial result(319)

Income taxes(677)

Profit for the period

2,698

Financial Statements 2016 - AIRBUS ° 27 °2

Notes to the IFRS Consolidated Financial Statements
2.3 Segment Information

Segment capital expenditures(In € million)

2016

2015

Airbus Commercial Aircraft

2,304

2,001

Airbus Helicopters

236

280

Airbus Defence and Space

469

552

Other / HQ / Conso.

51

91

3,060

2,924

Total capital expenditures(1)(1) Excluding expenditure for leased assets.

31 December

Segment assets(In € million)

2016

2015

Airbus Commercial Aircraft

51,45747,857

Airbus Helicopters

10,104

10,172

Airbus Defence and Space

16,457

19,388Other / HQ / Conso.

1,709

738

79,727

78,155

Total segment assets
UnallocatedDeferred and current tax assets

8,667

7,619

Securities

11,448

11,639Cash and cash equivalents(1)10,143

6,590

Assets classified as held for sale

1,148

1,779

111,133

105,782

Total assets(1) Investments made by Airbus Group SE in certain securities and trade liabilities have been reassessed and reclassified. Previous year figures are adjusted by € -899 million.

The revenues by geographical areas are disclosed in “– Note 10: Revenues, Cost of Sales and Gross Margin”. The property, plantand equipment by geographical areas is disclosed in “– Note 18: Property, Plant and Equipment”.

Financial Statements 2016 - AIRBUS ° 28 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.4 Airbus Performance

2.4 Airbus Performance
10. Revenues, Cost of Sales and Gross Margin

Revenues
Revenues are mainly comprised of sales of goods and services, as well as revenues associated with construction contracts
accounted for under the PoC method, contracted research and development and customer ﬁnancing.
2016(In € million)

2015

Revenues from construction contracts

10,956

9,860

Other revenues(1)55,62554,590Total(2)66,58164,450

9,045

8,328

thereof service revenues including sale of spare parts(1) Includes mainly revenues from sales of commercial aircraft recognised under IAS 18.
(2) For more details, please see “– Note 9: Segment Information”.

Revenues increased by 3.3%, mainly at Airbus Commercial
Aircraft, mostly driven by a positive volume effect and afavourable foreign exchange impact. Deliveries increased to
688 aircraft (635 in the previous year). Airbus Defence andSpace revenues decreased mainly due to perimeter changes for
defence activities (see “– Note 6: Acquisitions and Disposals”)
and include revenues related to the A400M programme of€ 1,702 million (2015: € 1,648 million).

Revenues by geographical areas based on the location of the customer are as follows:(In € million)

2016

2015

Europe21,377

20,060Asia – Pacific

21,26618,755

North America

8,931

10,217

Middle East

8,464

8,612

Latin America

4,925

4,096

Other countries

1,618

2,710

66,58164,450

Total

Cost of Sales and Gross Margin
Cost of sales increased by 10.3%. The increase was primarily
due to business growth at Airbus Commercial Aircraft, the higher
net charge related to A400M programme for € 2,210 million(in 2015: € 290 million) and to A350 XWB programme for€ 385 million (in 2015: € 0 million).
Inventories recognised as an expense during the period amountto € 47,835 million (in 2015: € 45,289 million).
The gross margin decreased by € -3,587 million to € 5,264 million
compared to € 8,851 million in 2015, resulting in a gross marginrate decrease from 13.7% to 7.9%. Included are net charges
recorded in 2016, as mentioned above.

In 2016, Airbus Commercial Aircraft has delivered 49 A350 XWB
aircraft, including to 7 new customers.
To reflect expected lower revenues escalation, increased
learning curve costs and delivery phasing, Airbus Commercial
Aircraft recorded a net charge of € 385 million on A350 XWB
loss making contracts in the second quarter 2016.
The industrial ramp-up is progressing and associated risks
continue to be closely monitored in line with the schedule, aircraft
performance and overall cost envelope, as per customer’scommitment. Despite the progress made, challenges remain
with the ramp-up acceleration and recurring costs convergence.

Financial Statements 2016 - AIRBUS ° 29 °2

Notes to the IFRS Consolidated Financial Statements
2.4 Airbus Performance

17 A400M aircraft were delivered during 2016. Acceptanceactivities of one additional aircraft were ﬁnalised at the end of
December 2016, but transfer of title only took place on 1 January
2017 (corresponding revenues will be recognised in 2017). In
total, 38 aircraft have now been delivered to the customer asof 31 December 2016.
Industrial efﬁciency and military capabilities remain a challenge
for the A400M programme and furthermore, the EASA
Airworthiness Directive, linked to the Propeller Gear Box (“PGB”)
on the engine, and various PGB quality issues have strongly
impacted the customer delivery programme.
The ﬁrst major development milestone of the mission capability
roadmap deﬁned with customers earlier in 2016 was successfullycompleted in June with certiﬁcation and delivery of “MSN 33”,
the ninth aircraft for the French customer, however achievementof contractual technical capabilities remains challenging.
In the ﬁrst half-year 2016, management reviewed the programmeevolution and estimated contract result incorporating theimplications at this time of the revised engine programme
and its associated recovery plan, technical issues related tothe aluminium alloy used for some parts within the aircraft,recurring cost convergence issues, an updated assumptionof export orders during the launch contract phase and ﬁnallysome delays, escalation and cost overruns in the development
programme. During the second half-year 2016, the programme
encountered further challenges to meet military capabilities andmanagement reassessed the industrial cost of the programme,
now including an estimation of the commercial exposure. As aresult of these reviews, Airbus Defence and Space has recorded
a charge of € 2,210 million in 2016 (thereof € 1,026 million in
the first half-year 2016). This represents the current best
management assessment. Challenges remain on meeting
contractual capabilities, securing sufﬁcient export orders intime, cost reduction and commercial exposure, which could
be signiﬁcant. Given the order of magnitude on the cumulative
programme loss, the Board of Directors has mandated the
management to re-engage with customers to cap the remaining
exposure.
The A400M contractual SOC 1, SOC 1.5 and SOC 2 milestones
remain to be achieved. SOC 1 fell due end October 2013,
SOC 1.5 fell due end December 2014, and SOC 2 end of
December 2015. The associated termination rights became
exercisable by OCCAR on 1 November 2014, 1 January 2016,
and 1 January 2017, respectively. Management judges that
it is highly unlikely that any of these termination rights will be
exercised.

11. Research and Development Expenses

Research and development expenses decreased by 14.2% primarily reﬂecting R&D activities on the A350 XWB programme at
Airbus Commercial Aircraft. In addition, an amount of € 311 million of development costs has been capitalised, mainly related to
the H160 and A350 XWB programmes.

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

2016(In € million)

2015

Share of profit from investments in joint ventures

182

243

Share of profit from investments in associates(1)

49

773

Share of profit from investments accounted for under the equity method

231

1,016

Other income from investments

2154(1) In 2015, it includes a significant impact from the investment in Dassault Aviation. For more details, please see “– Note 6: Acquisitions and Disposals”.

Financial Statements 2016 - AIRBUS ° 30 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.4 Airbus Performance

13. Other Income and Other Expenses

Other income increased by € +2,215 million. This increaseis mainly due to the capital gain of € 1,175 million following
the completion of the creation of ASL, the capital gain of€ 146 million from the sale of the business communications
entities, the capital gain from the sale of Dassault Aviation sharesof € 528 million and the revaluation at fair value of the remaining
investment in Dassault Aviation for € 340 million (see “– Note 6:
Acquisitions and Disposals”).
Other expenses increased to € -254 million compared to€ -222 million in 2015.

14. Total Finance Costs

Interest income derived from Airbus’ asset management and lending activities is recognised as interest accrues, using theeffective interest rate method.
(In € million)

2016

2015

Interest on European Government refundable advances

(212)

(280)

Others

(63)

(88)

(275)

(368)
(119)

Total interest result(1)Change in fair value measurement of financial instruments(370)

Foreign exchange translation of monetary items

(220)

(74)

Unwinding of discounted provisions

(65)

(101)

Others(37)(25)

Total other financial result

(692)

(319)

Total

(967)

(687)

(1) In 2016, the total interest income amounts to € 247 million (in 2015: € 183 million) for financial assets which are not measured at fair value through profit or loss. For financial
liabilities which are not measured at fair value through profit or loss € -522 million (in 2015: € -551 million) are recognised as total interest expenses. Both amounts are calculated
by using the effective interest method.

15. Income Tax

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

2016

2015

Current tax expense

(753)

(661)

Deferred tax benefit (expense)

462

(16)

(291)

(677)

Total

In 2016, € 15 million of current tax income (in 2015: € 42 million) and € -13 million of deferred tax expense (in 2015: € -56 million)
relate to prior years.
Main income tax rates and main changes impacting Airbus:
Countries

2016

2017

> 2017

Netherlands

25.00%

25.00%

25.00%

France(1)34.43%

34.43%

34.43%

Germany

30.00%

30.00%

30.00%

Spain

25.00%

25.00%

25.00%

UK(2)20.00%

19.00%

18.00%(1) A tax law has been enacted in December 2016 changing the rate for income taxes from 34.43% to 28.92% as of 1 January 2020.
(2) 20% from 1 April 2015 until 31 March 2017, 19% from 1 April 2017 until 31 March 2020 and 17% from 1 April 2020.

Financial Statements 2016 - AIRBUS ° 31 °2

Notes to the IFRS Consolidated Financial Statements
2.4 Airbus Performance

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

2016

Profit before income taxes

1,291

2015
3,375

* Corporate income tax rate

25.0%

25.0%

Expected (expense) for income taxes

(323)

(844)

Effects from tax rate differentials

(194)

(329)

Income from investments / associates(1)

580

412

Tax credit

73

66

(117)

(90)

Change in valuation allowances

(102)

96

Non-deductible expenses and tax-free income

(208)

12

Reported tax (expense)

(291)

(677)

Change of tax rate(1) In 2016, it includes the impact of the completion of the second phase of the ASL creation and the impact from the sale of shares of Dassault Aviation, both subject to specifictax treatment. In 2015, it includes the impact of the partial sale of shares of Dassault Aviation subject to specific tax treatment. For more details, see “– Note 6: Acquisitions andDisposals”.

Changes in valuation allowances represent reassessments of the recoverability of deferred tax assets based on future taxable
proﬁts of certain companies mainly for Airbus Commercial Aircraft and Airbus Defence and Space in Germany. The amount ofchange in valuation allowances of € -102 million in 2016 (2015: € 96 million) excludes a positive impact of € 2 million (2015: € 1 million)
from a change in tax rates which is presented in the line “change of tax rate”.
As Airbus controls the timing of the reversal of temporary
differences associated with its subsidiaries (usually referred to as“outside basis differences”) arising from yet undistributed proﬁts
and changes in foreign exchange rates, it does not recognisea deferred tax liability. For temporary differences arising frominvestments in associates Airbus recognises deferred tax
liabilities. The rate used reﬂects the assumptions that thesedifferences will be recovered from dividend distribution unlessa management resolution for the divestment of the investment
exists at the closing date. For joint ventures, Airbus assesses its
ability to control the distribution of dividends based on existing
shareholder agreements and recognises deferred tax liabilities
accordingly.

As of 31 December 2016, the aggregate amount of temporary
differences associated with investments in subsidiaries,
branches and associates and interests in joint arrangements,
for which deferred tax liabilities have not been recognised,amounts to € 104 million.
Companies in deﬁ cit situations in two or more subsequent
years recorded a total deferred tax asset balance of € 1 million(in 2015: € 52 million). Assessments show that these deferred
tax assets will be recovered in future through either (i) own
projected proﬁts, or (ii) proﬁts of other companies integrated in
the same ﬁscal group (“régime d’intégration fiscale” in France,“steuerliche Organschaft” in Germany) or (iii) via the “losssurrender-agreement” in the UK.

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

NOL

FranceGermany

Spain

UK

Other
countries

31 December
2016

31 December
2015

958

1,565

307

1,809

270

4,909

6,503

Trade tax loss carry forwards

0

1,510

0

0

0

1,510

1,955

Tax credit carry forwards

0

0

392

54

14

460

323

Tax effect

330

462

470

361

83

1,706

1,849

Valuation allowances

(9)

(268)

(149)

(51)

(9)

(486)

(423)

321

194

321

310

74

1,220

1,426

Deferred tax assets on NOL’s
and tax credit carry forwards

NOLs, capital losses and trade tax loss carry forwards are indeﬁnitely usable in France, Germany, the UK and Spain. In Spain,
R&D tax credit carry forwards still expire after 18 years. The ﬁrst tranche of tax credit carry forwards (€ 1 million) will expire in
2020. No deferred tax has been recognised for this tranche.

Financial Statements 2016 - AIRBUS ° 32 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.4 Airbus Performance

Roll forward of deferred taxes:(In € million)

2016

2015

Net deferred tax asset at beginning of the year

5,559

4,587

Deferred tax benefit (expense) in income statement

462

(16)

Deferred tax recognised directly in AOCI (IAS 39)

(7)

1,112

Deferred tax on remeasurement of the net defined benefit pension plans

365

(235)

(114)

111

6,265

5,559

OthersNet deferred tax asset at 31 December

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

2016

2015

(97)

(86)
2,612

Available-for-sale investments
Cash flow hedges

2,616

Deferred tax on remeasurement of the net defined benefit pension plans

1,678

1,313

Total

4,197

3,839

Deferred income taxes as of 31 December 2016 are related to the following assets and liabilities:

1 January 2016

(In € million)

Deferredtax
assetsDeferredtax
liabilities

Other movements

Movement throughincome statement

31 December 2016

OCI /IAS 19Others(1)R&D
tax
credits

Deferredtax
assetsDeferredtax benefit(expense)

Deferredtax
liabilities

Intangible assets

53

(538)

0

16

0

(71)

70

(610)

Property, plant and equipment

832(1,353)

0

8

0

(130)

741

(1,384)

Investments and other long-term
financial assets
Inventories
Receivables and other assets
Prepaid expenses
Provision for retirement plans

186

(157)

(10)

(46)

0

(82)

197

(306)

1,333

(752)

0

111

0

(879)

1,140

(1,327)837(2,615)

(4)

21

0

2,601

2,007

(1,167)

3

(1)

0

0

0

(1)

1

0

1,519

0

393

(77)

0

(415)

1,420

0

Other provisions

1,999

(627)

0

14

0

1,055

3,876

(1,435)

Liabilities

4,007

(440)

1

(71)

0

(1,400)4,785(2,688)Deferred income

98

(74)

0

(7)

0

17

105

(71)

NOLs and tax credit carry forwards

1,849

0

0

(91)

81

(133)

1,706

0

Deferred tax assets (liabilities)
before offsetting

12,716(6,557)

380

(122)

81

562

16,048(8,988)

(600)

0

(22)

(15)

(58)

(100)

(795)

0

Valuation allowanceson deferred tax assets
Set-off(5,357)

5,357

0

0

0

0

(7,696)

7,696

Net deferred tax assets (liabilities)

6,759(1,200)

358

(137)

23

462

7,557

(1,292)(1) “Others” mainly comprises changes in the consolidation scope and foreign exchange rate effects.

Financial Statements 2016 - AIRBUS ° 33 °2

Notes to the IFRS Consolidated Financial Statements
2.4 Airbus Performance

Deferred income taxes as of 31 December 2015 are related to the following assets and liabilities:

1 January 2015

(In € million)

Deferredtax
assetsDeferredtax
liabilities

Other movements

Movement throughincome statement

31 December 2015

OCI /IAS 19R&D
tax
credits

Deferredtax
assetsOthers(1)Deferredtax benefit(expense)

Deferredtax
liabilities

Intangible assets

50

(475)

0

(1)

0

(59)

53

(538)

Property, plant and equipment490(1,355)

0

(10)

0

354

832

(1,353)

Investments and other long-term
financial assets

332

(167)

(35)

80

0

(181)

186

(157)

Inventories

1,219

(457)

0

(8)

0

(173)

1,333

(752)

397

(2,267)

(115)

(1)

0

208

837

(2,615)

2

0

0

0

0

0

3

(1)

Receivables and other assets
Prepaid expenses
Provision for retirement plans

1,897

0

(235)

13

0

(156)

1,519

0

Other provisions

2,422

(498)

0

(2)

0

(550)

1,999

(627)

Liabilities

2,335

(871)

1,389

1

0

713

4,007

(440)

53

(22)

0

0

0

(7)

98

(74)

NOLs and tax credit carry forwards

2,080

0

0

82

(51)

(262)

1,849

0

Deferred tax assets (liabilities)
before offsetting

11,277(6,112)

1,004

154

(51)

(113)

12,716(6,557)

Deferred income

Valuation allowanceson deferred tax assets

(578)

0

(127)

8

0

97

(600)

0

Set-off(4,982)

4,982

0

0

0

0

(5,357)

5,357

Net deferred tax assets (liabilities)

5,717(1,130)

877

162

(51)

(16)

6,759

(1,200)(1) “Others” mainly comprises changes in the consolidation scope and foreign exchange rate effects.

16. Earnings per Share

2016

2015

Profit for the period attributable to equity owners of the parent (Net income)€ 995 million€ 2,696 million

Weighted average number of ordinary shares

773,798,837

785,621,099€ 1.29€ 3.43

Basic earnings per share

Diluted earnings per share – Airbus’ categories of dilutive
potential ordinary shares are Stock Option Plan (“SOP”),
share-settled Performance Units relating to Long-Term
Incentive Plans (“LTIP”) and the convertible bond issued
on 1 July 2015. The last SOP expired in December 2016. During
2016, the average price of the Company’s shares exceeded
the exercise price of the share-settled Performance Units
and therefore 287,807 shares (in 2015: 359,335 shares) wereconsidered in the calculation of diluted earnings per share. The
dilutive effect of the convertible bond was also considered in
the calculation of diluted earnings per share in 2016, by adding
back € 7 million of interest expense to the proﬁt for the period
attributable to equity owners of the parent (2015: € 3 million)
and by including 5,022,990 of dilutive potential ordinary shares(2015: 2,511,495 shares).

Profit for the period attributable to equity owners of the parent (Net income)Weighted average number of ordinary shares (diluted)(1)Diluted earnings per share(1) Dilution assumes conversion of all potential ordinary shares.

Financial Statements 2016 - AIRBUS ° 34 °

2016

2015

€ 1,002 million€ 2,699 million

779,109,634

788,491,929€ 1.29€ 3.42Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.5 Operational Assets and Liabilities

2.5 Operational Assets and Liabilities
17. Intangible Assets

Intangible assets comprise (i) goodwill (see “– Note 5: Scope of Consolidation”), (ii) capitalised development costs (see “– Note 2:“Signiﬁcant Accounting Policies”) and (iii) other intangible assets, e.g. internally developed software and acquired intangible assets.
Intangible assets with ﬁnite useful lives are generally amortised on a straight-line basis over their respective estimated useful lives(3 to 10 years) to their estimated residual values.
Intangible assets as of 31 December 2016 and 2015 comprise the following:
31 December 2016

1 January 2016

(In € million)GrossamountAmortisation /Impairment

Net book
value

Gross
amountAmortisation /Impairment

Net book
value

Goodwill

10,498(1,073)

9,425

10,995(1,088)

9,907

Capitalised development costs

2,871(1,164)

1,707

2,686

(1,027)

1,659

Other intangible assets

Total

3,399

(2,463)

936

3,375

(2,386)989

16,768(4,700)12,06817,056(4,501)

12,555

Net Book Value(In € million)

Balance at
Changes in
Balance at
1 January Exchange
consolidation
Amortisation / 31 December
2016 differences Additions
scope Reclassification(1) Disposals(1)2016
Impairment

Goodwill

9,907

(11)

89

52

(102)

(510)

0

9,425

Capitalised
development
costs

1,659

(38)

311

3

(19)

0

(209)

1,707

Other intangible
assets

Total

989

10

199

21

(15)

(26)

(242)

936

12,555

(39)

599

76

(136)

(536)

(451)

12,068(1) Includes intangible assets from entities disposed and reclassified to assets of disposal groups classified as held for sale (see “– Note 6: Acquisitions and Disposals”).

(In € million)

Balance at
Changes in
1 January Exchange
consolidation
2015 differences Additions
scope Reclassification(1)Amortisation /Disposals
Impairment

Balance at
31 December
2015

Goodwill

9,979

60

0

0

(107)

(25)

0

9,907

Capitalised
development
costs

1,688

20

154

0

0

0

(203)

1,659

Other intangible
assets

1,091

17

211

0

(37)

(11)

(282)

989

12,758

97

365

0

(144)

(36)

(485)

12,555Total(1) Includes intangible assets from entities reclassified to assets of disposal groups classified as held for sale (see “– Note 6: Acquisitions and Disposals”).

Development Costs
Airbus has capitalised development costs in the amount of € 1,707 million as of 31 December 2016 (€ 1,659 million as of 31 December2015) as internally generated intangible assets mainly for the Airbus Commercial Aircraft A350 XWB (€ 808 million) and A380(€ 336 million) programmes. The amortisation for the A380 and A350 XWB programmes development costs is performed on aunit of production basis.

Financial Statements 2016 - AIRBUS ° 35 °2

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

Impairment Tests
Airbus assesses at each end of the reporting period whether
there is an indication that a non-ﬁ nancial asset or a Cash
Generating Unit (“CGU”) to which the asset belongs may be
impaired. In addition, intangible assets with an indeﬁnite usefullife, intangible assets not yet available for use and goodwill aretested for impairment in the fourth quarter of each ﬁnancial year
irrespective of whether there is any indication for impairment.
An impairment loss is recognised in the amount by which theasset’s carrying amount exceeds its recoverable amount. For
the purpose of impairment testing any goodwill is allocated to
the CGU or group of CGUs in a way that reﬂects the way goodwill
is monitored for internal management purposes.
The discounted cash ﬂow method is used to determine therecoverable amount of a CGU or the group of CGUs to which
goodwill is allocated. The discounted cash flow method
is particularly sensitive to the selected discount rates andestimates of future cash ﬂows by management. Discount rates

are based on the weighted average cost of capital (“WACC”)
for the groups of cash-generating units. The discount rates
are calculated based on a risk-free rate of interest and amarket risk premium. In addition, the discount rates reﬂect thecurrent market assessment of the risks speciﬁc to each groupof cash-generating units by taking into account speciﬁc peergroup information on beta factors, leverage and cost of debt.
Consequently, slight changes to these elements can materiallyaffect the resulting valuation and therefore the amount of apotential impairment charge.
These estimates are influenced by several assumptions
including growth assumptions of CGUs, availability andcomposition of future defence and institutional budgets, foreignexchange ﬂuctuations or implications arising from the volatilityof capital markets. Cash ﬂow projections take into account pastexperience and represent management’s best estimate about
future developments.

As of 31 December 2016 and 2015, goodwill was allocated to CGUs or group of CGUs, which is summarised in the following
schedule:
AirbusCommercial
Aircraft

AirbusHelicopters

Goodwill as of 31 December 2016

6,873

Goodwill as of 31 December 2015

6,759

(In € million)

AirbusDefenceand Space

Other / HQ

308

2,230

14

9,425

299

2,835

14

9,907

Consolidated

The goodwill mainly relates to the creation of Airbus in 2000 and the Airbus Combination in 2001.

General Assumptions Applied in the Planning
Process
The basis for determining the recoverable amount is the value
in use of the CGUs. Generally, cash ﬂow projections used for
Airbus’ impairment testing are based on operative planning.
The operative planning, which covers a planning horizon of ﬁve
years, used for the impairment test, is based on the following
key assumptions which are relevant for all CGUs:
increase of expected future labour expenses of 2% (2015: 2%);■
future interest rates projected per geographical market, for
the European Monetary Union, the UK and the US;■
future exchange rate of 1.25 US$/€ (2015: 1.25 US$/€) toconvert in euro the portion of future US dollar which are nothedged;■Airbus follows an active policy of foreign exchange risk hedging.
As of 31 December 2016, the total hedge portfolio with maturities
up to 2023 amounts to US$ 102 billion (US$ 102 billion as of
31 December 2015) and covers a major portion of the foreignexchange exposure expected over the period of the operativeplanning (2017 to 2021). The average US$/€ hedge rate of
the US$/€ hedge portfolio until 2023 amounts to 1.25 US$/€(previous year: 1.28 US$/€) and for the US$/£ hedge portfolio
until 2022 amounts to 1.49 US$/£ (previous year: 1.58 US$/£).

For the determination of the operative planning in the CGUs,
management assumed future exchange rate of 1.25 US$/€ from2017 onwards to convert in euro the portion of future US dollar
which are not hedged.
General economic data derived from external macroeconomic
and ﬁnancial studies has been used to derive the general key
assumptions.
In addition to these general planning assumptions, the following
additional CGU specific assumptions, which represent
management’s current best assessment as of the date of these
Consolidated Financial Statements, have been applied in theindividual CGUs.

Airbus Commercial Aircraft■

The planning takes into account the decision to ramp-up
A320 programme deliveries progressively to a maximum of
60 aircraft per month. A330 deliveries are now at rate 6 asAirbus Commercial Aircraft transitions for the introduction of
the ﬁrst A330 Neo from 2018. The A350 XWB delivery rateincreases to 10 aircraft per month from the end of 2018 whilst
A380 deliveries are expected to reduce to 12 deliveries per
year from 2018.

Financial Statements 2016 - AIRBUS ° 36 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.5 Operational Assets and Liabilities

In the absence of long-term ﬁnancial reference, expected cash
ﬂows generated beyond the planning horizon are consideredthrough a terminal value.
■
Long-term commercial assumptions in respect of market
share, deliveries and market value are based on General
Market Forecast updated in 2016. The development of market
share per segment considers enlargement of the competitionas per current best assessment. Current market evolutions
are considered through sensitivities.
■
Due to the huge hedge portfolio, the carrying value and theplanned cash ﬂows of the CGU Airbus Commercial Aircraft
are materially inﬂuenced.
■
Cash ﬂows are discounted using a euro weighted WACC of
6.9% (2015: 8.4%).
■

Airbus Helicopters
The planning takes into account the ramp-up of our medium
segment driven by the H135 which has been certiﬁ ed in2015 and the H175, the continuing deliveries of NH90 anda continuous growth of our support and services activity.
■
In the absence of long-term ﬁnancial reference, expectedcash flows generated beyond the planning horizon are
considered through a terminal value. The terminal value
reﬂects management’s assessment of a normative operating
year based on an outlook of a full aeronautic cycle over the
next decade.
■Long-term commercial assumptions in respect of market
share, deliveries and market value are based on the helicopter
market forecast considering the decrease of last three years■

in the civil and parapublic market partially driven by decreaseof investment in oil and gas, needs of helicopter ﬂeet renewal
and growth markers and the increase of Airbus Helicoptersmarket share in this environment. Current market evolutions
are considered through sensitivities.
■
Cash ﬂows are discounted using a euro weighted WACC of
6.7% (2015: 8.2%).

Airbus Defence and Space
After a successful restructuring and portfolio review, Airbus
Defence and Space’s focus for the planning period is to increasebusiness and proﬁtability while implementing a growth strategy
to pave the way for future upsides.
The planning period is characterised by a strong forecasted
order intake across Military Aircraft and Space Systems.
■
The major products driving signiﬁcant growth are A400M
programme, including export contracts, Combat aircraft,
Tankers, satellites and Services.
■
Airbus Defence and Space assumes a further increasein proﬁ tability over the planning period, driven by higher
programme performance and cost savings.
■
Airbus Defence and Space’s Free Cash Flow target is also
expected to grow leveraging on a solid cash generation fromcurrent contracts and businesses as well as future orderintakes (Military Aircraft, Satellites, Communication Intelligenceand Security) and improvement on the A400M programme.
■
Cash ﬂows are discounted using a euro weighted WACC of
6.5% (2015: 8.0%).
■

18. Property, Plant and Equipment

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

10 to 50 years

Site improvements

6 to 30 years

Technical equipment and machinery

3 to 20 years

Jigs and tools(1)5 years

Other equipment, factory and office equipment

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

For details on assets related to lease arrangements on sales ﬁnancing, please see “– Note 25: Sales Financing Transactions”.

Financial Statements 2016 - AIRBUS ° 37 °2

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

Property, plant and equipment as of 31 December 2016 and 2015 comprise the following:
31 December 2016Grossamount(In € million)

Depreciation /Impairment

1 January 2016
Net book
value(1)GrossamountDepreciation /Impairment

Net book
value(1)Land, leasehold improvements and buildings
including buildings on land owned by others

9,444(4,252)

5,192

9,518

(4,349)5,169

Technical equipment and machinery

20,331(12,076)

8,255

20,296(11,946)

8,350

Other equipment, factory and officeequipment(2)3,933(2,939)

994

4,324

(3,290)1,034

Construction in progress

2,472

0

2,472

2,574

0

2,574

36,180(19,267)

16,91336,712(19,585)

17,127

Total(1) Includes the net book value of aircraft under operating lease (see “– Note 25: Sales Financing Transactions”).
(2) Buildings, technical equipment and other equipment accounted for in fixed assets under finance lease agreements for net amounts to € 356 million (2015: € 364 million).

