2017

Financial
Statements

02

Financial Statements 2017 - AIRBUS

FINANCIAL STATEMENTS 2017

Financial
Statements
1_ Airbus SE IFRS
Consolidated Financial Statements
2_ Notes to the IFRS
Consolidated Financial Statements
3_ Airbus SE IFRS
Company Financial Statements
4_ Notes to the IFRS
Company Financial Statements
5_ Other Supplementary Information
Including the Independent Auditor’s Report

2017

03

04

Financial Statements 2017 - AIRBUS

Chapter1

FINANCIAL STATEMENTS 201705

Airbus SE
IFRS Consolidated
Financial Statements

Airbus SE — IFRS Consolidated Income Statements
for the years ended 31 December 2017 and 201606

Airbus SE — IFRS Consolidated Statements of Comprehensive
Income for the years ended 31 December 2017 and 201607

Airbus SE — IFRS Consolidated Statementsof Financial Position at 31 December 2017 and 201608

Airbus SE — IFRS Consolidated Statements of Cash Flowsfor the years ended 31 December 2017 and 201610

Airbus SE — IFRS Consolidated Statements of Changes in Equity
for the years ended 31 December 2017 and 2016

11

1

06

Financial Statements 2017 - AIRBUS
Airbus SE IFRS Consolidated Financial Statements

Airbus SE — IFRS Consolidated Income Statements
for the years ended 31 December 2017 and 2016

(In € million)

Note

2017

2016

Revenues

10

66,767

66,581(59,160)(61,317)

7,607

5,264

Cost of sales
Gross margin10

Selling expenses
Administrative expenses

(872)

(997)

(1,567)(1,726)

Research and development expenses

11(2,807)(2,970)

Other income

13

981

2,689

Other expenses

13

(336)

(254)

Share of profit from investments accounted for under the equity method

12

333

231

Other income from investments

12

Profit before finance costs and income taxes

82

21

3,421

2,258

Interest income

189

247

Interest expense

(517)

(522)

Other financial result

1,477

(692)

Total financial result

14

1,149

(967)

Income taxes

15(1,693)

(291)

2,877

1,000

2,873

995

4

5

€

€

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

Earnings per share
Basic

16

3.71

1.29

Diluted

16

3.70

1.29

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

FINANCIAL STATEMENTS 201707

Airbus SE IFRS Consolidated Financial Statements

Airbus SE — IFRS Consolidated Statements of Comprehensive Income
for the years ended 31 December 2017 and 2016

(In € million)

Note

Profit for the period

2017

2016

2,877

1,000

116

(1,649)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 plans frominvestments accounted for under the equity method
Income tax relating to items that will not be reclassified

15

61

(102)

(26)

365

(526)

(174)

10,636

(247)

396

(53)

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

35

Change in fair value of available-for-sale financial assets
Share of changes in other comprehensive income from investments
accounted for under the equity method
Income tax relating to items that may be reclassified

15

Other comprehensive income, net of tax

Total comprehensive income for the period

(3)

(35)

(2,881)

(7)

7,773

(1,902)

10,650(902)

10,611

(917)

39

15

Attributable toEquity owners of the parent
Non-controlling interests

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

1

08

Financial Statements 2017 - AIRBUS
Airbus SE IFRS Consolidated Financial Statements

Airbus SE — IFRS Consolidated Statements of Financial Position
at 31 December 2017 and 2016

(In € million)

Note

2017

2016

AssetsNon-current assets
Intangible assets

17

11,62912,068Property, plant and equipment

18

16,61016,913

3

5

7

1,678

1,608

Other investments and other long-term financial assets

19

4,204

3,655

Non-current other financial assets

23

2,980

976

Investment property
Investments accounted for under the equity method

Non-current other assets

24

2,295

2,358

Deferred tax assets

15

3,598

7,557

Non-current securities

34

10,944

9,897

53,94155,037

Current assets
Inventories

20

31,46429,688Trade receivables

21

8,358

8,101

Current portion of other long-term financial assets

19

529

522

Current other financial assets

23

1,979

1,257

Current other assets

24

2,907

2,576

914

1,110

Current tax assets
Current securities

34

1,627

1,551

Cash and cash equivalents

34

12,016

10,14359,79454,948Assets and disposal group of assets classified as held for sale

6

202

1,148

113,937

111,133

Total assets

FINANCIAL STATEMENTS 201709

Airbus SE IFRS Consolidated Financial Statements

Note(In € million)

2017

2016

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

775

773

Share premium

2,826

2,745

Retained earnings

7,007

4,987

Accumulated other comprehensive income

2,742(4,845)(2)(3)

13,348

3,657

3

(5)

32

13,351

3,652

Non-current provisions

22

10,153

10,826Long-term financing liabilities

34

8,984

8,791

Non-current other financial liabilities

23

6,948

13,313

Non-current other liabilities

24

17,19016,279Deferred tax liabilities

15

981

1,292

Treasury shares

Non-controlling interests
Total equity(1)

Liabilities
Non-current liabilities

Non-current deferred income

199

288

44,45550,789Current liabilities
Current provisions

22

6,575

6,143

Short-term financing liabilities

34

2,212

1,687

Trade liabilities

21

13,444

12,532Current other financial liabilities

23

2,185

5,761

Current other liabilities

24

29,193

27,535

1,481

1,126

Current tax liabilities
Current deferred income

Disposal group of liabilities classified as held for sale

6

935

917

56,02555,701

106991

Total liabilities

100,586

107,481

Total equity and liabilities

113,937

111,133(1) As of 31 December 2017, the accumulated other comprehensive income, previously classified within equity relating to assets and disposal groups classified as held for sale,amounts to € 65 million.

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

1

10

Financial Statements 2017 - AIRBUS
Airbus SE IFRS Consolidated Financial Statements

Airbus SE — IFRS Consolidated Statements of Cash Flowsfor the years ended 31 December 2017 and 2016

Note

(In € million)

Operating activities:
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
Advance payments received
Other assets and liabilities and others (1)Cash provided by operating activities (1) (2)Investing activities:
Purchases of intangible assets, property, plant and equipment, investment property
Proceeds from disposals of intangible assets, property, plant and equipment andinvestment property
Acquisitions of subsidiaries, joint ventures, businesses and non-controlling interests(net of cash)
Proceeds from disposals of subsidiaries (net of cash)
Payments for investments accounted for under the equity method, other investments andother long-term financial assets
Proceeds from disposals of investments accounted for under the equity method,other investments and other long-term financial assets
Dividends paid by companies valued at equity
Disposals of non-current assets and disposal groups classified as assets held for sale andliabilities directly associatedPayments for investments in securities
Proceeds from disposals of securities
Cash (used for) investing activities
Financing activities:
Increase in financing liabilities
Repayment of financing liabilities
Cash distribution to Airbus SE shareholders
Dividends paid to non-controlling interests
Changes in capital and non-controlling interests
Share buyback
Cash provided by (used for) financing activities
Effect of foreign exchange rate changes on cash and cash equivalents

2017

2016

2,873
4

995
5

(189)
517
149
(501)
1,693
(152)
2,298
(1,755)
(773)
(333)
805
(458)
266
(2,572)
621
1,419
1,268
(470)
4,444

(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(1,089)4,369(2,558)(3,060)

177

72

(23)
377

(120)
731

(913)

(691)

532
218

182
192

6

893
(3,767)2,534(2,530)1,527(2,280)
2,617
(830)

34
34
32

1,703
(419)
(1,043)
(3)
83
0
321
(374)

3,297
(1,725)(1,008)
(4)
60
(736)
(116)
60

1,861

3,483

10,1606,677

34

12,021

10,16034
612,016
5

10,143
17

9

6
6

7

32

Net increase 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) Customer financing flows previously disclosed in separate line items on the face of the cash flow statement are now included within the cash flows from “other assets andliabilities and others” (see “— Note 25: Sales Financing Transactions”).
(2) In 2017, cash provided by operating activities has been positively impacted by certain agreements reached with Airbus’ suppliers and customers relating to the settlement ofclaims and negotiation on payment terms.

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

FINANCIAL STATEMENTS 201711

Airbus SE IFRS Consolidated Financial Statements

Airbus SE — IFRS Consolidated Statements of Changes in Equity
for the years ended 31 December 2017 and 2016
Equity attributable to equity holders of the parent
Accumulated othercomprehensive income(In € million)

AvailableForeignfor-saleCashcurrency
CapitalShare Retained financial
flow translation Treasury
Note stock premium earnings
assets hedges adjustments shares

Balance at
1 January 2016

Noncontrolling
Total interests

Total
equity

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 for 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 SE
shareholders /Dividends paid to
non-controllinginterests

32

0

0

(1,008)

0

0

0

0

(1,008)(4)(1,012)

0

0

38

0

0

0

0

38

(23)

15

Equity transaction(IAS 27)
Change in treasury
shares

32

0

0

(2)

0

0

0

(511)

(513)

0

(513)

Cancellation oftreasury shares

32

(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

Profit for the period

0

0

2,873

0

0

0

0

2,873

4

2,877

Other comprehensive
income

0

0

151

369

7,757

(539)

0

7,738

35

7,773

Total comprehensive
income for the period

0

0

3,024

369

7,757

(539)

0

10,611

39

10,650Capital increase

32

2

81

0

0

0

0

0

83

0

83

Share-based payment(IFRS 2)

30

0

0

36

0

0

0

0

36

0

36

Cash distribution
to Airbus SE
shareholders /Dividends paid to
non-controllinginterests

32

0

0

(1,043)

0

0

0

0

(1,043)(3)(1,046)

0

0

3

0

0

0

0

3

(28)

(25)

0

0

0

0

0

0

1

1

0

1

775

2,826

7,007

1,139

604

999

Equity transaction(IAS 27)
Change in treasury
sharesBalance at
31 December 201732(2) 13,348

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

3 13,351

1

12Financial Statements 2017 - AIRBUS

Chapter2

FINANCIAL STATEMENTS 201713

Notes to the
IFRS Consolidated
Financial Statements

2.1 Basis of Presentation

15

2.2 Airbus Structure20

2.3 Segment Information

27

2.4 Airbus Performance29

2.5 Operational Assets and Liabilities

35

2.6 Employees Costs and Beneﬁ ts

48

2.7 Capital Structure and Financial Instruments

61

2.8 Other Notes

79

2.9 Appendix “Simpliﬁed Airbus Structure”

83

2

14

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements

CONTENTS

2.1 Basis of Presentation

15

2.6 Employees Costs and Beneﬁ ts

48

1.
2.
3.
4.

15
15
17

26.
27.
28.
29.
30.
31.

48
48
48
48
55
57

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

18

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

2.2 Airbus Structure

20

5.
6.
7.

20
21

2.7 Capital Structure and Financial
Instruments

61

24
26

32.
33.
34.
35.

61
62
63
66

8.

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

Total Equity
Capital Management
Net Cash
Information about Financial Instruments

2.3 Segment Information

27

9.

27

2.8 Other Notes

79

2.4 Airbus Performance

29

10.
11.
12.

29
30

36.
37.
38.

Litigation and Claims
Auditor Fees
Events after the Reporting Date

79
82
82

2.9 Appendix “Simpliﬁed Airbus
Structure”

83

13.
14.
15.
16.

Segment Information

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

30
30
31
31
34

2.5 Operational Assets and Liabilities 35
17.
18.
19.
20.
21.
22.
23.
24.
25.

Intangible Assets
Property, Plant and Equipment
Other Investments and Other Long-Term
Financial Assets
Inventories
Trade Receivables and Trade Liabilities
Provisions, Contingent Assets
and Contingent Liabilities
Other Financial Assets andOther Financial Liabilities
Other Assets and Other Liabilities
Sales Financing Transactions

35
37
39
40
40
41
43
44
44

FINANCIAL STATEMENTS 201715

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 ﬁnancial position and the results of operations ofAirbus SE, the “Company”, and its subsidiaries, a European
public limited-liability company (Societas Europaea) with its
seat (statutaire zetel) in Amsterdam, The Netherlands, its
registered address at Mendelweg 30, 2333 CS Leiden, The
Netherlands, and registered with the Dutch Commercial Register(Handelsregister) under number 24288945. On 12 April 2017, theCompany changed its name from Airbus Group SE to Airbus SE,
following approval at the Annual General Meeting. Therefore,

2.

the Company together with its subsidiaries is referred to as“Airbus” and no longer the “Group”, and the segment formerly
known as Airbus is referred to as “Airbus Commercial Aircraft”.
In this new set-up, Airbus retains Airbus Defence and Spaceand Airbus Helicopters as Divisions. In 2017, Airbus continued
to report under the existing reportable segments. The Company
is listed on the European stock exchanges in Paris, Frankfurt
am Main, Madrid, Barcelona, Valencia and Bilbao. The IFRS
Consolidated Financial Statements were authorised for issue
by the Company’s Board of Directors on 14 February 2018.

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. They are prepared and reported in euro (“€”) and allvalues are rounded to the nearest million appropriately. Due torounding, numbers presented may not add up precisely to thetotals provided and percentages may not precisely reﬂect theabsolute ﬁgures.
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. A new revenue recognition standard will be
implemented from 1 January 2018, the principles described
below will be impacted (see “— Note 4: Change in Accounting
Policies and Disclosures”).

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.

2

16

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.1 Basis of Presentation

The method is based either on inputs (i.e. costs incurred fordevelopment contracts) or outputs (i.e. contractually agreed
technical milestones, delivered units).

development costs are amortised over the estimated usefullife of the internally generated intangible asset. Amortisation ofcapitalised development costs is recognised in cost of sales.

Whenever the outcome of a construction contract cannot
be estimated reliably – for example during the early stagesof a contract 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”).

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.

Provisions 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 and Gross Margin” and“— Note 22: Provisions, Contingent Assets and Contingent
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 when incurred.
The costs for self-initiated development are capitalised when:■
the product or process is technically feasible and clearlydeﬁned (i.e. the critical design review is ﬁnalised);■adequate resources are available to successfully complete
the development;■
the beneﬁts from the assets are demonstrated (a market exists
or the internal usefulness is demonstrated) and the costs
attributable to the projects are reliably measured;■
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 testingof prototypes and models, as property, plant and equipment.
Capitalised development costs are generally amortised overthe estimated number of units produced. If the number ofunits produced cannot be estimated reliably, capitalised

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 intofunctional currency at the foreign exchange rate in effect at thedate of the transaction. Translation differences on non-monetaryﬁnancial assets and liabilities that are measured at fair value
are reported as part of the fair value gain or loss. However,translation differences of non-monetary financial assets
measured at fair value and classiﬁed as available-for-sale areincluded in accumulated other comprehensive 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
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.