Net Book Value(In € million)

Balance at
Changes in
Balance at
1 January Exchange
consolidation
Depreciation / 31 December
2016 differences Additions
scope Reclassification(1) Disposals(1)2016
Impairment

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

5,169

(61)

67

(3)

349

(37)

(292)

5,192

Technical
equipment
and machinery

8,350

(263)

531

20

1,059

(137)

(1,305)

8,255

Other equipment,
factory and officeequipment

1,034

(5)

419

2

109

(351)

(214)

994

Constructionin progress

2,574

(88)

1,788

1

(1,615)

(188)

0

2,472

17,127

(417)

2,805

20

(98)

(713)

(1,811)

16,913Total(1) Includes property, plant and equipment from entities disposed and reclassified to assets of disposal groups classified as held for sale (see “– Note 6: Acquisitions and Disposals”).

(In € million)

Balance at
Changes in
1 January Exchange
consolidation
Depreciation /2015 differences Additions
scope Reclassification(1) Disposals(1)Impairment

Balance at
31 December
2015

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

4,808

33

339

0

372

(79)

(304)

5,169

Technical
equipment andmachinery

8,246

154

508

0

869

(154)

(1,273)

8,350

Other equipment,
factory and officeequipment

1,162

38

377

0

0

(199)

(344)

1,034

Constructionin progress

Total

2,105

24

1,811

0

(1,366)

0

0

2,574

16,321

249

3,035

0

(125)

(432)

(1,921)

17,127(1) Includes property, plant and equipment from entities disposed and reclassified to assets of disposal groups classified as held for sale (see “– Note 6: Acquisitions and Disposals”).

In 2016, Airbus capitalised € 5 million of borrowing cost on the production of qualifying assets (2015: € 8 million). Airbus’ borrowing
rate at the end of 2016 was 1.46% (2015: 2.06%).

Financial Statements 2016 - AIRBUS ° 38 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.5 Operational Assets and Liabilities

Property, Plant and Equipment by Geographical Areas
31 December(In € million)

2016

France

7,263

7,035

Germany

4,348

4,294

UK

2,472

3,015

Spain

1,636

1,560

Other countries

1,078

1,105

16,797

17,009Property, plant and equipment by geographical areas(1)2015(1) Property, plant and equipment by geographical areas excludes leased assets of € 116 million (2015: € 118 million).

Off-Balance Sheet Commitments
Commitments related to property, plant and equipment
comprise contractual commitments for future capital
expenditures and contractual commitments for purchases of“Land, leasehold improvements and buildings including buildings
on land owned by others” (€ 310 million as of 31 December 2016
compared to 2015 of € 320 million).

Future nominal operating lease payments (for Airbus as alessee) for rental and lease agreements not relating to aircraft
sales ﬁ nancing amount to € 768 million as of 31 December
2016 (2015: € 844 million), and relate mainly to procurement
operations (e.g. facility leases).

Maturities as of 31 December 2016 and 31 December 2015 are as follows:
31 December

2016(In € million)

2015

Not later than 1 year

159

158

Later than 1 year and not later than 5 years

397

393

Later than 5 years

212

293

Total

768

844

19. Other Investments and Other Long-Term Financial Assets

31 December(In € million)

2016

Other investments

2,091

1,232

Other long-term financial assets

1,564

1,260

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

3,655

2,492

522

178

4,177

2,670

Current portion of other long-term financial assets
Total

Other investments mainly comprise Airbus’ participations.
The increase is mainly due to the reclassiﬁ cation in otherinvestments (see “– Note 6: Acquisitions and D isposals”) of
the remaining investment in Dassault Aviation (Airbus share:
10%) amounting to € 876 million as of 31 December 2016. Othersigniﬁcant participations at 31 December 2016 include AviChina(Airbus share: 5.0%, 2015: 5.0%) amounting to € 180 million(2015: € 199 million) and CARMAT SAS (Airbus share: 22.4%,
2015: 24.2%) amounting to € 38 million (2015: € 43 million).

2015

Other long-term financial assets and the current portion ofother long-term financial assets encompass other loans in theamount of € 1,147 million and € 717 million as of 31 December
2016 and 2015, and the sales ﬁnance activities in the form ofﬁnance lease receivables and loans from aircraft ﬁnancing (see“– Note 25: Sales Financing Transactions”).

Financial Statements 2016 - AIRBUS ° 39 °2

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

20. Inventories

31 December 2016
(In € million)

Gross amount

Write-down

Net book value

Raw materials and manufacturing supplies

3,288

(508)

2,780

Work in progress

27,304(6,246)

21,058Finished goods and parts for resale

3,374

(624)

2,750

Advance payments to suppliers

3,155

(55)

3,100

37,121(7,433)29,688Total

31 December 2015

Gross amount

Write-down

Net book value

Raw materials and manufacturing supplies

3,229

(476)

2,753

Work in progress

25,585(5,150)20,435

Finished goods and parts for resale

3,134

(779)

2,355

Advance payments to suppliers

3,559

(51)

3,508

35,507(6,456)

29,051(In € million)

Total

The increase in work in progress of € +623 million is driven by
Airbus Commercial Aircraft mainly associated with A350 XWB
ramp-up, partly offset by a decrease in Airbus Defence andSpace, mainly related to the reclassification of defence
electronics entities to disposal groups classiﬁed as held forsale and the creation of ASL (see “– Note 6: Acquisitions andDisposals”). It is also related to a decrease in work in progress
for the A400M programme reﬂecting the netting of inventories
with the respective portion of the loss making contracts
provision (see “– Note 22: Provisions, Contingent Assets andContingent Liabilities”). Finished goods and parts for resale

increased by € +395 million, primarily at Airbus Commercial
Aircraft. Advance payments to suppliers decreased at Airbus
Defence and Space, mostly due to the creation of ASL.
Write-downs for inventories are recorded when it becomesprobable that total estimated contract costs will exceed total
contract revenues. In 2016, write-downs of inventories in theamount of € -306 million (2015: € -410 million) are recognisedin cost of sales, whereas reversal of write-downs amounts
to € 217 million (2015: € 66 million). At 31 December 2016
€ 9,374 million of work in progress and € 2,301 million of ﬁnishedgoods and parts for resale were carried at net realisable value.

21. Trade Receivables and Trade Liabilities

Trade receivables arise when Airbus provides goods orservices directly to a customer with no intention of trading
the receivable. Trade receivables include claims arising fromrevenue recognition that are not yet settled by the debtor aswell as receivables relating to construction contracts. Trade
receivables are initially recognised at their transaction priceand are subsequently measured at amortised cost less any
allowance for impairment. Gains and losses are recognised in
the Consolidated Income Statement when the receivables are
derecognised or impaired as well as through the amortisation
process.
Allowance for doubtful accounts involves significant
management judgement and review of individual receivables

based on individual customer creditworthiness, current
economic trends including potential impacts from the EUsovereign debt crisis and analysis of historical bad debts.
Assets and liabilities relative to constructions contracts —In the construction contract business, an asset or liability isclassiﬁed as current when the item is realised or settled within
Airbus’ normal operating cycle for such contracts and as noncurrent otherwise. As a result, assets and liabilities relating to
the construction contract business such as trade receivables
and payables and receivables from PoC method, that are settled
as part of the normal operating cycle are classiﬁed as current
even when they are not expected to be realised within 12 months
after the reporting period.

Financial Statements 2016 - AIRBUS ° 40 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.5 Operational Assets and Liabilities

Trade Receivables
31 December(In € million)

2016

2015

Receivables from sales of goods and services

8,366

8,153

Allowance for doubtful accounts

(265)

(276)

Total

8,101

7,877

1,153

1,819

thereof trade receivable not expected to be collected within 1 year

The trade receivables increased by € +224 million, mainly in
Airbus Commercial Aircraft.
In application of the PoC method, as of 31 December 2016an amount of € 2,882 million (in 2015: € 2,936 million) for
construction contracts is included in the trade receivables netof related advance payments received.
The aggregate amount of costs incurred and recognised
profits (less recognised losses) to date amounts to€ 73,017 million (in 2015: € 71,813 million).
The gross amount due from customers for contract work,on construction contracts recognised under the PoC method,is the net amount of costs incurred plus recognised proﬁts lessthe sum of recognised losses and progress billings. In 2016, it
amounts to € 7,887 million (in 2015: € 9,190 million). Due to thenature of certain contracts and the respective recognition ofrevenues, these incurred costs also include associated workin progress and respective contract losses.
The gross amount due to customers for contract work on
construction contracts recognised under the PoC method, isthe net amount of costs incurred plus recognised proﬁts less thesum of recognised losses and progress billings for all contracts
in progress for which progress billings exceed costs incurred
plus recognised proﬁts (less recognised losses). In 2016, thegross amount due to customers amounts to € 87 million (in2015: € 77 million).

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

2016

2015

Allowance balance at beginning of the year

(276)

(289)

Foreign currency translation adjustment(1)0

Utilisations / disposals

39

15(Additions)

Allowance balance at 31 December

(27)

(2)

(265)

(276)

Trade Liabilities
As of 31 December 2016, trade liabilities amounting to € 133 million (2015: € 129 million) will mature after more than one year.

22. Provisions, Contingent Assets and Contingent Liabilities

2
Provisions — The determination of provisions, for example forcontract losses, warranty costs, restructuring measures andlegal proceedings is based on best available estimates.
In general, as the contractual and technical parameters to beconsidered for provisions in the aerospace sector are rather

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

31 December(In € million)

2016

Provision for pensions (Note 29)

8,656

7,615

Other provisions (Note 22)

8,313

7,465

16,96915,080

Total

2015

thereof non-current portion

10,826

9,871

thereof current portion

6,143

5,209

Financial Statements 2016 - AIRBUS ° 41 °Notes to the IFRS Consolidated Financial Statements
2.5 Operational Assets and Liabilities

Movements in other provisions during the year were as follows:
Reclassification /Change inconsolidated
group
Additions

Balance at
1 January
2016

Exchangedifferences

Increasefrompassageof timeContract losses

356

(3)

0

2,787

(1,196)

(674)

(119)

1,151

Outstanding costs

2,431

2

0

1,099

(219)

(967)

(186)

2,160

Aircraft financing risks(1)

618

21

40

50

(14)

(66)

(55)

594

Obligation from services
and maintenanceagreements

600

8

14

138

0

(134)

(35)

591

Warranties

385

2

2

87

(40)

(73)

(24)

339

Personnel-related
provisions(2)

1,145

(1)

1

615

(80)

(538)

(122)

1,020

Litigation and claims(3)

130

0

0

39

3

(14)

(36)

122

Asset retirement

161

(1)

6

2

1

(1)

(2)

166

Other risks and charges

1,639

(4)

2

1,282

(105)

(523)

(121)

2,170

Total

7,465

24

65

6,099

(1,650)(2,990)

(700)

8,313

(In € million)

Used

Released

Balance at
31 December
2016(1) See “– Note 25: Sales Financing Transactions”.
(2) See “– Note 28: Personnel-Related Provisions”.
(3) See “– Note 36: Litigation and Claims”.

In 2016, provision for contract losses mainly includes the A400M programme (€ 825 million) and other Airbus Defence and Space
programmes (€ 260 million). The additions to the contract losses provision include the net charge of € 2,210 million for the A400M
programme before netting with work in progress. Reclassiﬁcation / Change in consolidated group mainly relates to the offsetting of
the A400M programme contract provision to respective inventories (see “– Note 10: Revenues, Costs of Sales and Gross Margin”).
The majority of the addition to provisions for outstanding costs relates to Airbus Defence and Space (€ 529 million) and corresponds
among others to the Euroﬁghter programme and to diverse tasks to complete on construction contracts, as well as to Airbus
Helicopters (€ 501 million), mainly for the NH90 and Tiger programmes.
The agreement on insurance reimbursement that was under negotiation at year-end 2015 was settled during the ﬁrst half-year 2016.
An additional provision of € 160 million related to restructuring measures has been recorded at year-end 2016 following theannouncement in September 2016 of the merger of Airbus structure with the commercial aircraft activities of its largest division
Airbus Commercial Aircraft to increase future competitiveness. Accordingly, a plan including temporary contract termination,
non-replacement of attrition, redeployment, partial and early retirement as well as voluntary leaves in Germany, France, the UK
and Spain has been communicated to the employees and the European Works Council in November 2016.
In Airbus Helicopters, the business has been reassessed in 2016 leading to a restructuring provision of € 42 million.
In 2016, after reassessing and adjusting the restructuring provision recorded in 2013 in Airbus Defence and Space andHeadquarters, € 20 million has been released.
An H225 Super Puma helicopter was involved in an accident on 29 April 2016. Management is cooperating fully with the authorities
to determine the precise cause of the accident. On the basis of recent developments, an estimate of the related future costs has
been prepared and consequently a provision has been recorded in the accounts as of 31 December 2016.
Contingent assets and contingent liabilities — Airbus is
exposed to technical and commercial contingent obligations
due to the nature of its businesses. To mitigate this exposure,
Airbus has subscribed a Global Aviation Insurance Programme(“GAP”). When Airbus has obtained insurance coverage fromthird parties for these risks, any reimbursement is recognised
separately only when it is virtually certain to be received.
Information required under IAS 37 “Provisions, contingent
liabilities and contingent assets” is not disclosed if Airbus
concludes that disclosure can be expected to prejudiceseriously its position in a dispute with other parties.

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

Financial Statements 2016 - AIRBUS ° 42 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.5 Operational Assets and Liabilities

23. Other Financial Assets and Other Financial Liabilities

Other Financial Assets
31 December(In € million)

Positive fair values of derivative financial instruments

(1)

2016

2015

893

931

Others83

165

Total non-current other financial assets

976

1,096

Receivables from related companies

517

616

Positive fair values of derivative financial instruments(1)

258

349

482

437

Total current other financial assets

1,257

1,402

Total

2,233

2,498

Others(1) See “– Note 35: Information about Financial Instruments”.

Other Financial Liabilities
31 December(In € million)

2016

2015

Liabilities for derivative financial instruments(1)

6,544

6,703

European Governments refundable advances

6,340

6,716

429

619

13,313

14,038

Liabilities for derivative financial instruments(1)

4,476

3,884

European Governments refundable advances

730

570

OthersTotal non-current other financial liabilities

Liabilities to related companies

116

80

Others439

487

Total current other financial liabilities

5,761

5,021

Total

19,074

19,059

5,761

5,021

thereof other financial liabilities due within 1 year
(1) See “– Note 35: Information about Financial Instruments”.

Refundable advances from European Governments are provided to Airbus to ﬁnance research and development activities for certain
projects on a risk-sharing basis, i.e. they have to be repaid to the European Governments subject to the success of the project.

Financial Statements 2016 - AIRBUS ° 43 °2

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

24. Other Assets and Other Liabilities

Other Assets
31 December(In € million)

2016

2015

Prepaid expenses

2,265

2,051

93

115

Total non-current other assets

2,358

2,166

Value added tax claims

1,589

1,450

Prepaid expenses

552

663

Others435

706

Total current other assets

2,576

2,819

Total

4,934

4,985

OthersOther Liabilities
31 December(In € million)

2016

2015

Customer advance payments

15,714

14,472565

521

Total non-current other liabilities

16,27914,993Customer advance payments(1)24,11523,612

Tax liabilities (excluding income tax)

1,047

885

Others

2,373

2,540

Total current other liabilities

27,53527,037

Total

43,81442,03026,562

26,313

Othersthereof other liabilities due within 1 year

(1) Of which € 6,318 million (2015: € 8,252 million) relate to construction contracts mainly in Airbus Defence and Space (2016: € 5,001 million and 2015: € 7,007 million) and Airbus
Helicopters (2016: € 1,317 million and 2015: € 1,246 million).

25. Sales Financing Transactions

Sales ﬁnancing — With a view to facilitating aircraft sales for
Airbus Commercial Aircraft and Airbus Helicopters, Airbus may
enter into either on-balance sheet or off-balance sheet sales
ﬁnancing transactions.
On-balance sheet transactions where Airbus Commercial
Aircraft is lessor are classiﬁed as operating leases, ﬁnance leases
and loans, inventory and to a minor extent, equity investments:(i) Operating leases – Aircraft leased out under operatingleases are included in property, plant and equipment at costless accumulated depreciation (see “– Note 18: Property,
Plant and Equipment”). Rental income from operating leases
is recorded as revenues on a straight-line basis over theterm of the lease.

(ii) Finance leases and loans – When, pursuant to a financing
transaction, substantially all the risks and rewards ofownership of the financed aircraft reside with a third party,
the transaction is characterised as either a finance leaseor a loan. In such instances, revenues from the sale of theaircraft are recorded upon delivery, while financial interestis recorded over time as financial income. The outstandingbalance of principal is recorded on the statement of financial
position (on-balance sheet) in long-term financial assets, netof any accumulated impairments.
(iii) Inventory – Second hand aircraft acquired as part of acommercial buyback transaction, returned to Airbus after
a payment default or at the end of a lease agreement areclassified as inventory held for resale if there is no subsequent
lease agreement in force (see “– Note 20: Inventories”).

Financial Statements 2016 - AIRBUS ° 44 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.5 Operational Assets and Liabilities

Off-balance sheet commitments — Financing commitments
are provided to the customer either as backstop commitments
before delivery, asset value guarantees at delivery, operating
head-lease commitments or counter guarantees:(i) Backstop commitments are guarantees by Airbus
Commercial Aircraft, made when a customer-order isplaced, to provide financing to the customer in the eventthat the customer fails to secure sufficient funding when
payment becomes due under the order. Such commitments
are not considered to be part of Gross Customer Financing
Exposure as (i) the financing is not in place, (ii) commitments
may be transferred in full or part to third parties prior todelivery, (iii) past experience suggests it is unlikely that all
such proposed financings actually will be implemented and,(iv) Airbus retains the asset until the aircraft is delivered anddoes not incur an unusual risk in relation thereto. In order tomitigate customer credit risks for Airbus, such commitments
typically contain financial conditions which guaranteed
parties must satisfy in order to benefit therefrom.
(ii) Asset value guarantees are guarantees whereby Airbus
guarantees a portion of the value of an aircraft at a specificdate after its delivery. Airbus Commercial Aircraft considers
the financial risks associated with such guarantees to be
acceptable, because (i) the guarantee only covers a trancheof the estimated future value of the aircraft, and its levelis considered prudent in comparison to the estimatedfuture value of each aircraft, and (ii) the exercise dates ofoutstanding asset value guarantees are distributed through2028. It is management policy that the present value of theguarantee given does not exceed 10% of the sales price of
the aircraft.
As of 31 December 2016, the nominal value of asset value
guarantees provided to beneficiaries amounts to € 836 million(2015: € 781 million), excluding € 51 million (2015: € 97 million)
where the risk is considered to be remote. The present
value of the risk inherent in asset value guarantees wherea settlement is being considered probable is fully provided
for and included in the total of provisions recognised for
asset value risks of € 580 million (2015: € 550 million) (see“– Note 22: Provisions, Contingent Assets and Contingent
Liabilities”).
(iii) Operating head-lease commitments – Airbus has enteredinto head-lease sub-lease transactions in which it acts as alessee under an operating head-lease and lessor under the
sub-lease. Airbus’ customer financing exposure to operating
head-lease commitments, determined as the present valueof the future head-lease payments, was € 0 million in 2016(2015: € 92 million).

Exposure — In terms of risk management, Airbus manages its
gross exposure arising from its sales ﬁnancing activities (“Gross
Customer Financing Exposure”) separately for (i) customer’s
credit risk and (ii) asset value risk.
Gross Customer Financing Exposure is the sum of(i) the book value of operating leases before impairment,(ii) the outstanding principal amount of ﬁnance leases or loans
due before impairment, (iii) the guaranteed amounts underﬁnancial guarantees and the net present value of head-leasecommitments, (iv) the book value of second hand aircraft for
resale before impairment, and (v) the outstanding value of any
other investment in sales ﬁ nancing SEs before impairment.
This Gross Customer Financing Exposure may differ fromthe value of related assets on Airbus’ Statement of Financial
Position and related off-balance sheet contingent commitments,
mainly because (i) assets are recorded in compliance with IFRS,
but may relate to transactions that are ﬁnanced on a limited
recourse basis and (ii) the carrying amount of the assets on theConsolidated Statement of Financial Position may have beenadjusted for impairment losses.
Gross Customer Financing Exposure amounts to US$ 1.8 billion(€ 1.7 billion) (2015: US$ 1.5 billion (€ 1.4 billion)).
Net exposure is the difference between Gross Customer
Financing Exposure and the collateral value. Collateral value
is assessed using a dynamic model based on the net present
value of expected future receivables, expected proceeds fromresale and potential cost of default. This valuation model yields
results that are typically lower than residual value estimates by
independent sources in order to allow for what management
believes is its conservative assessment of market conditions andfor repossession and transformation costs. The net exposure
is fully provided for by way of impairment losses and otherprovisions.
Impairment losses and provisions — For the purpose ofmeasuring an impairment loss, each transaction is tested
individually. Impairment losses relating to aircraft under operatinglease and second hand aircraft for resale (included in inventory)
are recognised for any excess of the aircraft’s carrying amountover the higher of the aircraft’s value in use and its fair valueless cost to sell. Impairment allowances are recognised forﬁnance leases and loans when their carrying amounts exceed
the present value of estimated future cash ﬂows (including cash
ﬂows expected to be derived from a sale of the aircraft). Under
its provisioning policy for sales ﬁnancing risk, Airbus records
provisions as liabilities for estimated risk relating to off-balance
sheet commitments.

Financial Statements 2016 - AIRBUS ° 45 °2

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

Security — Sales ﬁnancing transactions, including those thatare structured through SE, are generally collateralised by theunderlying aircraft. Additionally Airbus beneﬁts from protective
covenants and from security packages tailored according to
the perceived risk and the legal environment.
Airbus endeavours to limit its sales ﬁ nancing exposure bysharing its risk with third parties usually involving the creation of
an SE. Apart from investor interest protection, interposing an SE
offers advantages such as ﬂexibility, bankruptcy remoteness,
liability containment and facilitating sell-downs of the aircraft
ﬁnanced. An aircraft ﬁnancing SE is typically funded on a nonrecourse basis by a senior lender and one or more providers ofsubordinated ﬁnancing. When Airbus acts as a lender to suchSEs, it may take the role of the senior lender or the providerof subordinated loan. Airbus consolidates an aircraft ﬁnancing
SE if it is exposed to the SE’s variable returns and has theability to direct the relevant remarketing activities. Otherwise,
it recognises only its loan to the SE under other long-term
ﬁnancial assets. At 31 December 2016 the carrying amount of
its loans from aircraft ﬁnancing amounts to € 732 million (2015:€ 553 million). This amount also represents Airbus’ maximum
exposure to loss from its interest in unconsolidated aircraft
ﬁnancing SEs.

On-Balance Sheet Operating and Finance Leases
The minimum future operating lease payments (undiscounted) due from customers to be included in revenues, and the future
minimum lease payments (undiscounted) from investments in ﬁnance leases to be received in settlement of the outstanding
receivable at 31 December 2016 are as follows:
Aircraft underoperating lease

Finance leasereceivable(1)Not later than 1 year

25

133

Later than 1 year and not later than 5 years

60

71(In € million)

Later than 5 years

815

31 December 2016

93

219

(1) Includes € 12 million of unearned finance income.

Off-Balance Sheet Commitments
Operating head-lease commitments comprise operating lease payments due by Airbus Commercial Aircraft as lessee underhead-lease transactions. As of 31 December 2016 and as of 31 December 2015, the scheduled payments owed under sales
ﬁnancing head-leases are as follows:
31 December

2016(In € million)

2015

Not later than 1 year

52

62

Later than 1 year and not later than 5 years

48

98

0

0

Total aircraft lease commitments(1)

100

160

Of which commitments where the transaction has been sold to third parties

(100)

(149)

0

11

Later than 5 years

Total aircraft lease commitments where Airbus bears the risk (not discounted)(1) Backed by sublease income from customers with an amount of € 75 million in 2016 (2015: € 119 million).

Financial Statements 2016 - AIRBUS ° 46 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.5 Operational Assets and Liabilities

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

2016

2015

Loans

45

94

Liabilities to financial institutions

0

0

Total sales financing liabilities

45

94(In € million)

Customer Financing Exposure
The on-balance sheet assets relating to sales ﬁnancing, the off-balance sheet commitments and the related ﬁnancing exposure(not including asset value guarantees) as of 31 December 2016 and 2015 are as follows:
31 December 2016

(In € million)

Operating leases(1)Finance leases and loans
Inventory

31 December 2015

AirbusCommercial
Aircraft

AirbusHelicopters

Total

AirbusCommercial
Aircraft

169

44

213

337

0

337

1,094

54

1,148

779

61

840

208

0

208

179

0

179

AirbusHelicopters

Total

28

0

28

28

0

28

1,499

98

1,597

1,323

61

1,384

Off-balance sheet customer financing

182

21

203

84

8

92

Non-recourse transactions on-balance sheet

(109)

0

(109)

(17)

0

(17)

Other investments
On-balance sheet customer financing

0

0

0

(24)

0

(24)

Gross Customer Financing Exposure

1,572

119

1,691

1,366

69

1,435
(942)

Off-balance sheet adjustments

Collateral values(1,157)(60)(1,217)

(922)

(20)

Net exposure

415

59

474

444

49

493

Operating leases

(89)

(9)

(98)

(220)

0

(220)

Finance leases and loans

(158)

(50)

(208)

(113)

0

(113)

On-balance sheet commitments - provisions(2)

0

0

0

0

(49)

(49)

On-balance sheet commitments - inventories

(154)

0

(154)

(93)

0

(93)

Off-balance sheet commitments - provisions(2)

(14)

0

(14)

(18)

0

(18)

(415)

(59)

(474)

(444)

(49)

(493)

Asset impairments and provisions(1) For 2016 and 2015, depreciation amounts to € 12 million and € 27 million respectively and related accumulated depreciation is € 84 million and € 203 million respectively.
(2) See “– Note 22: Provisions, Contingent Assets and Contingent Liabilities”.

Financial Statements 2016 - AIRBUS ° 47 °2

Notes to the IFRS Consolidated Financial Statements
2.6 Employees Costs and Beneﬁ ts

2.6 Employees Costs and Beneﬁts
26. Number of Employees

AirbusCommercial
Aircraft

AirbusDefenceand Space

AirbusHelicopters

Total
segments

Other / HQ

Consolidated

31 December 2016

73,85222,50734,397130,756

3,026

133,782

31 December 2015

72,81622,52038,206

133,542

3,032

136,574

27. Personnel Expenses(In € million)

2016

2015

Wages, salaries and social contributions

12,59513,022

Net periodic pension cost (Note 29)

Total

533

598

13,128

13,62028. Personnel-Related Provisions

Several German Airbus companies provide life-time working account models, being employee beneﬁt plans with a promised returnon contributions or notional contributions that qualify as other long-term employee benefits under IAS 19. The employees’
periodical contributions into their life-time working accounts result in corresponding personnel expense in that period, recognisedin other personnel charges.

(In € million)

Balance at
1 January
2016

Exchangedifferences

Increasefrompassageof time Additions

Reclassification /Change inconsolidated
group Used Released

Balance at
31 December
2016

Restructuring measures /pre-retirement part-time work(1)

265

0

0

247

(11)

(97)

(39)

Other personnel charges

880

(1)

1

368

(69)

(441)

(83)

655

1,145

(1)

1

615

(80) (538)

(122)

1,020

Total

365

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

29. Post-Employment Beneﬁts

31 December(In € million)

2016

2015

Provision for retirement plans (Note 29.1)

7,749

6,867

Provision for deferred compensation (Note 29.2)

Total

Financial Statements 2016 - AIRBUS ° 48 °

907

748

8,656

7,615

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.6 Employees Costs and Beneﬁ ts

29.1 Provisions for Retirement Plans
When Airbus employees retire, they receive indemnities as
stipulated in retirement agreements, in accordance withregulations and practices of the countries in which Airbus
operates.
France — The French pension system is operated on a “payas you go” basis. Besides the basic pension from the Frenchsocial security system, each employee is entitled to receive acomplementary pension from deﬁned contribution schemes
Association pour le régime de retraite complémentaire dessalaries (“ARRCO”) and Association générale des institutions deretraite des cadres (“AGIRC”). Moreover, French law stipulates
that employees are paid retirement indemnities in the form oflump sums on the basis of the length of service, which areconsidered as deﬁned obligations.
Germany — Airbus has a pension plan (P3) for executive
and non-executive employees in place. Under this plan, theemployer provides contributions for the services rendered by
the employees, which are dependent on their salaries in therespective service period. These contributions are converted
into components which become part of the accrued pension
liability at the end of the year. Total beneﬁts are calculated asa career average over the entire period of service. Certain
employees that are not covered by this plan receive retirement
indemnities based on salary earned in the last year or on
an average of the last three years of employment. For some
executive employees, beneﬁts are dependent on the ﬁnal salaryof the respective individual at the date of retirement and the time
period served as an executive.
Parts of the pension obligation in Germany are funded by assets
invested in speciﬁ c funding vehicles. Besides a relief fund(“Unterstützungskasse”), Airbus has implemented a Contractual
Trust Arrangement. The Contractual Trust Arrangement
structure is that of a bilateral trust arrangement. Assets thatare transferred to the relief fund and the Contractual Trust
Arrangement qualify as plan assets under IAS 19.
UK — The Airbus Group UK Pension Scheme (“the Scheme”)
was implemented by Airbus Defence and Space Ltd., Stevenage(UK) as the principal employer. This plan comprises all eligible
employees of Airbus Defence and Space Ltd. as well as all
personnel, who were recruited by one of Airbus companies
located in the UK and participating in the scheme. The majorityof the Scheme’s liabilities relate to Airbus Defence and SpaceLtd. The major part of the obligation is funded by scheme
assets due to contributions of the participating companies.
The Scheme is a registered pension scheme under the FinanceAct 2004. The trustee’s only formal funding objective is thestatutory funding objective under the Pensions Act part 6,2004,
which is to have sufﬁcient and appropriate assets to cover the
Scheme’s obligations. Since 1 November 2013, this plan isgenerally closed for new joiners, who participate in a separate
deﬁned contribution plan.

Moreover, Airbus participates in the UK in several funded
trustee-administered pension plans for both executive andnon-executive employees with BAE Systems being the principal
employer. Airbus’ most signiﬁ cant investments in terms of
employees participating in these BAE Systems UK pension
plans is Airbus Operations Ltd. Participating Airbus Operations
Ltd. employees have continued to remain members in the BAE
Systems UK pension plans due to the UK pension agreement
between Airbus and BAE Systems and a change in the UK
pensions legislation enacted in April 2006.
For the most significant of these BAE Systems Pension
Schemes, the Main Scheme, BAE Systems, Airbus and thescheme Trustees agreed on a sectionalisation, which was
implemented on 1 April 2016. Although BAE Systems remains
the only principal employer of the Scheme, Airbus has obtained
powers in relation to its section which are the same as if itwere the principal employer. The deﬁcit of the Main Scheme
was allocated between BAE Systems and Airbus based inprinciple on each Member’s last employer, which was donein December 2015. Before, the deﬁcit allocation was basedon the relative payroll contributions of active members whichamounted to a share of Airbus in BAE Systems’ main scheme in2015 to 20.96%. The impact of this change was mainly reﬂectedin the remeasurements of the previous period.
The other schemes qualify as multi-employer deﬁned beneﬁt
pension plans under IAS 19 “Employee beneﬁts”. Based on
detailed information about the other pension schemes provided
by BAE Systems, Airbus is able to appropriately and reliably
estimate the share of its participation in the schemes, i.e. its
share in plan assets, deﬁned beneﬁt obligation (“DBO”), andpension costs. The information enables Airbus to derive keys
per plan to allocate for accounting purposes an appropriate
proportion in plan assets, DBO and pension costs to its UK
investments as of the reporting date, taking into account the
impact of contributions as well as future extra contributions
agreed by BAE Systems with the trustees. Therefore, Airbus
accounts for its participation in BAE Systems’ UK deﬁned beneﬁtschemes under the deﬁned beneﬁt accounting approach inaccordance with IAS 19.
Based on the funding situation of the respective pension
schemes, the pension plan trustees determine the contribution
rates to be paid by the participating employers to adequately
fund the schemes. The different UK pension plans in which
Airbus investments participate are currently underfunded.
Airbus Operations Ltd. (for its section of the Main Scheme)
and BAE Systems (for the other schemes) have agreed withthe trustees various measures designed to make good theunderfunding. These include (i) regular contribution payments
for active employees well above such which would prevail for
funded plans and (ii) extra employers’ contributions.

Financial Statements 2016 - AIRBUS ° 49 °2

Notes to the IFRS Consolidated Financial Statements
2.6 Employees Costs and Beneﬁ ts

In the event that an employer who participates in the BAE
Systems pension schemes fails or cannot be compelled tofulfil its obligations as a participating employer, the remaining
participating employers are obliged to collectively take on its
obligations. Airbus considers the likelihood of this event asremote. However, for the Main Scheme Airbus considers thatits obligation is in principle limited to that related to its section.

Risks
The DBO exposes Airbus to actuarial risks, including thefollowing ones:
Market price risk — The return on plan assets is assumed tobe the discount rate derived from AA-rated corporate bonds.
If the actual return rate of plan assets is lower than the applied
discount rate, the net DBO increases accordingly. Moreover, themarket values of the plan assets are subject to volatility, which
also impacts the net liability.
Interest rate risk — The level of the DBO is signiﬁ cantly
impacted by the applied discount rate. The low interest rates,

particular in the euro-denominated market environment, leadto a relatively high net pension liability. If the decline in returnsof corporate bonds will continue, the DBO will further increasein future periods, which can only be offset partially by the
positive development of market values of those corporate bonds
included in plan assets. Generally, the pension obligation issensitive to movements in the interest rate leading to volatile
results in the valuation.
Inﬂ ation risk — The pension liabilities can be sensitive to
movements in the inﬂation rate, whereby a higher inﬂation rate
could lead to an increasing liability. Since some pension plans
are directly related to salaries, increases in compensations could
result in increasing pension obligations. A ﬁxed interest rate has
been agreed for the deferred compensation plan P3, which isﬁnanced by the employees.
Longevity risk — The pension liabilities are sensitive to the life
expectancy of its members. Rising life expectancies lead to anincrease in the valuation of the pension liability.

The weighted-average assumptions used in calculating the actuarial values of the most signiﬁ cant retirement plans as of
31 December are as follows:
Pension plans inGermany

FranceParticipation in BAE
Systems Pension
Scheme (UK)

UK

2016

2015

2016

2015

2016

2015

2016

Discount rate

1.7

2.4

1.9

2.5

2.7

3.9

2.6

3.9

Rate of compensation increase

2.75

2.75

2.5

2.5

2.6

3.0

2.6

3.2

Rate of pension increase

1.7

1.7

- / 1.7- / 1.7

3.0

2.9

3.1

2.3-3.2

Inflation rate

1.7

1.7

1.7

1.7

3.1

3.0

3.1

3.2

Assumptions in %For Germany and France, Airbus derives the discount rate used
to determine the DBO from yields on high quality corporate
bonds with an AA rating. The determination of the discount rateis based on the iBoxx€ Corporates AA bond data and uses the
granularity of single bond data in order to receive more market
information from the given bond index. The discount rate forthe estimated duration of the respective pension plan is thenextrapolated along the yield curve. In the UK it is determined withreference to the full yield curve of AA-rated sterling-denominatedcorporate bonds of varying maturities. The salary increase
rates are based on long-term expectations of the respective
employers, derived from the assumed inﬂation rate and adjusted
by promotional or productivity scales.

2015

Rates for pension payment increases are derived from therespective inﬂation rate for the plan.
Inﬂation rate for German plans corresponds to the expected
increase in cost of living. In the UK, the inﬂation assumptions
are derived by reference to the difference between then yields
on index-linked and ﬁxed-interest long-term government bonds.
For the calculation of the German pension obligation, the“2005 G” mortality tables (generation tables) as developed byProfessor Dr. Klaus Heubeck are applied. For the UK schemes,
the Self-Administered Pensions S1 mortality tables based on
year of birth (as published by the Institute of Actuaries) is usedin conjunction with the results of an investigation into the actual
mortality experience of scheme members. In France, Institutefor French Statistics (“INSEE”) tables are applied.

Financial Statements 2016 - AIRBUS ° 50 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.6 Employees Costs and Beneﬁ ts

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

Balance as of
1 January 2015

Plan assets

Participation in
BAE Systems
PensionPensionSchemeplans ofin the UK
Airbus

Total

Participation in
BAE Systems
PensionPensionSchemeplans ofin the UK
Airbus

Total

Total
provisions

10,625

4,337

14,962(4,237)(3,158)(7,395)

7,567

Service cost

358

81

439

0

0

0

439

Interest cost and income

219

175

394

(105)

(130)

(235)

159

from changes indemographic assumptions

(2)

0

(2)

0

0

0

(2)

from changes in financial
assumptions(642)(1,218)(1,860)000(1,860)from changes in experience
adjustments

Remeasurements: Actuarial(gains) and losses arising
■

■

■

213

(44)

169

0

0

0

169

from plan assets

0

0

0

67

898

965

965

Change in consolidation,transfers and others

(95)

5

(90)

0

0

0

(90)

Benefits paid

■

(338)

(168)

(506)

139

168

307

(199)

Contributions by employer
and other plan participants

0

0

0

(245)

(117)

(362)

(362)

Foreign currency translation
adjustment

54

279

333

(50)

(202)

(252)

81

Balance as of
31 December 2015

10,392

3,447

13,839(4,431)(2,541)(6,972)

6,867

Service cost

316

63

379

0

0

0

379

Interest cost and income

251

119

370

(126)

(90)

(216)

154

Settlements

(4)

0

(4)

0

0

0

(4)

Remeasurements: Actuarial(gains) and losses arising
■

■

■

■

from changes indemographic assumptions

6

0

6

0

0

0

6

from changes in financial
assumptions

1,027

786

1,813

0

0

0

1,813

from changes in experience
adjustments

158

0

158

0

0

0

158

0

0

0

(179)

(296)

(475)

(475)

from plan assets

Change in consolidation,transfers and others

(530)

2

(528)

44

0

44

(484)

Benefits paid

(348)

(79)

(427)

132

79

211

(216)

Contributions by employer
and other plan participants

0

0

0

(104)

(167)

(271)

(271)

Foreign currency translation
adjustment

(164)

(530)

(694)

133

383

516

(178)

11,104

3,808

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

7,749

Balance as of
31 December 2016

Financial Statements 2016 - AIRBUS ° 51 °2

Notes to the IFRS Consolidated Financial Statements
2.6 Employees Costs and Beneﬁ ts

The funding of the plans is as follows:
31 December

2016

2015

(In € million)

DBO

Plan assets

DBO

Plan assets

Unfunded pension plans

1,577

0

1,491

0

Funded pension plans (partial)

13,335(7,163)

12,348(6,972)

Total

14,912(7,163)

13,839(6,972)

In 2016, contributions in the amount of € 104 million(2015: € 241 million) are made into the pension plans of Airbus,
mainly relating to the relief fund in Germany with € 50 million(2015: € 50 million) and the Airbus Group UK scheme with€ 50 million (2015: € 58 million). Previous year included
additionally the Contractual Trust Arrangement of € 130 million.

Contributions of approximately € 400 million are expected tobe made in 2017.
The weighted average duration of the DBO for retirement plansand deferred compensation is 16 years at 31 December 2016(31 December 2015: 14 years).

The split of the DBO for retirement plans and deferred compensation between active, deferred and pensioner members for themost signiﬁcant plans is as follows (as of 31 December 2016 unless otherwise noted):
ActiveDeferredPensioner

Germany

44%

6%

50%

France

99%

0%

1%

67%

16%

17%

60%

17%

23%

UK

(1)

Participation in BAE Systems Pension Scheme (Main Scheme)(1) As of 5 April 2016.

The following table shows how the present value of the DBO of retirement plans and deferred compensation would have been
inﬂuenced by changes in the actuarial assumptions as set out for 31 December 2016:
Change in actuarial assumptions

Impact on DBO
Change as of 31 December

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

2016

2015

15,93014,680

Increase by 0.5%-point(1,197)(1,007)

Decrease by 0.5%-point

1,322

1,062

Increase by 0.25%-point

106

188

Decrease by 0.25%-point

(279)

(305)

Increase by 0.25%-point

342

256

Decrease by 0.25%-point

(486)

(369)

Life expectancy

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

Increase by 1 year

287

283

Reduction by 1 year

(461)

(411)

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

Financial Statements 2016 - AIRBUS ° 52 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.6 Employees Costs and Beneﬁ ts

The fair value of the plan assets for retirement plans and deferred compensation can be allocated to the following classes:
2016(In € million)

2015

QuotedpricesUnquoted
prices

Total

QuotedpricesUnquoted
prices

Total
990

Equity securities
1,112

0

1,112

990

0

Rest of the world

5

0

5

0

0

0

Emerging markets

248

0

248

221

0

221

Global

1,474

0

1,474

1,454

0

1,454

EuropeBonds
Corporates

1,877

0

1,877

1,549

0

1,549

Governments

1,464

0

1,464

1,715

0

1,715

Pooled investment vehicles

17

288

305

273

0

273

Commodities

161

0

161

119

0

119

Hedge funds

236

0

236

251

0

251

Derivatives

0

(60)

(60)

0

(58)

(58)
335

Property

337

3

340

331

4

Cash and money market funds

62

0

62

48

0

48

Others

209

(142)

67

252

(64)

188

7,202

89

7,291

7,203

(118)

7,085

Balance as of 31 December

The majority of funded plans apply broadly an asset-liability
matching (“ALM”) framework. The strategic asset allocation(“SAA”) of the plans takes into account the characteristics of
the underlying obligations. Investments are widely diversiﬁed,
such that the failure of any single investment would not have amaterial impact on the overall level of assets. A large portion ofassets in 2016 consists of ﬁxed income instruments, equities,
although Airbus also invests in property, commodities andhedge funds. Airbus is reassessing the characteristics of thepension obligations from time to time or as required by theapplicable regulation or governance framework. This typicallytriggers a subsequent review of the SAA.

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

Share ofmulti-employer
plan in the UK

Total

Germany

FranceUK

Others

DBO

7,793

1,545

1,044

10

3,447

13,839Plan assets

3,464

17

950

0

2,541

6,972

Recognised as of 31 December 2015

4,329

1,528

94

10

906

6,867

DBO

8,227

1,643

1,223

11

3,808

14,912

Plan assets

3,514

17

1,000

0

2,632

7,163

Recognised as of 31 December 2016

4,713

1,626

223

11

1,176

7,749

(In € million)

Employer’s contribution to state and private pension plans, mainly in Germany and France, are to be considered as deﬁned
contribution plans. Contributions in 2016 amount to € 703 million (2015: € 689 million).

Financial Statements 2016 - AIRBUS ° 53 °2

Notes to the IFRS Consolidated Financial Statements
2.6 Employees Costs and Beneﬁ ts

29.2 Provisions for Deferred Compensation
This amount represents obligations that arise if employees elect to convert part of their remuneration or bonus into an equivalentcommitment for deferred compensation which is treated as a deﬁned beneﬁt post-employment plan. The development for the
DBO and plan assets is as follows:2016(In € million)

2015

DBO

Plan
assets

Total

DBO

Plan
assets

Total

Balance as of 1 January

841

(113)

728

744

(81)

663

Service cost

118

0

118

137

0

137

Interest cost

20

0

20

14

0

14

Interest income

0

(3)

(3)

0

(2)

(2)

Remeasurements: Actuarial (gains) and losses arising■from changes in financial assumptions

0

0

0

(34)

0

(34)

■

from changes in experience adjustments

35

0

35

0

0

0

■

from plan assets

91

2

93

0

3

3

Transfer and change in consolidation

(80)

1

(79)

(15)

0

(15)

Benefits paid

(7)

0

(7)

(5)

0

(5)

Contributions

0

(15)

(15)

0

(33)

(33)

1,018

(128)

890

841

(113)

728

Balance as of 31 December
RECOGNISED AS

31 December(In € million)

2016

2015

Provision

907

748

Non-current other assets and current other assets

17

20

890

728

Total

The portion of the obligation, which is not protected by thepension guarantee association or Pensions-Sicherungs Verein(“PSV”) in case of an insolvency of Airbus companies concerned,
is covered by securities. Trust agreements between the trust andthe participating companies stipulate that some portions of theobligation must be covered with securities in the same amount,
while other portions must be covered by 115% leading to an
overfunding of the related part of the obligation. These amounts
are recognised as other non-current and current assets.

30. Share-Based Payment
Share-based compensation — In 2007, Airbus introduced a
Performance and Restricted Unit Plan or LTIP which qualiﬁes
as a cash settled share-based payment plan under IFRS 2. The
grant of so called “units” will not physically be settled in shares(except with regard to Airbus Executive Committee Members). For
details of the conversion of some Performance Units granted to
Executive Committee Members into equity-settled plans pleasesee “– Note 31.1: Remuneration-Executive Committee”. In 2016,
Airbus implemented a Performance Units and Performance
Share Plan, which is granted in units as well as in shares.
For plans settled in cash, provisions for associated services
received are measured at fair value by multiplying the numberof units expected to vest with the fair value of one LTIP unit
at the end of each reporting period, taking into account theextent to which the employees have rendered service to date.
The fair value of each LTIP unit is determined using a forward
pricing model. Changes of the fair value are recognised as
personnel expense of the period, leading to a remeasurementof the provision.
Besides the SOP that has been granted in the past and theequity settled part of the LTIP 2016, the Employee ShareOwnership Plan (“ESOP”) is an additional equity settled
share-based payment plan. Airbus offers its employees under
this plan the Company shares at fair value matched with anumber of free shares based on a determining ratio. The fairvalue of shares provided is reﬂected as personnel expense in
Airbus’ Consolidated Income Statements with a corresponding
increase in equity.

Financial Statements 2016 - AIRBUS ° 54 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.6 Employees Costs and Beneﬁ ts

30.1 SOP and LTIP
Based on the authorisation given to it by the Shareholders’Meetings, Airbus’ Board of Directors approved a SOP in 2006(see date below). This plan provides to the Members of the
Executive Committee as well as to Airbus’ senior management
the grant of options for the purchase of the Company’s shares.
For the Company’s SOP, the granted exercise price exceeded
the share price at the grant date.
In the years 2011 to 2015, the Board of Directors of Airbus
approved the granting of LTIP Performance and Restricted
Units. In 2016, it approved an LTIP Performance Units andPerformance Share Plan.

In 2014, Airbus decided to hedge the share price risk inherent in
the cash-settled LTIP units by entering equity swaps where thereference price is based on the Airbus share price. To the extent
that LTIP units are hedged, compensation expense recognised
for these units will effectively reﬂect the reference price ﬁxed
under the equity swaps.
In 2016, compensation expense for LTIPs including theeffect of the equity swaps amounted to € 35 million (in 2015:€ 175 million). For the SOP, expenses were neither recognisedin 2016 nor in 2015.

The fair value of units and shares granted per vesting date is as follows (LTIP plan 2016):
Expected vesting date
FV of Performance Units and Shares(In € per unit / share granted)

May 2020 – Performance share

45.15

May 2020 – Performance unit

45.13

May 2021 – Performance unit

44.71

As of 31 December 2016 provisions of € 179 million (2015: € 320 million) relating to LTIP have been recognised.
The lifetime of the Performance and Restricted Units as well as Performance Shares is contractually ﬁxed (see the description of
the respective tranche). For the units, the measurement is next to other market data, mainly affected by the share price as of theend of the reporting period (€ 62.84 as of 31 December 2016) and the lifetime of the units.
The principal characteristics of the SOP as at 31 December 2016 are summarised in the table below:
SOP 2006
Date of Shareholders’ Meeting

4 May 2006

Grant date18 December 2006

Number of options granted

1,747,500

Number of options outstanding0

Total number of eligible employees
Vesting conditions

221
50% of options may be exercised after a period of two years from the date of grantof the options; 50% of options may be exercised as of the third anniversaryof the date of grant of the options (subject to specific provisions contained in the
Insider Trading Rules — see “Part 2/3.1.3 Governing Law — Dutch Regulations”)

Expiry date16 December 2016

Conversion right

One option for one share

Vested100%

Exercise price
Exercise price conditions€ 25.65
110% of fair market value of the shares at the date of grant

Number of exercised options

1,501,000

Financial Statements 2016 - AIRBUS ° 55 °2

Notes to the IFRS Consolidated Financial Statements
2.6 Employees Costs and Beneﬁ ts

The following table summarises the development of the number of outstanding stock options:
Number of options

Balance at
1 January

Exercised

Forfeited

Balance at
31 December

2015

511,750(241,750)(5,500)264,500

2016

264,500(224,500)(40,000)

0

Tranches
SOP 2006

The weighted average share price at the date of exercise for share options exercised in 2016 was € 59.21 (2015: € 60.65).
The principal characteristics of the LTIPs as at 31 December 2016 are summarised below:
LTIP 2011
Grant date(1)

9 November 2011

LTIP 2012

LTIP 2013

LTIP 201413 December 2012 17 December 2013 13 November 2014

LTIP 2015

LTIP 2016

29 October 2015

25 October 2016

Performance and Restricted Unit plan

Performance plan

Units

Performance Restricted Performance Restricted Performance Restricted Performance Restricted Performance Restricted

Numberof units
granted(2)2,606,900 882,591 2,123,892 621,980 1,245,052 359,060 1,114,962

Numberof units
outstanding
Total numberof eligible
beneficiaries
Vesting
conditions
Share priceper unit islimited atthe vesting
dates to(3)Vesting
dates

Number ofvested units

0

0

1,771

880,095

283,320 1,159,814

1,797

Units

Shares291,420926,398

240,972

615,792

621,198

346,100 1,068,502 287,442

916,246

239,674

615,792

621,198

1,709

1,621

1,564

1,671

The Performance and Restricted Units and Performance Shares will vest if the participant is still employed by an Airbus company
at the respective vesting dates and, in the case of Performance Units and Shares, upon achievement of mid-term businessperformance. Vesting schedule is made up of four payments (from the LTIP 2014 onwards two payments) over two years.

-€ 55.66€ 92.34€ 94.90€ 112.62€ 105.34

25% each:
25% each
25% each:in May 2016
expected:in May 2015
in November 2016
in May 2017
in November 2015 25% each expected: in November 2017
in May 2016
in May 2017
in May 2018
in November 2016 in November 2017 in November 2018

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

3,108,160 823,828

2,500

2,116

855,388289,135

3,860

0

0

0

-

50% each
expected:in100%
May 2020 expectedinin
May 2021 May 202000(1) Date, when the vesting conditions were determined.
(2) Based on 100% target performance achievement. A minimum of 50% of Performance Units will vest; 100% in case of on-target performance achievement; up to a maximum of
150% in case of overachievement of performance criteria. In case of absolute negative results (cumulative EBIT of Airbus) during the performance period, the Board of Directors
can decide to review the vesting of the Performance Units including the 50% portion which is not subject to performance conditions (additional vesting condition).
(3) Corresponds to 200% of the respective reference share price. Overall, the pay-out for Performance Units is limited to a total amount of 250% of the units originally granted, eachvalued with the respective reference share price of € 27.83 (for LTIP 2012), € 46.17 (for LTIP 2013), € 47.45 (for LTIP 2014), € 56.31 (for LTIP 2015) and € 52.67 (for LTIP 2016).

30.2 ESOPIn 2016, the Board of Directors approved a new ESOP. Eligible
employees were able to purchase a ﬁxed number of previously
unissued shares at fair market value (4, 6, 10, 19, 38 or 76 shares).
Airbus matched each ﬁxed number of shares with a number of
the Company free shares based on a determined ratio (4, 5, 7,
11, 16 and 25 free shares, respectively). During a custody periodof at least one year or, provided the purchase took place in thecontext of a mutual fund (regular savings plan), of ﬁve years,
employees are restricted from selling the shares, but have theright to receive all dividends paid. Employees who directly
purchased the Company shares have, in addition, the ability tovote at the annual shareholder meetings. The subscription price
was equal to the closing price at the Paris stock exchange on
23 February 2016 and amounted to € 55.41. Investing throughthe mutual fund led to a price which corresponds to the average
price at the Paris stock exchange during the 20 trading days
immediately preceding 23 February 2016, resulting in a priceof € 54.31. The Company issued and sold 485,048 ordinary

Financial Statements 2016 - AIRBUS ° 56 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.6 Employees Costs and Beneﬁ ts

shares with a nominal value of € 1.00 each. Compensation
expense (excluding social security contributions) of € 27 million
was recognised in connection with ESOP.
In 2015, the Board of Directors approved a new ESOP. Eligible
employees were able to purchase a ﬁxed number of previously
unissued shares at fair value (4, 6, 9, 19, 37, 74 or 148 shares).
Airbus matched each ﬁxed number of shares with a number of
the Company free shares based on a determined ratio (4, 5, 6,
11, 16, 25 and 39 free shares, respectively). During a lock-up
period of at least one year or, provided the purchase took placein the context of a mutual fund (regular savings plan), of ﬁve
years, employees are restricted from selling the shares, but havethe right to receive all dividends paid. Employees who directly
purchased the Company shares have, in addition, the ability tovote at the annual shareholder meetings. The subscription price
was equal to the closing price at the Paris stock exchange on
26 February 2015 and amounted to € 51.63. Investing throughthe mutual fund led to a price which corresponds to the average
price at the Paris stock exchange during the 20 trading days
immediately preceding 26 February 2015, resulting in a price of€ 49.70. The Company issued and sold 477,985 ordinary shareswith a nominal value of € 1.00 each. Compensation expense(excluding social security contributions) of € 25 million wasrecognised in connection with ESOP.

31. Remuneration

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

2016

2015
23.2

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

28.4

Post-employment benefit costs

6.1

7.5

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

20.5

15.4

Termination benefits

0.0

3.5

Other benefits

0.7

0.8

Social charges

5.5

6.5

1.8

1.5

63.0

58.4

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

Total expense recognised

For additional information regarding the remuneration of Executive Committee Members (including the CEO), please also refer tothe “Report of the Board of Directors – Chapter 4.4: Remuneration Report”.

Salaries and Other Short-Term Benefits (Including Bonuses)
The amount of bonuses is based on estimated performanceachievement as at the balance sheet date and difference
between previous year estimation and actual pay-out in thecurrent year. Outstanding short-term beneﬁts (bonuses) at yearend 2016 for Executive Committee Members based on estimatedperformance achievement at year-end was € 13.4 million (2015:€ 13.4 million).

In 2015, Airbus had to recognise high salary taxes for Executive
Committee Members subject to French tax jurisdictions underthe “Taxe sur les hauts revenus”, requiring exceptional 50%
charges on individual annual remuneration exceeding € 1 million(2015: € 1 million). For 2016, this surtax has been abolished.

Financial Statements 2016 - AIRBUS ° 57 °2

Notes to the IFRS Consolidated Financial Statements
2.6 Employees Costs and Beneﬁ ts

Post-Employment Benefit Cost
The pension DBO of the Executive Committee, including theCEO, at 31 December 2016 amounted to € 68.3 million (2015:€ 61.6 million). The disclosed DBO reﬂects the total outstandingbalance for all Executive Committee Members subject to adeﬁned beneﬁt plan and in charge at the end of the respectivebalance sheet date.

Share-Based Remuneration (“LTIP Award”)
The share-based payment expenses result from not yet forfeitedunits granted to the Executive Committee Members under the
Airbus LTIP which are re-measured to fair value as far as they
are cash settled.
In 2016, the Members of the Executive Committee were granted
85,386 Performance Units and 91,082 Performance Sharesfor LTIP 2016 and 13,674 additional units for LTIP 2015 (2015:
184,652 units), the respective fair value of these Performance
Units and Shares at the respective grant dates was € 8.76 million(2015: € 10.3 million). Fair value of outstanding LTIP balancesat the end of 2016 for all Executive Committee Members

was € 14.5 million (2015: € 21.6 million). The total number ofoutstanding Performance and Restricted Units amounted to467,245 at 31 December 2016 (2015: 775,744), granted to thecurrent Members of the Executive Committee.
Until and including the plan 2015, based on the intention of theBoard of Directors to increase the long-term commitment of
Executive Committee Members to the success of Airbus, theBoard has authorised the Executive Committee Members to
opt for partial conversion of the otherwise cash settled LTIPs
into share-settled plans at each grant date of any new LTIP,
requiring a minimum conversion rate into equity settlement of
25% of total granted Performance Units. At the conversion date,each Executive Committee Member individually determined
the split of equity and cash settlement for the formerly granted
LTIP. After overall performance assessment of each of theplans, the vesting dates as determined at the initial grant date
apply to all cash settled Performance Units, however, units
converted into equity settlement only vest at the last of thevesting dates of the respective plan.

The number of Performance Units granted to Executive Committee Members 31 December 2016 are summarised below:
LTIP 2011(1)LTIP 2012(2)LTIP 2013(3)LTIP 2014

LTIP 2015(4)Total number of units granted

337,280

245,551

203,000

199,310

189,476

Number of cash-settled units

227,949

177,933

138,300

147,269

143,217

Number of equity-settled units

109,331

67,71864,70052,041

46,25931 December
2012

28 February
2013

28 February
2014

28 February
2015

28 February
2016€ 29.50€ 39.70€ 53.39€ 55.33€ 59.78

Date of conversion
Share price at date of conversion(1) Based on performance achievement of 128% for Performance Units under 2011 LTIP.
(2) Based on performance achievement of 89% for Performance Units under 2012 LTIP.
(3) Based on performance achievement of 75% for Performance Units under 2013 LTIP.