FINANCIAL STATEMENTS 201717

Notes to the IFRS Consolidated Financial Statements
2.1 Basis of Presentation

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
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.

3.

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

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:
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.
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”).
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.
Airbus makes estimates and provides, across the programmes,for costs related to in service technical issues which have been
identiﬁed and for which solutions have been deﬁned, and forwhich the associated costs can be reliably estimated reﬂecting
the latest facts and circumstances. Airbus is contractually liable

for the repair or replacement of the defective parts but not
for any other damages whether direct, indirect, incidental orconsequential (including loss of revenue, proﬁt or use). However,in view of overall commercial relationships, contract adjustments
may occur, and be considered on a case by case basis.
Estimates and judgements are subject to change basedon new information as contracts and related programmes
progress. Furthermore, the complex design and manufacturing
processes of 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 and Gross Margin” and “— Note 22:
Provisions, Contingent Assets and Contingent Liabilities”).
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 thesematters may have a material effect on the ﬁnancial position,
results of operations or cash ﬂows of Airbus. Management
regularly analyses current information about these matters andprovides provisions for probable cash outﬂows, including theestimate of legal expenses to resolve the matters. Internal andexternal lawyers are used for these assessments. In making
the decision regarding the need for provisions, management
considers the degree of probability of an unfavourable outcome
and the ability to make a sufﬁciently reliable estimate of theamount of loss. The ﬁling of a suit or formal assertion of a claim
against Airbus companies or the disclosure of any such suit orassertion, does not automatically indicate that a provision may
be appropriate.
Income taxes — Airbus operates and earns income innumerous countries and is subject to changing tax laws
in multiple jurisdictions within these countries. Signiﬁ cantjudgements are necessary in determining the worldwide
income tax liabilities. Although management believes that it2

18

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.1 Basis of Presentation

has made reasonable estimates about the ﬁnal outcome oftax uncertainties, no assurance can be given that the ﬁ nal
tax outcome of these matters will be consistent with what is
reﬂected in the historical income tax provisions. At each end of
the reporting period, Airbus assesses whether the realisationof future tax beneﬁ ts is probable to recognise deferred tax
assets. This assessment requires the exercise of judgement on
the part of management with respect to, among other things,
beneﬁts that could be realised from available tax strategies andfuture taxable income, as well as other positive and negative
factors. The recorded amount of total deferred tax assets
could be reduced, through valuation allowances recognition, if
estimates of projected future taxable income and beneﬁts fromavailable tax strategies are lowered, or if changes in current

4.

tax regulations are enacted that impose restrictions on thetiming or extent of Airbus’ ability to utilise future tax beneﬁts.
The basis for the recoverability test of deferred tax assets isthe same as Airbus’ latest operative planning also taking into
account certain qualitative aspects regarding the nature of thetemporary differences. Qualitative factors include but are notlimited to an entity’s history of planning accuracy, performancerecords, business model, backlog, existence of long-term
contracts as well as the nature 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 Trade Liabilities”).

Change in Accounting Policies and Disclosures

The accounting policies applied by Airbus for preparing its 2017 year-end Consolidated Financial Statements are the same asapplied for the previous year. Amendments and improvements to standards effective on 1 January 2017 have no material impact
on the Consolidated Financial Statements. As a result of the implementation of the amendment to IAS 7 “Disclosure initiative”,
Airbus provides disclosures that enable users of ﬁnancial statements to evaluate changes in liabilities arising from ﬁnancing
activities, including both cash and non-cash changes (see “— Note 34: Net Cash”).

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 2017 and have not been applied in preparing these Consolidated Financial Statements and early
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

Endorsed

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

1 January 2018

Not yet endorsed
Not yet endorsedStandards and amendments

IFRIC 22 “Foreign currency transactions and advance consideration”

1 January 2018

IFRS 16 “Leases”

1 January 2019

Endorsed

IFRIC 23 “Uncertainty over income tax treatments”

1 January 2019

Not yet endorsed

IFRS 9 “Financial Instruments”
IFRS 9, published in July 2014, replaces the existingguidance in IAS 39 “Financial instruments: recognition andmeasurement”. IFRS 9 includes revised guidance on theclassification and measurement of financial instruments,
including a new expected credit loss model for calculating
impairment on ﬁnancial assets, and the new general hedge
accounting requirements. It also carries forward the guidanceon recognition and derecognition of ﬁnancial instruments fromIAS 39.

The vast majority of Airbus’ ﬁ nancial instruments will be
accounted for in a manner similar to IAS 39. In particular, Airbus’
bonds’ portfolio will continue to be held in a business model
whose objective is achieved by both collecting contractual
coupon payments and selling individual instruments and it
will hence continue to be accounted for at fair value throughother comprehensive income.
However, IFRS 9 will give rise to classiﬁcation and measurementchanges of Airbus’ sales ﬁnancing portfolio and certain equity
investments.

FINANCIAL STATEMENTS 201719

Notes to the IFRS Consolidated Financial Statements
2.1 Basis of Presentation

practical approach of always measuring expected credit lossesof trade receivables and contract assets on a life-time basis.

Airbus’ sales ﬁ nancing portfolio, being held with a view tofacilitating aircraft sales rather than with the intention ofcollecting all of the contractual interest and principal payments
until maturity, will henceforth be measured at fair value throughproﬁt or loss (as opposed to amortised cost under IAS 39).

Moving from IAS 39 to IFRS 9, including hedge accounting, asof 1 January 2018 should not have any signiﬁcant impact on
Consolidated Financial Statements. However, going forward,
Airbus will take the opportunity provided by IFRS 9 of aligningits major hedge accounting strategies more closely with its risk
management activities (see “— Note 35: Information a bout
F inancial I nstruments” ). For certain hedges where Airbus
designates the change in the value of the spot element of aforward contract as being hedged, Airbus will apply the costof hedging approach to the foreign currency swap points,
allowing Airbus to recognise the change in the value of theswap points in OCI (rather than proﬁt or loss).

The equity investments in the scope of IFRS 9, including the
non-quoted ones, will be measured at fair value in the future.
Airbus will determine on an instrument-by-instrument basis
whether to elect accounting for an individual investment at
fair value through other comprehensive income.
No material impact will arise from these changes on transition.
The same is true for moving from the incurred loss model under
IAS 39 to an expected loss model under IFRS 9. Owing to
the high credit quality of Airbus’ bond portfolio, the expected
losses to be recognised under IFRS 9 will be insigniﬁ cant.
Airbus will apply the low credit risk exemption allowing Airbus
to assume that there is no signiﬁcant increase in credit risk
since initial recognition of a ﬁnancial instrument if the instrument
is determined to have low credit risk at the reporting date.

Airbus has elected to apply the limited exemption in IFRS 9
relating to transition for classiﬁcation and measurement andimpairment, and accordingly will not restate comparative
periods in the year of initial application. As a consequence, any
adjustments to carrying amounts of ﬁnancial assets or liabilities
will be recognised at the beginning of the reporting period, withthe difference recognised in opening retained earnings.

Similarly, Airbus has determined that its trade receivables andcontract assets generally have low credit risk, and the related
loss allowances to be recognised under IFRS 9 will not besigniﬁcantly different from current levels. Airbus will apply the

Airbus does not expect material changes from the implementationof IFRS 9.

IFRS 15 “Revenue from Contracts with Customers”
restated, and equity will be adjusted as of 1 January 2017.
Airbus will elect practical expedients for completed contracts
and contract modiﬁcations.

In May 2014, the IASB issued IFRS 15 which establishes asingle comprehensive framework for determining when torecognise revenue and how much revenue to recognise. IFRS 15
will replace the current revenue recognition standards IAS 18“Revenue” and IAS 11 “Construction contracts” and related
interpretations.

Airbus is completing the restatement of its comparative ﬁnancial
statements.
Airbus has estimated the impact that the initial application of
IFRS 15 will have on its Consolidated Financial Statements. The
estimated impact of the adoption of this standard is summarised
below.

Airbus will adopt the new standard on 1 January 2018, using thefull retrospective transition method. Accordingly, the comparative2017 results included in the 2018 ﬁnancial statements will be
As of 1 January 2017:(In € billion)

As reported
at 31 December 2016

Estimated adjustments dueto the adoption of IFRS 15

Estimated adjusted opening
balance at 1 January 2017

3.7

(2.1)

1.6

EquityThe actual impacts may differ from the estimates above when
adopting the standard as of 1 January 2018. The practicalimplementation on Airbus’ accounting policies relating to
IFRS 15 are subject to change until Airbus presents its ﬁrst
ﬁnancial statements that include the date of initial application.
IFRS 15 will not impact the overall proﬁtability over the life-timeof contracts and the cash ﬂows. As such IFRS 15 quantitative
impacts on equity are phasing differences.

Revenue from construction contracts
Airbus has compared its current accounting policies andpractices to the requirements of the new standard. As a resultof this analysis, Airbus expects that the adoption of IFRS 15 will

have a signiﬁcant impact on the timing of revenue recognition
on certain long-term construction contracts that are currently
accounted for under IAS 11. The most signiﬁcant changes will
result from the following:■
S everal performance obligations will be identiﬁ ed insteadof recognising a single contract margin under IAS11 (e.g.
A400M, NH90 contracts). In some cases, the over-time (e.g.
PoC method) revenue recognition criteria are not fulﬁlled under
IFRS 15. In particular, on A350 launch contracts, on A400M
series production and certain NH90 contracts, revenue andproduction costs relative to the manufacture of aircraft will
hence be recognised at a point of time (e.g. upon delivery of
the aircraft to the customer);2

20

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.2 Airbus Structure

Under IFRS 15, measurement of the revenue will take into
account variable consideration constraints in order to achieve
high likelihood that a signiﬁcant reversal of the recognised
revenue will not occur in the future. The constraint in assessing
revenue at completion for some contracts will generate adecrease in recognised revenue;■
Under IFRS 15, for the application of the overtime method(PoC method), the measure of the progress towards complete
satisfaction of a performance obligations will be based on
inputs (i.e. cost incurred) rather than on outputs (i.e. milestones
achieved). At Airbus current long-term construction contracts
progress is usually measured based on milestones achieved(e.g. Tiger programme, satellites, orbital infrastructures). Under
IFRS 15, Airbus will measure progress of work performed
using a cost-to-cost approach, whenever control of the work
performed transfers to the customer over time.
■

Revenue from the sale of commercial aircraft
With respect to the commercial aircraft business, other thansales made under the A350 launch contracts described above,
IFRS 15 will not change the timing of recognising revenue, which
will continue to be recognised when the customer takes deliveryof the aircraft.

IFRS 15 will impact the presentation of the revenue. Under
IAS 18, Airbus recognises revenues based on the amount of
its contracts with its customer, unless it has conﬁrmation of theamount of the price concession. In contrast, IFRS 15 requires
Airbus to estimate the amount of price concession in all cases
and to treat the price concession as a reduction of revenue andcost of sales. Under IFRS 15, revenue and cost of sales will bedecreased by the amount of the estimated concession grantedby Airbus engine supplier to their customers. This change inpresentation triggers an equal decrease between revenue andcost of sales for an amount of € 7.4 billion in 2017 with no impact
on Gross Margin, EBIT and on the Cash Flows of the Company.

Impacts on the disclosures
IFRS 15 requires a disclosure of the unperformed performanceobligations (represent obligations under binding contracts
which are not or not fully completed). In its 2018 ﬁ nancial
statements, Airbus will elect the practical expedient which willallow disclosing the unperformed performance obligations as
at 31 December 2018 without comparative ﬁgures.

IFRS 16 “Leases”
IFRS 16 introduces a single, on-balance sheet lease 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.
As at 31 December 2017, Airbus has operating lease commitmentsof € 1,025 million. IAS 17 does not require the recognition of any

right of use asset or liability for future payments for these leases;
instead certain information is disclosed as operating leasecommitments in “— Note 18: Property, Plant and Equipment”.
The assessment of the materiality of IFRS 16 impact on Airbus’
Consolidated Financial Statements is currently being performed.

2.2 Airbus Structure
5.

Scope of Consolidation

Consolidation — Airbus’ Consolidated Financial Statements
include the ﬁnancial statements of Airbus SE and all material
subsidiaries controlled by Airbus. Airbus’ subsidiaries prepare
their ﬁnancial statements at the same reporting date as Airbus’
Consolidated Financial Statements (see Appendix “Simpliﬁed
Airbus Structure Chart”).
Subsidiaries are entities controlled by Airbus including so-called
structured entities, which are created to accomplish a narrow
and well-deﬁned objective (see “— Note 25: Sales Financing
Transactions”). They are fully consolidated from the date control
commences to the date control ceases.
The assessment of control of a structured entity is performed inthree steps. In a ﬁrst step, Airbus identiﬁes the relevant activitiesof the structured entities (which may include managing leasereceivables, managing the sale or re-lease at the end of the leaseand managing the sale or re-lease on default) and in a second
step, Airbus assesses which activity is expected to have themost signiﬁcant impact on the structured entities’ 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 joint ventures are accounted for under the equity
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.

FINANCIAL STATEMENTS 201721

Notes to the IFRS Consolidated Financial Statements
2.2 Airbus Structure

Perimeter of consolidation
31 December(Number of companies)

Fully consolidated entities

2017

2016

207

244

Investments accounted for under the equity method:in joint ventures40

52

in associates

23

23

270

319

Total

For more details related to unconsolidated and consolidated structured entities, see “— Note 25: Sales Financing Transactions”.

6.

Acquisitions and Disposals

Business combinations are accounted for using the acquisition
method, as at the acquisition date, which is the date on which
control is transferred to Airbus.
The determination of the fair value of the acquired assets andthe assumed liabilities which are the basis for the measurementof goodwill requires signiﬁcant estimates. Land, buildings andequipment are usually independently appraised while marketablesecurities are valued at market prices. If any intangible assets
are identiﬁed, depending on the type of intangible asset and thecomplexity of determining its fair value, Airbus either consultswith an independent external valuation expert or develops thefair value internally, using appropriate valuation techniques which
are generally based on a forecast of the total expected future
net cash ﬂows.
These evaluations are linked closely to the assumptions madeby management regarding the future performance of the assets
concerned and the discount rate applied.
Loss of control, loss of joint control, loss of signiﬁ cantinﬂuence — Upon loss of control of a subsidiary, the assets
and liabilities and any components of Airbus’ equity related to

6.1

the subsidiary are derecognised. Any gain or loss arising fromthe loss of control is recognised within other income or otherexpenses in the Consolidated Income Statements. If Airbus
retains any interest in the previous subsidiary, such interest ismeasured 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 for under the equity method ishighly probable and will occur in the coming 12 months, thisassociate 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.