SOP

Other Benefits

To the other current Members of the Executive Committee
and to Airbus’ senior management, there were no outstanding
stock options at 31 December 2016 (2015: 264,500). During theyear 2016, the Executive Committee Members have exercised
10,000 options (2015: 241,085) granted under the remaining
SOP 2006. 97,500 options (2015: 137,500) were exercisedand 40,000 options (2015: 0 options) were forfeited by former
Executive Committee Members. As all Airbus SOPs vested
before 2012 no related personnel expense was recognised in2016 or in 2015.

Other beneﬁ ts include expenses for Executive Committee
Members’ company cars and accident insurance. There were no
outstanding liabilities at 31 December 2016 or 2015 respectively.

Financial Statements 2016 - AIRBUS ° 58 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.6 Employees Costs and Beneﬁ ts

31.2 Remuneration – CEO
The total remuneration of the CEO and Executive Member of the Board of Directors, related to the reporting periods 2016 and2015, can be summarised as follows:
2016

2015

Base salary

1,500,000

1,400,004(In €)

Annual variable pay

2,062,000

1,659,000

Post-employment benefits costs

1,075,888

1,079,861

Share-based remuneration (“LTIP award”)(1)

1,528,732

2,401,751

Other benefits

71,75569,050Social charges

11,66811,368(1) Expense related to share-based payment plans as recognised in the annual period (service period) including the result from the hedge of cash-settled share-based payment:
see “– Note 30: Share-Based Payment” for details. The pay-out from vested cash settled LTIP in 2016 was € 2,279,689 (2015: € 3,148,629).

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

Post-Employment Benefit Costs
Post-employment beneﬁt costs relate to the aggregated amount of current service and interest costs as well as interest costs on
employee’s contribution to the deﬁned beneﬁt plan.
For the CEO, the pension DBO including deferred compensation amounted to € 21,251,788 as of 31 December 2016 (€ 17,118,048
as of 31 December 2015), whilst the amount of current service and interest cost related to his pension promise accounted for in
the ﬁscal year 2016 represented an expense of € 1,075,888 (2015: € 1,079,861). This amount has been accrued in the Consolidated
Financial Statements.

Share-Based Remuneration
The table below gives an overview of the interests of the CEO, under the various LTIPs of Airbus:
LTIP
Granted date

2011

2012

2013

2014

2015

2016

Performance Units

51,40050,30030,30029,50024,862

28,480Re-evaluation of PU

128%

89%

75%

100%

100%

100%

PUs re-evaluated65,792

44,76722,726

29,50024,862

28,480

Vested in 2016■

in cash24,672

16,787

0

0

0

0

■

in shares

16,448

0

0

0

0

0

Outstanding 2016■

in cash0

16,78811,36322,125

18,647

14,240■in shares

0

11,192

11,363

7,375

6,215

14,240November 2016

November 2017

July 2020

May 2020

Vesting scheduleCash-settled units
Equity-settled units

For vesting dates, please see “– Note 30.1: SOP and LTIP”
November 2018

June 2019

Vesting of all Performance Units granted to the CEO is subject to performance conditions.
Fair value of outstanding LTIP balances at the end of 2016 for the CEO was € 2,353,453 (2015: € 3,460,607).

Other Benefits
The CEO is entitled to accident insurance coverage and a company car. In 2016, the total amount expensed was € 71,755 (2015:€ 69,050). Airbus has not provided any loans to / advances to / guarantees on behalf of the CEO.

Financial Statements 2016 - AIRBUS ° 59 °2

Notes to the IFRS Consolidated Financial Statements
2.6 Employees Costs and Beneﬁ ts

31.3 Remuneration – Board of Directors
The remuneration of the Non-Executive Members of the Board of Directors was as follows:2016(In €)

2015

Fixum(1)Attendance fees(2)Total

Fixum(1)Denis Ranque

180,000

60,000240,000

Manfred Bischoff

26,15420,00046,154

Ralph D. Crosby

80,00050,000130,000

Attendance fees

Total

180,000

70,000250,000

80,00025,000105,000

80,00035,000115,000

Non-Executive Board Members(3)67,58240,000107,58200

0

Hans-Peter Keitel

100,000

60,000160,000

100,000

35,000135,000

Hermann-Josef Lamberti

110,000

55,000165,000

110,000

30,000140,000

Catherine Guillouard

Anne Lauvergeon

32,692

10,00042,692100,000

30,000130,000

Lakshmi N. Mittal

100,000

50,000150,000

100,000

35,000135,000

María Amparo Moraleda Martínez

100,000

55,000155,000

50,00020,00070,000(3)

Claudia Nemat

67,58230,00097,582000

Sir John Parker

110,000

60,000170,000

110,000

30,000140,000

Michel Pébereau

32,69220,00052,692100,000

25,000125,000

Carlos Tavares(4)Jean-Claude Trichet

54,06620,00074,06600

0100,000

60,000160,000

100,000

35,000135,000

Former Non-Executive Board Members
Josep Piqué i Camps

Total

0

0

0

41,668041,6681,160,768

590,000

1,750,768

1,151,668

370,000

1,521,668(1) The fixum related to 2016 was paid 50% in December 2016 and the other 50% will be paid in July 2017. The fixum related to 2015 was paid in 2016.
(2) The attendance fees are paid at the end of each semester.
(3) Member of the Company Board of Directors and Audit Committee as of 28 April 2016.
(4) Member of the Company Board of Directors as of 28 April 2016.

Financial Statements 2016 - AIRBUS ° 60 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.7 Capital Structure and Financial Instruments

2.7 Capital Structure and Financial Instruments
32. Total Equity
32.1 Equity Attributable to Equity Owners of the Parent
The Company’s shares are exclusively ordinary shares with a par value of € 1.00. The following table shows the development of
the number of shares issued and fully paid:
2016

2015

785,344,784

784,780,585

Issued for ESOP

1,474,716

1,539,014

Issued for exercised options

224,500

1,910,428(14,131,131)(2,885,243)

772,912,869

785,344,784(In number of shares)

Issued as at 1 January

Cancelled
Issued as at 31 December(184,170)(1,474,057)

Outstanding as at 31 December

772,728,699

783,870,727

Authorised shares

3,000,000,000

3,000,000,000

Treasury shares as at 31 December

Holders of ordinary shares are entitled to dividends and areentitled to one vote per share at general meetings of theCompany.

which € 223 million were recognised in ﬁnancial liability which
led to a reduction of equity by € -513 million. The share buyback
has been completed for a total amount of € 1 billion.

Capital stock comprises the nominal amount of shares
outstanding. The addition to capital stock represents thecontribution for exercised options of € 224,500 (in 2015:€ 1,910,428) in compliance with the implemented SOP andby employees of € 1,474,716 (in 2015: € 1,539,014) under the
ESOPs.

On 28 April 2016, the Annual General Meeting (“AGM”) of
the Company authorised the Board of Directors, for a period
expiring at the AGM to be held in 2017, to issue shares andgrant rights to subscribe for shares in the Company’s sharecapital for the purpose of:Share premium mainly results from contributions in kind in
the course of the creation of Airbus, cash contributions fromthe Company’s initial public offering, capital increases andreductions due to the issuance and cancellation of shares.
Retained earnings include mainly the proﬁt of the period and thechanges in other comprehensive income from remeasurementsof the deﬁned beneﬁt pension plans net of tax which amounts to€ -1,383 million in 2016 (2015: € +491 million), and cash dividend
payments to Airbus Group SE shareholders.
On 28 April 2016, the Shareholders’ General Meeting decided to
distribute a gross amount of € 1.30 per share, which was paid on
4 May 2016. For the ﬁscal year 2016, Airbus’ Board of Directors
proposes a cash distribution payment of € 1.35 per share.
Treasury shares represent the amount paid or payable for own
shares held in treasury and relates to the share buyback which
took place between 2 November 2015 and 30 June 2016. As of
31 December 2015, the Company bought back € 264 million ofshares and recognised a ﬁnancial liability of € 223 million for its
irrevocable share buyback commitment at that date. Recognitionof the ﬁnancial liability led to a corresponding reduction of equity.
In 2016, the Company bought back € 736 million of shares of

ESOPs and share- related LTIPs in the limit of 0.14% of
the Company’s authorised share capital (see “– Note 30:
Share-Based Payment”);■
funding the Company and its subsidiaries, provided thatsuch powers shall be limited to an aggregate of 0.3% of
the Company’s authorised share capital (see “– Note 34.3:
Financing Liabilities”).
■

For each operation, such powers shall not extend to issuingshares or granting rights to subscribe for shares if there is nopreferential subscription right and for an aggregate issue pricein excess of € 500 million per share issuance.
Also on 28 April 2016, the AGM authorised the Board of
Directors for an 18-month period to repurchase up to 10%of the Company’s issued and outstanding share capital (i.e.
issued share capital excluding shares held by the Company or
its subsidiaries) at a price not exceeding the higher of the price ofthe last independent trade and the highest current independent
bid on the trading venues of the regulated market of the country
in which the purchase is carried out.
Furthermore, the AGM authorised both the Board of Directors
and the CEO, with powers of substitution, that the number ofshares repurchased by the Company pursuant to the sharebuyback programme are cancelled.

Financial Statements 2016 - AIRBUS ° 61 °2

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

32.2 Non-Controlling Interests
The non-controlling interests (“NCI”) from non-wholly owned subsidiaries amount to € -5 million as of 31 December 2016(2015: € 7 million). These NCI do not have a material interest in Airbus’ activities and cash ﬂows.
Subsidiaries with NCI that are material to their stand-alone ﬁnancial information are:
GEW
AirbusTechnologies (Pty) Ltd. DS Optronics (Pty) Ltd
Principal place of business

Pretoria (South Africa)

Irene (South Africa)

AlestisAerospace S.L.

PFW
Aerospace GmbHLa Rinconada (Spain)

Speyer (Germany)

2016

2015

2016

2015

2016

2015

2016

2015

25%

25%

30%

30%

38.09%

38.09%

25.10%

25.10%

NCI (in € million)

13

9

10

7

(34)

(25)

(28)

(28)

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

1

2

1

1

(5)

(7)

0

0

Ownership interest held by NCI

33. Capital Management

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

Long-term rating

Outlook

Short-term ratingStandard and Poor’s(1)A+

StableA-1+

Moody’s Investors Services

A2

StableP-1

Fitch Ratings (unsolicited)A-

StableF-2(1) The long-term rating with Standard and Poor’s has been upgraded to A+ from A in September 2016.

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

Airbus uses Return on Capital Employed (“RoCE”) to measure
the value created by ﬁnancial returns relative to its capital base.
RoCE, as deﬁned by Airbus, uses EBIT for the numerator and
Average Capital Employed for the denominator. The Average
Capital Employed for Airbus is deﬁned as the average of theannual opening and closing positions of Fixed Assets plus Net
Operating Working Capital plus O perating Cash less Other
Provisions.
Financial value is created if proﬁts relative to Airbus’ Capital
Employed exceed the Company’s cost of capital. Value canbe measured by comparing RoCE to the WACC. A ﬁ ve year
plan for a value creation ambition is constructed annually, andis composed of (i) RoCE, (ii) EBIT, and (iii) Free Cash Flow,which is deﬁned as Cash provided by operating activities andCash used for investing activities less Change of securities,
Contribution to plan assets for pensions and realised Treasury
swaps. The Company’s long-term aspiration is to reach theﬁrst quartile of RoCE performance among our aerospace anddefence peers.
Airbus also monitors the level of dividends paid to its
shareholders.

Financial Statements 2016 - AIRBUS ° 62 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.7 Capital Structure and Financial Instruments

The Company generally satisﬁes its obligations arising fromshare-based payment plans by issuing new shares. In order toavoid any dilution of its current shareholders out of these sharebased payment plans, the Company performs share buybacks
and cancels its own shares following the decisions of the Boardof Directors and approval of the AGM. Apart from this purpose,
the Company generally does not trade with treasury shares.
The Company complies with the capital requirements underapplicable law and its Articles of Association.

34. Net Cash

The net cash-position provides ﬁnancial ﬂexibility to fund Airbus’ operations, to react to business needs and risk proﬁle and toreturn capital to the shareholders.
31 December(In € million)

2016

2015

Cash and cash equivalents(1)10,143

6,590

Current securities

1,551

1,788

Non-current securities

9,897

9,851

Short-term financing liabilities(1,687)(2,790)Long-term financing liabilities(8,791)(6,335)

Total(1)11,1139,104(1) Investments made by Airbus Group SE in certain securities and trade liabilities have been reassessed and reclassified. Previous year figures are adjusted by € -899 million.

Derivative instruments recognised on Airbus’ Statement of
Financial Position consist of (i) instruments that are enteredinto as hedges of Airbus’ operating activities or interest result,and (ii) embedded foreign currency derivatives that arise fromseparating the foreign currency component from certain
operating contracts. Cash ﬂows resulting from the settlementof these derivatives are therefore recorded as part of cash ﬂow
from operations. Similarly, ﬁnancial assets and liabilities arisingfrom customer ﬁnancing activities and refundable advancesfrom European Governments are considered part of operating
activities and related cash ﬂows are hence recognised as cash
ﬂows from operating activities.

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

2016

2015

Bank account and petty cash

3,100

1,504

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

5,513

3,220

Short-term securities (available-for-sale)(1)

1,535

1,952

12

1

10,160

6,677

17

87

10,143

6,590

OthersTotal cash and cash equivalents(1)

Recognised in disposal groups classified as held for sale
Recognised in cash and cash equivalents(1)(1) Investments made by Airbus Group SE in certain securities and trade liabilities have been reassessed and reclassified. Previous year figures are adjusted by € -899 million.

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

Financial Statements 2016 - AIRBUS ° 63 °2

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

34.2 Securities

34.3 Financing Liabilities

The majority of Airbus’ securities consists of debt securities andare classiﬁed as available-for-sale ﬁnancial assets and carriedat their fair values (see “– Note 35.2: Carrying Amounts andFair Values of Financial Instruments” for more details on how
available-for-sale assets are accounted for).

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

Airbus’ security portfolio amounts to € 11,448 millionand € 11,639 million as of 31 December 2016 and 2015,
respectively. The security portfolio contains a non-current
portion of available-for-sale-securities of € 9,897 million (in2015: € 9,848 million), no amount of securities designated atfair value through proﬁt and loss (in 2015: € 3 million), and acurrent portion of available-for-sale-securities of € 1,551 million(in 2015: € 1,788 million).
Included in the securities portfolio as of 31 December 2016
and 2015, respectively, are corporate and government bonds
bearing either ﬁxed rate coupons (€ 10,736 million nominal value;comparably in 2015: € 10,956 million) or ﬂoating rate coupons(€ 360 million nominal value; comparably in 2015: € 397 million)
and foreign currency funds of hedge funds (€ 6 million nominal
value; 2015: € 8 million).
When Airbus enters into securities lending activities, thesecurities pledged as collateral continue to be recognised on
the balance sheet. There were no such securities pledged asof 31 December 2016 and 2015.

Financing liabilities to ﬁ nancial institutions include liabilities
from securities lending transactions. In securities lendingtransactions, Airbus receives cash from its counterparty andtransfers the securities subject to the lending transaction as
collateral. The amount of cash received is recognised as aﬁnancing liability. The securities lent are not derecognised, but
remain on Airbus’ Statement of Financial Position.
The Company has issued several euro-denominated bonds
under its Euro Medium Term Note programme (“EMTN”) and astand-alone US dollar-denominated bond on the US institutional
market under Rule 144A. It has also issued an euro-denominatedconvertible bond and euro-denominated exchangeable bonds
into Dassault Aviation shares. Furthermore, the Company has
long-term US dollar-denominated loans outstanding with theEuropean Investment Bank (“EIB”) and the Development Bankof Japan (“DBJ”).

Financial Statements 2016 - AIRBUS ° 64 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.7 Capital Structure and Financial Instruments

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

Principal
amount(In million)

EMTN 15 years€ 500

EMTN 7 years

US$ Bond 10 years€ 1,000

US$ 1,000

EMTN 10 years€ 1,000

2016

533

0

940

1,052

2015

550

1,018

Issuancedate

Sep. 2003

Aug. 2009

917

Apr. 2013

1,021

Apr. 2014

€ 500

526

497

Oct. 2014

US$ 3,000

0505

Apr. 2015

EMTN 15 years
US$ Commercial
paper programme

31 December

Convertible bond
7 years

EMTN 10 years

EMTN 15 years
Exchangeablebonds 5 years

€ 500

€ 600

€ 900

€ 1,078

Bonds

DBJ 10 years

US$ 300

464

589

861

458

0

May 2016

0

1,048

0

6,013

4,966

285

Jul. 2015

May 2016

276

Couponor interest
rate

5.50%

4.625%

2.70%

2.375%

2.125%

0.00%

0.875%

1.375%EIB 7 years

US$ 406

385

373

Feb. 2013

3M US-Libor+0.93%

OthersLiabilities to financial
institutions

US$ 320

304

294

0

223

370

153

2,423

2,462

Dec. 2014

2.52%

Dec. 2015

6M US-Libor+0.559%The Company can issue commercial paper under the so called“billet de trésorerie” programme at ﬂoating or ﬁxed interest rates
corresponding to the individual maturities ranging from 1 day
to 12 months. The programme has been set up in 2003 with amaximum volume of € 2 billion, increased in 2013 to a maximum

1.386%

0.951%

1.49%

0.333%

Apr. 2024

Interest rate
swapped into 3M
Euribor +1.40%

Oct. 2029

Interest rate
swapped into 3M
Euribor +0.84%

Jul. 2022

Convertible into
Airbus Group SE
shares at € 99.54
per share

May 2026

Interest rate
swapped into 3M
EuriborMay 2031

Interest rate
swapped into 3M
Euribor

Jun. 2021

Exchangeable
into Dassault
Aviation sharesJan. 2021

Interest rate
swapped into
4.76% fixedInterest rate
swapped into
3.2% fixed

Feb. 2020

Aug. 2011

Share buybackcommitment

2.194%

Apr. 2023

Interest rate
swapped into 3M
Libor +0.68%

Aug. 2021

567

EIB 10 years

2.394%

Aug. 2016

Interest rate
swapped into 3M
Euribor +1.57%

Jan. 2011

488

576

2.73%

Sep. 2018

Interest rate
swapped into 3M
Euribor +1.72%

3M US-Libor+1.15%

US$ 721

591

4.68%

Additionalfeatures0.00%

EIB 10 years

US$ 627

5.58%

MaturitydateJun. 2016

3M US-Libor+0.85%

EIB 10 years

Effective
interest
rate

2.52%

Dec. 2024

Interest rate
swapped into 3M
Libor +0.61%

Dec. 2025

volume of € 3 billion. As of 31 December 2016, there was nooutstanding amount under the programme. The Company
established in April 2015 a US$ 2 billion commercial paper
programme which has been increased to US$ 3 billion in
April 2016.

Financial Statements 2016 - AIRBUS ° 65 °2

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

Financing liabilities include outstanding debt of € 85 million(2015: € 129 million) relating to a loan Airbus Commercial
Aircraft received from Air 2 US in 1999 by way of a reinvestment
note amounting to US$ 800 million, bearing a ﬁ xed interest
rate of 9.88%, and other liabilities related to sales ﬁnancing(see “– Note 25: Sales Financing Transactions”).
(In € million)

In June 2016, the Company issued € 1,078 million exchangeablebonds into Dassault Aviation shares, with a 5-year maturity.
The exchangeable bonds were issued at 103.75% of par witha coupon of 0%. Their effective interest rate, after separationof the equity conversion option related to Dassault Aviation
shares, is 0.333%.

Not exceeding 1 year

Over 1 year up to 5 years

More than 5 years

Bonds

Total

0

1,581

4,432

6,013

Liabilities to financial institutions

351

1,573

499

2,423

Loans

332

213

118

663

Liabilities from finance leases

15

154

220

389

Others

(1)

989

1

0

990

31 December 2016

1,687

3,522

5,269

10,478

Bonds

1,523

550

2,893

4,966

Liabilities to financial institutions

349

1,112

1,001

2,462

Loans

255

163

240

658

Liabilities from finance leases

13

145

230

388

Others(1)31 December 2015

650

1

0

651

2,790

1,971

4,364

9,125

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

The aggregate amounts of ﬁnancing liabilities maturing during the next ﬁve years and thereafter as of 31 December 2016 and asof 31 December 2015, are as follows:
31 December(In € million)

2016

2015

1 year

1,687

2,790

2 years829

228

3 years

271

835

4 years703

252

5 years

1,719

656

Thereafter

5,269

4,364

10,478

9,125

Total

35. Information about Financial Instruments

35.1 Financial Risk Management
By the nature of its activities, Airbus is exposed to a variety ofﬁnancial risks: (i) market risks, in particular foreign exchange risk,
but also interest rate risk, equity price risk and commodity pricerisk, (ii) liquidity risk and (iii) credit risk. Airbus’ overall ﬁnancial
risk management activities focus on mitigating unpredictableﬁnancial market risks and their potential adverse effects on
Airbus’ operational and ﬁnancial performance.

policies approved by the Board of Directors or by the Chief
Financial Ofﬁcer. The identiﬁcation, evaluation and hedging of
the ﬁnancial risks is in the joint responsibility of establishedtreasury committees and Airbus’ Divisions.
Airbus uses financial derivatives solely for risk mitigating
purposes (“hedging”) and applies hedge accounting for asigniﬁcant portion of its hedging portfolio.

The ﬁnancial risk management of Airbus is generally carriedout by the Corporate Finance department at Airbus under

Financial Statements 2016 - AIRBUS ° 66 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.7 Capital Structure and Financial Instruments

Market Risk
Foreign exchange risk — Foreign exchange risk arises
when future commercial transactions or ﬁrm commitments,
recognised monetary assets and liabilities and net investments
in foreign operations are denominated in a currency that is not
the entity’s functional currency.
Airbus manages a long-term hedge portfolio with maturities ofseveral years covering its net exposure to US dollar sales, mainly
from the activities of Airbus Commercial Aircraft. This hedge
portfolio covers a large portion of Airbus’ ﬁrm commitments
and highly probable forecast transactions.
Most of Airbus’ revenue is denominated in US dollars, while amajor portion of its costs is incurred in euro and to some extent
in other foreign currencies. Consequently, to the extent that
Airbus does not use ﬁnancial instruments to hedge its exposure
resulting from this currency mismatch, its proﬁts will be affectedby changes in the €/US$ exchange rate. As Airbus intends togenerate proﬁts primarily from its operations rather than throughspeculation on exchange rate movements, it uses hedging
strategies to manage and minimise the impact of exchange
rate ﬂuctuations on these proﬁts.
With respect to its commercial aircraft products, Airbus
typically hedges ﬁrmly committed sales in US dollars using a“ﬁrst ﬂow approach”. Under that approach, the foreign currency
derivatives Airbus enters into are designated as a hedge of theﬁrst US dollar inﬂows received from the customer at aircraft
delivery in a given month. The strategy implies that only a portionof the expected monthly customer payments made at aircraft
delivery are hedged. For this reason, a reduction of monthly
cash inﬂows as a result of postponements or order cancellations
have no impact on the effectiveness of the hedge as long as theactual gross US dollar cash inﬂows received at aircraft delivery
in a particular month exceed the portion designated as being
hedged in that month.
Similarly, though to a much lesser extent, Airbus hedges its
expected foreign currency exposure arising from US dollar or
pound sterling cash outﬂows in the commercial aircraft businesson a ﬁrst outﬂow basis.
In military aircraft and non-aircraft businesses, Airbus hedges
in and outﬂows in foreign currencies from ﬁrmly committed
or highly probable forecast sales and purchase contracts.
Here, foreign currency derivatives are typically contracted inlower volumes; they may be accounted for using a ﬁrst ﬂow
approach or are designated as hedges of speciﬁ c agreed
milestone payments. The amount of the expected ﬂ ows to
be hedged can cover up to 100% of the equivalent of the net
US dollar exposure at inception. The coverage ratio considers
the variability in the range of potential outcomes taking into
account macroeconomic movements affecting spot rates andinterest rates as well as the robustness of the commercial
cycle.

In situations where the payment dates for hedged firmly
committed cash ﬂows are not ﬁxed and subject to potentiallysigniﬁcant delays, Airbus may use rollover strategies, usually
involving F/X swaps.
For all foreign currency hedges of future cash ﬂows which qualify
for hedge accounting under IAS 39, Airbus uses the cash ﬂow
hedge model, which requires (i) recognising the effective portionof the fair value changes of the hedging derivatives in equity(within other comprehensive income) and (ii) recognising theeffect of the hedge in proﬁt or loss when the hedged cash ﬂows
affect proﬁt or loss.
In addition, Airbus hedges currency risk arising from ﬁnancial
assets or liabilities denominated in currencies other thanthe euro, including foreign currency receivable and payableaccounts, as well as foreign currency denominated fundingtransactions or securities. Airbus applies hedge accounting if
a mismatch in terms of proﬁt or loss recognition of the hedging
instrument and hedged item would otherwise occur. Frequently,
however, the currency-induced gains or losses of the hedging
instrument and the hedged item match in terms of proﬁt orloss recognition (“natural hedge”), so no hedge accounting
is required. Sometimes such gains or losses may end up in
different sections of the income statement (such as operating
proﬁt for the hedged item and ﬁnancial result for the hedging
instrument). If so, Airbus may choose to present the gains
or losses of both the hedging instrument and the hedged
item in the same income statement line item if certain formal
requirements are met.
As hedging instruments, Airbus primarily uses foreign currency
forwards, foreign currency options and to a minor extent nonderivative ﬁnancial instruments.
Airbus also has foreign currency derivative instruments which
are embedded in certain purchase contracts denominated in acurrency other than the functional currency of any substantial
party to the contract, principally in US dollar and pound sterling.
If such embedded derivatives are required to be accounted forseparately from the host purchase contract, related gains orlosses are generally recognised in other ﬁnancial result. However,if the embedded derivatives qualify for hedge accounting, Airbus
might choose to designate them as a hedging instrument in ahedge of foreign currency risk, in which case they are accounted
for under the cash ﬂow hedge model as described above.
Interest rate risk — Airbus uses an asset-liability management
approach with the objective to limit its interest rate risk. Airbus
undertakes to match the risk proﬁle of its interest-bearing assets
with those of its interest-bearing liabilities. The remaining net
interest rate exposure is managed through several types ofinterest rate derivatives, such as interest rate swaps and interest
rate futures contracts, in order to minimise risks and ﬁnancial
impacts.

Financial Statements 2016 - AIRBUS ° 67 °2

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

The vast majority of related interest rate hedges qualify for hedge
accounting, and most of them are accounted for under the fairvalue hedge model. As a result, both the fair value changes ofthese derivatives and the portion of the hedged items’ fair valuechange that is attributable to the hedged interest rate risk arerecognised in proﬁt and loss, where they offset to the extent
the hedge is effective.
A few interest rate swaps that have been entered into as ahedge of certain of Airbus’ variable rate debt (see “– Note 34.3:
Financing Liabilities”) are accounted for under the cash ﬂow
hedge model, and related fair value gains are recognised in
OCI and reclassiﬁed to proﬁt or loss when the hedged interest
payments affect proﬁt or loss.
Airbus invests in financial instruments such as overnight
deposits, certiﬁcates of deposits, commercial papers, othermoney market instruments and short-term as well as mediumterm bonds. For its ﬁnancial instruments portfolio, Airbus has an
Asset Management Committee in place that meets regularly andaims to limit the interest rate risk on a fair value basis througha value-at-risk approach.
Commodity price risk — Airbus is exposed to risk relating toﬂuctuations in the prices of commodities used in the supply
chain. Airbus manages these risks in the procurement process
and to a certain extent uses derivative instruments in order tomitigate the risks associated with the purchase of raw materials.
To the extent that the gains or losses of the derivative andthose of the hedged item or transaction do not match in terms
of proﬁt or loss, Airbus applies cash ﬂow hedge accounting to
the derivative instruments.
Equity price risk — Airbus is to a small extent invested in equity
securities mainly for operational reasons. Airbus’ exposure toequity price risk is hence limited. Furthermore, Airbus is exposed
under its LTIP to the risk of the Company share price increases.
Airbus limits these risks through the use of equity derivatives
that qualify for hedge accounting and have been designatedas hedging instruments in a cash ﬂow hedge.
Sensitivities of market risks — The approach used tomeasure and control market risk exposure within Airbus’
ﬁnancial instrument portfolio is, amongst other key indicators,
the value-at-risk (“VaR”). The VaR of a portfolio is the estimatedpotential loss that will not be exceeded over a speciﬁed periodof time (holding period) from an adverse market movementwith a speciﬁ ed conﬁ dence level. The VaR used by Airbus
is based upon a 95% conﬁdence level and assumes a ﬁ veday holding period. The VaR model used is mainly based on
the so called “Monte-Carlo-Simulation” method. Deriving thestatistical behaviour of the markets relevant for the portfolio
out of market data from the previous two years and observed
interdependencies between different markets and prices, themodel generates a wide range of potential future scenarios formarket price movements.
Airbus’ VaR computation includes Airbus’ ﬁnancial debt, shortterm and long-term investments, foreign currency forwards,
swaps and options, commodity contracts, finance leasereceivables and liabilities, foreign currency trade payables andreceivables, including intra-Airbus payables and receivables
affecting Airbus proﬁt and loss.
Although VaR is an important tool for measuring market risk,
the assumptions on which the model is based give rise to some
limitations, including the following:
A 5-day holding period assumes that it is possible to hedge or
dispose of positions within that period. This is considered to
be a realistic assumption in almost all cases but may not be
the case in situations in which there is severe market illiquidity
for a prolonged period.
■
A 95% conﬁdence level does not reﬂect losses that may occur
beyond this level. Even within the model used there is a 5%
statistical probability that losses could exceed the calculated
VaR.
■
T he use of historical data as a basis for estimating thestatistical behaviour of the relevant markets and finallydetermining the possible range of future outcomes out of
this statistical behaviour may not always cover all possible
scenarios, especially those of an exceptional nature.
■

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

Financial Statements 2016 - AIRBUS ° 68 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.7 Capital Structure and Financial Instruments

A summary of the VaR position of Airbus’ ﬁnancial instruments portfolio at 31 December 2016 and 2015 is as follows:
Total VaR

Equity price VaR

Foreign exchange hedges for forecast
transactions or firm commitments

1,778

0

1,873

0

180

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

80

57

58

0

19

Finance lease receivables andliabilities, foreign currency trade
payables and receivables

81

0

15

0

86

(In € million)

Currency VaR Commodity price VaRInterest rate VaR

31 December 2016

Commodity contracts

4

0

1

4

0

Equity swaps

4

4

0

0

0

Diversification effect

(276)

(1)

(127)

0

(70)

All financial instruments

1,671

60

1,820

4

215

Foreign exchange hedges for forecast
transactions or firm commitments

1,814

0

1,870

0

181

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

196

162

61

0

14

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

87

0

22

0

83

Commodity contracts

7

0

3

6

0

Equity swaps

11

11

0

0

0

31 December 2015

Diversification effect(1)

(403)

(8)

(148)

0

(91)

All financial instruments

1,712

165

1,808

6

187

(1) Investments made by Airbus Group SE in certain securities and trade liabilities have been reassessed and reclassified.

The total VaR as of 31 December 2016 is stable compared to year-end 2015. The market environment, in particular foreign exchange
volatility, as well as the size of the net foreign exchange portfolio, is comparable to year-end 2015. As a result, the respective
market risks of these hedging instruments are – depending on the hedges’ actual effectiveness – offset by corresponding opposite
market risks of the underlying forecast transactions, assets or liabilities. Under IFRS 7, the underlying forecast transactions do
not qualify as ﬁnancial instruments and are therefore not included in the tables shown above. Accordingly, the VaR of the foreignexchange hedging portfolio in the amount of € 1,778 million (2015: € 1,814 million) cannot be considered as a risk indicator for
Airbus in the economic sense. When looking at the ﬁnancial instrument types the noticeable change is within the ﬁnancial assets
coming from the lower equity price VaR related to the decrease of the Dassault Aviation equity portfolio.

Liquidity Risk
Airbus’ policy is to maintain sufﬁcient cash and cash equivalents
at any time to meet its present and future commitments asthey fall due. Airbus manages its liquidity by holding adequate
volumes of liquid assets and maintains a committed credit facility(€ 3.0 billion as of 31 December 2016 and 2015) in addition to
the cash inﬂow generated by its operating business. Airbus
continues to keep within the asset portfolio the focus on low
counterparty risk. In addition, Airbus maintains a set of otherfunding sources, and accordingly may issue bonds, notes andcommercial papers or enter into security lending agreements.

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

Financial Statements 2016 - AIRBUS ° 69 °2

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

The contractual maturities of Airbus’ ﬁnancial liabilities, based on undiscounted cash ﬂows and including interest payments, if
applicable, are as follows:
Carrying Contractual
amount(1) cash flows(1) < 1 year(1)(In € million)

1 year2 years

2 years3 years

3 years4 years

4 years5 years> 5 years(5,856)31 December 2016
Non-derivative financial liabilities(23,994)(25,293)(14,903)(1,268)

(458)

(886)

(1,923)

Derivative financial liabilities(11,020)(13,891)(4,568)(3,772)(2,897)(1,511)

(831)

(312)

Total

(35,014)(39,184)(19,471)(5,040)(3,355)(2,397)(2,754)(6,168)Non-derivative financial liabilities(21,175)(22,456)(14,412)(832)(1,113)

(408)

(762)

(4,929)Derivative financial liabilities(10,587)(12,690)(3,973)(2,747)(3,518)(1,898)

(506)

(48)

Total

(31,762)(35,146)(18,385)(3,579)(4,631)(2,306)(1,268)(4,977)31 December 2015(1) Investments made by Airbus Group SE in certain securities and trade liabilities have been reassessed and reclassified. Previous year figures are adjusted by € 899 million.

Non-derivative ﬁnancial liabilities included in the table above comprise ﬁnancing liabilities and ﬁnance lease liabilities as presented
in the tables of “– Note 35.2: Carrying Amounts and Fair Values of Financial Instruments”. Due to their speciﬁc nature, namely
their risk-sharing features and uncertainty about the repayment dates, the European Governments refundable advances, whichamount to € 7,070 million at 31 December 2016 (€ 7,286 million at 31 December 2015) are not included.

Credit Risk
Airbus is exposed to credit risk to the extent of non-performanceby either its customers (e.g. airlines) or its counterparts withregard to ﬁnancial instruments or issuers of ﬁnancial instruments
for gross cash investments. However, Airbus has policies inplace to avoid concentrations of credit risk and to ensure thatcredit risk is limited.

Sales of products and services are made to customers after
having conducted appropriate internal credit risk assessment. In
order to support sales, primarily at Airbus Commercial Aircraft
and ATR, Airbus may agree to participate in the ﬁ nancingof customers, on a case-by-case basis, directly or throughguarantees provided to third parties. In determining the amountand terms of the ﬁ nancing transaction, Airbus Commercial
Aircraft and ATR take into account the airline’s credit ratingand economic factors reﬂecting the relevant ﬁnancial market
conditions, together with appropriate assumptions as to theanticipated future value of the ﬁnanced asset.

As far as central treasury activities are concerned, credit risk
resulting from ﬁnancial instruments is managed on Airbus level.
In order to ensure sufﬁcient diversiﬁcation, a credit limit system
is used.
Airbus monitors the performance of the individual ﬁ nancial
instruments and the impact of the market developments on
their performance and takes appropriate action on foreseeable
adverse development based on pre-deﬁned procedures andescalation levels.

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

The following table breaks down the carrying amounts of non-cash loans and receivables including ﬁnance leases, separately
showing those that are impaired, renegotiated or past due:(In € million)

Not
past
due

Renegociated /Past due
Past due
Past due
not past due /Past due> 3 and> 6 and> 9 and
Past due
not impaired Impaired ≤ 3 months ≤ 6 months ≤ 9 months ≤ 12 months > 12 months

Total

31 December 2016
Customer financing

846

0

0

4

3

86

0

0

939

Trade receivables

5,976

27

42

1,035

232

281

77

431

8,101

Others

1,313

9

78

111

48

182

22

466

2,229

Total

8,135

36

120

1,150

283

549

99

897

11,26931 December 2015
Customer financing

721

0

0

0

0

0

0

0

721

Trade receivables

5,823

115

162

866

402

112

96

301

7,877

Others

1,251

24

8

196

30

45

198

183

1,935

Total

7,795

139

170

1,062

432

157

294

484

10,533Financial Statements 2016 - AIRBUS ° 70 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.7 Capital Structure and Financial Instruments

The management believes that the unimpaired amounts that are
past due are still collectible in full, based on historic payment
behaviour and analysis of customer credit risk, including
underlying customers’ credit ratings if they are available.
At year-end there was no indication that any ﬁnancial assets
carried at fair value were impaired.

35.2

Carrying Amounts and Fair Valuesof Financial Instruments

Financial instruments — Airbus’ ﬁnancial assets mainly consist
in cash, short to medium-term deposits and securities. Airbus’
ﬁnancial liabilities include trade liabilities, obligations towards
ﬁnancial institutions, issued bonds and refundable advancesfrom European Government s. All purchases and sales ofﬁnancial assets are recognised on the settlement date according
to market conventions. Airbus classiﬁes its ﬁnancial assets inthe following three categories: (i) at fair value through proﬁt or
loss, (ii) loans and receivables and (iii) available-for-sale ﬁnancial
assets. Their classiﬁ cation is determined by management
when ﬁrst recognised and depends on the purpose for theiracquisition.
Within Airbus, all investments in entities which do not qualify
for consolidation or equity-method accounting are classiﬁed as
non-current available-for-sale ﬁnancial assets. They are includedin the line other investments and other long-term ﬁnancial assets
in the Consolidated Statement of Financial Position.
Available-for-sale financial assets — Financial assets
classiﬁed as available-for-sale are accounted for at fair value.
Changes in their fair value other than impairment losses andforeign exchange gains and losses on monetary items arerecognised directly within AOCI. As soon as such ﬁ nancial

assets are sold or otherwise disposed of, or are determined to
be impaired, the cumulative gain or loss previously recognisedin equity is recorded as part of other income (other expense)from investments in the Consolidated Income Statement forthe period. Interest earned on the investment is presented asinterest income in the Consolidated Income Statement using theeffective interest method. Dividends earned on investment arerecognised as other income (other expense) from investmentsin the Consolidated Income Statement when the right to thepayment has been established.
In case of the impairment of debt instruments classiﬁ ed asavailable-for-sale, interest continues to be accrued at the original
effective interest rate on the reduced carrying amount of theasset and is recorded in ﬁnancial result. If, in a subsequent year,
the fair value of a debt instrument increases and the increase canbe objectively related to an event occurring after the impairment
loss was recognised in the Consolidated Income Statement, theimpairment loss is reversed through the Consolidated Income
Statement.
Financial assets at fair value through proﬁ t or loss —Within Airbus, only derivatives not designated as hedges are
categorised as held for trading. Furthermore, Airbus designates
certain ﬁnancial assets (such as investments in accumulatedmoney market funds) at fair value through proﬁt or loss at initialrecognition if they are part of a group of ﬁnancial assets thatis managed and its performance is evaluated on a fair value
basis, in accordance with a documented risk management orinvestment strategy.
Airbus assigns its ﬁnancial instruments into classes based on
their balance sheet category.

2

Financial Statements 2016 - AIRBUS ° 71 °

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

The following table presents the carrying amounts and fair values of ﬁnancial instruments by class and by IAS 39 measurement
category as of 31 December 2016:
Fair value
for hedge
relations

Fair value throughprofit or loss(In € million)

Held fortrading

Designated

Loans and receivables
Available- and financial liabilities
at amortised costfor-sale

Fair
value

Fair
value

Amortised
cost

Other

Fair
value

Financial
instruments
total
Book
value

Fair
value

2,091

AssetsOther investments and otherlong-term financial assets■

Equity investments(1)(2)

0

0

0

2,091

0

0

0

2,091

■

Customer financing(3)

0

0

0

0

732

735

207

939

942

■

Other loans

0

0

0

0

1,147

1,147

0

1,147

1,147

Trade receivables

0

0

0

0

8,101

8,101

0

8,101

8,101

Other financial assets■

Derivative instruments(6)

66

0

1,085

0

0

0

0

1,151

1,151

■

Non-derivative instruments

0

0

0

0

1,082

1,082

0

1,082

1,082
11,448

Securities

0

0

0

11,44800011,448Cash and cash equivalents

0

5,513

0

1,535

3,095

3,095

0

10,143

10,143

Total

66

5,513

1,085

15,074

14,157

14,160207

36,102

36,10500

00(6,013)(6,217)0(6,013)(6,217)

Liabilities
Financing liabilities■■■

Issued bonds andcommercial papers
Liabilities to banks and otherfinancing liabilities

0

0

0

0

(4,076)(4,086)0(4,076)(4,086)

Finance lease liabilities(4)

0

0

0

0

0

0

(389)

(389)

(389)

(349)

0

(10,671)

0

0

0

0

(11,020)(11,020)(7,070)

Other financial liabilities■■

Derivative instruments(7)European Governments
refundable advances(5)

0

0

0

0

(7,070)(7,070)0(7,070)

Other

(38)

0

0

0

(946)

(946)

0

(984)

(984)

Trade liabilities

0

0

0

0

(12,532)(12,532)

0(12,532)(12,532)(387)

0(10,671)0(30,637)(30,851)■

Total(389) (42,084) (42,298)(1) Other than those accounted for under the equity method.
(2) For certain unlisted equity investments price quotes are not available and fair values may not be reliably measurable using valuation techniques because the range of reasonable
fair value estimates is significant and the probabilities of the various estimates within the range cannot be reasonably assessed. These equity investments are accounted forat cost, and their fair values as reported in the table above equal their carrying amounts. As of 31 December 2016, the aggregate carrying amount of these investments was€ 494 million.
(3) This includes finance lease receivables, which are not assigned to an IAS 39 measurement category, but reported as “other”.
(4) Finance lease liabilities are accounted for in accordance with IAS 17 in a manner that is similar, though not identical in all respects, to amortised-cost accounting under IAS 39.
They are therefore assigned to the category “other”.
(5) The European Governments refundable advances of € 7,070 million are measured at amortised cost. Fair values cannot be reliably measured because their risk sharing natureand the uncertainty of the repayment dates give rise to a broad range of reasonable fair value estimates and make it impossible to reasonably assess the probabilities of thevarious estimates within the range. This may change and reliable fair value measures become available as the related programmes approach the end of production.
(6) This includes credit value adjustments of € -44 million, of which € -42 million is recognised in OCI.
(7) This includes debit value adjustments of € 87 million, of which € 82 million is recognised in OCI.

Financial Statements 2016 - AIRBUS ° 72 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.7 Capital Structure and Financial Instruments

The following table presents the carrying amounts and fair values of ﬁnancial instruments by class and by IAS 39 measurement
category as of 31 December 2015:
Fair value throughprofit or loss(In € million)

Fair value
for hedge
relations

Availablefor-sale

Held fortrading

Designated

Fair
value

Fair
value

Loans and receivables
and financial liabilities
at amortised cost
Amortised
cost

Other

Fair
value

Financial
instruments total
Book
value

Fair
value

AssetsOther investments and otherlong-term financial assets■

Equity investments(1)(2)

0

0

0

1,232

0

0

0

1,232

1,232

■

Customer financing(3)

0

0

0

0

553

553

168

721

721

■

Other loans

0

0

0

0

717

717

0

717

717

Trade receivables

0

0

0

0

7,877

7,877

0

7,877

7,877

317

0

963

0

0

0

0

1,280

1,280

0

0

0

0

1,218

1,218

0

1,218

1,218

0

3

0

11,63600

011,639

11,639Other financial assets■

Derivative instruments(6)■Non-derivative instruments

Securities
Cash and cash equivalents(8)Total(8)

0

3,220

0

1,952

1,418

1,418

0

6,590

6,590

317

3,223

963

14,82011,783

11,783

168

31,274

31,27400

0

0(4,966)(5,091)

0(4,966)(5,091)

Liabilities
Financing liabilities■

Issued bonds andcommercial papers
Liabilities to banks andother financing liabilities

0

0

0

0

(3,771)(3,822)0(3,771)(3,822)Finance lease liabilities(4)

0

0

0

0

0

0

(388)

(388)

(388)

Derivative instruments(7)

(427)

0

(10,160)

0

0

0

0

(10,587)(10,587)

European Governments
refundable advances(5)

0

0

0

0

(7,286)(7,286)0(7,286)(7,286)

Other

(74)

0

0

0

(1,112)(1,112)0(1,186)(1,186)

Trade liabilities(8)

0

0

0

0

(10,864)(10,864)0(10,864)(10,864)(501)

0(10,160)

0(27,999)(28,175)

(388)

■

■

Other financial liabilities■■■

Total(8)(39,048) (39,224)(1) Other than those accounted for under the equity method.
(2) For certain unlisted equity investments price quotes are not available and fair values may not be reliably measurable using valuation techniques because the range of reasonable
fair value estimates is significant and the probabilities of the various estimates within the range cannot be reasonably assessed. These equity investments are accounted forat cost, and their fair values as reported in the table above equal their carrying amounts. As of 31 December 2015, the aggregate carrying amount of these investments was€ 404 million.
(3) This includes finance lease receivables, which are not assigned to an IAS 39 measurement category, but reported as “other”.
(4) Finance lease liabilities are accounted for in accordance with IAS 17 in a manner that is similar, though not identical in all respects, to amortised-cost accounting under IAS 39.
They are therefore assigned to the category “other”.
(5) The European Governments refundable advances of € 7,286 million are measured at amortised cost. Fair values cannot be reliably measured because their risk sharing natureand the uncertainty of the repayment dates give rise to a broad range of reasonable fair value estimates and make it impossible to reasonably assess the probabilities of thevarious estimates within the range. This may change and reliable fair value measures become available as the related programmes approach the end of production.
(6) This includes credit value adjustments of € -47 million, of which € -28 million is recognised in OCI.
(7) This includes debit value adjustments of € 117 million, of which € 95 million is recognised in OCI.
(8) Investments made by Airbus Group SE in certain securities and trade liabilities have been reassessed and reclassified. Previous year figures are adjusted by € -899 million.

Fair Value Hierarchy
Fair value of ﬁnancial instruments — The fair value of quoted
investments is based on current market prices. If the market
for ﬁ nancial assets is not active, or in the case of unlisted
ﬁnancial instruments, Airbus determines fair values by using
generally accepted valuation techniques on the basis of market
information available at the end of the reporting period. Derivative
instruments are generally managed on the basis of Airbus’ net
exposure to the credit risk of each particular counterparty andfair value information is provided to Airbus’ key management

personnel on that basis. For these derivative instruments, thefair value is measured based on the price that would be received
to sell a net long position, or transfer a net short position, fora particular credit risk exposure as further described below.
Depending on the extent the inputs used to measure fair values
rely on observable market data, fair value measurements may
be hierarchised according to the following levels of input:■

Level 1: quoted prices (unadjusted) in active markets for
identical assets and liabilities;

Financial Statements 2016 - AIRBUS ° 73 °2

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

Level 2: inputs other than quoted prices that are observable forthe asset or liability – fair values measured based on Level 2
input typically rely on observable market data such as interest
rates, foreign exchange rates, credit spreads or volatilities;■
Level 3: inputs for the asset or liability that are not based on
observable market data – fair values measured based on
Level 3 input rely to a signiﬁcant extent on estimates derived

from Airbus’ own data and may require the use of assumptions
that are inherently judgemental and involve various limitations.

■

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

The following table presents the carrying amounts of the ﬁnancial instruments held at fair value across the three levels of the fairvalue hierarchy as of 31 December 2016 and 2015, respectively:
31 December 2016
(In € million)

31 December 2015

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

1,597

0

0

1,597

828

0

0

828

0

1,148

3

1,151

0

1,234

46

1,280

11,4462

0

11,448

11,474165

0

11,639Financial assets measured at fair value
Equity instruments
Derivative instruments
Securities
Cash equivalents(1)

5,513

1,535

0

7,048

3,042

2,130

0

5,172

18,5562,685

321,244

15,344

3,529

46

18,919Derivative instruments0(11,009)(11)(11,020)0(10,587)0(10,587)

Other liabilities

0

0

(38)

(38)

0

0

(74)

(74)

0

(11,009)(49)(11,058)

0(10,587)(74)(10,661)

Total(1)Financial liabilities measured at fair value

Total(1) Investments made by Airbus Group SE in certain securities and trade liabilities have been reassessed and reclassified. Previous year figures are adjusted by € -899 million.

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

Commodity
swap
agreements

Financial liabilities

Total

Written put
options on
NCI interests

Commodity
swap
agreements

Earn-outagreements

Total
(137)

1 January 2015

2

2

(127)

0

(10)

Total gains or losses in profit or loss

59

59

0

0

0

0

OCI

0

0

60

0

0

60

(15)

(15)

3

0

0

3

Settlements
31 December 2015

46

46

(64)

0

(10)

(74)

Total gains or losses in profit or loss

(10)

(10)

(2)

(11)

0

(13)

0

0

0

0

0

0

(33)

(33)

38

0

0

38

3

3

(28)

(11)

(10)

(49)

OCI
Settlements

31 December 2016

The proﬁt of the period impact attributable to Level 3 ﬁnancial assets and liabilities which are still held by Airbus as of 31 December
2016 was a loss of € -16 million (2015: gain of € 46 million).

Financial Assets Classified as Level 3
The ﬁnancial assets measured at fair value that are classiﬁed
as Level 3 mainly consist of short-term commodity contracts
whose notional amounts vary with the actual volumes of certain
commodity purchases made by Airbus in speciﬁ c months.
For fair value measurement purposes, the notional amounts,
being the unobservable input, are set with reference to monthly
commodity volumes that management expects to purchase
based on planning forecasts. The fair values are otherwise

determined using observable market data including quoted
interest rates and pricing information obtained from recognised
vendors of market data.
A deviation of 10% of actual monthly volumes purchasedfrom expected monthly volumes purchased would increase or
decrease (depending on whether actual volumes are 10% moreor 10% less than expected volumes) the total Level 3 fair value ofthese short-term commodity contracts by less than € 1 million.

Financial Statements 2016 - AIRBUS ° 74 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.7 Capital Structure and Financial Instruments

Financial Liabilities Classified as Level 3
The ﬁnancial liabilities measured at fair value that are classiﬁed as
Level 3 consist of several written put options on non-controllinginterest of Airbus subsidiaries. The fair values of these NCI
puts (i.e. the net present value of their redemption amount on
exercise) are derived from a discounted cash ﬂow analysis of
the latest operating planning ﬁgures of the respective entities.
The fair value measurements are performed on an annual basis
in line with the operative planning cycle. Apart from the detailed
5-year operating planning ﬁgures, there are two unobservable
inputs that signiﬁcantly affect the values of the NCI puts: the
WACC used to discount the forecasted cash ﬂows and thegrowth rate used to determine the terminal value. WACC andgrowth rates as well as operating planning ﬁgures that wereused for the determination of the Level 3 fair values are derived

from the input perimeters as applied for the impairment test as
disclosed in “– Note 17: Intangible Assets – Goodwill Impairment
Tests”. An increase (decrease) of the discount rates by 50 basis
points results in a decrease (increase) of the NCI put values by€ 1 million (€ 5 million). An increase (decrease) in the growth rates
by 50 basis points increases (decreases) the NCI put values by€ 1 million (€ 5 million) respectively.
Another element of ﬁnancial liabilities measured at fair value
classiﬁed as Level 3 are earn-out payments that have been
agreed with former shareholders of entities acquired by Airbus
in business combinations. Fair value measurement is based on
the expectation regarding the achievement of deﬁned target
ﬁgures by the acquired entity or its ability to close identiﬁed
customer contracts.

Financial Assets Designated at Fair Value through Profit or Loss
The following types of financial assets held at 31 December 2016 and 2015, respectively, are designated at fair value throughproﬁt or loss:(In € million)

Nominal amount at
initial recognition asof 31 December 2016

Nominal amount at
Fair value as of initial recognition as of
31 December 201631 December 2015

Fair value as of
31 December 2015

Designated at fair value through profit
or loss at recognition:■

Money market funds (accumulating)■Foreign currency funds of hedge funds

Total

5,513

5,513

3,220

3,220

6

0

8

3

5,519

5,513

3,228

3,223

Airbus manages these assets and measures their performance on a fair value basis.
In addition, Airbus invests in non-accumulating money market funds, which pay interest on a monthly basis. The fair value of those
funds corresponds to their nominal amount at initial recognition date amounting to € 705 million (2015: € 720 million).

Fair Value Measurement Method
The methods Airbus uses to measure fair values are as follows:
Equity instruments — The fair values of listed equity instruments
reﬂect quoted market prices. The fair values of unlisted equity
instruments may not be reliably measured because the range ofreasonable fair value estimates is signiﬁcant and the probabilitiesof the various estimates within the range cannot be reasonably
assessed. Those instruments are measured at cost, and theircarrying amounts used as a proxy for fair value.
Customer ﬁnancing assets and other loans — The carrying
amounts reﬂected in the annual accounts are used as a proxyfor fair value.
Trade receivables and other receivables — The carrying
amounts reﬂected in the annual accounts are used as reasonableestimates of fair value because of the relatively short period
between the receivables’ origination and their maturity.
Securities — The fair values of securities reﬂect their quoted
market price at the end of the reporting period.

Cash and cash equivalents include cash in hand, cash inbanks, checks, ﬁxed deposits as well as commercial papers
and money market funds. The carrying amounts reﬂected in theannual accounts are used as reasonable estimates of fair value
because of the relatively short period between the originationof the instrument and its maturity or due date. The fair valueof commercial papers is determined based on Level 2 input
by discounting future cash ﬂ ows using appropriate interest
rates. The fair values of money market funds are determinedby reference to their quoted market price.
Derivatives — The fair values of derivative instruments reﬂect
quoted market prices, where available, but in most cases
are determined using recognised valuation techniques suchas option-pricing models and discounted cash ﬂow models.
The valuation is based on observable market data such as
currency rates, currency forward rates, interest rates and yield
curves, commodity forward prices as well as price and rate
volatilities obtained from recognised vendors of market data.

Financial Statements 2016 - AIRBUS ° 75 °2

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

Furthermore, to the extent that these instruments are subject
to master netting arrangements and similar agreements andmanaged on the basis of net credit exposure, their fair values
reﬂect credit and debit value adjustments based on the net longor net short position that Airbus has with each counterparty.
Except for certain short-term commodity contracts discussed
in the Level 3 section above, derivative fair values are measured
based on Level 2 input.
Financing liabilities — The fair values disclosed for ﬁnancing
liabilities, other than those of issued bonds and issued
commercial papers, are determined based on Level 2 input by
discounting scheduled or expected cash ﬂows using appropriate

market interest rates. The fair values disclosed for the issued
EMTN and US dollar bonds reﬂect public price quotations that
qualify as Level 1 input. For issued commercial papers, thecarrying amounts reﬂected in the annual accounts are used
as reasonable estimates of fair value because of the relatively
short period between the origination of these instruments andtheir maturity.
Trade liabilities and current other ﬁnancial liabilities — For
the same reason, carrying amounts are used as reasonable
fair value approximations for trade liabilities and current otherﬁnancial liabilities.

The following interest rate curves are used in the determination of the fair value in respect of the derivative ﬁnancial instruments
as of 31 December 2016 and 2015:31 December

2016(Interest rate in %)

2015

2016

€

2015

2016

US$

2015
£

6 months(0.26)(0.08)

1.31

0.94

0.60

1 year

(0.11)

0.14

1.62

1.12

0.81

0.85
1.13

5 years(0.06)

0.21

1.97

1.72

0.87

1.59

10 years

0.54

0.89

2.35

2.18

1.23

1.99

35.3 Potential Effect of Set-Off Rights on Recognised Financial Assets and Liabilities
Airbus reports all its ﬁnancial assets and ﬁnancial liabilities on a gross basis. With each derivative counterparty there are masternetting agreements in place providing for the immediate close-out of all outstanding derivative transactions and payment of the
net termination amount in the event a party to the agreement defaults or another deﬁned termination event occurs. Furthermore,securities lending transactions are accounted for as collateralised borrowings. As a result, the securities pledged as collateralcontinue to be recognised on the balance sheet and the amount of cash received at the outset of the transaction is separately
recognised as a ﬁnancial liability. The following tables set out, on a counterparty speciﬁc basis, the potential effect of master netting
agreements and collateralised borrowings on Airbus’ ﬁnancial position, separately for ﬁnancial assets and ﬁnancial liabilities thatwere subject to such agreements as of 31 December 2016 and 31 December 2015, respectively:

Derivative instruments(In € million)Grossamounts
recognisedGrossamounts
recognised
set off inthe financial
statements

Net amounts
presented in
the financial
statements

Related amounts not set
off in the statementof financial position
Financial
instruments

Cash collateral
received

Net amount

31 December 2016
Financial assets

1,363

0

1,363

(1,358)0

5Financial liabilities

10,8790

10,879(1,358)0

9,521

31 December 2015
Financial assets

1,280

0

1,280

(1,280)0

0Financial liabilities

10,5870

10,587(1,280)09,307

Financial Statements 2016 - AIRBUS ° 76 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.7 Capital Structure and Financial Instruments

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

2 years

3 years

4 years

5 years

6 years

22,482

22,163

18,416

11,839

5,496

1,291

Purchased US-dollar put options

0

0

4,079

4,198

740

0

Written US-dollar put options

0

0

4,079

4,198

740

0

(104)

0

0

0

0

0

20,395

21,23420,041

14,655

4,086

Purchased US-dollar put options

0

0

0

3,536

Written US-dollar put options

0

0

0

3,536

Foreign exchange swap contracts

906

0

0

0

(In € million)

7 years > 7 years

Total

31 December 2016
Net forward sales contracts

(11)

0

81,676

0

0

9,017

0

0

9,017

0

0

(104)

(367)

(445)

2

79,601

3,399

441

0

0

7,376

3,399

441

0

0

7,376

0

0

0

0

906

7 years > 7 years

Total

Foreign exchange options

Foreign exchange swap contracts
31 December 2015
Net forward sales contracts
Foreign exchange options

The notional amounts of interest rate contracts are as follows:
Remaining period
1 year

2 years

3 years

Interest rate contracts

36

1,096

Interest rate future contracts

1300Interest rate contracts

1,382Interest rate future contracts

1,032(In € million)

4 years

5 years

6 years

989

7

988

4

949

3,771

7,840

0

0

0

0

0

0

130

36

1,194

1,152

7

864

4

3,232

7,871

0

0

0

0

0

0

0

1,032

31 December 201631 December 2015

Please also see “– Note 34.3: Financing Liabilities”.