Acquisitions

On 16 October 2017, Airbus and Bombardier Inc.
(“Bombardier”) signed an agreement that brings together
Airbus’ global reach and scale with Bombardier’s newest,
state-of-the-art jet aircraft family. Under the agreement,
Airbus will provide procurement, sales and marketing, andcustomer support expertise to the C Series Aircraft Limited
Partnership (“CSALP”), the entity that manufactures and sells
the C Series. At closing, Airbus will acquire a 50.01% interest
in CSALP. Bombardier and Investissement Québec will own
approximately 31% and 19%, respectively. The transaction
has been approved by the Boards of Directors of both Airbus
and Bombardier, as well as the Cabinet of the Governmentof Québec. The transaction remains subject to regulatory
approvals, as well as other conditions usual in this type oftransaction.

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, andhas recognised goodwill of € 104 million. The purchase priceallocation ended on 9 March 2017. No adjustment was madeon the goodwill. Navtech provides aviation services witha suite of ﬂ ight operations products, aeronautical charts,
navigation data solutions, ﬂight planning, aircraft performanceand crew planning solutions. Navtech generates annual
revenues of approximately US$ 40 million and employs over
250 employees, mainly based in Waterloo (Canada) and in
Hersham and Cardiff (the UK).

2

22

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.2 Airbus Structure

6.2

Disposals

On 17 October 2017, Airbus and StandardAero Aviation
Holdings, Inc signed a sale purchase agreement for Vector
Aerospace Holding SAS (“Vector”) which was closed on
3 November 2017. Vector is a global aerospace maintenance,
repair and overhaul company, providing quality support for
turbine engines, components, and ﬁxed and rotary-wing aircraft.
It generated revenues of € 638 million in 2016 and employs
approximately 2,200 people in 22 locations. Airbus Helicopters
received € 542 million and recognised a non-material gain whichis reﬂected in other income.
On 28 February 2017, Airbus sold its defence electronics
business, a leading global provider of mission-critical sensors,
integrated systems and services for premium defence andsecurity applications mainly based in Ulm (Germany), to afﬁliates
of KKR & Co. L.P. (the acquirer), a leading global investmentﬁrm. The German defence electronics business was sold for€ 823 million, Airbus Defence and Space recognised a net gainon sale of € 604 million. The closing for the French defence
electronics business will occur after full separation of the businesssold from Airbus other business activities and is expected to takeplace in 2018. The divestment is part of the strategic review of
the Airbus Defence and Space business portfolio. The assets
and liabilities of this company were classiﬁed as a disposalgroup held for sale as of 31 December 2016. With respect toextending security clearance for the Airbus Defence and Spacebusiness, Airbus made a 25.1% reinvestment into Hensoldt
Holding Germany GmbH, a subsidiary of the acquirer which
now holds the transferred business. The reinvestment took theform of an equity investment of € 6 million and a shareholder
loan of € 109 million. In addition, the reinvestment agreement
provides for a combined put/call option mechanism which is
subject to full separation being achieved and will then allow theacquirer to take over Airbus’ equity investment and shareholder
loan at a pre-determined price at any time, and Airbus to sellthem to the acquirer at that price after three years.
On 3 April 2017, Airbus sold its 49% stake in Atlas to Thyssen
Krupp.
On 17 June 2015, Airbus Commercial Aircraft signed anagreement with Singapore-based ST Aerospace Ltd. (“STA”)
to offer passenger-to-freighter (“P2F”) conversion solutions for
its A320 and A321 aircraft. Elbe Flugzeugwerke’s (“EFW”),
Dresden (Germany), assets and liabilities were classiﬁ ed as
disposal groups held for sale as of 31 December 2015. On
4 January 2016, STA acquired an additional 20% of the sharesby way of a contribution in kind and a capital increase to EFW,
and consequently, Airbus lost the control of EFW. Airbus retains
45% of the shares of EFW with signiﬁcant inﬂuence. As per 2016
ﬁnancial statements, Airbus Commercial Aircraft has recognisedin 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 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 classified as otherinvestments and measured at fair value (see “— Note 19: Other
Investments and Other Long-Term Financial Assets”). The
resulting gain of € 340 million was recognised in other income(reported in “Other / HQ / Conso.”) in 2016. The Company also
issued bonds exchangeable in Dassault Aviation shares (see“— Note 34: Net Cash”). In the event of exchange in full of thebonds, Airbus will have fully disposed of its Dassault Aviation
stake.
On 20 May 2016, Airbus and Safran signed the second phase of
the Master Agreement enabling the joint venture ArianeGroup(formerly Airbus Safran Launchers, “ASL”) to be fully equipped forall design, development, production and commercial activities
related to civil and military launchers and associated propulsion
systems. During the second phase, Safran and Airbus integrated
within the joint venture all the remaining contracts, assets andindustrial resources, related to space launchers and associatedpropulsion 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. In 2016, Airbus participationin ArianeGroup was accounted for at-equity for a € 677 million
amount. In 2016, 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). Airbus andSafran ﬁnalised the respective contribution balance sheet in
the third quarter 2016 in alignment with the provision of the
Master Agreement. On 31 December 2016, the transfer of the
34.68% of the Centre National d’Études Spatiales (CNES) stakein Arianespace to ArianeGroup was completed. ArianeGroupholds 74% of the shares of Arianespace. This change in theshareholder mix at Arianespace ﬁnalises the creation of a newlauncher governance in Europe.
The ArianeGroup joint venture transaction was ﬁnalised in 2017with a ﬁnal agreement on Airbus contribution balance sheet
leading to € 52 million additional capital gain on the period. The
purchase price allocation was completed as of 30 June 2017.
The purchase price was mainly allocated to identiﬁed intangible
assets for a € 395 million value, a € 16 million depreciation
expense net of tax was recognised in 2017 (2016: € 7 million
based on preliminary allocation). The remaining goodwill is partof the value of the investment accounted for under the equity
method in ArianeGroup (see “— Note 7: “Investments Accounted
for under the Equity Method”).

FINANCIAL STATEMENTS 201723

Notes to the IFRS Consolidated Financial Statements
2.2 Airbus Structure

6.3

Assets and Disposal Groups Classiﬁed as Held for Sale

As of 31 December 2017, Airbus accounted for assets anddisposal groups of assets classified as held for sale in
the amount of € 202 million (2016: € 1,148 million). Disposalgroup of liabilities classified as held for sale as of
31 December 2017 amount to € 106 million (2016: € 991 million).

The assets and disposal groups classiﬁed as held for sale aremainly related to assets and liabilities from non-core businesses
planned to be sold under the strategic portfolio review within
Airbus Defence and Space.

The assets and disposal group of assets and liabilities classiﬁed as held for sale consist of:
31 December(In € million)

2017

2016

Non-current financial assets

013

Non-current other assets

81

354

Inventories

16

428

Trade receivables

74

247

Other assets

26

89Cash and cash equivalents

5

17

202

1,148

19

559

Assets and disposal group of assets classified as held for sale
Provisions
Non-current financial liabilities

06

Trade liabilities

16

85

Other liabilities

71

341

106

991

Disposal group of liabilities classified as held for sale

6.4

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

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

2017

2016

Total selling price received by cash and cash equivalents

1,298

2,273

(28)

(15)

1,270

2,258

Cash and cash equivalents included in the disposed subsidiaries

Total

The aggregate cash ﬂows from disposals of subsidiaries and assets and disposals groups classiﬁed as held for sale in 2017 result
mainly from the sale of the defence electronics business, the sale of Vector and the completion of ArianeGroup.
The aggregate cash ﬂows from disposals of subsidiaries and assets and disposals groups classiﬁed as held for sale in 2016
were mainly from the completion of the creation of ArianeGroup, the sale of Dassault Aviation shares and the sale of business
communication entities.

2

24

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.2 Airbus Structure

7.

Investments Accounted for under the Equity Method

31 December(In € million)

2017

2016

Investments in joint ventures

1,485

1,437

Investments in associates

Investments accounted for under the equity method

193

171

1,678

1,608

Investments accounted for under the equity method increased by +€ 70 million to € 1,678 million (2016: € 1,608 million) andmainly include the equity investments in ArianeGroup, MBDA and ATR GIE.

7.1

Investments in Joint Ventures

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

2017

2016

Airbus’ interest in equity on investee at beginning of period

1,437

1,264

0

595

296

182

New joint ventures (1)Result from continuing operations attributable to Airbus
Other comprehensive income attributable to Airbus

53

(93)

(255)

(195)

Reclassification as asset held for sale

0

(198)

Deconsolidation of investment

0

(112)

Dividends received during the year

Others(2)

Carrying amount of the investment at 31 December

(46)

(6)

1,485

1,437

(1) In 2016, it includes the impact of the completion of the second phase of the ArianeGroup creation. For more details, see “— Note 6: Acquisitions and Disposals”.
(2) In 2017, it includes the impact of the finalisation of the ArianeGroup joint venture transaction. For more details, see “— Note 6: Acquisitions and Disposals”.

Airbus’ individually material joint ventures are ArianeGroup, Paris(France), MBDA S.A.S., Paris (France), and ATR GIE, Blagnac(France), as parent companies of their respective groups. These
joint venture companies are not publicly listed.
ArianeGroup is a 50% joint venture between Airbus and Safran.
ArianeGroup is the head company in a group comprising several
subsidiaries and afﬁliates, all leading companies in their ﬁelds,such as: APP, Arianespace, Cilas, Eurockot, Eurocryospace,
Europropulsion, Nuclétudes, Pyroalliance, Regulus, Sodern
and Starsem. ArianeGroup inherits a rich portfolio of products
and services, enabling it to deliver innovative and competitive
solutions to numerous customers around the world.

Airbus holds a 37.5% stake in MBDA at 31 December 2017 and2016, 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.
ATR GIE manufactures advanced turboprop aircraft. It is a
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 ATR GIE in France. The members of ATR GIE are legally
entitled to the whole beneﬁts and are liable for the commitmentsof the Company. ATR GIE is obliged to transfer its cash to eachmember of the joint venture.

FINANCIAL STATEMENTS 201725

Notes to the IFRS Consolidated Financial Statements
2.2 Airbus Structure

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

ATR GIE(In € million)

2017

2016

2017

2016

2017

2016

Revenues

3,408

2,227

3,107

2,955

1,600

1,651

Depreciation and amortisation

(18)

(112)

(35)

(95)

(92)

(42)

Interest income

2

2

9

8

0

0

Interest expense

(4)

(2)

(6)

(3)

0

(3)

Income tax expense

(71)

(40)

(92)

(66)

(7)

(3)

Profit from continuing operations

247

102

231

213

265

331

Other comprehensive income

39

(4)

145

(215)

0

14

286

98

376

(2)

265

345

Non-current assets

5,611

5,324

2,316

2,339

159

147

Current assets

5,335

5,518

7,408

6,425

743

814

807

797

2,818

1,890

8

7

496

526

1,145

1,357

131

98

Total comprehensive income (100%)

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)

31

35

0

7

0

0

6,470

6,511

7,966

7,119

426

407

36

333

55

122

0

0

Total equity (100%)

3,980

3,805

613

288

345

456

Equity attributable to equity owners of the parent

3,973

3,797

613

288

345

456

7

8

0

0

0

0

2016

2017

2016

Non-controlling interests

ArianeGroupMBDA

ATR GIE(In € million)

2017

2016

2017

Airbus’ interest in equity on investee

1,987

1,899

230

108

173

228

244

255

282

282

0

0

Goodwill
PPA adjustments, net of tax(1,537)(1,479)

0

0

0

0

Contingent liability release adjustment

(15)

0

0

0

0

0

Fair value adjustments and modifications for differencesin accounting policies

10

0

(47)

(14)

0

0

Elimination of downstream inventory

2

2

0

0

(4)

(4)

691

677

465

376

169

224

Carrying amount of the investment
at 31 December

The development of these investments is as follows:
ArianeGroupATR GIE

2016

2017

2016

2017

2016

677

51

376

394

224

232

78

38

88

80

133

166

Other comprehensive income attributable to Airbus

13

(2)

54

(82)

(14)

7

Dividends received during the year

(25)

0

(53)

(16)

(174)

(177)

(In € million)

Airbus’ interest in equity on investee
at beginning of period
Result from continuing operations attributable to Airbus

Changes in consolidation

2017

MBDA

0

590

0

0

0

0

Others

(52)

0

0

0

0

(4)

Carrying amount of the investment
at 31 December

691

677

465

376

169

224

Airbus’ share of contingent liabilities as of 31 December 2017 relating to MBDA is € 308 million (2016: € 455 million) and to
ArianeGroup is € 8 million (2016: € 16 million).

2

26

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.2 Airbus Structure

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)

Airbus’ interest in equity on investee at beginning of period

20172016 (1)171

62

Result from continuing operations attributable to Airbus

37

49

Other comprehensive income attributable to Airbus

(7)

(27)

Dividends received during the year

(8)

(10)

Disposal of shares

0(3)Changes in consolidation(1)

Carrying amount of the investment at 31 December

0

100

193

171

(1) In 2016, it included the change in consolidation method of EFW.

The cumulative unrecognised comprehensive loss for these associates amounts to € -47 million and € -108 million as of 31 December
2017 and 2016, respectively (thereof € 61 million for the period).

8.

Related Party Transactions(In € million)

Sales of
Purchases ofgoods andgoods andservices andservices andother income other expenses

Loans granted /Receivables
Payables Other receivables
due as ofdue as ofdue as of
31 December 31 December
31 December

Loans received /Other liabilities
due as of
31 December

2017
Total transactions
with associates

7

234

5

39

92

14

Total transactions
with joint ventures

2,205

282

989

730

1

1,076

Total transactions
with associates

11

55

4

9

91

6

Total transactions
with joint ventures

1,904

488

1,213

203

2

817

2016

Transactions with unconsolidated subsidiaries are immaterial
to Airbus’ Consolidated Financial Statements.
As of 31 December 2017, Airbus granted guarantees of€ 152 million to Air Tanker group in the UK (2016: € 152 million).

For information regarding the funding of Airbus’ pension plans,
which are considered as related parties, see “— Note 29: “PostEmployment 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”.

FINANCIAL STATEMENTS 201727

Notes to the IFRS Consolidated Financial Statements
2.3 Segment Information

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 Aircraft — Development, manufacturing,marketing and sale of commercial jet aircraft of more than 100
seats; aircraft conversion and related services; development,
manufacturing, marketing and sale of regional turboprop
aircraft and aircraft components.
■
Airbus Helicopters — Development, manufacturing,marketing and sale of civil and military helicopters; provisionof helicopter related services.
■9.

Airbus Defence and Space — Military Aircraft designs,
develops, delivers, and supports military aircraft suchas combat, mission, transport and tanker aircraft as
well as Unmanned Aerial systems and their associatedservices. Space Systems designs, develops, delivers, andsupports full range of civil and defence space systems fortelecommunications, earth observations, navigation, scienceand orbital systems. Communication, Intelligence & Security
provides services around data processing from platforms,
secure communication and cyber security. In addition, themain joint ventures design, develop, deliver, and support
missile systems as well as space launcher systems.

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
Bank and other activities not allocable to the reportable segments, combined together with consolidation effects, are disclosed
in the column “Other / HQ / Conso.”.
Airbus uses EBIT as a key indicator of its economic performance.
Business segment information for the year ended 31 December 2017 is as follows:(In € million)

Total revenues

AirbusCommercial
Airbus
Aircraft Helicopters
50,9586,450

AirbusDefence and
Space

Total
segments

Other /
HQ /Conso.

Consolidated

10,804

68,212

55

68,267

(919)

(476)

(100)

(1,495)(5)(1,500)

Revenues

50,0395,974

10,704

66,71750

66,767

Profit before finance costs
and income taxes (EBIT)

3,428

337

212

3,977

(556)

3,421

Internal revenues

thereof:depreciation and amortisation(1,593)

(209)

(429)

(2,231)(67)(2,298)research and development expenses(2,011)

(306)

(322)

(2,639)(168)(2,807)

share of profit from investments
accounted for under the equity
method

144

5

183

332

1

333

additions to other provisions(see Note 22)

(912)

(667)

(2,319)(3,898)(162)(4,060)Interest result(328)

Other financial result

1,477

Income taxes(1,693)

Profit for the period

2,877

2

28

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.3 Segment Information

Business segment information for the year ended 31 December 2016 is as follows:
AirbusCommercial
Airbus
Aircraft Helicopters(In € million)

AirbusDefence and
Space

Total
segments

Other /
HQ /Conso.

Consolidated

Total revenues

49,237

6,652

11,85467,74357

67,800Internal revenues

(646)

(448)

(118)

(1,212)(7)(1,219)48,591

6,204

11,736

66,531

50

66,581

1,543

308

(93)

1,758

500

2,258

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)

185

6

41

232

(1)

231

(1,395)(693)(3,700)(5,788)(311)(6,099)

Revenues
Profit before finance costs
and income taxes (EBIT)
thereof:share of profit from investments
accounted for under the equity
methodadditions to other provisions(see Note 22)
Interest result(275)

Other financial result(692)

Income taxes(291)

Profit for the period

1,000

Segment capital expenditures(In € million)

2017

2016

Airbus Commercial Aircraft

1,851

2,304

Airbus Helicopters

192

236

Airbus Defence and Space

481

469

Other / HQ / Conso.

34

51

2,558

3,060

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

Segment assets(In € million)

Airbus Commercial Aircraft
Airbus Helicopters
Airbus Defence and Space
Other / HQ / Conso.
Total segment assets

31 December
2017

2016

59,67851,457

9,124

10,104

16,58916,457

(755)

1,709

84,636

79,727

UnallocatedDeferred and current tax assets

4,512

8,667

Securities

12,571

11,448Cash and cash equivalents

12,016

10,143

202

1,148

113,937

111,133

Assets classified as held for sale

Total assets

Revenues by geographical areas are disclosed in “— Note 10: Revenues and Gross Margin”. Property, plant and equipment bygeographical areas is disclosed in “— Note 18: Property, Plant and Equipment”.

FINANCIAL STATEMENTS 201729

Notes to the IFRS Consolidated Financial Statements
2.4 Airbus Performance

2.4 Airbus Performance
10. Revenues and Gross Margin

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.
(In € million)

Revenues from construction contracts
Other revenues(1)

Total (2)thereof service revenues including sale of spare parts

2017

2016

10,838

10,95655,92955,62566,767

66,581

8,632

9,045

(1) Includes mainly revenues from sales of commercial aircraft recognised under IAS 18.
(2) For more details, see “— Note 9: Segment Information”.

Revenues of € 66,767 million (2016: € 66,581 million) were stablecompared to previous year. An increase at Airbus Commercial
Aircraft (€ +1,721 million) was mostly driven by higher deliveriesof 718 aircraft (in 2016: 688 aircraft), and a favourable foreignexchange impact. A decrease at Airbus Defence and Space(€ -1,050 million) was mainly due to perimeter changes for
defence activities (see “— Note 6: Acquisitions and Disposals”)
and includes A400M programme revenues of € 1,880 million(2016: € 1,702 million).
The gross margin increased by € +2,343 million to € 7,607 million
compared to € 5,264 million in 2016, mainly at Airbus Defence
and Space and Airbus Commercial Aircraft, reﬂecting improved
business performance. In 2017, there were lower net charges
related to the A400M (€ 1,299 million, compared to € 2,210 million
in 2016) and A350 XWB programmes (no charge, comparedto € 385 million in 2016). The gross margin rate increased from
7.9% to 11.4%.
In 2017, Airbus Commercial Aircraft has delivered 78 A350 XWB
aircraf t. New order intakes, cancellations, deliver y
postponements and other contractual agreements to the end of
December 2017 have been reﬂected in the ﬁnancial statements.
The industrial ramp-up is progressing and associated risks
continue to be closely monitored in line with the schedule,
aircraft performance and overall cost envelope, as per customer
commitments. Despite the progress made, challenges remain
with recurring cost convergence as the ramp-up continues.
19 A400M aircraft were delivered in 2017. In total, 57 aircraft
have been delivered as of 31 December 2017.
In 2017, Airbus continued with development activities towardachieving the revised capability roadmap.
As a result of the 2016 detailed contract reviews, Airbus
Defence and Space had recorded a charge of € 2,210 million

in the ﬁscal year 2016. Given the order of magnitude of the
cumulative programme loss, the Board of Directors mandated
the management in February 2017 to re-engage with customers
to cap the remaining exposure.
In 2017, Airbus entered into discussions with OCCAR and thecustomer Nations that resulted in the signature of a Declarationof Intent (“DOI”) on 7 February 2018 agreeing on a global rebaselining of the contract, including a revised aircraft delivery
schedule, an updated technical capability roadmap and arevised retroﬁ t schedule. The DOI represents an important
step towards reaching a contractually binding agreement also
mitigating the commercial exposure while satisfying customer
needs with regard to capabilities and availability of the aircraft.
A detailed review of the programme concluded in the fourth
quarter of 2017 including an estimate of the ﬁnancial impacts of
the above mentioned adaptations on schedule, capabilities andretroﬁt results in an update of the loss making contract provisionof € 1,299 million for the year 2017 (thereof € 1,149 million in the
fourth quarter 2017). Airbus’ remaining exposure going forward
is expected to be more limited. Risks remain on developmentof technical capabilities and the associated costs, on securing
sufﬁcient export orders in time, and on cost reductions as per
the revised baseline. Airbus intends to turn the DOI into a ﬁrm
contract within 2018.
The A400M contractual SOC 1, SOC 1.5, SOC 2, SOC 2.5
and SOC 3 development milestones remain to be achieved.
SOC 1 fell due end October 2013, SOC 1.5 fell due end
December 2014, SOC 2 end of December 2015 and SOC 2.5
end of October 2017. The associated termination rights became
exercisable by OCCAR on 1 November 2014, 1 January 2016,
and 1 January 2017, respectively. Management judges that
it is highly unlikely that any of these termination rights will be
exercised.

2

30

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.4 Airbus Performance

Revenues by geographical areas based on the location of the customer are as follows:
2017

2016

Europe16,972

21,377(In € million)

Asia - Pacific24,816

21,266

North America

12,611

8,931

Middle East

8,406

8,464

Latin America

990

4,925

Other countries

Total

2,972

1,618

66,767

66,581

11. Research and Development Expenses

Research and development expenses decreased by -5.5% primarily reﬂecting R&D activities on the A350 XWB programme at
Airbus Commercial Aircraft. In addition, an amount of € 219 million of development costs has been capitalised, mainly related to
the A330 Neo and H160 programmes.

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

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

2017

2016

296

182

37

49

Share of profit from investments accounted for under the equity method

333

231

Other income from investments

82

21

Share of profit from investments under the equity method and other income from investments increased by € +163 million
to € 415 million compared to € 252 million in 2016.

13. Other Income and Other Expenses

Other income decreased by € -1,708 million to € 981 million
compared to € 2,689 million in 2016. In 2017, it mainly includes
the capital gain of € 604 million from the sale of the defence
electronics business. In 2016, it mainly included the capitalgain of € 1,175 million following the completion of the creation of
ArianeGroup, the capital gain from the sale of Dassault Aviation
shares of € 528 million and the revaluation at fair value of theremaining investment in Dassault Aviation for € 340 million. For
more details, see “— Note 6: Acquisitions and Disposals”.

Other expenses increased to € -336 million compared to€ -254 million in 2016. It includes the arbitral award relating to the
Republic of China (Taiwan). For more details, see “— Note 36:
Litigation and Claims”.

FINANCIAL STATEMENTS 201731

Notes to the IFRS Consolidated Financial Statements
2.4 Airbus Performance

14. Total Financial Result

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

2017

2016

Interests on European Governments refundable advances

(270)

(212)

Others

(58)

(63)

(1)

(328)

(275)

Change in fair value measurement of financial instruments

373

(370)

Foreign exchange translation of monetary items

219

(220)

Unwinding of discounted provisions

(61)

(65)

Total interest result

946

(37)

Total other financial result

1,477

(692)

Total

1,149

(967)

Others(1) In 2017, the total interest income amounts to € 189 million (in 2016: € 247 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 € -517 million (in 2016: € -522 million) are recognised as total interest expenses. Both amounts are calculated
by using the effective interest method.

Total financial result improved by € +2,116 million to€ 1,149 million compared to € -967 million in 2016. Thi s ismainly related to a positive impact from both foreign exchange
valuation of monetary items of €+439 million and the revaluationof ﬁnancial instruments of € +743 million. In addition, it included

the impact of the decrease in the European Governments
refundable advances primarily related to the A380 programme(see “— Note 23: Other Financial Assets and Other Financial
Liabilities”).

15. Income Tax

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

2017

2016

Current tax expense

(912)

(753)

Deferred tax benefit (expense)

(782)

462

(1,693)

(291)

Total

Main income tax rates and main changes impacting Airbus:(Rate in %)

2017

2018

> 2018Netherlands

25.00

25.00

25.00

(1) (2)

34.43

34.43

25.83

Germany

30.00

30.00

30.00

Spain

25.00

25.00

25.00

UK (3)

19.00

19.00

17.00

France(1) A tax law has been enacted in 2017 changing the rate for income taxes from 34.43% to 32.02% for 2019, to 28.92% for 2020, to 27.37% for 2021 and to 25.83% from 2022.
(2) A corporate tax surcharge has been enacted at the end of 2017 to increase 2017 income tax rate to 44.43% depending on turnover thresholds. Current income tax has been
calculated accordingly for entities above these thresholds.
(3) 20% until 31 March 2017, 19% from 1 April 2017 until 31 March 2020 and 17% from 1 April 2020.

2

32

Financial Statements 2017 - AIRBUS
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):2017(In € million)

2016

Profit before income taxes

4,570

1,291

Corporate income tax rate

25.0%

25.0%

Expected (expense) for income taxes(1,143)(323)

Effects from tax rate differentials

(156)

(194)

Capital gains and losses on disposals / mergers (1)

148

655

Income from investments and associates (1)

197

(75)

Tax credit

53

73

Change of tax rate

(82)

(117)

Change in valuation allowances (2)

(396)

(102)

Tax contingencies (1)

(318)

(115)

Other non-deductible expenses and tax-free income (1)Reported tax (expense)

4

(93)

(1,693)(291)(1) For previous year, certain items have now been presented separately.
(2) It represents reassessments of the recoverability of deferred tax assets based on future taxable profits.

The income tax expense of € -1,693 million (2016: € -291 million)
corresponds to an effective tax rate of 37.1% (2016: 22.5%).
In 2017, the effective tax rate was mainly impacted by nonrealised tax losses in the period leading to additional deferred
tax asset impairment. It also included an additional income
tax charge related to the French corporate tax surcharge andthe reduction in deferred tax asset due to the income tax
rate decrease in the US, both enacted end of 2017. This waspartially compensated by the disposal of the defence electronics
business, which is taxed at a reduced rate. Without these
impacts, the effective tax rate would be approximately 26%.
In 2016, the effective tax rate was due to the sale of sharesof Dassault Aviation and the creation of ASL, both subject tospeciﬁc tax treatment. These were partially compensated byadditional income tax charges including the planned reductionof the income tax rate in France from 34.43% to 28.92% enacted
in December 2016. Without these impacts, the effective tax ratewould be approximately 28%.
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 2017, 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 € 127 million.
Companies in deﬁ cit situations in two or more subsequent
years recorded a total deferred tax asset balance of € 10 million(in 2016: € 1 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:
FranceGermany

Spain

UK

Other
countries

31 December
2017

31 December
2016

804

1,036

454

1,595

380

4,269

4,909

Trade tax loss carry forwards

0

1,051

0

0

0

1,051

1,510

Tax credit carry forwards

0

0

488

55

4

547

460

(In € million)

NOL

Tax effect

277

313

601

326

100

1,617

1,706

Valuation allowances

(123)

(300)

(236)

(50)

(24)

(733)

(486)

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

154

13

365

276

76

884

1,220

NOLs, capital losses and trade tax loss carry forwards are indeﬁnitely usable under certain restrictions in France, Germany, theUK 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 201733

Notes to the IFRS Consolidated Financial Statements
2.4 Airbus Performance

Roll forward of deferred taxes:(In € million)

2017

2016

Net deferred tax assets at beginning of period

6,265

5,559

(782)

462

(2,881)(7)

Deferred tax benefit in income statement
Deferred tax recognised directly in AOCI (IAS 39)
Deferred tax on remeasurement of the net defined benefit pension plans

(26)

365

Others

41

(114)

2,617

6,265

2017

2016

Net deferred tax assets at 31 December

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

Available-for-sale investments

(124)

(97)

Cash flow hedges

(238)

2,616

Deferred tax on remeasurement of the net defined benefit pension plans

1,652

1,678

Total

1,290

4,197

Deferred income taxes as of 31 December 2017 are related to the following assets and liabilities:
1 January 2017

(In € million)

Deferredtax
assetsOther movements

Deferredtax
liabilities

OCI /IAS 19OthersMovement throughincome statement(1)

R&D tax
credits

31 December 2017

Deferredtax benefit
Deferred(expense) tax assets

Deferredtax
liabilities

Intangible assets

70

(610)

0

16

0

9

70

(585)

Property, plant and equipment

741(1,384)

0

(48)

0

115

681

(1,257)

Investments and other long-term
financial assets

197

(306)

0

34

0

450

542

(167)

Inventories

1,140(1,327)

0

28

0

(803)

899

(1,861)

Receivables and other assets

2,007(1,167)

(918)

(19)

0

(625)

2,542

(3,264)

1

0

0

0

0

(3)

0

(2)

Provision for retirement plans

Prepaid expenses

1,420

0

(34)

32

0

62

1,480

0

Other provisions

3,876(1,435)

0

0

0

11

3,695

(1,243)Liabilities

4,785(2,688)(2,159)

(2)

0

545

2,696

(2,215)

105

(71)

0

(18)

0

(19)

68

(71)

NOL and tax credit carry forwards

1,706

0

0

0

39

(128)

1,617

0

Deferred tax assets (liabilities)
before offsetting

16,048(8,988)(3,111)

23

39

(386)

14,290(10,665)

Valuation allowances on deferred
tax assets

(795)

0

204

(21)

0

(396)

(1,008)0Set-off(7,696)

7,696

0

0

0

0

(9,684)

9,684

Net deferred tax assets(liabilities)

7,557(1,292) (2,907)

2

39

(782)

3,598

(981)

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

2

34

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.4 Airbus Performance

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

Other movements

Deferredtax
assetsDeferredtax
liabilities

OCI /IAS 19Intangible assets

53

(538)

Property, plant and equipment

832

Investments and other long-term
financial assets

186(In € million)

Inventories
Receivables and other assets

Movement throughincome statement

31 December 2016

Deferredtax benefit
Deferred(expense) tax assets

Deferredtax
liabilities(1)

R&D tax
credits

0

16

0

(71)

70

(610)

(1,353)

0

8

0

(130)

741

(1,384)

(157)

(10)

(46)

0

(82)

197

(306)

Others

1,333

(752)

0

111

0

(879)

1,140

(1,327)837(2,615)

(4)

21

0

2,601

2,007

(1,167)

Prepaid expenses

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)Provision for retirement plans

Deferred income

98

(74)

0

(7)

0

17

105

(71)

NOL 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)Valuation allowances on deferred
tax assets

(600)

0

(22)

(15)

(58)

(100)

(795)

0

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.