The notional amounts of commodity contracts are as follows:
Remaining period
1 year

2 years

3 years

4 years> 4 years

Total

31 December 2016

270

41

16

6

0

333

31 December 2015

336

129

23

11

1

500

(In € million)

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

2 years

3 years

4 years> 4 years

Total

31 December 2016

76

52

49

19

0

196

31 December 2015

153

76

52

49

19

349

(In € million)

Financial Statements 2016 - AIRBUS ° 77 °2

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

35.5 Derivative Financial Instruments and Hedge Accounting Disclosure
The development of the foreign exchange rate hedging instruments recognised in AOCI as of 31 December 2016 and 2015 is asfollows:
Equity attributable
to equity ownersof the parent(In € million)

Non-controllinginterests

Total

1 January 2015

(3,310)(22)(3,332)

Unrealised gains and losses from valuations, gross(1)(8,421)(111)(8,532)

Transferred to profit or loss for the period, gross(1)

3,762

71

3,833

Changes in fair values of hedging instruments recorded in AOCI, gross(4,659)(40)(4,699)Changes in fair values of hedging instruments recorded in AOCI, tax

1,134

13

1,147

Share of changes in fair values of hedging instruments frominvestments accounted for under the equity method, net

(29)

0

(29)

Changes in fair values of hedging instruments recorded in AOCI, net(3,554)(27)(3,581)31 December 2015

(6,864)(49)(6,913)

Unrealised gains and losses from valuations, gross(3,462)(50)(3,512)

Transferred to profit or loss for the period, gross

3,199

66

3,265

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

(263)

16

(247)

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

12

(8)

4

Share of changes in fair values of hedging instruments frominvestments accounted for under the equity method, net

(38)

0

(38)

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

(289)

8

(281)

(7,153)(41)(7,194)31 December 2016
(1) Previous year figures are adjusted to correct a sign error.

In the year 2016, an amount of € -3,265 million (2015 adjusted: € -3,833 million) was reclassiﬁed from equity mainly to revenues
resulting from matured cash ﬂow hedges. No material ineffectiveness arising from hedging relationship has been determined.
In addition, a loss of € -27 million was recognised in the proﬁt of the period in 2016 (2015: gain of € 20 million) on derivatives thatwere designated as hedging instruments in a fair value hedge, and a gain of € 12 million (2015: loss of € -18 million) attributable tothe hedged risk was recognised in the proﬁt of the period on the corresponding hedged items. Corresponding with its carrying
amounts, the fair values of each type of derivative ﬁnancial instruments as of 31 December 2016 and 2015, respectively, are as
follows:
31 December

2016(In € million)

Foreign currency contracts – cash flow hedges

2015

AssetsLiabilities

AssetsLiabilities

946(10,398)832(10,017)

Foreign currency contracts – not designated in a hedge relationship

4

(25)

182

(82)

Interest rate contracts – cash flow hedges

0

(26)

0

(40)

Interest rate contracts – fair value hedges

122

(38)

101

(8)

Interest rate contracts – not designated in a hedge relationship

59

(71)

80

(87)

Commodity contracts – cash flow hedges

2

(27)

0

(57)

Commodity contracts – not designated in a hedge relationship

3

(34)

46

(73)

Equity swaps – cash flow hedges

15

(3)

30

(7)

Embedded bonds conversion option – not designated in a hedge relationship

0

(122)

0

0

Embedded foreign currency derivatives – cash flow hedges

0

(179)

0

(31)

Embedded foreign currency derivatives – not designated in a hedge relationship

Total

0

(97)

9

(185)

1,151

(11,020)

1,280(10,587)

Financial Statements 2016 - AIRBUS ° 78 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.8 Other Notes

35.6 Net Gains or Net Losses
Airbus’ net gains or net losses recognised in proﬁt or loss in 2016 and 2015, respectively, are as follows:
2016

2015

(451)

(178)

Designated on initial recognition

50

166

Available-for-sale financial assets

15

183

Loans and receivables(1)

(160)

(182)

Financial liabilities measured at amortised cost

(249)

(192)

(In € million)

Financial assets or financial liabilities at fair value through profit or loss:
Held for trading(1) Contain among others impairment losses.

Net losses of € -50 million (2015: net gain of € 366 million) are recognised directly in equity relating to available-for-sale ﬁnancial
assets.
Interest income from ﬁnancial assets or ﬁnancial liabilities through proﬁt or loss is included in net gains or losses.

35.7 Impairment Losses
The following impairment losses on ﬁnancial assets are recognised in proﬁt or loss in 2016 and 2015, respectively:
2016

2015

Equity instruments

(12)

(49)

Customer financing

(123)

(25)

(10)

(12)

(In € million)

Other investments and other long-term financial assets:

Other loans
Trade receivables

Total

(34)

(25)

(179)

(111)

2.8 Other Notes
36. Litigation and Claims

2
Litigation and claims — Various legal actions, governmental
investigations, proceedings and other claims are pending or
may be instituted or asserted in the future against the Company.
Litigation is subject to many uncertainties, and the outcomeof individual matters is not predictable with certainty. The
Company believes that it has made adequate provisions tocover current or contemplated litigation risks. It is reasonably
possible that the ﬁ nal resolution of some of these matters
may require the Company to make expenditures, in excess ofestablished reserves, over an extended period of time and ina range of amounts that cannot be reasonably estimated. The
term “reasonably possible” is used herein to mean that the
chance of a future transaction or event occurring is more thanremote but less than likely.

Airbus is involved from time to time in various legal andarbitration proceedings in the ordinary course of its business,the most significant of which are described below. Other
than as described below, Airbus is not aware of any material
governmental, legal or arbitration proceedings (including any
such proceedings which are pending or threatened), during
a period covering at least the previous twelve months which
may have, or have had in the recent past signiﬁcant effects on
Airbus Group SE’s or Airbus’ ﬁnancial position or proﬁtability.
If the Company concludes that the disclosures relative tocontingent liabilities can be expected to prejudice seriously its
position in a dispute with other parties, the Company limits its
disclosures to the nature of the dispute.

Financial Statements 2016 - AIRBUS ° 79 °Notes to the IFRS Consolidated Financial Statements
2.8 Other Notes

WTO

Euroﬁghter Austria

Although Airbus is not a party, Airbus is supporting the European
Commission in litigation before the WTO. Following its unilateral
withdrawal from the 1992 EU-US Agreement on Trade in Large
Civil Aircraft, the US lodged a request on 6 October 2004 to
initiate proceedings before the WTO. On the same day, the EUlaunched a parallel WTO case against the US in relation to its
subsidies to Boeing. On 19 December 2014, the European Union
requested WTO consultations on the extension until the end of2040 of subsidies originally granted by the State of Washington
to Boeing and other US aerospace ﬁrms until 2024.

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

On 1 June 2011, the WTO adopted the Appellate Body’s ﬁnal
report in the case brought by the US assessing funding toAirbus Commercial Aircraft from European Governments. On
1 December 2011, the EU informed the WTO that it had taken
appropriate steps to bring its measures fully into conformity
with its WTO obligations, and to comply with the WTO’s
recommendations and rulings. Because the US did not agree,
the matter is now under WTO review pursuant to WTO rules.
On 23 March 2012, the WTO adopted the Appellate Body’s ﬁnal
report in the case brought by the EU assessing funding to Boeing
from the US. On 23 September 2012, the US informed the WTO
that it had taken appropriate steps to bring its measures fully
into conformity with its WTO obligations, and to comply with
the WTO’s recommendations and rulings. Because the EU did
not agree, the matter is now under WTO review pursuant to
WTO rules.
Exact timing of further steps in the WTO litigation process issubject to further rulings and to negotiations between the US
and the EU. Unless a settlement, which is currently not underdiscussion, is reached between the parties, the litigation is
expected to continue for several years.

GPT
Prompted by a whistleblower’s allegations, Airbus conductedinternal audits and retained PricewaterhouseCoopers (“PwC”) to
conduct an independent review relating to GPT Special ProjectManagement Ltd. (“GPT”), a subsidiary that Airbus acquired in2007. The allegations called into question a service contract
entered into by GPT prior to its acquisition by Airbus, relating toactivities conducted by GPT in Saudi Arabia. PwC’s report wasprovided by Airbus to the UK Serious Fraud Ofﬁce (the “SFO”) in
March 2012. In the period under review and based on the work
it undertook, nothing came to PwC’s attention to suggest that
improper payments were made by GPT. In August 2012, the SFO
announced that it had opened a formal criminal investigation
into the matter. Airbus is in continuing engagement with theauthorities.

Investigation by the UK SFO into Civil Aviation
Business
In the context of review and enhancement of its internal
compliance improvement programme, Airbus discovered
misstatements and omissions relating to information provided
in respect of third party consultants in certain applications forexport credit ﬁnancing for Airbus customers. In early 2016,
Airbus informed the UK, German and French Export Credit
Agencies (“ECAs”) of the irregularities discovered. Airbus madea similar disclosure to the UK Serious Fraud Ofﬁce (“SFO”). In
August 2016, the SFO informed Airbus that it had opened aninvestigation into allegations of fraud, bribery and corruption
in the civil aviation business of Airbus relating to irregularities
concerning third party consultants (business partners). Airbus
is cooperating fully with the SFO. The SFO investigation andany enforcement action potentially arising as a result could havenegative consequences for Airbus. The potential imposition ofany monetary penalty (and the amount thereof) arising fromthe SFO investigation would depend on factual ﬁndings, andcould have a material impact on the ﬁ nancial statements,
however at this stage it is too early to determine the likelihood
or extent of any liability. Investigations of this nature could
also result in (i) civil claims or claims by shareholders against
Airbus (ii) adverse consequences on Airbus’ ability to obtain orcontinue ﬁnancing for current or future projects (iii) limitations
on the eligibility of group companies for certain public sector
contracts and/or (iv) damage to Airbus’ business or reputation
via negative publicity adversely affecting Airbus’ prospects inthe commercial market place.

Financial Statements 2016 - AIRBUS ° 80 °

Financial Statements 2016
Notes to the IFRS Consolidated Financial Statements
2.8 Other Notes

ECA Financing

Review of Business Partner Relationships

ECA ﬁnancing continues to be suspended. Airbus is working
with the relevant ECAs to re-establish ECA ﬁnancing.

In light of regulatory investigations and commercial disputes,
including those discussed above, Airbus has determined toenhance certain of its policies, procedures and practices,
including Ethics and Compliance. Airbus is accordingly in theprocess of revising and implementing improved procedures,
including those with respect to its engagement of consultants
and other third parties, in particular in respect of sales support
activities and is conducting enhanced due diligence as a precondition for future or continued engagement and to inform
decisions on corresponding payments. Airbus has therefore
engaged legal, investigative, and forensic accounting expertiseof the highest calibre to undertake a comprehensive review of all
relevant third party business consultant relationships and related
subject matters. Airbus believes that these enhancements to
its controls and practices will best position it for the future,
particularly in light of advancements in regulatory standards.
Certain consultants and other third parties have initiatedcommercial litigation and arbitration against Airbus seeking
relief. The comprehensive review and these enhancements of
its controls and practices may lead to additional commercial
disputes or other civil law or criminal law consequences in the
future, which could have a material impact on the ﬁ nancial
statements, however at this stage it is too early to determine
the likelihood or extent of any liability.

Other Investigations
In October 2014, the Romanian authorities announced aninvestigation relating to a border surveillance project in Romania.
Airbus conﬁrms that Airbus Defence and Space GmbH had been
informed that the German prosecution ofﬁce is also investigating
potential irregularities in relation to this project, a project in Saudi
Arabia and a project of Tesat-Spacecom GmbH & Co. KG.
The public prosecutor in Germany has launched administrative
proceedings in the context of those investigations against Airbus
Defence and Space GmbH and Tesat-Spacecom GmbH &Co. KG. Airbus has cooperated fully with the authorities. In
October 2016, the German authorities announced that they
were dropping their investigations into the Romanian and Saudi
projects. The tax authorities may challenge the tax treatmentof business expenses in connection with the Romanian andSaudi projects.
In 2013, public prosecutors in Greece and Germany launchedinvestigations into a current employee and former managing
directors and employees of Atlas Elektronik GmbH (“Atlas”),
a joint company of ThyssenKrupp and Airbus, on suspicionof bribing foreign ofﬁcials and tax evasion in connection withprojects in Greece. The public prosecutor in Germany haslaunched an administrative proceeding for alleged organisationaland supervisory shortfalls against Atlas. The authorities in
Greece have launched civil claims against Atlas. In 2015, thepublic prosecutor in Germany launched another investigation
into current and former employees and managing directors ofAtlas on suspicion of bribery and tax evasion in connection
with projects in Turkey and extended the investigation in 2016
to ﬁve current and former employees of Atlas’ shareholders. A
further investigation was also launched against two former Atlas
employees on suspicion of bribery in connection with projects
in Pakistan. In 2016 two further investigations were started
by the Bremen public prosecutor with regard to operations inIndonesia and Thailand. With the support of its shareholders,
Atlas is cooperating fully with the authorities and is conducting
its own internal investigation. Settlement talks with the Bremen
public prosecutor started in November 2016.

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

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

Financial Statements 2016 - AIRBUS ° 81 °2

Notes to the IFRS Consolidated Financial Statements
2.8 Other Notes

37. Auditor Fees

With reference to Section 2:382a (1) and (2) of the Netherlands Civil Code, the following fees for the ﬁnancial year 2016 have been
charged by EY to the Company (2015: by KPMG), its subsidiaries and other consolidated entities:
2016 - EY

2015 - KPMG

Audit of the financial statements

6,578

6,008

Other audit engagements

1,226

2,396

362

608

(In € thousand)Tax services
Other non-audit services

Total

6,870

3,764

15,036

12,776

In 2016, Airbus was audited by EY only (2015: by KPMG only). Other audit ﬁrms have audit fees related to audit process, certiﬁcationand examination of individual and consolidated accounts of € 4 million in 2016 (2015: € 6 million).

38. Events after the Reporting Date

On 1 January 2017, Airbus Group has been further integrated by merging its Group structure with the commercial aircraft activities
of Airbus, with associated restructuring measures. In this new set-up, the Company will retain Airbus Defence and Space andAirbus Helicopters as divisions.
These Consolidated Financial Statements have been authorised for issuance by the Board of Directors on 21 February 2017.

Financial Statements 2016 - AIRBUS ° 82 °

Financial Statements 2016 - AIRBUS ° 83 °15.80 %

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

Airbus Operations
GmbH(Germany)

MBDA Group

Airbus Safran Launchers Group

Airbus Group North America

Airbus Helicopters

Airbus Defence and SpaceElbe
FlugzeugwerkeGmbH(Germany)

45 %Airbus Defence
and Space GmbH
(Germany)

Airbus Operations
SAS(France)

Airbus Group
Limited(UK)

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

Airbus Defence
and Space SAS(France)

Airbus DS SAS(France)

MBDA Group

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

37.5 %*

Airbus DS Holding
SAS(France)95.96 %

Airbus GroupSAS(France)

Airbus SAS(France)4.68 %

Airbus DS GmbH
(Germany)
99.99 %

Airbus Safran
Launchers Group50 %97.57 %

Airbus DS
Holdings B.V.
(The Netherlands)

2.43 %

Airbus Defence
and Space Holding
France SAS(France)

4.04 %

5.06 %EADS Casa
France(France)

CRI, S.A.
(Spain)90.26 %

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

Stelia Aerospace(France)*Airbus owns indirectly 50 % of ATR GIE, 50 % of Airbus Safran Launchers Group and 37.50 % of MBDA Group.

66.08 %

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

AIRBUS GROUP SE

Astrium Services
UK Limited(UK)

Airbus Defence
and Space
Limited(UK)

EADS Casa
Holding(France)5%

Paradigm Secure
Communications
Limited(UK)

Infoterra Limited(UK)

Paradigm
Services Limited(UK)

Vector Aerospace
Holding SAS(France)

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

Airbus Helicopters
DeutschlandGmbH(Germany)

Airbus Helicopters(France)95 %Airbus Helicopters
Holding(France)Financial Statements 2016

Notes to the IFRS Consolidated Financial Statements
2.9 Appendix “Simpliﬁ ed Airbus Structure Chart”

2.9 Appendix “Simpliﬁed Airbus Structure Chart”

2Chapter3

Financial Statements 2016 - AIRBUS ° 84 °

Financial Statements 2016

Airbus Group SE
IFRS Company
Financial Statements
IFRS Company Income Statements
for the years ended 31 December 2016 and 201586

IFRS Company Statements of Comprehensive
Income for the years ended 31 December 2016
and 2015

86

IFRS Company Statements of Financial Position
at 31 December 2016 and 2015

87

IFRS Company Statements of Cash Flowsfor the years ended 31 December 2016 and 2015

88

IFRS Company Statements of Changes in Equity
for the years ended 31 December 2016 and 2015

89

3

Financial Statements 2016 - AIRBUS ° 85 °

Airbus Group SE — IFRS Company Financial Statements

IFRS Company Income Statements
for the years ended 31 December 2016 and 2015

Note

(In € million)

2016

2015

Operating income

531

476

Operating expenses

(652)

(634)

Income from investments

4,021

9

0

(5)

3,900

(154)

Loss on disposal of investments
Total operating result

4Interest income

204

225

Interest expense

(120)

(133)

Other financial result
Total financial result

5

(101)

127

(17)

219

3,883

65

17

(11)

3,900

54

(In € million)

2016

2015

Profit for the period

3,900

54

138

26

Profit before income taxes
Tax income (expense)

6

Profit for the period

IFRS Company Statements of Comprehensive Income
for the years ended 31 December 2016 and 2015

Other comprehensive income
Items that will be reclassified to profit or loss:
Net change in fair value of available-for-sale financial assets
Net change in fair value of cash flow hedges

40

Other comprehensive income, net of tax

142

26

4,042

80

Total comprehensive income of the period

Financial Statements 2016 - AIRBUS ° 86 °

Financial Statements 2016
Airbus Group SE — IFRS Company Financial Statements

IFRS Company Statements of Financial Position
at 31 December 2016 and 2015

Note

2016

2015

Investments in subsidiaries and associates

7

15,545

14,521Long-term financial assets

8

3,296

3,594

Non-current other financial assets

8

7,602

7,979

(In € million)

AssetsNon-current assets

Non-current other assets
Deferred tax assets

6

Non-current securities

12

4

5

9

15

9,670

9,593

36,12635,707

Current assets
102

11

Current other financial assets

8

4,656

4,431

Current accounts Group companies

8

9,409

8,353

160

149

Current securities

12

1,489

1,683

Cash and cash equivalents

12

Trade receivables

Current other assets

Total assets

8,758

6,515

24,574

21,14260,70056,849Equity and liabilities
Stockholders’ equity

11
773

785

Share premium

2,745

3,484

Retained earnings

4,014

4,939

353

211

Treasury shares

(3)

(303)

Result of the year

3,900

54

11,782

9,170

Issued and paid up capital

Legal reserves

Non-current liabilities
Long-term financing liabilities

12

7,934

5,394

Non-current financial liabilities

8

7,698

7,960

15,632

13,354Current liabilities
Short-term financing liabilities

12

98

1,823

Current accounts Group companies

828,55728,415Current financial liabilities

8

4,543

3,991

88

96

Current other liabilities

Total equity and liabilities

Financial Statements 2016 - AIRBUS ° 87 °33,28634,32560,70056,8493

Airbus Group SE — IFRS Company Financial Statements

IFRS Company Statements of Cash Flowsfor the years ended 31 December 2016 and 2015

Note

2016

2015

3,900

54

Interest income

(204)

(225)

Interest expense

120

133

Interest received

231

206

Interest paid

(In € million)

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

(104)

(117)

Income tax received

03

Depreciation and amortisation

0

5

Valuation adjustments

(102)

(240)

Deferred tax (income) expense

(17)

11

Change in current and non-current provisions

122

Change in other operating assets and liabilities:

(136)

(3)
(2)

■

Trade receivables

(126)

■

Trade liabilities

(9)

0

■

Other assets and liabilities

(1)

(1)

3,700

(171)

(921)

(546)

(642)

(670)

Cash provided by (used for) operating activities
Investments:■

Acquisitions of subsidiaries, joint ventures, businesses and non-controlling interests■

Payments for long-term financial assets■

7

Proceeds from disposals of associates, joint ventures, other investments
and other long-term financial assets

11

44

1,340

127

Payments for investments in securities(2,037)(6,877)

Proceeds from disposals of securities

2,300

4,592

51

(3,330)■

Repayments of other long-term financial assets

Cash provided by (used for) investing activities
Draw-down in financing liabilities

2,580

788

Repayment of financing liabilities(1,607)

(136)

(797)

4,056

(1,008)(945)

Change in current accounts Group companies
Cash distribution to Airbus Group SE shareholders

60

171

(736)

(264)

(1,508)

3,670

0

146

Net increase in cash and cash equivalents

2,243

315

Cash and cash equivalents at beginning of period

6,515

6,200

8,758

6,515

Changes in capital
Share buyback
Cash (used for) provided by financing activities
Effect of foreign exchange rate changes on cash and cash equivalents

Cash and cash equivalents at end of period

Financial Statements 2016 - AIRBUS ° 88 °12

Financial Statements 2016
Airbus Group SE — IFRS Company Financial Statements

IFRS Company Statements of Changes in Equity
for the years ended 31 December 2016 and 2015

Accumulated othercomprehensive income

Capital
stock

Share
premium

Retainedearnings

Availablefor-salefinancialassets

785

4,500

4,860

195

(10)

(8)

10,322

Profit for the period

0

0

54

0

0

0

54

Other comprehensive income

0

0

0

26

0

0

26

Total comprehensive income of the period

0

0

54

26

0

0

80

Capital increase

3

115

0

0

0

0

118

Share-based payments (IFRS 2)

0

0

29

0

0

0

29

Cash distribution to Airbus Group SE shareholders

0

(945)

0

0

0

0

(945)

Equity component convertible bond

0

0

53

0

0

0

53

Change in treasury shares

0

0

(3)

0

0

(484)

(487)

Balance at 1 January 2015

Cash flow
hedgesTreasurysharesTotalequityCancellation of treasury shares

(3)

(186)

0

0

0

189

0

Balance at 31 December 2015

785

3,484

4,993

221

(10)

(303)

9,170

0

0

3,900

0

0

0

3,900

Profit for the period
Other comprehensive income

0

0

0

138

4

0

142

Total comprehensive income of the period

0

0

3,900

138

4

0

4,042

Capital increase

2

58

0

0

0

0

60

Share-based payments (IFRS 2)

0

0

31

0

0

0

31

Cash distribution to Airbus Group SE shareholders

00(1,008)00

0(1,008)(513)

Change in treasury shares

0

0

(2)

0

0

(511)

Cancellation of treasury shares

(14)

(797)

0

0

0

811

0

Balance at 31 December 2016

773

2,745

7,914

359

(6)

(3)

11,782

3

Financial Statements 2016 - AIRBUS ° 89 °

Chapter

4

Financial Statements 2016 - AIRBUS ° 90 °

Financial Statements 2016

Notes to the
IFRS Company
Financial Statements
4.1 Basis of Presentation

93

4.2 Company Performance95

4.3 Operational Assets and Liabilities

97

4.4 Employees

100

4.5 Capital Structure and Financial Instruments

100

4

Financial Statements 2016 - AIRBUS ° 91 °Notes to the IFRS Company Financial Statements

CONTENTS
4.1 Basis of Presentation

93

1.

The Company

93

2.

Signiﬁcant Accounting Policies

93

3.

Related Party Transactions

94

4.2 Company Performance95

4.

Total Operating Result

95

5.

Total Financial Result

95

6.

Income Tax

96

4.3 Operational Assets and Liabilities 97
7.

Investments in Subsidiaries, Associates
and Participations

97

8.

Financial Assets and Liabilities

99

9.

Commitments and Contingencies

100

4.4 Employees

100

10.

100

Number of Employees

4.5 Capital Structure and Financial
Instruments

100

11.

Total Equity

100

12.

Cash, Securities and Financing Liabilities

102

13.

Information about Financial Instruments

104

14.

Events after the Reporting Date

109

Financial Statements 2016 - AIRBUS ° 92 °

Financial Statements 2016
Notes to the IFRS Company Financial Statements

4.1 Basis of Presentation
1.

The Company

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

2.

listings at the European Stock Exchanges in Paris, Frankfurt
am Main, Madrid, Barcelona, Valencia and Bilbao. The
IFRS Financial Statements were authorised for issue by theCompany’s Board of Directors on 21 February 2017. They areprepared and reported in euro (“€”) and all values are rounded
to the nearest million appropriately.

Signiﬁcant Accounting Policies

Basis of preparation — The Company’s Financial Statements
are prepared in accordance with International Financial ReportingStandards (“IFRS”), issued by the International AccountingStandards Board (“IASB”) as endorsed by the European Union(“EU”) and with Part 9 of Book 2 of the Dutch Civil Code.
In the Company Financial Statements of Airbus Group SE,
unless otherwise disclosed, the same accounting principles
have been applied as set out in the Notes to the Consolidated
Financial Statements, except for the valuation of the investments
as presented under investments in subsidiaries and associates
in the Company Financial Statements. These policies have been
consistently applied to all years presented.
In the Company Financial Statements, the investments in
subsidiaries and associates are recorded at acquisition
cost less impairments, whereas in prior years, investments
in Group companies were stated at net asset value. As aconsequence, the determination of the results in the Company
Financial Statements changed compared to previous years.
In the Company Statement of Income, dividend received frominvestments is recorded as dividend income.
Due to this application, the Company equity and net result
are not equal to the consolidated equity and net result. A
reconciliation of the total shareholders’ equity and proﬁt for theperiod is presented in Note 11 “Total Equity” to the Company
Financial Statements.
The Company Financial Statements have been prepared on ahistorical cost basis, unless otherwise indicated.
Regarding the application of new, revised or amended IFRS
standards issued but not yet applied please refer to Note 2“Signiﬁcant accounting policies” of the Group’s Consolidated

Financial Statements. Further information about Share-Based
Payments and Employee Stock Ownership Plans (ESOP) ispresented in Note 30 and information about Remuneration ispresented in Note 31 of the Consolidated Financial Statements.
The information with regard to Capital Management is disclosed
in Note 33, further information about Litigation and Claims refers
to Note 36 and Events after the Reporting Date are disclosed
in Note 38 of the Group’s Consolidated Financial Statements.
Unless reference is made to the accounting policies describedin the Consolidated Financial Statements, the main accounting
policies applied in the preparation of these Company Financial
Statements are described in each accounting area. These
accounting policies have been consistently applied to all
ﬁnancial years presented, unless otherwise stated.

Use of Estimates and Judgements
The preparation of the Company Financial Statements inconformity with EU-IFRS requires the use of estimates andassumptions. In preparing those ﬁ nancial statements, themanagement exercises its best judgement based upon its
experience and the circumstances prevailing at that time. The
estimates and assumptions are based on available informationand conditions at the end of the ﬁnancial period presented andare reviewed on an ongoing basis. Actual results could differ
from these estimates.
Key accounting estimates and judgements affecting theassessment and measurement of impairment are includedin Note 7 “Investments in Subsidiaries, Associates andParticipations” of the Company Financial Statements.

Financial Statements 2016 - AIRBUS ° 93 °4

Notes to the IFRS Company Financial Statements

3.