16. Earnings per ShareProfit for the period attributable to equity owners of the parent (Net income)Weighted average number of ordinary shares
Basic earnings per share

Diluted earnings per share — Airbus’ categories of dilutive
potential ordinary shares are share-settled Performance Units
relating to Long-Term Incentive Plans (“LTIP”) and theconvertible bond issued on 1 July 2015. In 2016, it also included
the last Stock Option Plan (“SOP”) expired in December 2016.
During 2017, the average price of the Company’s shares
exceeded the exercise price of the share-settled Performance

Diluted earnings per share(1) Dilution assumes conversion of all potential ordinary shares.

2016€ 2,873 million€ 995 million

773,772,702

773,798,837€ 3.71€ 1.29Units and therefore 505,536 shares (in 2016: 287,807 shares)
were considered in the calculation of diluted earnings per share.
The dilutive effect of the convertible bond was also consideredin the calculation of diluted earnings per share in 2017, by adding
back € 7 million of interest expense to the proﬁt for the period
attributable to equity owners of the parent (2016: € 7 million)
and by including 5,022,990 of dilutive potential ordinary shares.

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

2017

2017

2016

€ 2,880 million€ 1,002 million

779,301,228

779,109,634€ 3.70€ 1.29

FINANCIAL STATEMENTS 201735

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 2017 and 2016 comprise the following:
31 December 2017
Amortisation /Impairment

1 January 2017

Net book
value

Gross
amountAmortisation /Impairment

Net bookvalue(In € million)GrossamountGoodwill

10,180(1,040)9,141

10,498(1,073)

9,425

Capitalised development costs

3,104(1,340)

1,763

2,871

(1,164)

1,707

Other intangible assets

3,135(2,409)

725

3,399

(2,463)936

16,418(4,789)

11,62916,768(4,700)12,068Total

Net Book Value(In € million)

Balance at
Changes in
Balance at
1 January Exchange
consolidation
Amortisation / 31 December(1)(1)
2017 differences Additions
scope Reclassification Disposals
Impairment
2017

Goodwill

9,425

(72)

0

0

(208)

(4)

0

9,141

Capitalised
development
costs

1,707

(8)

219

0

34

(5)

(185)

1,763

936

(27)

189

0

(164)

(2)

(207)

725

12,068

(107)

409

0

(338)

(11)

(392)

11,629Other
intangible
assetsTotal(1) Includes intangible assets from entities disposed and reclassified to assets and disposal groups classified as held for sale (see “— Note 6: Acquisitions and Disposals”).

(In € million)

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

Goodwill

9,907

(11)

89

52

(102)

(510)

0

9,425

Capitalised
development
costs

1,659

(38)

311

3

(19)

0

(209)

1,707

989

10

199

21

(15)

(26)

(242)

936

12,555

(39)

599

76

(136)

(536)

(451)

12,068

Other
intangible
assetsTotal(1) Includes intangible assets from entities reclassified to assets and disposal groups classified as held for sale (see “— Note 6: Acquisitions and Disposals”).

Intangible assets decreased by € -439 million to € 11,629 million (2016: € 12,068 million) mainly due to the disposal of Vector.
Intangible assets mainly relate to goodwill of € 9,141 million (2016: € 9,425 million).

Development Costs
Airbus has capitalised development costs in the amount of € 1,763 million as of 31 December 2017 (€ 1,707 million as of 31 December2016), mainly for the Airbus Commercial Aircraft A350 XWB (€ 762 million) and A380 (€ 300 million) programmes. The amortisation
for the A380 and A350 XWB programmes development costs is performed on a unit of production basis.

2

36

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.5 Operational Assets and Liabilities

Impairment Tests
Airbus assesses each year whether there is an indication that a
non-ﬁnancial asset or a Cash Generating Unit (“CGU”) to which
the asset belongs may be impaired. In addition, intangible
assets with an indeﬁ nite useful life, intangible assets not yet
available for use and goodwill are tested for impairment eachﬁ nancial year irrespective of whether there is any indication
for impairment. An impairment loss is recognised in theamount by which the asset’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 reﬂ ects the way goodwill is monitored for internalmanagement purposes.
The discounted cash ﬂ ow method is used to determine therecoverable amount of a CGU or the group of CGUs to which
goodwill is allocated. The discounted cash ﬂ ow method isparticularly sensitive to the selected discount rates andestimates of future cash ﬂows by management. Discount rates

are based on the weighted average cost of capital (“WACC”)
for the groups of cash-generating units. The discount rates arecalculated based on a risk-free rate of interest and a market
risk premium. In addition, the discount rates reﬂect the current
market assessment of the risks speciﬁ c to each group of
CGUs by taking into account speciﬁ c peer group information
on beta factors, leverage and cost of debt. Consequently,
slight changes to these elements can materially affect theresulting valuation and therefore the amount of a potential
impairment charge.
These estimates are influenced by several assumptions
including growth assumptions of CGUs, availability andcomposition of future defence and institutional budgets, 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 2017 and 2016, goodwill was allocated to CGUs or group of CGUs, and is summarised in the following schedule:(In € million)

AirbusCommercial
Aircraft

AirbusHelicopters

AirbusDefenceand Space

Other / HQ

Consolidated

Goodwill as of 31 December 2017

6,838

129

2,160

14

9,141

Goodwill as of 31 December 2016

6,873

308

2,230

14

9,425

The goodwill mainly relates to the creation of Airbus in 2000 and the Airbus Combination in 2001.
The annual impairment tests performed in 2017 led to no impairment charge.
The revised commercial outlook for the A380 programme has not triggered any impairment losses for capitalised development
costs or jigs and tools dedicated to the programme.

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, 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% (2016: 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$/€ (2016: 1.25 US$/€) toconvert in euro the portion of future US dollar which are
not hedged (see “— Note 35: Information about Financial
Instruments);
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 current production rate
assumptions and provides an assessment of expected futuredeliveries on that basis.
■
In the absence of long-term ﬁnancial reference, expected cash
ﬂows generated beyond the planning horizon are consideredthrough a terminal value.
■
Long-term commercial assumptions in respect of market
share, deliveries and market value are based on General
Market Forecast updated in 2017. 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
9.6% (2016: 6.9%).
■

FINANCIAL STATEMENTS 201737

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

Airbus Helicopters

Airbus Defence and Space

The planning takes into account the evolution of programmes
based upon the current backlog and an assessment of orderintake for platforms and services.
■
In the absence of long-term ﬁnancial reference, 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
9.7% (2016: 6.7%).

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.

■

Overall the defence and space markets are expected to growat a steady rate during the period of the operative planninghorizon.
■Business growth is underpinned by growing defence
opportunities boosted after ﬁ nalisation of the successful
portfolio re-shaping programme. Underlying performanceis improved by focusing on project delivery, cost control andefﬁciency.
■
In the absence of long-term ﬁnancial reference, expected cash
ﬂows generated beyond the planning horizon are consideredthrough a terminal value.
■
Cash ﬂows are discounted using a euro weighted WACC of
8.3% (2016: 6.5%).
■

18. Property, Plant and Equipment

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

10 to 50 years

Site improvements

6 to 30 years

Technical equipment and machinery

2 to 20 years

Jigs and tools(1)

5 years

Other equipment, factory and office equipment

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

2

Property, plant and equipment as of 31 December 2017 and 2016 comprises the following:
31 December 2017

1 January 2017GrossamountDepreciation /Impairment

Net book
value (1)GrossamountDepreciation /Impairment

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

9,542(4,452)

5,091

9,444

(4,252)

5,192

Technical equipment and machinery

21,004(12,938)

8,066

20,331(12,076)

8,255

Other equipment, factory and officeequipment (2)3,693(2,754)

939

3,933

(2,939)994(In € million)

Construction in progress

Total

2,514

0

2,514

2,472

0

2,472

36,753(20,144)

16,61036,180(19,267)

16,913(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 € 359 million (2016: € 356 million).

38

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.5 Operational Assets and Liabilities

Net Book Value(In € million)

Balance at
Changes in
Balance at
1 January Exchange
consolidation ReclassiDepreciation / 31 December(1)(1)
2017 differences Additions
scope fication Disposals
Impairment
2017

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

5,192

(58)

123

(1)

167

(41)

(291)

5,091

Technical equipment
and machinery

8,255

(128)

429

7

900

(17)

(1,380)

8,066

994

(29)

335

3

79

(220)

(223)

939

Other equipment,
factory and officeequipment
Constructionin progress

Total

2,472

(22)

1,452

0

(1,384)

(4)

0

2,514

16,913

(237)

2,339

9

(238)

(282)

(1,894)

16,610(1) Includes property, plant and equipment from entities disposed and reclassified to assets and disposal groups classified as held for sale (see “— Note 6: Acquisitions and Disposals”).

(In € million)

Balance at
Changes in
1 January Exchange
consolidation ReclassiDepreciation /2016 differences Additions
scope fication (1) Disposals (1)Impairment

Balance at
31 December
2016

Land, leasehold
improvements andbuildings including
buildings 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

Total

17,127

(417)

2,805

20

(98)

(713)

(1,811)

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

Property, plant and equipment decreased by € -303 million to € 16,610 million (2016: € 16,913 million) mainly at Airbus Helicopters(€ -210 million), primarily driven by the disposal of Vector.
For details on assets related to lease arrangements on sales ﬁnancing, see “— Note 25: Sales Financing Transactions”.

FINANCIAL STATEMENTS 201739

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

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

2017

2016

France

7,222

7,263

Germany

4,649

4,348

UK

2,193

2,472

Spain

1,613

1,636

881

1,078

16,558

16,797

Other countries

Property, plant and equipment by geographical areas(1)(1) Property, plant and equipment by geographical areas excludes leased assets of € 52 million (2016: € 116 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” (€ 257 million as of 31 December 2017,2016: € 310 million).

Future nominal operating lease payments (for Airbus as alessee) for rental and lease agreements not relating to aircraft
sales ﬁnancing amount to € 1,025 million as of 31 December
2017 (2016: € 768 million), and relate mainly to procurement
operations (e.g. facility leases).

Maturities as of 31 December 2017 and 2016 are as follows:
31 December
2017

2016

202

159

Later than 1 year and not later than 5 years

516

397

Later than 5 years

307

212

1,025

768

(In € million)

Not later than 1 year

Total

19. Other Investments and Other Long-Term Financial Assets

31 December(In € million)

2017

2016

Other investments

2,441

2,091

Other long-term financial assets

1,763

1,564

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

4,204

3,655

529

522

4,733

4,177

Current portion of other long-term financial assets

Total

Other investments mainly comprise Airbus’ participations.
The signiﬁcant participations at 31 December 2017 include theremaining investment in Dassault Aviation (Airbus share: 9.93%,
2016: 10.0%) amounting to € 1,071 million (2016: € 876 million).

Other long-term financial assets and the current portion ofother long-term financial assets encompass other loans in theamount of € 1,521 million and € 1,147 million as of 31 December
2017 and 2016, and the sales ﬁnance activities in the form ofﬁnance lease receivables and loans from aircraft ﬁnancing.

2

40

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.5 Operational Assets and Liabilities

20. Inventories

31 December 201731 December 2016GrossamountWritedown

Net book
value

Gross
amountWritedown

Net bookvalue

Raw materials and manufacturing supplies

3,135

(484)

2,651

3,288

(508)

2,780

Work in progress

29,100(6,448)22,652

27,304(6,246)

21,058Finished goods and parts for resale

3,465

(612)

2,853

3,374

(624)

2,750

(In € million)

Advance payments to suppliers

Total

3,374

(66)

3,308

3,155

(55)

3,100

39,074(7,610)31,464

37,121(7,433)29,688Inventories of € 31,464 million (2016: € 29,688 million) increasedby € +1,776 million. This is driven by Airbus Commercial Aircraft(€ +2,354 million), and mainly reﬂects an increase in work inprogress associated with A350 XWB ramp-up. This increase
was partly compensated by a decrease in Airbus Helicopters(€ -455 million), mainly related to the disposal of Vector (see“— Note 6: Acquisitions and Disposals”).
Write-downs for inventories are recorded when it becomesprobable that total estimated contract costs will exceed total

contract revenues. In 2017, write-downs of inventories in theamount of € -126 million (2016: € -306 million) are recognisedin cost of sales, whereas reversal of write-downs amounts
to € 117 million (2016: € 217 million). At 31 De cember 2017
€ 10,526 million of work in progress and € 2,383 million of ﬁnishedgoods and parts for resale were carried at net realisable value.
Inventories recognised as an expense during the period amountto € 47,065 million (2016: € 47,835 million).

21. Trade Receivables and Trade Liabilities

Tr ade 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 Statements 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 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 the 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.

Trade Receivables
31 December(In € million)

2017

2016

Receivables from sales of goods and services

8,628

8,366

Allowance for doubtful accounts

(270)

(265)

Total

8,358

8,101

964

1,153

thereof trade receivables not expected to be collected within 1 year

FINANCIAL STATEMENTS 201741

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

Trade receivables of € 8,358 million (2016: € 8,101 million)
increased by € +257 million, mainly in Airbus Commercial
Aircraft.
In application of the PoC method, as of 31 December 2017 an
amount of € 2,917 million (2016: € 2,882 million) for construction
contracts is included in the trade receivables net of related
advance payments received.
The aggregate amount of costs incurred and recognised
profits (less recognised losses) to date amounts to€ 76,235 million (2016: € 73,017 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 2017, it
amounts to € 8,220 million (2016: € 7,887 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 2017, thegross amount due to customers amounts to € 350 million (2016:€ 87 million).

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

2017

2016

Allowance balance at beginning of period

(265)

(276)

Foreign currency translation adjustment

1(1)

Utilisations / disposals

38

39

Additions

Allowance balance at 31 December

(44)

(27)

(270)

(265)

Trade Liabilities
Trade liabilities of € 13,444 million (2016: € 12,532 million) increased by € +912 million, mainly in Airbus Commercial Aircraft.
As of 31 December 2017, trade liabilities amounting to € 24 million (2016: € 133 million) will mature after more than one year.

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

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
2017

2016

Provisions for pensions (see Note 29)

8,361

8,656

Other provisions

8,367

8,313

(In € million)

Total

16,728

16,969thereof non-current portion

10,153

10,826

thereof current portion

6,575

6,143

Provisions for pensions decreased mainly due to contributions made into the various pension vehicles and the strong performanceof plan assets.

2

42

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.5 Operational Assets and Liabilities

Other provisions are presented net of programme losses against inventories (see “— Note 20: Inventories”).
Movements in other provisions during the year were as follows:

Exchangedifferences

Increasefrompassageof time

Additions

Reclassification /Change inconsolidated
group

Used

1,151

(2)

0

1,512

(185)

(1,017)

(21)

1,438

2,160

(13)

0

858

10

(886)

(164)

1,965

Aircraftfinancingrisks (1)Obligation
fromservices andmaintenanceagreements

594

(81)

38

24

3

(33)

(16)

529

591

0

8

56

0

(128)

(35)

492

Warranties

339

0

1

69

(4)

(73)

(29)

303

Personnelrelated
provisions

1,020

(4)

2

413

22

(388)

(46)

1,019

Litigationand claims

122

(1)

0

237

0

(62)

(8)

288

Asset
retirement

166

0

8

5

0

0

(21)

158

Balance at
1 January
2017

Contract
lossesOutstanding
costs(In € million)

Balance at
31 December
Released
2017

Other risks
and charges

2,170

(4)

0

886

(232)

(302)

(343)

2,175

Total

8,313

(105)

57

4,060

(386)

(2,889)

(683)

8,367

(1) See “— Note 25: Sales Financing Transactions”.

Provisions for contract losses in 2017 mainly includes the A400M programme provisions after netting against inventories. The
additions include the net charge of € 1,299 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 and Gross Margin” and “— Note 20: Inventories”).
The majority of the addition to provisions for outstanding costs relates to Airbus Helicopters (€ 489 million), mainly for the NH90
and Tiger programmes, as well as to Airbus Defence and Space (€ 315 million), and corresponds among others to the Euroﬁghter
programme and to diverse tasks to complete on construction contracts.
Provisions for litigations and claims in 2017 includes the arbitral award relating to the Republic of China (Taiwan). For moredetails, see “— Note 36: Litigation and Claims”.
Personnel-related provisions include restructuring provisions and other personnel charges. For more details, see “— Note 28:
Personnel-Related Provisions”.
An H225 Super Puma helicopter was involved in an accident on 29 April 2016. Management is cooperating fully with the authorities
to determine the precise cause of the accident. An estimate of the related net future costs has been prepared and is included inother provisions.
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”). 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, see “— Note 36: Litigation and
Claims” and “— Note 10: Revenues 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 201743

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)

OthersTotal non-current other financial assets

2017

2016

2,901

893

79

83

2,980

976

Receivables from related companies

992

517

Positive fair values of derivative financial instruments (1)

663

258

Others324

482

Total current other financial assets

1,979

1,257

Total

4,959

2,233

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

Other Financial Liabilities
31 December
2017

2016

(1)

1,127

6,544

European Governments refundable advances

5,537

6,340

284

429

Total non-current other financial liabilities

6,948

13,313Liabilities for derivative financial instruments (1)

1,144

4,476

364

730

334

116

(In € million)

Liabilities for derivative financial instruments

OthersEuropean Governments refundable advances(2)

Liabilities to related companies

343

439

Total current other financial liabilities

2,185

5,761

Total

9,133

19,074

2,125

5,761

Othersthereof other financial liabilities due within 1 year

(1) See “— Note 35: Information about Financial Instruments”.
(2) 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
are repaid to the European Governments subject to the success of the project.

The total net fair value of derivative ﬁnancial instruments improvedby € +11,162 million to € +1,293 million (2016: € -9,869 million)
as a result of the devaluation of the US dollar versus the euro
associated with the mark to market valuation of the hedge
portfolio.

The European Governments refundable advances decreasedby € -1,169 million to € 5,901 million (2016: € 7,070 m illion),primarily related to the update of the valuation of refundable
advances from European Governments on A380 programme
to reﬂect the revised commercial outlook of the programme andcurrent status of discussions with Nations on RLI agreements
restructuring. The corresponding impact is recorded in theﬁnancial result (see “— Note 14: Total Financial Result”).

2

44

Financial Statements 2017 - AIRBUS
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)

2017

2016

Prepaid expenses

2,210

2,265

Others86

93

Total non-current other assets

2,295

2,358

Value added tax claims

1,892

1,589

639

552

Prepaid expenses

376

435

Total current other assets

2,907

2,576

Total

5,202

4,934

OthersOther Liabilities
31 December(In € million)

Customer advance payments
Others2017

2016

16,65915,714531

565

Total non-current other liabilities

17,19016,279Customer advance payments (1)25,284

24,115

Tax liabilities (excluding income tax)

1,397

1,047

Others

2,512

2,373

Total current other liabilities

29,193

27,535

Total

46,38343,81428,22526,562

thereof other liabilities due within 1 year

(1) Of which € 5,449 million (2016: € 6,318 million) relate to construction contracts, mainly in Airbus Defence and Space (2017: € 4,568 million and 2016: € 5,001 million) and Airbus
Helicopters (2017: € 895 million and 2016: € 1,317 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) O perating 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 201745

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) B ackstop commitments are guarantees by Airbus
Commercial Aircraft, made when a customer-orderis placed, to provide financing to the customer in theevent that the customer fails to secure sufficient funding
when payment becomes due under the order. Suchcommitments are not considered to be part of Gross
Customer Financing Exposure as (i) the financing is not inplace, (ii) commitments may be transferred in full or part tothird parties prior to delivery, (iii) past experience suggests
it is unlikely that all such proposed financings actually will
be implemented and, (iv) Airbus retains the asset until theaircraft is delivered and does not incur an unusual risk inrelation thereto. In order to mitigate customer credit risks
for Airbus, such commitments typically contain financial
conditions which guaranteed parties must satisfy in order
to benefit therefrom;(ii) A sset 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 through2029. 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 2017, the nominal value of asset value
guarantees provided to beneficiaries amounts to € 722 million(2016: € 836 million), excluding € 30 million (2016: € 51 million)
whe re 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 € 519 million (2016: € 580 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
a lessee under an operating head-lease and lessor under
the sub-lease. Airbus’ customer financing exposure tooperating head-lease commitments is determined as thepresent value of the future head-lease payments. There wasno net exposure for such leases as of 31 December 2017and 2016.
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) thebook value of operating leases before impairment, (ii) the
outstanding principal amount of finance leases or loans
due before impairment, (iii) the guaranteed amounts underﬁnancial guarantees and the net present value of head-leasecommitments, (iv) the book value of second hand aircraft for
resale before impairment, and (v) the outstanding value of any
other investment in sales ﬁnancing structured entities before
impairment. This Gross Customer Financing Exposure may differ
from the value of related assets on 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 Statements of Financial Position may have beenadjusted for impairment losses.
Gross Customer Financing Exposure amounts to US$ 1.7 billion(€ 1.4 billion) (2016: US$ 1.8 billion (€ 1.7 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 isprovided for by way of impairment losses and other provisions.
Impairment losses and provisions — For the purpose ofmeasuring an impairment loss, each transaction is tested
individually. Impairment losses relating to aircraft 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.
Security — Sales financing transactions, including thosethat are structured through structured entities, are generally
collateralised by the underlying 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 creationof a structured entity. Apart from investor interest protection,interposing a structured entity offers advantages such as
ﬂ exibility, bankruptcy remoteness, liability containment andfacilitating sell-downs of the aircraft ﬁnanced. An aircraft ﬁnancing
structured entity is typically funded on a non-recourse basis
by a senior lender and one or more providers of subordinatedﬁnancing. When Airbus acts as a lender to such structured2

46

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.5 Operational Assets and Liabilities

entities, it may take the role of the senior lender or the providerof subordinated loan. Airbus consolidates an aircraft ﬁnancing
structured entity if it is exposed to the structured entity’s variable
returns and has the ability to direct the relevant remarketing
activities. Otherwise, it recognises only its loan to the structured

entity under other long-term ﬁnancial assets. At 31 December
2017 the carrying amount of its loans from aircraft ﬁnancing
amounts to € 695 million (2016: € 732 million). This amount also
represents Airbus’ maximum exposure to loss from its interestin unconsolidated aircraft ﬁnancing structured entities.

On-Balance Sheet Operating and Finance Leases
The future minimum operating lease payments (undiscounted) due from customers to be included in 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 2017 are as follows:
Aircraft underoperating lease

Finance leasereceivables (1)Not later than 1 year

1659

Later than 1 year and not later than 5 years

42

21(In € million)

Later than 5 years

31 December 2017

0

0

58

80

(1) Includes € 4 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 2017 and as of 31 December 2016, the scheduled payments owed under sales
ﬁnancing head-leases are as follows:
31 December
2017

2016

Not later than 1 year

28

52

Later than 1 year and not later than 5 years

16

48

Later than 5 years

00(In € million)

Total aircraft lease commitments(1)

thereof commitments where the transaction has been sold to third parties

Total aircraft lease commitments where Airbus bears the risk
(not discounted)

44

100

(44)

(100)

0

0

(1) Backed by sublease income from customers with an amount of € 40 million in 2017 (2016: € 75 million).

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

Loans

2017

2016

29

45

Liabilities to financial institutions

0

0

Total sales financing liabilities

29

45

FINANCIAL STATEMENTS 201747

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

Customer Financing Cash Flows
Direct customer ﬁnancing cash ﬂows amount to € -100 million in 2017 (2016: € -252 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 2017 and 2016 are as follows:
31 December 2017
AirbusCommercial
Aircraft

AirbusHelicopters

Operating leases (1)107

Finance leases and loans
Inventories(In € million)

Other investments

31 December 2016

Total

AirbusCommercial
Aircraft

AirbusHelicopters

Total

34

141

169

44

213

839

97

936

1,094

54

1,148

149

0

149

208

0

208

25

0

25

28

0

28

On-balance sheet customer financing

1,120

131

1,251

1,499

98

1,597

Off-balance sheet customer financing

144

4

148

182

21

203

Non-recourse transactions on balance
sheet

0

0

0

(109)

0

(109)

Gross Customer Financing Exposure

1,264

135

1,399

1,572

119

1,691

Collateral values

(953)

(64)

(1,017)(1,157)(60)(1,217)

Net exposure

311

71

382

415

59

474

Operating leases

(68)

(21)

(89)

(89)

(9)

(98)

Finance leases and loans

(115)

(50)

(166)

(158)

(50)

(208)

On-balance sheet commitments inventories

(119)

0

(119)

(154)

0

(154)

(8)

0

(8)

(14)

0

(14)

(311)

(71)

(382)

(415)

(59)

(474)

Off-balance sheet commitments - provisions (2)Asset impairment and provisions(1) For 2017 and 2016, depreciation amounts to € 11 million and € 12 million respectively and related accumulated depreciation is € 53 million and € 84 million respectively.
(2) See “— Note 22: Provisions, Contingent Assets and Contingent Liabilities”.

2

48

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.6 Employees Costs and Beneﬁ ts

2.6 Employees Costs and Beneﬁts
26. Number of Employees

AirbusCommercial
Aircraft

AirbusHelicopters

AirbusDefenceand SpaceTotal
segments

Other / HQ

Consolidated

31 December 2017

74,542

20,10832,171

126,8212,621

129,442

31 December 2016

73,85222,50734,397130,756

3,026

133,782

27. Personnel Expenses(In € million)

Wages, salaries and social contributions

2017

2016

12,62912,595

Net periodic pension cost (see Note 29.1)

Total

511

533

13,14013,12828. 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 expenses in that period, recognisedin other personnel charges.

(In € million)

Increase
Balance at
from
1 January Exchange passage
2017 differencesof timeReclassification /Change inconsolidated
Additions
group

Used

Balance at
31 December
Released2017

Restructuring
measures /pre-retirement
part-time work

365

(1)

0

92

(3)

(91)

(16)

346

Other personnel
charges

655

(3)

2

321

25

(297)

(30)

673

1,020

(4)

2

413

22

(388)

(46)

1,019

Total

A restructuring provision associated with the re-organisationof Airbus of € 160 million was recorded at year-end 2016,
following the communication of the plan to the employees andthe European Works Council in November 2016. The Frenchsocial plan was agreed between Airbus and the works council
in June 2017. The German social plan was agreed between
Airbus and the works councils in September 2017, however thereconciliation of interest is still under discussion.

In Airbus Helicopters, the restructuring plan launched in 2016
was signed by the three representative trade unions andvalidated by the Work Administration Agency (DIRECCTE) in
March 2017.