Related Party Transactions

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

Intercompany Transactions

is common practice. In its responsibility as holding company
to manage its subsidiaries and to assist the businessactivities conducted by companies of the Airbus Group andits subsidiaries, Airbus Group SE applies transfer prices for
its business activities in conformity with market levels and inaccordance with national and international tax requirements(arm’s length principle).

A comprehensive exchange of internal services between thesubsidiaries of a multinational corporation like Airbus Group SE
The following table discloses the related party intercompany transactions in 2016 and 2015:
Transactions
with subsidiaries
2016

Transactions
with associates
2016

Transactions
with subsidiaries
2015

Transactions
with associates
2015

Rendering of services, dividend income
and interest income

4,634

33

560

62

Purchases of services, investment charge
and interest expenses(In € million)

(736)

(2)

(724)

(4)

Intercompany receivables due asof 31 December

12,88683

12,40018

Intercompany payables due asof 31 December(32,403)(666)(32,414)(503)

Hedge relationships receivable asof 31 December

10,7300

10,4820

Hedge relationships payable asof 31 December(1,344)0(1,383)0

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

Financial Statements 2016 - AIRBUS ° 94 °

Financial Statements 2016
Notes to the IFRS Company Financial Statements

4.2 Company Performance4.

Total Operating Result

2016

2015

Corporate services rendered to Group companies

531

476

(In € million)

Operating income
Operating expenses

(652)

(634)

Service fees charged by Group companies

(596)

(581)

Administrative expenses

(56)

(53)

Income from investments

4,021

9

Dividends received from Group companies

4,021

9

Expense from investments

0(5)Loss on disposal of investments

0

(5)

3,900

(154)

Total operating result

5.

Total Financial Result

2016

2015

Interest result(1)8492Interest income from available-for-sale securities

89

93

Others(5)(1)

Other financial result

(101)

127

Option liability exchangeable bond(In € million)

(64)

0

Equity instruments

5159Interest rate hedging

(16)

(11)

3

(9)

FX revaluation

(29)

(12)

Total financial result

(17)

219

Financing income (expense)(1) In 2016, the total interest income amounts to € 204 million (in 2015: € 225 million) for financial assets which are not measured at fair value through profit or loss. For financial
liabilities which are not measured at fair value through profit or loss € -120 million (in 2015: € -133 million) are recognised as total interest expenses. Both amounts arecalculated by using the effective interest method.

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

4

Financial Statements 2016 - AIRBUS ° 95 °Notes to the IFRS Company Financial Statements

6.

Income Tax

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

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

The expense for income taxes is comprised of the following:
2016(In € million)

2015

Current tax expense

00

Deferred tax income (expense)

17

(11)

Total

17

(11)

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

2016

Profit before income taxes

3,883

2015
65

* Corporate income tax rate

25.0%

25.0%

Expected expense for income taxes

(971)

(16)

Non-taxable income from investments

1,005

1

Option liability exchangeable bond

(16)

0

Income from other companies within the fiscal unity

(6)

5

Other

5

(1)

Reported tax income (expense)

17

(11)

The ﬁrst tranche of tax loss carry forwards (€ 20 million) will expire by the end of 2023.
Deferred income taxes as of 31 December 2016 are related to the following assets and liabilities:

1 January 2016

Other movements

Movement
throughincomestatement

31 December 2016
Deferredtax
assetsDeferredtax
liabilities(In € million)

Deferredtax
assetsDeferredtax
liabilities

OCI

OthersDeferredtax benefit(expense)

Securities

0

(21)

(22)

0

0

0

(43)

Financial instruments

0

(3)

(1)

0

3

0

(1)

Net operating loss and tax loss
carry forwards

39

0

0

0

14

53

0

Deferred tax assets (liabilities)
before offsetting

39

(24)

(23)

0

17

53

(44)

Set-off

(24)

24

0

0

0

(44)

44

Net deferred tax assets (liabilities)

15

0

(23)

0

17

9

0

Financial Statements 2016 - AIRBUS ° 96 °

Financial Statements 2016
Notes to the IFRS Company Financial Statements

Deferred income taxes as of 31 December 2015 are related to the following assets and liabilities:

1 January 2015

Other movements

Movement
throughincomestatement

31 December 2015

Deferredtax benefit(expense)

Deferredtax
assetsDeferredtax
liabilities(In € million)

Deferredtax
assetsDeferredtax
liabilities

OCI

OthersSecurities

0

(31)

10

0

0

0

(21)

Financial instruments

27

0

0

0

(30)

0

(3)

Net operating loss and tax loss carry forwards

23

0

0

(3)

19

39

0

Deferred tax assets (liabilities)
before offsetting

50

(31)

10

(3)

(11)

39

(24)

Set-off

(31)

31

0

0

0

(24)

24

Net deferred tax assets (liabilities)

19

0

10

(3)

(11)

15

0

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

2016

2015

(43)

(21)

Available-for-sale investments
Cash flow hedges

Total

2

3

(41)

(18)

4.3 Operational Assets and Liabilities
7.

Investments in Subsidiaries, Associates and Participations

Subsidiaries

Associates

Participations

Total

14,04821

174

14,243

196

0

0

196

Loss on disposal of investments

(5)

0

0

(5)

Share-based payments (IFRS 2)

29

0

0

29

(In € million)

Balance at 1 January 2015
Additions

Fair value changes through AOCI

0

0

58

58

Balance at 31 December 2015

14,26821

232

14,521

Additions

136

0

785

921

Share-based payments (IFRS 2)

31

0

0

31

Fair value changes through AOCI

0

0

72

72

14,43521

1,089

15,545

Balance at 31 December 2016

4

Financial Statements 2016 - AIRBUS ° 97 °Notes to the IFRS Company Financial Statements

Investments in Subsidiaries, AssociatedCompanies and Participations
Investments in subsidiaries and associated companies are statedat cost, less impairment. Dividend income from the Company’s
subsidiaries and associated companies is recognised when theright to receive payment is established.
Available-for-sale participations are stated at fair value withchanges in fair value recognised in Other Comprehensive
Income.
For the purpose of impairment testing all consolidated
subsidiaries are allocated to Cash Generating Units (“CGU”) ina way they are monitored for internal management purposes.
At each balance sheet date, the Company reviews whether
there is an indication that a CGU to which its investments in
subsidiaries and associated companies belong to are impaired.

If the recoverable amount of an investment is estimated to be lessthan its carrying amount, the carrying amount of the investment
is reduced to its recoverable amount. Any impairment loss isrecognised immediately in the Income Statement.
Impairment losses recognised in prior periods shall be reversed
only if there has been a change in the estimates or external market
information used to determine the investment’s recoverable
amount since the last impairment loss was recognised.
The recoverable amount shall not exceed the carrying amountthat would have been determined had no impairment loss beenrecognised in prior years.

Change of Investments in Subsidiaries
On 26 January 2016, Airbus Group SE made a further capital
contribution of € 100 million into Airbus Group Bank GmbH.

An indication for impairment of the investments in subsidiaries
and associated companies may include, respectively,
management’s downward adjustment of the strategic plan ora signiﬁcant decrease in the share price of a publicly listedcompany. Further indications for impairment of its investments
may include other areas where observable data indicates that
there is a measurable decrease in the estimated future cash
ﬂows. These determinations require signiﬁcant judgement. In
making this judgement, management evaluates, among otherfactors, the ﬁnancial performance of and business outlook for
its investments, including factors such as industry and sector
performance, changes in technology and operational andﬁnancing cash ﬂow.

On 26 September 2016, Airbus Group SE made a further capital
contribution of € 22 million into Airbus Group Proj B.V., a 100%
subsidiary, in the frame of the industrial partnership with OneWeb
Ltd. for the design and manufacturing of microsatellites.

If any indication for impairment exists, the recoverable amountof the investments is estimated in order to determine the extent,
if any, of the impairment loss. An investment is impaired if therecoverable amount is lower than the carrying value. The
recoverable amount is deﬁned as the higher of an investment’s
fair value less costs to sell and its value in use.

With effect of 1 January 2015, Airbus Operations GmbH
contributed its A400M “IFA and Cargo Hold System”, Bremen
business into Airbus Defence and Space GmbH in turn to becomea new shareholder. As a consequence Airbus Group SE’s
participation in Airbus Defence and Space GmbH was diluted
from 78.48% to 66.08%.

The determination of the investment’s value in use is basedon calculations using pre-tax cash ﬂow projections based on
ﬁnancial budgets approved by management covering a ﬁve-year
period. Cash ﬂows beyond the ﬁve-year period are extrapolatedusing estimated growth rates. The discounted cash ﬂow method
is used to determine the recoverable amount of a CGU to which
its investments in subsidiaries and associated companies
belongs to. The discounted cash ﬂow method is particularly
sensitive to the selected discount rates and estimates of future
cash ﬂows by management. Key assumptions used to determine
the recoverable value of the CGU are the expected future labour
expenses, future interest rates, future exchange rates to convert
in euro the portion of future US dollar and pound sterling which
are not hedged and the estimated growth rate of terminal values.

On 23 December, 2016, Airbus Group SE contributed its 100%
subsidiary Airbus Group SAS to its subsidiary Airbus SAS fora total amount of € 1,118 million. In return for this contribution
Airbus Group SE received additional shares in Airbus SAS foran equivalent amount.
During the year 2016, Airbus Group SE made further capital
contributions into Airbus Group Ventures Fund for a total amountof € 14 million.

Change of Investments in Associated Companies
and Participations
On 13 September 2016, Airbus Group SE internally acquired
9.05% of the shares in Dassault Aviation SA for a total amountof € 785 million. The acquisition of these shares in Dassault
Aviation SA is related to the issuance by the Company of an
exchangeable bond in June 2016 (see Note 12 “Cash, Securities
and Financing Liabilities”). After a share cancellation by Dassault
Aviation SA on 23 December 2016, reducing its capital by 9.6%,
the Company’s stake in Dassault Aviation SA increased to
10.00% of the total shares.

Financial Statements 2016 - AIRBUS ° 98 °

Financial Statements 2016
Notes to the IFRS Company Financial Statements

INFORMATION ON PRINCIPAL INVESTMENTS OF THE COMPANY

2016

2015
%

Company

Head office

50.90

50.90

Aero Ré S.A.

Bertrange (Luxembourg)

66.08

66.08

Airbus Defence and Space GmbH

Taufkirchen (Germany)

100.00100.00Airbus Defence and Space S.A.

Madrid (Spain)

97.57

97.57

Airbus DS Holdings B.V.

Leiden (Netherlands)

100.00100.00Airbus Group Bank GmbH

Munich (Germany)

100.00100.00Airbus Group Finance B.V.

Leiden (Netherlands)

100.00100.00Airbus Group, Inc.

Herndon, VA (USA)100.00100.00Airbus Group Ltd.

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

Leiden (Netherlands)

0.00

100.00Airbus Group S.A.S.

Toulouse (France)

99.00

99.00

Airbus Group Ventures Fund I, L.P.

Mountain View, CA (USA)100.00100.00Airbus Helicopters Holding S.A.S.

Marignane (France)

90.26

94.42

Airbus S.A.S.

Toulouse (France)

100.00100.00DADC Luft-und Raumfahrt Beteiligungs GmbH

Taufkirchen (Germany)

10.00

0.00

Dassault Aviation S.A.

Paris (France)

100.00100.00Premium Aerotec GmbH

Augsburg (Germany)

Percentages represent share held directly by Airbus Group SE.

8.

Financial Assets and Liabilities

Financial assets and liabilities at 31 December 2016 and 2015 consist of the following:
31 December(In € million)

2016

2015

Long-term financial assets

3,296

3,594

Long-term loans Group companies

3,296

3,583

Long-term loans external
Non-current other financial assets

0

11

7,602

7,979

Positive fair values of derivative financial instruments

7,602

7,979

Current other financial assets

4,656

4,431

Positive fair values of derivative financial instruments

4,551

3,982

Current portion long-term loans Group companies
Current accounts Group companies(1)

105

449

(19,148)(20,062)

9,409

8,353

Liabilities to subsidiaries(28,557)(28,415)

Non-current financial liabilities(7,698)(7,960)

Negative fair values of derivative financial instruments(7,698)(7,960)Current financial liabilities(4,543)(3,991)

Negative fair values of derivative financial instruments(4,543)(3,991)

Receivables from subsidiaries(1) The receivables from and liabilities to subsidiaries include mainly transactions in connection with the cash pooling in Airbus Group SE. Terms and conditions are in agreementwith the prevailing market environment.

Financial Statements 2016 - AIRBUS ° 99 °4

Notes to the IFRS Company Financial Statements

9.

Commitments and Contingencies

Off-Balance Sheet Commitments
Airbus Group SE issued guarantees on behalf of Group companies
in the amount of € 5,849 million (2015: € 6,347 million). The
commitments of these companies to third parties mainly relate
to their operating business as described in Note 18 “Property,
Plant and Equipment”, Note 25 “Sales Financing Transactions”
and Note 35 “Information about Financial Instruments” of theConsolidated Financial Statements. In addition, the Company
has entered into capital contribution commitments with Group
companies in the amount of € 54 million (2015: € 54 million).

On 8 December 2015, Airbus Group SE entered into a
partnership agreement to establish a corporate venture capitalfund, dubbed Airbus Group Ventures, as well as a technology
and business innovation center in Silicon Valley with a totalcommitment amount of US$ 150 million. On 25 November 2015,
a ﬁrst investment of US$ 5 million has been made into this fund.
During the year 2016, Airbus Group SE made further capital
contributions into Airbus Group Ventures Fund for a total amountof US$ 15 million.

4.4 Employees
10. Number of Employees

The average number of the persons employed by the Company in 2016 was 2 (2015: 3).

4.5 Capital Structure and Financial Instruments
11. Total Equity

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

Issued as at 1 January

2016

2015

785,344,784

784,780,585

Issued for ESOP

1,474,716

1,539,014

Issued for exercised options

224,500

1,910,428(14,131,131)(2,885,243)

772,912,869

785,344,784

Cancelled
Issued as at 31 December(184,170)(1,474,057)

Outstanding as at 31 December

772,728,699

783,870,727

Authorised shares

3,000,000,000

3,000,000,000

Treasury shares as at 31 December

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

Financial Statements 2016 - AIRBUS ° 100 °Financial Statements 2016
Notes to the IFRS Company Financial Statements

Capital stock comprises the nominal amount of shares
outstanding. The addition to capital stock represents thecontribution for exercised options of € 224,500 (in 2015:€ 1,910,428) in compliance with the implemented stock option
plans and by employees of € 1,474,716 (in 2015: € 1,539,014)
under the Employee Stock Ownership Plans (“ESOP”).
Share premium mainly results from contributions in kind in
the course of the creation of Airbus Group, cash contributions
from the Initial Public Offering, capital increases and reductions
due to the issuance and cancellation of shares as well as cash
distributions to Airbus Group SE shareholders.
Retained earnings include mainly the proﬁt of the period andcash dividend payments to Airbus Group SE shareholders.
On 28 April 2016, the Shareholders’ General Meeting decided
to distribute a gross amount of € 1.30 per share, which was paidon 3 May 2016. For the ﬁscal year 2016, the Group’s Board of
Directors proposes a cash distribution payment of € 1.35 pershare.
Accumulated Other Comprehensive Income (“AOCI”)
includes:change from available-for-sale financial assets (seeNote 13.2 “Carrying Amounts and Fair Values of Financial
Instruments”);■
change in fair value of derivatives designated as cash ﬂow
hedges (see Note 13.2 “Carrying Amounts and Fair Valuesof Financial Instruments”).
■

According to Dutch law, the AOCI is considered to be a Legal
Reserve and therefore distribution is restricted.
Treasury shares represent the amount paid or payable for own
shares held in treasury and relates to the share buyback which
took place between 2 November 2015 and 30 June 2016. Asof 31 December 2015, the Group bought back € 264 million ofshares and recognised a ﬁnancial liability of € 223 million for its
irrevocable share buyback commitment at that date. Recognitionof the ﬁnancial liability led to a corresponding reduction of equity.
In 2016, the Group bought back € 736 million of shares on which€ 223 million were recognised in ﬁnancial liability which led toa reduction of equity by € -513 million. The share buyback has
been completed for a total of € 1 billion.

Authorisations Granted by the Shareholders’
General Meeting of Airbus Group SE Heldon 28 April 2016
On 28 April 2016, the Annual General Meeting (“AGM”) of
the Company authorised the Board of Directors, for a period
expiring at the AGM to be held in 2017, to issue shares andgrant rights to subscribe for shares in the Company’s sharecapital for the purpose of:
ESOPs and share related LTIPs in the limit of 0.14% of theCompany’s authorised share capital (see “– Note 30: ShareBased Payments” of the Group’s Consolidated Financial
Statements);■
funding the Company and its Group companies, provided thatsuch powers shall be limited to an aggregate of 0.3% of theCompany’s authorised capital (see “– Note 34.3: Financing
Liabilities” of the Group’s Consolidated Financial Statements).
■

For each operation, such powers shall not extend to issuingshares or granting rights to subscribe for shares if there is nopreferential subscription right and for an aggregate issue pricein excess of € 500 million per share issuance.
Also on 28 April 2016, the AGM authorised the Board of
Directors for an 18-month period to repurchase up to 10%of the Company’s issued and outstanding share capital (i.e.
issued share capital excluding shares held by the Company or
its subsidiaries) at a price not exceeding the higher of the price ofthe last independent trade and the highest current independent
bid on the trading venues of the regulated market of the country
in which the purchase is carried out.
Furthermore, the AGM authorised both the Board of Directors
and the CEO, with powers of substitution, that the number ofshares repurchased by the Company pursuant to the sharebuyback programme are cancelled.

4

Financial Statements 2016 - AIRBUS ° 101 °Notes to the IFRS Company Financial Statements

Reconciliation Consolidated to Company Equity and Net Income
The difference between the total shareholders’ equity according to the Consolidated Financial Statements and Company’s Financial
Statements as at 31 December 2016 and 2015 is as follows:
31 December(In € million)

2016

2015

Consolidated equity

3,657

5,966

AOCI - Restatement of investments from Consolidated to Company Financial Statements

5,198

4,527

Retained Earnings - Restatement of investments from Consolidated to Company Financial Statements

2,713(1,537)Retained Earnings - Valuation investments at historical cost

1,487

1,487

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

11,7829,170

The difference between the net income according to the Consolidated Financial Statements and Company’s Financial Statements
for the year ended 31 December 2016 and 2015 is as follows:
2016

2015

995

2,696

Income from investments according to Consolidated Financial Statements(1,118)(2,694)

Income from investments according to Company Financial Statements

4,021

9

0

(5)

(In € million)

Consolidated net income

Loss on / Impairment of financial assets
Other valuation differences

Company’s net income (Profit for the period)

2

48

3,900

54

12. Cash, Securities and Financing Liabilities

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

2016

Bank accounts

1,710

2015
444

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

5,513

3,220

Short-term securities (available-for-sale)

1,535

2,851

Total cash and cash equivalents

8,758

6,515

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

12.2 Securities
31 December(In € million)

2016

Current securities (available-for-sale)

1,489

1,683

Non-current securities (available-for-sale)

9,670

9,590

Non-current securities (at fair value through profit or loss)

Total securities

Financial Statements 2016 - AIRBUS ° 102 °

2015

0

3

11,15911,276

Financial Statements 2016
Notes to the IFRS Company Financial Statements

Included in the securities portfolio as of 31 December 2016
and 2015, respectively, are corporate and government bonds
bearing either ﬁxed rate coupons (€ 10,458 million nominal value;comparably in 2015: € 10,604 million) or ﬂoating rate coupons(€ 359 million nominal value; comparably in 2015: € 397 million)
and foreign currency funds of hedge funds (€ 6 million nominal
value; 2015: € 8 million).

12.3 Financing Liabilities
Current and non-current classiﬁcation – A ﬁnancial asset or liability is classiﬁed as current if it is settled within 12 months after
the reporting date, and as non-current otherwise.
Financing liabilities comprise obligations towards ﬁnancial institutions, issued corporate bonds, and payables due to relatedparties.
The Company has received several euro-denominated loans and one US dollar-denominated loan from Airbus Group Finance B.V.
(“AGFBV”). It has also issued a convertible bond in euro. Furthermore, the Company has long-term US dollar-denominated loans
outstanding with the European Investment Bank (“EIB”) and the Development Bank of Japan (“DBJ”). The terms and repayment
schedules of these bonds and loans are as follows:
Carrying amountPrincipal
amount(in million)

2016

2015

Coupon orinterest
rate

€ 499

€ 499

3M Euribor+1.85%

at variable
rate

Sept. 2018at variablerateAug. 201631 December

Effective
interest
rate

Maturity

Additional features

Loans from Airbus Group Finance B.V.
AGFBV 15 years(EMTN)€ 500

AGFBV 7 years (EMTN)€ 1,000€0€ 999

3M Euribor+1.59%AGFBV 10 years(EMTN)€ 1,000€ 1,052€ 1,021

2.40%

2.45%

Apr. 2024

Interest rate swapped into
3M Euribor +1.40%

AGFBV 15 years(EMTN)

€ 500

€ 526

€ 497

2.15%

2.24%

Oct. 2029

Interest rate swapped into
3M Euribor +0.84%

AGFBV 10 years(EMTN)

€ 600

€ 589

€0

0.91%

0.95%

May 2026

Interest rate swapped into
3M Euribor

AGFBV 15 years(EMTN)

€ 900

€ 861

€0

1.41%

1.49%

May 2031

Interest rate swapped into
3M Euribor

AGFBV USD Loan
10 years

US$ 1,000

€ 940

€ 919

2.72%

2.80%

Apr. 2023

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

Billet de trésorerie
programme

US$ 0

€0

€ 505

Loans from financial institutions
DBJ 10 years

US$ 300

€ 285

€ 276

3M US-Libor+1.15%

4.84%

Jan. 2021

Interest rate swapped into
4.76% fixed

EIB 10 years

US$ 721

€ 488

€ 567

3M US-Libor+0.85%

3.20%

Aug. 2021

Interest rate swapped into
3.2% fixed

EIB 7 years

US$ 406

€ 385

€ 373

3M US-Libor+0.93%

at variablerate

Feb. 2020

EIB 10 years

US$ 627

€ 591

€ 576

2.52%

2.52%

Dec. 2024

EIB 10 years

US$ 320

€ 304

€ 294

6M US-Libor+0.56%

at variablerate

Dec. 2025

Share buybackcommitment

€0

€ 223

Others€0€ 11Interest rate swapped into
3M Euribor +0.61%

Bond
Convertible bond
7 years
Exchangeable bond
5 years

€ 500

€ 464

€ 457

€ 1,048€0€ 8,032€ 7,217

thereof non-current
financing liabilities€ 7,934€ 5,394

thereof current
financing liabilities€ 98€ 1,823

Total€ 1,078

0.00%

0.00%

Convertible into
Airbus Group SE shares at€ 99.54 per share

1.39%

July 2022

0.33%

Exchangeable into Dassault
Aviation SA shares atJune 2021€ 1,306.25 per share

Financial Statements 2016 - AIRBUS ° 103 °4

Notes to the IFRS Company Financial Statements

The increase in long-term financing liabilities is mainly due tothe issuance in May 2016 of two bonds under the Company’s
EMTN-Programme for a total amount of € 1.5 billion, maturing
in 2026 and 2031, as well as the issuance in June 2016 of an
exchangeable bond for an amount of € 1.1 billion, maturing in
2021.
The decrease in short-term financing liabilities is mainly
due to the repayment of a bond under the Company’s EMTNProgramme that matured in August 2016 for an amount of€ 1 billion as well as repayment of the debts related to commercial
papers and share buyback commitment for a total amount of€ 728 million.
The Company can issue commercial paper under the so called“billet de trésorerie” programme at ﬂ oating or ﬁ xed interest
rates corresponding to the individual maturities ranging from1 day to 12 months. The programme has been set up in 2003
with a maximum volume of € 2 billion, increased in 2013 toa maximum volume of € 3 billion. As of 31 December 2016,
there was no outstanding amount under the programme. The
Company established in April 2015 a US$ 2 billion commercial
paper programme which has been increased to US$ 3 billion
in April 2016.
In June 2016, the Company issued € 1,078 million exchangeablebonds into Dassault Aviation shares, with a 5-year maturity.
The exchangeable bonds were issued at 103.75% of par witha coupon of 0%. Their effective interest rate, after separationof the equity conversion option related to Dassault Aviation
shares, is 0.333%.

13. Information about Financial Instruments

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

Market Risk
Foreign exchange risk — The Company manages a longterm hedge portfolio with maturities of several years for its
subsidiaries, mainly Airbus, and to a small extent for its joint

ventures or associates. This hedge portfolio covers a large
portion of Airbus Group’s firm commitments and highly
probable forecast transactions. As explained above, owing to
the Company’s back-to-back approach, its own exposure toforeign exchange risk is very limited.
Interest rate risk — The Company uses an asset-liability
management approach with the objective to limit its interest
rate risk. The Company undertakes to match the risk proﬁleof its interest-bearing assets with those of its interest-bearing
liabilities, the remaining net interest rate exposure being
managed through several types of interest rate derivatives. If
the derivative instruments qualify for hedge accounting in the
Company Financial Statements the Company applies cash ﬂow
hedge accounting or fair value hedge accounting. For more
information on the risk management and hedging strategies
used by the Group please refer to Section 35.1 “Financial
Risk Management” of the Notes to the Consolidated Financial
Statements.
Equity price risk — The Company is to a small extent invested
in quoted equity securities mainly for strategic reasons. The
Company’s exposure to equity price risk is hence limited.
Furthermore, Airbus Group is exposed under its long-term
incentive plan (LTIP) to the risk of Airbus Group share pricemovements. In order to limit these risks for the Group, theCompany enters into equity derivatives that reference theAirbus Group SE share price.
Sensitivities of market risks — The approach used to measure
and control market risk exposure within the Group’s ﬁnancial
instrument portfolio is amongst other key indicators the value-at-

Financial Statements 2016 - AIRBUS ° 104 °Financial Statements 2016
Notes to the IFRS Company Financial Statements

risk (“VaR”). For information about VaR and the approach usedby the Company to assess and monitor sensitivities of market
risks please refer to Section 35.1 “Financial Risk Management”
of the Notes to the Consolidated Financial Statements.

The Company is part of the Group risk management process,which is more fully described in Section 35.1 “Financial Risk
Management” of the Notes to the Consolidated Financial
Statements.

A summary of the VaR position of the Company’s ﬁnancial instruments portfolio at 31 December 2016 and 2015 is as follows:
Total VaR

Equity price VaR

Currency VaRInterest rate VaR

FX hedges

8

0

7

1

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

36

23

6

23

Equity swaps

4

4

0

0

Diversification effect

(14)

(2)

(11)

(1)

All financial instruments

34

25

2

23

FX hedges

19

0

19

0

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

50

22

29

28

Equity swaps

11

11

0

0

Diversification effect

(39)

(8)

(39)

0

All financial instruments

41

25

9

28

(In € million)

31 December 201631 December 2015

The decrease in the total VaR compared to 31 December 2015 is mainly triggered by an improved asset liability match in foreign
currencies.The Company enters into derivative instruments mainly for hedging purposes of the Group. The derivative instruments
entered into with Group-external counterparties are passed on a 1:1 basis to Airbus Group entities. As a result, the respective market
risks of the Group-external derivative instruments are offset by corresponding opposite market risks of intragroup transactions.

Liquidity Risk
The Company’s policy is to maintain sufﬁcient cash and cash equivalents at any time to meet its own and the Group’s present
and future commitments as they fall due. For information on how the Group monitors and manages liquidity risk, please refer to
Section 35.1 “Financial Risk Management” of the Notes to the Consolidated Financial Statements.
The contractual maturities of the Company ﬁnancial liabilities, based on undiscounted cash ﬂows and including interest payments,
if applicable, are as follows:(In € million)

Carrying Contractual
amount cash flows< 1 year

1 year2 years

2 years3 years

3 years4 years

(226)

(809)

(298)

(730)

4 years- More than
5 years
5 years

31 December 2016
Non-derivative financial liabilities
Derivative financial liabilities

Total(8,032)(9,042)(1,695)(5,284)(12,241)(15,147)(4,762)(4,104)(3,106)(1,630)(1,127)(418)(20,273)(24,189)(4,988)(4,913)(3,404)(2,360)(2,822)(5,702)(4,170)31 December 2015
Non-derivative financial liabilities(7,217)(8,064)(1,946)

(211)

(781)

(269)

(687)

Derivative financial liabilities(11,951)(13,698)(4,100)(3,635)(2,992)(1,976)

(560)

(435)

Total

(19,168)(21,762)(6,046)(3,846)(3,773)(2,245)(1,247)(4,605)

4

Credit Risk
The Company is exposed to credit risk to the extent of nonperformance by either the related parties to which it provides
ﬁnancing or its counterparts with regard to ﬁnancial instruments
or issuers of ﬁnancial instruments for gross cash investments.
Although the Company provides loans to Group companies its
credit risk is limited to its direct subsidiaries. For the policies

the Company has put in place to avoid concentrations ofcredit risk and to ensure that credit risk is limited please refer
to Section 35.1 “Financial Risk Management” of the Notes to
the Consolidated Financial Statements.
In 2016, the total receivables, neither past due nor impaired
amount to € 4,759 million (in 2015: € 4,946 million).