FINANCIAL STATEMENTS 201749

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

29. Post-Employment Beneﬁts

31 December(In € million)

2017

2016

Provisions for retirement plans

7,127

7,749

Provisions for deferred compensation

1,234

907

Retirement plans and similar obligations

8,361

8,656

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 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 majorpart of the obligation is funded by scheme assets due tocontributions of the participating companies. The Scheme is a

registered pension scheme under the Finance Act 2004. The
trustee’s only formal funding objective is the statutory funding
objective under the Pensions Act part 6, 2004, which is tohave sufﬁcient and appropriate assets to cover the Scheme’s
obligations. Since 1 November 2013, this plan is generally closed
for joiners, who participate in a separate deﬁned contribution
plan.
Moreover, Airbus participates in the UK in several funded
trustee-administered pension plans for both executive and nonexecutive 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 it were
the principal employer.
Based on the funding situation of the respective pension
schemes, the pension plan trustees determine the contribution
rates to be paid by the participating employers to adequately
fund the schemes. The different UK pension plans in which
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.
In the event that an employer who participates in the BAE
Systems pension schemes fails or cannot be compelled to
fulﬁl its obligations as a participating employer, the remaining
participating employers are obliged to collectively take on its
obligations. 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.

2

50

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.6 Employees Costs and Beneﬁ ts

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 continues, the DBO will further increasein future periods, which can only be offset partially by the

positive development of market values of those corporate bonds
included in plan assets. Generally, the pension obligation issensitive to movements in the interest rate leading to volatile
results in the valuation.
Inﬂ ation risk — The pension liabilities can be sensitive to
movements in the inﬂation rate, whereby a higher inﬂation rate
could lead to an increasing liability. Since some pension plans
are directly related to salaries, increases in compensations could
result in increasing pension obligations. 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 2017 are as follows:
Pension plans inGermany(Rate in %)2017

France2016

2017

Participation in BAE
Systems Pension
Scheme (UK)

UK
2016

2017

2016

2017

2016

Discount rate

1.7

1.7

1.7

1.9

2.5

2.7

2.5

2.6

Rate of compensation increase

2.8

2.75

2.5

2.5

2.6

2.6

2.6

2.6

Rate of pension increase

1.5

1.7

- / 1.7- / 1.7

3.0

3.0

2.9

3.1

Inflation rate

1.5

1.7

1.7

1.7

3.1

3.1

3.1

3.1

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.
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 the 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 S2 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 201751

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 2016

Plan assets

Participation in
BAE Systems
PensionPensionplans of
SchemeAirbusin the UK
10,392

Total

3,447

13,839Participation in
BAE Systems
PensionPensionplans of
SchemeAirbusin the UK(4,431)(2,541)

Total

Total
provisions(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 arisingfrom changes indemographic assumptions

6

0

6

0

0

0

6

from changes infinancial assumptions

1,027

786

1,813

0

0

0

1,813

from changes inexperience 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
Service cost

348

81

429

0

0

0

429

Interest cost and income

195

97

292

(92)

(67)

(159)

133

Past service cost

(51)

0

(51)

0

0

0

(51)

from changes indemographic assumptions

308

(160)

148

0

0

0

148

from changes infinancial assumptions

(51)

48

(3)

0

0

0

(3)

from changes inexperience adjustments

(9)

(83)

(92)

0

0

0

(92)

from plan assets

Remeasurements: Actuarial(gains) and losses arising

0

0

0

(210)

(169)

(379)

(379)

Change in consolidation,transfers and others

(136)

4

(132)

50

0

50

(82)

Benefits paid

(368)

(92)

(460)

137

92

229

(231)

Contributions by employer
and other plan participants

0

0

0

(300)

(152)

(452)

(452)

Foreign currency translation
adjustment

(41)

(132)

(173)

35

96

131

(42)

11,2993,571

14,870(4,911)(2,832)(7,743)

7,127

Balance as of
31 December 20172

52

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.6 Employees Costs and Beneﬁ ts

The funding of the plans is as follows:
31 December
2017

2016

(In € million)

DBO

Plan assets

DBO

Unfunded pension plans

1,563

0

1,577

0

Funded pension plans (partial)

13,307(7,743)

13,335(7,163)

Total

14,870(7,743)

14,912(7,163)

In 2017, contributions in the amount of € 300 million (2016:€ 104 million) are made into the pension plans of Airbus, mainly
relating to the Contractual Trust Arrangement of € 187 million(2016: € 0 million), the Airbus UK scheme for € 77 million (2016:€ 50 million) and the relief fund in Germany for € 35 million (2016:€ 50 million).

Plan assets

Contributions of approximately € 350 million are expected tobe made in 2018.
The weighted average duration of the DBO for retirement plansand deferred compensation is 17 years at 31 December 2017(31 December 2016: 16 years).

The split of the DBO for retirement plans and deferred compensation between active, deferred and pensioner members for themost signiﬁcant plans is as follows:
ActiveDeferredPensioner

Germany

49%

6%

45%

France

99%

0%

1%

UK

57%

16%

27%

Participation in BAE Systems Pension Scheme (Main Scheme)

73%

14%

13%

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 2017:
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

2017

2016

16,232

15,930

Increase by 0.5%-point(1,228)(1,197)

Decrease by 0.5%-point

1,359

1,322

Increase by 0.25%-point

111

106

Decrease by 0.25%-point

(196)

(279)

Increase by 0.25%-point

283

342

Decrease by 0.25%-point

(356)

(486)

Increase by 1 year

369

287

Reduction by 1 year

(455)

(461)

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.

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 2017

53

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:
2017

2016

QuotedpricesUnquoted
prices

Total

QuotedpricesUnquoted
prices

Total

1,157

3

1,160

1,112

0

1,112

Rest of the world

511

48

559

5

0

5

Emerging markets

281

0

281

248

0

248

1,188

0

1,188

1,474

0

1,474

Corporates

1,250

591

1,841

1,877

0

1,877

Governments

1,310

74

1,384

1,464

0

1,464
305

(In € million)

Equity securities
EuropeGlobal
Bonds

Pooled investment vehicles

16

280

296

17

288

Commodities

115

0

115

161

0

161

Hedge funds

332

196

528

236

0

236

Derivatives

0

(54)

(54)

0

(60)

(60)

Property

92

284

376

337

3

340

Cash and money market funds

43

0

43

62

0

62

Others

216

(40)

176

209

(142)

67

6,511

1,382

7,893

7,202

89

7,291

Balance as of 31 December

The majority of funded plans apply broadly an asset-liability
matching 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 a material impact
on the overall level of assets. A large portion of assets in 2017consists of ﬁxed income instruments, equities, although Airbus
also invests in property, commodities and hedge funds. Airbus
reassesses the characteristics of the pension obligations fromtime to time or as required by the applicable regulation or
governance framework. This typically triggers 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
Germany

FranceUK

OthersParticipationin BAE Systems
Pension Scheme
in the UK

DBO

8,464

1,640

1,195

0

3,571

14,870Plan assets

3,861

17

1,033

0

2,832

7,743

Recognised as of
31 December 2017

4,603

1,623

162

0

739

7,127

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)

Total

Employer’s contribution to state and private pension plans, mainly in Germany and France, are to be considered as deﬁned
contribution plans. Contributions in 2017 amounted to € 677 million (2016: € 703 million).

2

54

Financial Statements 2017 - AIRBUS
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:
2017

2016

(In € million)

DBO

Plan assets

Total

DBO

Plan assets

Total

Balance as of 1 January

1,018

(128)

890

841

(113)

728

Service cost

135

0

135

118

0

118

Interest cost

17

0

17

20

0

20

Interest income

0

(3)

(3)

0

(3)

(3)

5

0

5

0

0

0

from changes indemographic assumptions

174

0

174

0

0

0

from changes inexperience adjustments

34

0

34

35

0

35

from plan assets

0

(3)

(3)

91

2

93

Transfer and change in consolidation

(13)

(1)

(14)

(80)

1

(79)

Benefits paid

(8)

0

(8)

(7)

0

(7)

Remeasurements: Actuarial (gains)and losses arisingfrom changes infinancial assumptions

Contributions

Balance as of 31 December

0

(15)

(15)

0

(15)

(15)

1,362

(150)

1,212

1,018

(128)

890

Recognised as
31 December(In € million)

2017

2016

Provisions

1,234

907

22

17

1,212

890

Non-current and current other assets

Total

The portion of the obligation, which is not protected by thepension guarantee association or Pensions-Sicherungs-Vereinin case of an insolvency of Airbus companies concerned, iscovered 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 non-current and current other assets.

FINANCIAL STATEMENTS 201755

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

30. Share-Based Payment
Share-based compensation — Until 2015, Airbus operated
a Performance and Restricted Unit Plan or LTIP which
qualifies as a cash-settled share-based payment planunder IFRS 2. The grant of so-called “units” will not physicallybe 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 see “— Note 31.1: RemunerationExecutive Committee”.
Since 2016, Airbus operates a Performance Units andPerformance Share Plan, which is granted in units as wellas in shares.
For plans settled in cash, provisions for associated services
received are measured at fair value by multiplying the numberof units expected to vest with the fair value of one LTIP unit

at the end of each reporting period, taking into account theextent to which the employees have rendered service todate. The fair value of each LTIP unit is determined using
a forward pricing model. Changes of the fair value arerecognised as personnel expenses of the period, leading
to a remeasurement of the provision.
Besides the equity-settled parts from LTIP 2016 onwards,
the Employee Share Ownership Plan (“ESOP”) is anadditional equit y-settled share-based payment plan.
Under this plan, Airbus offers its employees the Company
shares at fair value matched with a number of free sharesbased on a determining ratio. The fair value of sharesprovided is reflected as personnel expenses in Airbus’
Consolidated Income Statements with a corresponding
increase in equity.

30.1 LTIP
In the years 2012 to 2015, the Board of Directors of Airbus
approved the granting of LTIP Performance and Restricted
Units. In 2017 and 2016, it approved an LTIP Performance Units
and Performance Share Plan.

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.

Airbus hedges the share price risk inherent in the cash-settled
LTIP units by entering equity swaps where the reference priceIn 2017, compensation expense for LTIPs including the effect of
the equity swaps amounted to € 88 million (2016: € 35 million).

The fair value of units and shares granted per vesting date is as follows (LTIP plan 2017):
Expected vesting date(In € per unit / share granted)

Fair value of Performance Units and Shares

May 2021 - Performance Shares

76.76

May 2021 - Performance Units

74.83

May 2022 - Performance Units

71.69

As of 31 December 2017, provisions of € 183 million (2016: € 179 million) relating to LTIP have been recognised.
The life-time of the Performance and Restricted Units as well as Performance Shares is contractually ﬁxed (see the description of
the respective tranche in the following table). For the units, the measurement is next to other market data, mainly affected by theshare price as of the end of the reporting period (€ 83.00 as of 31 December 2017) and the lifetime of the units.
As of 31 December 2016, all SOPs had expired. No stock options were exercised in 2017.

2

56

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.6 Employees Costs and Beneﬁ ts

The principal characteristics of the LTIPs as at 31 December 2017 are summarised below:

Grant date (1)LTIP 2012

LTIP 2013

LTIP 2014

LTIP 2015

LTIP 2016

LTIP 201713 December
2012

17 December
2013

13 November
2014

29 October
2015

25 October
2016

30 October
2017

Performance and Restricted Unit Plan

Performance Plan

Units

Performance Restricted Performance Restricted Performance Restricted Performance Restricted

Numberof units
granted (2)2,123,892 621,980 1,245,052 359,060 1,114,962 291,420

Numberof units
outstanding
Total numberof eligible
beneficiaries

Vesting
conditions
Share priceper unit
limited at thevesting dates
to (3)

0

0

1,797

Units

SharesUnits

Shares926,398 240,972

615,792

621,198

421,638

425,702605,789

611,225

421,638

425,702440,591 167,386

834,572 275,070

890,248 238,386

1,709

1,621

1,564

1,671

1,601

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

€ 55.66€ 92.34€ 94.90€ 112.62€ 105.34

Vesting dates

25% each:in May 201725% each:in November 2017
in May 2016
25% eachin November 2016
expected:in May 2017
in May 2018
in November 2017 in November 2018

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

Number ofvested units

1,744,570 568,495 424,425 169,254

5,580

2,606

2,060

0

-

€ 147.62-

50% each
50% each
expected:
expected:
in
100%
in
May 2020 expected May 2021
100%
in
in
in
expected in
May 2021 May 2020 May 2022 May 2021
0

0

0

0

(1) Date, when the vesting conditions were determined.
(2) Based on 100% target performance achievement. A minimum of 50% of Performance Units will vest; 100% in case of on-target performance achievement; up to a maximum of
150% in case of overachievement of performance criteria. In case of absolute negative results (cumulative EBIT of 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), € 52.67 (for LTIP 2016) and€ 73.81 (for LTIP 2017).

30.2 ESOPIn 2017 and 2016, the Board of Directors approved a new
ESOP scheme. Eligible employees were able to purchase aﬁxed number of previously unissued shares at fair market value(2017: 5, 20, 30, 50 or 100 shares; 2016: 4, 6, 10, 19, 38 or
76 shares). Airbus matched each ﬁxed number of shares witha number of the Company free shares based on a determinedratio (2017: 4, 8, 10, 13 and 25 free shares, respectively; 2016:
4, 5, 7, 11, 16 and 25 free shares, respectively). During a custodyperiod of at least one year or, provided the purchase took placein the context of a mutual fund (regular savings plan), of ﬁve
years, employees are restricted from selling the shares, but havethe right to receive all dividends paid. Employees who directly
purchased the Company shares have, in addition, the ability

to vote at the Annual Shareholder Meetings. The subscription
price was equal to the closing price at the Paris stock exchange
on 21 February 2017 (2016: 23 February 2016) and amounted
to € 67.24 (2016: € 55.41). Investing through the mutual fund
led to a price which corresponds to the average price at theParis stock exchange during the 20 trading days immediately
preceding 21 February 2017 (2016: 23 February 2016), resulting
in a price of € 64.44 (2016: € 54.31). The Company issued andsold 411,710 ordinary shares (2016: 485,048) with a nominal
value of € 1.00 each. Compensation expense (excluding social
security contributions) of € 28 million (2016: € 27 million) was
recognised in connection with ESOP.

FINANCIAL STATEMENTS 201757

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

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 andrelated compensation costs of the key management personnel as expensed in the respective year can be summarised as follows:(In € million)

2017

2016

25.4

28.4

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

6.9

6.1

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

8.8

20.5

Termination benefits

10.9

0

Other benefits

0.6

0.7

Social charges

7.1

5.5

2.1

1.8

61.8

63.0

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 –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 2017 for Executive Committee Members based on estimatedperformance achievement at year-end was € 12.5 million (2016:€ 13.4 million).

Post-Employment and Other Long-Term Benefits
The post-employment and other long-term beneﬁ ts of the
Executive Committee, including the CEO, amounted to€ 78.6 million at 31 December 2017 (2016: € 85.5 million). The
disclosed post-employment and other long-term beneﬁts reﬂect
the total outstanding balance for all Executive Committee
Members in charge at the end of the respective balance sheet
date.

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 remeasured to fair value as far as they
are cash-settled.