Financial Statements 2016 - AIRBUS ° 105 °Notes to the IFRS Company Financial Statements

13.2 Carrying Amounts and Fair Values of Financial Instruments
Financial instruments – The Company’s ﬁnancial assets mainly
consist of cash, short to medium-term deposits and securities.
The Company’s ﬁnancial liabilities include intragroup liabilities,
obligations towards ﬁnancial institutions and issued bonds.
The Company has the same classiﬁ cation and accounting
policies as the Group. Please refer to Section 35.1 “Financial
Risk Management” of the Notes to the Consolidated Financial
Statements for more information.

The Company assigns its ﬁnancial instruments (excluding its
at-cost investments, which are outside the scope of IAS 39“Financial instruments: recognition and measurement”) intoclasses based on their category in the statement of ﬁnancial
position.

The following tables present the carrying amounts and fair values of ﬁnancial instruments by class and by IAS 39 measurement
category as of 31 December 2016 and 2015:(In € million)

Held fortrading

Availablefor-saleLoans and receivables
and financial liabilities
at amortised cost

Financial
instruments
total

Fair
value

Book
value

Fair
value

Amortised
cost

Book
value

Fair value
for hedge
relations

Fair value throughprofit or loss
Designated

Fair
value

Fair
value

AssetsOther investments andlong-term financial assets■

Equity instruments

0

0

0

1,056

1,056

0

0

1,056

1,056

■

Loans

0

0

0

0

0

3,401

3,502

3,401

3,502

Trade receivables

0

0

0

0

0

102

102

102

102

Derivative instruments

12,031

0

122

0

0

0

0

12,153

12,153Current account Group
companies

Other financial assets
■

■

0

0

0

0

0

9,409

9,409

9,409

9,409

Securities

0

0

0

11,15911,15900

11,15911,159Cash and cash equivalents

0

5,513

0

1,535

1,535

1,710

1,710

8,758

8,758

12,0315,513

122

13,75013,75014,622

14,72346,03846,038Issued bonds andcommercial papers

0

0

0

0

0

1,512

1,557

1,512

1,557

Liabilities to banks andother financing liabilities

0

0

0

0

0

2,053

2,053

2,053

2,053

Internal loans payable

0

0

0

0

0

4,467

4,660

4,467

4,660

12,196

0

45

0

0

0

0

12,241

12,241

Total
Liabilities
Financing liabilities■■■

Other financial liabilities■■

Derivative instruments
Current accounts Group
companies

Total

0

0

0

0

0

28,55728,55728,55728,557

12,196

0

45

0

0

36,58836,827

48,83049,068Financial Statements 2016 - AIRBUS ° 106 °Financial Statements 2016
Notes to the IFRS Company Financial Statements(In € million)

Held fortrading

Availablefor-saleLoans and receivables
and financial liabilities
at amortised cost

Financial
instruments
total

Fair
value

Book
value

Fair
value

Amortised
cost

Book
value

Fair value
for hedge
relations

Fair value throughprofit or loss
Designated

Fair
value

Fair
value

AssetsOther investments andlong-term financial assets■

Equity instruments

0

0

0

199

199

0

0

199

199

■

Loans

0

0

0

0

0

4,043

4,147

4,043

4,147

Trade receivables

0

0

0

0

0

11

11

11

11

Other financial assets■■

Derivative instruments

11,899061

Current account Group
companies

0

0

0

0

0

0

11,96011,960

0

0

0

0

0

8,353

8,353

8,353

8,353

Securities

0

3

0

11,273

11,2730011,276

11,276

Cash and cash equivalents

0

3,220

0

2,851

2,851

444

444

6,515

6,515

11,8993,223

61

14,323

14,323

12,851

12,95542,35742,461

0

0

0

0

0

962

992

962

992

Total
Liabilities
Financing liabilities■■■

Issued bonds andcommercial papers
Liabilities to banks andother financing liabilities

0

0

0

0

0

2,309

2,338

2,309

2,338

Internal loans payable

0

0

0

0

0

3,945

4,070

3,945

4,070

11,901

0

50

0

0

0

0

11,951

11,951Other financial liabilities■■

Derivative instruments
Current accounts Group
companies

Total

0

0

0

0

0

28,41528,41528,41528,415

11,901

0

50

0

0

35,63135,81547,58247,766

Fair Value Hierarchy
For further details please refer to Note 35.2 “Carrying Amounts and Fair Values of Financial Instruments” in the Consolidated
Financial Statements.
The fair values disclosed for ﬁnancial instruments accounted for at amortised cost reﬂect Level 2 input.
The following table presents the carrying amounts of the ﬁnancial instruments held at fair value across the three levels of the fairvalue hierarchy as of 31 December 2016 and 2015, respectively:
31 December 2016
(In € million)

Level 1

Level 231 December 2015

Total

Level 1

Level 2

Total

Financial assets measured at fair value
Equity instruments
Derivative instruments
Securities
Cash equivalents

Total

1,056

0

1,056

199

0

199

0

12,153

12,153

0

11,961

11,961

11,13920

11,15911,112

164

11,276

6,218

830

7,048

3,941

2,130

6,071

18,41313,00331,416

15,252

14,25529,5070

12,241

12,241

0

11,951

11,951

Financial liabilities measured at fair value
Derivative instruments
Other liabilities

0

0

0

0

0

0

Total

0

12,241

12,241

0

11,951

11,951

Financial Statements 2016 - AIRBUS ° 107 °4

Notes to the IFRS Company Financial Statements

13.3 Potential Effect of Set-Off Rights on Recognised Financial Assets and Liabilities
The Company reports all its ﬁnancial assets and ﬁnancial liabilities on a gross basis. With each derivative counterparty there are
master netting agreements in place providing for the immediate close-out of all outstanding derivative transactions and paymentof the net termination amount in the event a party to the agreement defaults or another deﬁned termination event occurs. The
following tables set out, on a counterparty speciﬁc basis, the potential effect of master netting agreements on the Company’s
ﬁnancial position, separately for ﬁnancial assets and ﬁnancial liabilities that were subject to such agreements as of 31 December
2016 and 31 December 2015, respectively:

Derivative instruments(In € million)

Related amounts not set off inthe statement of financial position

Net amounts
presented in
the financial
statements

Gross amounts
recognised set
Grossamounts off in the financial
statements
recognised

Financial
instruments

Cash collateral
receivedNet
amount31 December 2016
Financial assets

12,1530

12,153(2,561)

0

9,592

Financial liabilities

12,241

0

12,241(2,561)

0

9,680

Financial assets

11,961

0

11,961(2,754)0

9,207

Financial liabilities

11,951

0

11,951(2,754)

0

9,197

7 years > 7 years

Total

31 December 2015

13.4 Notional Amounts of Derivative Financial Instruments
The maturity of hedged interest cash flows are as follows, speciﬁed by year of expected maturity:
Remaining period
1 year

2 years

3 years

4 years

5 years

6 years

Interest rate contracts

30

0

0

0

488

0

949

3,595

5,062

Interest rate future contracts

130

0

0

0

0

0

0

0

130

Interest rate contracts

2,549

41

1,021

18

14

1,134

8

3,469

8,254

Interest rate future contracts

1,032

0

0

0

0

0

0

0

1,032

(In € million)

31 December 201631 December 2015

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

2 years

3 years

4 years> 4 years

Total

31 December 2016

77

52

49

19

0

197

31 December 2015

153

76

52

49

20

350

(In € million)

Financial Statements 2016 - AIRBUS ° 108 °Financial Statements 2016
Notes to the IFRS Company Financial Statements

13.5 Derivative Financial Instruments and Hedge Accounting Disclosure
In addition, a loss of € -27 million was recognised in the proﬁt for the period in 2016 (€ 20 million in 2015) on derivatives that were
designated as hedging instruments in a fair value hedge, and a gain of € 12 million (in 2015: € -18 million) attributable to the hedged
risk was recognised in the proﬁt for the period on the corresponding hedged items. Corresponding with its carrying amounts, thefair values of each type of derivative ﬁnancial instruments are as follows:
31 December

2016
Assets(In € million)

Foreign currency contracts – cash flow hedges
Foreign currency contracts – not designated in a hedge relationship2015
Liabilities

AssetsLiabilities

0

0

0

26

11,941

11,962

11,66911,671
13

Interest rate contracts – cash flow hedges

0

7

0

Interest rate contracts – fair value hedges

122

38

30

4

Interest rate contracts – not designated in a hedge relationship

23

57

100

100

Commodity contracts - not designated in a hedge relationship

52

52

130

130

Equity swaps – not designated in a hedge relationship

15

3

31

7

Option component of Exchangeable Bond

0

122

12,153

12,241

11,96011,951

Total

13.6 Net Gains or Net Losses
The Company’s net gains or net losses recognised in proﬁt or loss in 2016 and 2015, respectively are as follows:2016(In € million)

2015

Financial assets or financial liabilities at fair value through profit or loss:
(168)

70

Designated on initial recognition

49

165

Available-for-sale financial assets

15

183

Held for trading

(1)

(93)

375

Financial liabilities measured at amortised cost

123

(631)

Total

(74)

162

Loans and receivables(1) Contain among others impairment losses.

14. Events after the Reporting Date

There are no signiﬁcant events after the reporting date.

4

Financial Statements 2016 - AIRBUS ° 109 °Chapter

5

Financial Statements 2016 - AIRBUS ° 110 °Financial Statements 2016

Other Supplementary
Information Including
the Independent
Auditor’s Report

5
Financial Statements 2016 - AIRBUS ° 111 °Other Supplementary Information Including the Independent Auditor’s Report

Other Supplementary Information
1.

Appropriation of Result

Articles 30 and 31 of the Articles of Association provide that the Board of Directors shall determine which part of the result shallbe attributed to the reserves. The General Meeting of Shareholders may dispose of a reserve only upon a proposal of the Boardof Directors and to the extent it is permitted by law and the Articles of Association. Dividends may only be paid after adoption of
the annual accounts from which it appears that the shareholders’ equity of the Company is more than the amount of the issued
and paid-in part of the capital increased by the reserves that must be maintained by law.
It will be proposed at the Annual General Meeting of Shareholders that the Proﬁt for the period of € 3,900 million as shown in theincome statements for the ﬁnancial year 2016 is to be added to retained earnings and that a payment of a gross amount of € 1.35
per share shall be made to the shareholders out of retained earnings.

2.

Independent auditor’s report

To: the shareholders and board of directors of Airbus Group SE

Report on the audit of the Annual Financial Statements 2016 included in the annual report
Our opinion
We have audited the ﬁnancial statements 2016 of Airbus Group SE (the Company), based in Amsterdam.
In our opinion the accompanying ﬁnancial statements give a true and fair view of the ﬁnancial position of Airbus Group SE as at
31 December 2016, and of its result and its cash ﬂows for 2016 in accordance with International Financial Reporting Standards
as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code.
The ﬁnancial statements comprise:■the consolidated and company statement of ﬁnancial position as at 31 December 2016;■

the following statements for 2016: the consolidated and company income statement, the consolidated and company statementsof comprehensive income, changes in equity and cash ﬂows;■

the notes comprising a summary of the signiﬁcant accounting policies and other explanatory information.

Basis for our opinion
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities underthose standards are further described in the “Our responsibilities for the audit of the ﬁnancial statements” section of our report.
We are independent of Airbus Group SE in accordance with the Verordening inzake de onafhankelijkheid van accountants
bij assurance-opdrachten (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) andother relevant independence regulations in the Netherlands. Furthermore we have complied with the Verordening gedrags- en
beroepsregels accountants (VGBA, Dutch Code of Ethics).
We believe the audit evidence we have obtained is sufﬁcient and appropriate to provide a basis for our opinion.

Financial Statements 2016 - AIRBUS ° 112 °Financial Statements 2016
Other Supplementary Information Including the Independent Auditor’s Report

Materiality
Materiality€ 198 million

Benchmark applied
Explanation

5% of the EBIT adjusted
We consider EBIT adjusted as the most appropriate benchmark given the nature of the businessWe have also taken into account misstatements and/or possible misstatements that in our opinion are material for the users of
the ﬁnancial statements for qualitative reasons.
We agreed with the Board of Directors that misstatements in excess of € 10 million which are identiﬁed during the audit, would bereported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.

Scope of the group audit
Airbus Group SE is at the head of a group of entities. The ﬁnancial information of this group is included in the consolidated ﬁnancial
statements of Airbus Group SE. The Company is structured along the divisions: Airbus, Airbus Helicopters and Airbus Defence
and Space, each comprising of multiple entities in various countries.
We are responsible for directing, supervising and performing the group audit. In this context, we have determined the nature andextent of the audit procedures to be carried out for the Group entities, based on their size and/or risk proﬁle.
We scope entities into the group audit where they are of signiﬁcant size, have signiﬁcant risks to the Company associated with themor are considered for other reasons. This resulted in coverage of 86% of total consolidated revenue and 99% of total consolidated
assets. The remaining 14% of revenues, and 1% of total assets results from entities, none of which individually represents morethan 1% of revenues. For remaining entities, we performed, amongst others, analytical procedures or speciﬁc audit procedureson certain account balances to corroborate our assessment that there are no signiﬁcant risks of material misstatements.
We executed a program that includes participation in risk assessment and planning discussions, setting the direction of the groupaudit work (including instructions to the divisional and entity auditors), review and discussion of the planned audit approach, obtaining
an understanding of the ﬁnancial reporting process and performing procedures on the group consolidation, participating in theevaluation of key accounting topics, reviewing the ﬁnancial statements and participating in meetings with the management of theCompany and its divisions. As part of our audit instructions, we also included questions on key programmes (A380, A350 XWB
and A400M) and the risk of non-compliance with laws and regulations. We involved several EY specialists to assist the audit team,including specialists from our tax, valuations, actuarial, treasury and compliance departments.
The audit of the three Airbus Divisions is performed jointly by EY network ﬁrms and other non-EY audit ﬁrms. Meetings were held withthe divisional auditors and divisional management to discuss the ﬁndings reported to the group audit team, as well as ﬁle reviews.
By performing the procedures mentioned above at group entities, together with additional procedures at consolidation level,
we have been able to obtain sufﬁcient and appropriate audit evidence about the Company’s ﬁnancial information to provide an
opinion about the consolidated ﬁnancial statements.

Our key audit matters
Key audit matters are those matters that, in our professional judgment, were of most signiﬁcance in our audit of the ﬁnancial
statements. We have communicated the key audit matters to the supervisory board. The key audit matters are not a comprehensive
reﬂection of all matters discussed.

5
Financial Statements 2016 - AIRBUS ° 113 °Other Supplementary Information Including the Independent Auditor’s Report

These matters were addressed in the context of our audit of the ﬁnancial statements as a whole and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
Risk

Our audit approach

Litigation and claims and risk of non-compliance with laws and regulation
Description
A part of the Company’s business is characterised by competition for
individual significant contracts with customers which are often directly
or indirectly associated with governments. The process associatedwith these activities is susceptible to the risk of non-compliancewith laws and regulations. In addition the Company operates in a
number of territories where the use of commercial intermediaries
is normal practice. Subsidiaries of Airbus Group SE remain underinvestigation by various law enforcement agencies in Germany,
Greece, UK, Romania and Austria. In August 2016, the Company
announced that it had been informed by the Serious Fraud Office inthe UK that it had commenced a formal investigation into allegationsof fraud, bribery and corruption in the civil aviation business of theCompany. These allegations relate to irregularities concerning third
party consultants. Breaches of laws and regulations in this area canlead to fines, penalties, criminal prosecution, commercial litigation
and restrictions on future business.
Litigation and claims involve amounts that are potentially significant
and the estimate of the amount to be provided as a liability, if any,
is inherently subjective. The outcome of these matters may have amaterial effect on the Company’s result and financial position.
Reference is made to disclosure on Note 3 ‘Key estimates andjudgements’, and Note 36 ‘Litigations and claims’ of the financial
statements.

Our audit approach
We evaluated and tested the Company’s policies, procedures andcontrols over the selection of intermediaries, contracting arrangements,
ongoing management, payments and responses to suspected
breaches of policy. We sought to identify and tested payments madeto intermediaries during the year, made enquiries of appropriate
personnel and evaluated the tone set by management and the Boardof Directors and the Company’s approach to managing this risk.
Having enquired of management, the Audit Committee and the Boardof Directors as to whether the Company is in compliance with laws
and regulations relating to bribery and corruption, we made writtenenquiries of and met with the Company’s legal advisers to cross checkthe results of those enquiries with third parties and maintained a highlevel of vigilance to possible indications of significant non-compliancewith laws and regulations relating to bribery and corruption whilst
carrying out our other audit procedures. We discussed the areasof potential or suspected breaches of law, including the ongoinginvestigations, with the Audit Committee and the Board of Directors
as well as the Company’s legal advisers and assessed related
documentation. We assessed whether the disclosure in note 36 to thefinancial statements of the Company’s exposure to the financial effects
of potential or suspected breaches of law or regulation complies withaccounting standards and in particular whether it is the case that theinvestigations remain at too early a stage to assess the consequences(if any), including in particular the size of any possible fines.

Accounting for construction contracts, including revenue recognition and loss provision
Description
The amount of revenue and profit recognised in a year is dependent
on the assessment of the stage of completion of construction
contracts as well as estimated total revenues and estimatedtotal cost. Significant estimates are made to assess the stage ofcompletion based on milestones, estimated revenue and costs for
key programmes such as A400M and A350 XWB (contracts withlaunch customers only).
Depending on these assessments, the stage of completion isdetermined, revenue is recognised and loss provisions are recorded
when the contract margin is negative.
Provisions for contract losses relate mainly to the A400M and A350
XWB launch customers and are recorded when it becomes probablethat estimated total contract costs will exceed estimated total contract
revenues. Updates to these provisions can have a significant impact
on the Company’s result and financial position. The determination ofthese provisions is based on best available estimates and requires
significant management’s judgement and assumptions associatedwith the technical development achievement and certification
schedules, production plan (including assumptions on ramp up),
performance guarantees as well as expected outcome from ongoingnegotiations with customers.
A key risk is the A400M programme which remains in a critical phase.
Negotiations with OCCAR/Nations on military capabilities, pricerevision formula and commercial compensation remain ongoing.
Reference is made to the disclosure on Note 3 ‘Key estimates andjudgements’, Note 10 ‘Revenues, cost of sales and gross margin’
and Note 22 ‘Provisions, contingent assets and contingent liabilities’of the financial statements.

Our audit approach
We evaluated the design and implementation of internal controls foraccounting for construction contracts. We also performed detailed
procedures on individually significant programmes, including
discussions with the individual Head of Programme, and evaluatedmanagement’s assumptions in the determination of amongst others
the stage of completion of a project, estimates to complete for bothrevenue and costs, and any provisions for loss making contracts.
We focused on management’s assessment of key contract risks andopportunities to determine whether these are appropriately reflected in
the cost to complete forecasts, and paid specific attention for example
to technical development, delivery plan and certification schedules.
We challenged management’s assumptions by discussing andreviewing correspondence with customers, considered the accuracy
and consistency of similar estimates made in previous years andcorroborated the assumptions with the latest contractual information.
We paid particular attention to the loss provision for the A400M
programme, including the € (2,210) million additional net charge in2016, as well as related disclosures.

Financial Statements 2016 - AIRBUS ° 114 °Financial Statements 2016
Other Supplementary Information Including the Independent Auditor’s Report

Risk

Our audit approach

Valuation of inventories for contracts accounted for under IAS 18 and completeness of provision
for contract losses and customer service obligations
Description
Inventories amount in total to € 30 billion, including work in progressof € 21 billion. Key programmes (which are accounted for under
IAS 18 Revenue recognition, for which revenue and cost of sales
are recognised as each aircraft is delivered) in light of the risks
mentioned below are the A380 and the A350 XWB contracts with
non-launch customers. With respect to the A380, a key challenge issecuring the order flow.
Estimates of total contract costs and selling price per aircraft arenecessary to determine if the net realisable value impairment orprovision for contract losses is required.
In addition to the risk of contract cancellations, significant costs
or loss of revenue may be incurred in connection with remedialaction required to correct any performance issues detected. Dueto the inherent uncertainty involved in forecasting future costs andinterpreting contractual and commercial positions in determining
impairments and provisions, this is a key audit area. Updates tothese provisions can have a significant impact on the Company’s
result and financial position.
Reference is made to the disclosures on Note 3 ‘Key estimatesand judgements’, and notes 20 ‘Inventories’ and 22 ‘Provisions,contingent assets and contingent liabilities’ of the financial
statements.

Our audit approach
We evaluated the design and implementation of internal controls for
identifying and recording impairments and provisions and performed
detailed procedures including inquiry of the Head of Programmes andcorroboration with other audit evidence. We evaluated management’s
assumptions in the determination of the forecast revenue to bereceived, cost to be incurred (including any contractual penalties) andgross margin. Our evaluation was based on our assessment of thehistorical accuracy of the Company’s estimates in previous periods
and included an analysis of contingencies and impact of known
technical issues on cost forecasts and provisions.
Particular attention was paid to the commercial status of the A380
programme, including discussions with Airbus management on thestatus and their ongoing commitment to the A380 programme.

Goodwill impairment
Description
Goodwill amounts to € 9.4 billion (2015: € 9.9 billion) and represents
8% (2015: 9%) of the balance sheet total and 255% (2015: 166%)of total equity. There is a risk of irrecoverability of the Company’s
significant goodwill balance due to weak demand in certain markets
and aircraft market cyclicality.
In its impairment calculations the company uses assumptions suchas growth rates, weighted average costs of capital and underlying
foreign exchange rates. Due to the inherent uncertainty involved inforecasting and discounting future cash flows, which are the basisof the assessment of recoverability, this is one of the key judgmental
areas.
Reference is made to the disclosure on Note 17 ‘Intangible assets’ of
the financial statements.

Our audit approach
In this area our audit procedures included, amongst others, testing of
the Company’s budgeting procedures upon which the forecasts are
based and the principles and integrity of the Company’s discounted
cash flow model. We used our own valuation specialists to assist us inevaluating the assumptions and methodologies used by the Company,
in particular relating to the discount rate used. We also evaluatedmanagement’s sensitivity analyses on the assumptions for each cash
generating unit. We compared the sum of the discounted cash flows
to the Company’s market capitalisation to assess the reasonablenessof those cash flows.

Derivative financial instruments, including impact on capitalization of Airbus Group SE
Description
The Company operates in a business environment that is exposed
to currency and interest rate volatility. A significant portion of theCompany’s revenue is dominated in US dollars, while a major partof its costs is incurred in Euro and, to a lesser extent, in pounds
Sterling. In response to these risks the Company uses financial
instruments (mainly currency forwards) to mitigate the exposure tochanges in market rates.
There is a high inherent risk of error in the Company financial
statements, both in valuation of the financial instruments and in thepresentation and disclosure in the financial statements.
The magnitude of the Company’s hedge portfolio and potential
significant changes in the exchange rate of the US dollar versus theEuro could have a negative impact on the equity of the Company
via the ‘mark to market’ valuation of the hedge portfolio. It therefore
also has a major impact on the capitalisation of Airbus Group SE,
with net equity (as percentage of total assets) amounting to 3.1% per
31 December 2016 (2015: 5.6%).
Reference is made to Note 35 ‘Information about financial
instruments’ of the financial statements.

Our audit approach
For the audit of financial instruments we used specialists who
tested the controls around the Company’s central treasury system,
independently calculated the valuation of the treasury portfolio andtested the application of the hedge accounting rules and the resulting
accounting treatment. We also obtained counterparty confirmationof the outstanding financial instruments to verify the existence andownership. Finally we evaluated whether appropriate disclosuresrelating to financial instruments were made in the financial statements.

Independence matter
Description
In 2016, few EY staff from The Netherlands were seconded for
non-audit services contracted and allowed outside the Netherlands.
This secondment abroad caused a formal breach of independence
under Dutch law.

Our audit response
After this breach was discovered by EY it was, together with the
mitigating and corrective measures taken, reported to the Airbus Audit
Committee and the Dutch regulator. Our independence has not been
compromised and thus does not affect our opinion as an independent
auditor.

Financial Statements 2016 - AIRBUS ° 115 °5

Other Supplementary Information Including the Independent Auditor’s Report

Report on other information included in the annual report
In addition to the ﬁnancial statements and our auditor’s report thereon, the annual report contains other information that consists of:■■

the Report of the Board of Directors (we refer to www.airbusgroup.com for the Report of the Board of Directors);
other information pursuant to Part 9 of Book 2 of the Dutch Civil Code.

Based on the following procedures performed, we conclude that the other information:■■is consistent with the ﬁnancial statements and does not contain material misstatements;
contains the information as required by Part 9 of Book 2 of the Dutch Civil Code.

We have read the other information. Based on our knowledge and understanding obtained through our audit of the ﬁnancial
statements or otherwise, we have considered whether the other information contains material misstatements. By performing theseprocedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard 720. The scopeof the procedures performed is less than the scope of those performed in our audit of the ﬁnancial statements.
The Board is responsible for the preparation of the other information, including the Report of the Board of Directors in accordancewith Part 9 of Book 2 of the Dutch Civil Code and other information pursuant to Part 9 of Book 2 of the Dutch Civil Code.

Report on other legal and regulatory requirements
Engagement
We were appointed by the Annual General Meeting of Shareholders as auditor of Airbus Group SE on 28 April 2016, as of theaudit for the year 2016.

Description of responsibilities for the ﬁnancial statements
Responsibilities of the Board of Directors and Audit Committee for the financial statements
The Board of Directors is responsible for the preparation and fair presentation of the ﬁnancial statements in accordance with
EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code. Furthermore, the Board of Directors is responsible for such internal
control as management determines is necessary to enable the preparation of the ﬁnancial statements that are free from material
misstatement, whether due to fraud or error.
As part of the preparation of the ﬁnancial statements, the Board of Directors is responsible for assessing the company’s ability
to continue as a going concern. Based on the ﬁnancial reporting frameworks mentioned, the Board of Directors should prepare
the ﬁnancial statements using the going concern basis of accounting unless the Board of Directors either intends to liquidate thecompany or to cease operations, or has no realistic alternative but to do so. The Board of Directors should disclose events andcircumstances that may cast signiﬁcant doubt on the company’s ability to continue as a going concern in the ﬁnancial statements.
The Audit Committee is responsible for overseeing the Company’s ﬁnancial reporting process.

Our responsibilities for the audit of the financial statements
Our objective is to plan and perform the audit assignment in a manner that allows us to obtain sufﬁcient and appropriate audit
evidence for our opinion.
Our audit has been performed with a high, but not absolute, level of assurance, which means we may not have detected allmaterial errors and fraud.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to inﬂuence the economic decisions of users taken on the basis of these ﬁnancial statements. The materiality affects
the nature, timing and extent of our audit procedures and the evaluation of the effect of identiﬁed misstatements on our opinion.
We have exercised professional judgment and have maintained professional scepticism throughout the audit, in accordance with
Dutch Standards on Auditing, ethical requirements and independence requirements. Our audit included e.g.:■

identifying and assessing the risks of material misstatement of the ﬁnancial statements, whether due to fraud or error, designingand performing audit procedures responsive to those risks, and obtaining audit evidence that is sufﬁcient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

Financial Statements 2016 - AIRBUS ° 116 °Financial Statements 2016
Other Supplementary Information Including the Independent Auditor’s Reportobtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control;■
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management;■
concluding on the appropriateness of management’s use of the going concern basis of accounting, and based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast signiﬁcant doubt on thecompany’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the ﬁnancial statements or, if such disclosures are inadequate, tomodify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause a company to cease to continue as a going concern;■
evaluating the overall presentation, structure and content of the ﬁnancial statements, including the disclosures;■
evaluating whether the ﬁnancial statements represent the underlying transactions and events in a manner that achieves fairpresentation.
■

Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing thegroup audit. In this respect we have determined the nature and extent of the audit procedures to be carried out for group entities.
Decisive were the size and/or the risk proﬁle of the Company’s entities or operations. On this basis, we selected group entities forwhich an audit or review had to be carried out on the complete set of ﬁnancial information or speciﬁc items.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit andsigniﬁcant audit ﬁndings, including any signiﬁcant ﬁndings in internal control that we identify during our audit.
We provide the Board of Directors with a statement that we have complied with relevant ethical requirements regarding independence,and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of most signiﬁcance in theaudit of the ﬁnancial statements of the current period and are therefore the key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances,not communicating the matter is in the public interest.
Amsterdam, 21 February 2017
Ernst & Young Accountants LLP
Signed by: A.A. van Eimeren

5
Financial Statements 2016 - AIRBUS ° 117 °