In 2017, the Members of the Executive Committee were
granted 53,108 Performance Units (2016: 85,386) and 57,172
Performance Shares (2016: 91,082) for LTIP 2017, the respective
fair value of these Performance Units and Shares at therespective grant dates was € 8.76 million (2016: € 8.76 million).
Fair value of outstanding LTIP balances at the end of 2017 for
all Executive C ommittee Members was € 17.4 million (2016:€ 14.5 million). The total number of outstanding Performanceand Restricted Units amounted to 384,867 at 31 December
2017 (2016: 467,245), granted to the current 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 thesplit of equity and cash settlement for the formerly granted LTIP.
After overall performance assessment of each of the plans, thevesting dates as determined at the initial grant date apply to
all cash-settled Performance Units, however, units converted
into equity settlement only vest at the last of the vesting datesof the respective plan.

2

58

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.6 Employees Costs and Beneﬁ ts

The number of Performance Units granted to Executive Committee Members until 31 December 2015 are summarised below:
LTIP 2012 (1)LTIP 2013 (2)LTIP 2014 (3)LTIP 2015

Total number of units granted

245,551

152,250

159,448

189,476

Number of cash-settled units

177,933

103,725

117,816

143,217

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

67,71848,525

41,632

46,25928 February
2013

28 February
2014

28 February
2015

28 February
2016€ 39.70€ 53.39€ 55.33€ 59.78(1) Based on performance achievement of 89% for Performance Units under LTIP 2012.
(2) Based on performance achievement of 75% for Performance Units under LTIP 2013.
(3) Based on performance achievement of 80% for Performance Units under LTIP 2014.

As of 31 December 2016, all SOPs had expired. No stock options were exercised in 2017.

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

Past LTIP awards may be maintained in full or prorated, in caseof retirement or if a mandate is not renewed by the Company
without cause, prorata being based on the presence in the
Company during performance periods. The vesting of past
LTIP awards follows the plans’ rules and regulations and is not
accelerated in any case. LTIP awards are forfeited for Executives
who leave the Company on their own initiative, but this is subject
to review by the Board of Directors.
The termination beneﬁts include assumptions about all effective,
known or planned terminations to date.

Other Benefits
Other beneﬁ ts include expenses for Executive Committee
Members’ company cars and accident insurance. There
were no outstanding liabilities at 31 December 2017 or 2016,
respectively.

31.2 Remuneration – CEO
The total remuneration of the CEO and Executive Member of the Board of Directors, related to the reporting periods 2017 and2016, can be summarised as follows:
2017

2016

Base salary

1,500,000

1,500,000

Annual variable pay

1,912,500

2,062,000

Post-employment benefits costs

1,175,057

1,075,888

Share-based remuneration (“LTIP award”) (1)1,551,666

1,528,732

Termination benefits(In €)

2,900,000

0

Other benefits

63,25071,755Social charges

12,012

11,668(1) Expense related to share-based payment plans as recognised in the annual period (service period) including the result from the hedge of cash-settled share-based payment(see “— Note 30: Share-Based Payment”). The pay-out from vested cash-settled LTIP in 2017 was € 1,372,048 (2016: € 2,279,689).

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.

FINANCIAL STATEMENTS 201759

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

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 € 21,176,042 as of 31 December 2017 (2016:€ 21,251,788), whilst the amount of current service and interest cost related to his pension promise accounted for in the ﬁscal
year 2017 represented an expense of € 1,175,057 (2016: € 1,075,888). 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:
Granted date

LTIP 2012

LTIP 2013

LTIP 2014

LTIP 2015

LTIP 2016

LTIP 2017

50,30030,30029,50024,862

28,48020,324

89%

75%

80%

100%

100%

100%

44,76822,72423,60024,862

28,48020,324in cash16,788

5,682

0

0

0

0

in shares

11,192

0

0

0

0

0

Performance Unitsand Shares
Revaluation
Performance Unitsand Shares revaluated
Vested in 2017

Outstanding 2017
in cash0

5,682

17,70018,646

14,24010,162in shares

0

11,360

5,900

6,216

14,24010,162

May 2020

May 2021

Vesting scheduleCash-settled units
Equity-settled units

For vesting dates, see “—Note 30.1: LTIP”
November 2017 November 2018

June 2019

July 2020

Vesting of all Performance Units and Performance Shares granted to the CEO is subject to performance conditions.
The fair value of outstanding LTIP balances at the end of 2017 for the CEO was € 2,732,125 (2016: € 2,353,453).

Termination Benefits
Termination beneﬁts include non-compete indemnity estimated according to art. 74 et seq. of the German Commercial Code(“BGB”) based on 2017 data.
For more details, see “— Note 31.1: Remuneration-Executive Committee”, section “Termination beneﬁts”.

Other Benefits
The CEO is entitled to accident insurance coverage and a company car. In 2017, the total amount expensed was € 63,250 (2016:€ 71,755). Airbus has not provided any loans to / advances to / guarantees on behalf of the CEO.

2

60

Financial Statements 2017 - AIRBUS
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:
2017

2016

Fixum (1)Attendancefees (2)

Total

Fixum (1)Attendancefees (2)

Total

Denis Ranque (3)204,293

80,000284,293

180,000

60,000240,000

Ralph D. Crosby Jr.

94,42080,000174,42080,00050,000130,000

Lord Drayson (4)72,10060,000132,100000Catherine Guillouard (3)120,000

70,000190,000

67,58240,000107,582

Hans-Peter Keitel

100,000

60,000160,000

100,000

60,000160,000

Hermann-Josef Lamberti (3)135,707

70,000205,707110,000

55,000165,000(In €)

Non-Executive Board Members(5)28,176

10,00038,176

100,000

50,000150,000

María Amparo Moraleda Martínez (3)120,000

80,000200,000

100,000

55,000155,000

Claudia Nemat

100,000

70,000170,000

67,58230,00097,582Sir John Parker (3)135,707

65,000200,707110,000

60,000170,000

Lakshmi N. Mittal

Carlos Tavares

80,00065,000145,000

54,06620,00074,066

Jean-Claude Trichet

100,000

80,000180,000

100,000

60,000160,000

Manfred Bischoff

0

0

0

26,15420,00046,154

Anne Lauvergeon

0

0

0

32,692

10,00042,692Michel Pébereau

0

0

0

32,69220,00052,692

1,290,403

790,000

2,080,403

1,160,768

590,000

1,750,768

Former Non-Executive Board Members

Total(1) The fixum includes a base fee for a Board membership and a Committee fee membership within the Audit Committee, the Remuneration, Nomination and GovernanceCommittee of the Board of Directors (the “RNGC”) and/or the E&C Committee. The fixum for the year 2017 was paid 50% in January 2017 and 50% in July 2017. The fixum forthe year 2016 was paid 50% in December 2015 and 50% in July 2016.
(2) The attendance fees related to the first semester 2017 were paid in July 2017; those related to the second semester 2017 are payable in January 2018. The attendance fees
related to the first semester 2016 were paid in July 2016; those related to the second semester 2016 were paid in January 2017.
(3) Member of the E&C Committee and its predecessor, the temporary Ad-Hoc Committee, since the beginning of 2017.
(4) Member of the Company Board of Directors and the RNGC as of 12 April 2017.
(5) No Member of the Company Board of Directors as of 12 April 2017.

A dedicated Ethics and Compliance Committee (“E&C Committee”) has been established in 2017 and its related remuneration
paid in 2017. Please refer to the “Report of the Board of Directors — 4.1.3 Board Committees”.

FINANCIAL STATEMENTS 201761

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:(In number of shares)

Issued as at 1 January
Issued for ESOP

2017

2016

772,912,869

785,344,784

1,643,193

1,474,716

Issued for exercised options

0

224,500

Cancelled

0(14,131,131)

Issued as at 31 December

774,556,062

772,912,869

Treasury shares as at 31 December(129,525)(184,170)

Outstanding as at 31 December

774,426,537

772,728,699

Holders of ordinary shares are entitled to dividends and to one
vote per share at general meetings of the Company.
Equity attributable to equity owners of the parent (including
purchased treasury shares) amounts to € 13,348 million (2016:€ 3,657 million) representing an increase of € +9,691 million.
This is due to an increase in other comprehensive incomeof € +7,738 million, principally related to the mark to market
revaluation of the hedge portfolio of € +7,757 million, and a net
income for the period of € +2,873 million, partly offset by adividend payment of € 1,043 million (€ 1.35 per share).
Capital stock comprises the nominal amount of shares
outstanding. The addition to capital stock represents thecontribution for exercised options by employees of € 1,643,193(in 2016: € 1,474,716) in com pliance with the implemented
ESOPs. In 2016, it also included € 224,500 related to the last
SOP.
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 for the period and thechanges in other comprehensive income from remeasurementsof the deﬁned beneﬁt pension plans net of tax which amounts to€ 151 million in 2017 (2016: € -1,383 million), and cash dividend
payments to Airbus SE shareholders.
On 12 April 2017, the Shareholders’ General Meeting decided to
distribute a gross amount of € 1.35 per share, which was paid on
20 April 2017. For the ﬁscal year 2017, Airbus’ Board of Directors
proposes a cash distribution payment of € 1.50 per share.

Treasury shares represent the amount paid or payable for own
shares held in treasury. During 2017, the number of treasury
stock held by the Company decreased to 129,525 compared to184,170 as of 31 December 2016. No shares were sold back to
the market nor cancelled (in 2016: 14,131,131 shares).
On 12 April 2017, the Annual General Meeting (“AGM”) of theCompany authorised the Board of Directors, for a period
expiring at the AGM to be held in 2018, to issue shares andto grant rights to subscribe for shares in the Company’s sharecapital for the purpose of:■
ESOPs and share-related LTIPs, provided that such powers
shall be limited to an aggregate of 0.14% of the Company’s
authorised share capital (see “— Note 30: Share-Based
Payment”);■
funding the Company and its subsidiaries, provided thatsuch powers shall be limited to an aggregate of 0.3% of
the Company’s authorised share capital (see “— Note 34.3:
Financing Liabilities”).
For each operation, such powers shall not extend to issuingshares or granting rights to subscribe for shares if there is nopreferential subscription right and for an aggregate issue pricein excess of € 500 million per share issuance.
Also on 12 April 2017, the AGM authorised the Board of
Directors for an 18-month period to repurchase up to 10% of
the Company’s issued share capital at a price not exceeding thehigher of the price of the last independent trade and the highest
current independent bid on the trading venues of the regulated
market of the country in which the purchase is carried out.
Furthermore, the AGM authorised both the Board of Directors
and the CEO, with powers of substitution, to establish the exact
number of the relevant shares to be cancelled.

2

62

Financial Statements 2017 - AIRBUS
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 increased to € 3 million as of 31 December 2017 (2016:€ -5 million). These NCI do not have a material interest in Airbus’ activities and cash ﬂows. This increase is mainly related to themark to market revaluation of the hedge portfolio.
Subsidiaries with NCI that are material to their stand-alone ﬁnancial information are:Principal place of business

Ownership interest held by NCI

Alestis Aerospace S.L.

PFW Aerospace GmbHLa Rinconada (Spain)

Speyer (Germany)

2017

2016

2017

2016

38.09%

38.09%

25.10%

25.10%

NCI (in € million)

(18)

(34)

(8)

(28)

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

(2)

(5)

4

0

33. Capital Management

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

Long-term rating

Outlook

Short-term ratingStandard and Poor’s

A+

StableA-1+

Moody’s Investors Services

A2

StableP-1

Fitch Ratings (unsolicited)A-

StableF-2

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 Operating 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 three year
plan (previously: ﬁve year plan) for a value creation ambition isconstructed annually, and is composed of (i) RoCE, (ii) EBIT,and (iii) Free Cash Flow, which is deﬁned as Cash provided
by operating activities and Cash used for investing activities
less Change of securities, Contribution to plan assets forpensions, realised Treasury swaps and bank activities. The
Company’s long-term aspiration is to reach the ﬁrst quartile of
RoCE performance among our aerospace and defence peers.
Airbus also monitors the level of dividends paid to its
shareholders.

FINANCIAL STATEMENTS 2017

63

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)

2017

2016

Cash and cash equivalents

12,016

10,143Current securities

1,627

1,551

Non-current securities

10,944

9,897

Gross cash position

24,587

21,591

Short-term financing liabilities(2,212)(1,687)Long-term financing liabilities(8,984)(8,791)

Total

13,391

11,113The net cash position on 31 December 2017 amounted to€ 13,391 million (2016: € 11,113 million), with a gross cash
position of € 24,587 million (2016: € 21,591 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

2

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

2017

2016

Bank account and petty cash

3,672

3,100

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

6,256

5,513

Short-term securities (available-for-sale)

2,085

1,535

8

12

12,021

10,1605

1712,016

10,143

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

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

64

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.7 Capital Structure and Financial Instruments

34.2 Securities
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).
Airbus’ security portfolio amounts to € 12,571 million and€ 11,448 million as of 31 December 2017 and 2016, respectively.
The security portfolio contains a non-current portion ofavailable-for-sale securities of € 10,944 million (in 2016:€ 9,897 million), and a current portion of available-for-salesecurities of € 1,627 million (in 2016: € 1,551 million).
Included in the securities portfolio as of 31 December 2017and 2016, respectively, ar e corporate and government

bonds bearing either fixed rate coupons (€ 12,023 million
nominal value; 2016: € 10,736 million) or floating rate coupons(€ 376 million nominal value; 2016: € 360 million), foreign
c urrency funds of hedge funds (€ 5 million nominal value;
2016: € 6 million) and foreign curren cy funds of fixed income
funds (€ 11 million fair value; 2016: € 0 million).
When Airbus enters into securities lending or other ﬁnancing
activities that involve the pledging of securities as collateral, thesecurities pledged continue to be recognised on the balance
sheet. As of 31 December 2017, securities for an amount of€ 67 million were pledged as collateral for borrowings from banks(2016: € 0).

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

(In € million)

Financing liabilities to ﬁnancial institutions may 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 counterparty typically has the right to sell or
repledge the securities pledged. The amount of cash received
is recognised as a ﬁnancing liability. The securities pledged are
not derecognised, but remain on Airbus’ Statement of Financial
Position.

Not exceeding
1 yearOver 1 year
up to 5 years

More than
5 years

Total

Bonds

512

1,524

5,027

7,063

Liabilities to financial institutions

290

1,397

325

2,012

Loans

144

200

185

529

Liabilities from finance leases

17

139

186

342

Others (1)

1,249

1

0

1,250

31 December 2017

2,212

3,261

5,723

11,196

0

1,581

4,432

6,013

Liabilities to financial institutions

Bonds

351

1,573

499

2,423

Loans

332

213

118

663

Liabilities from finance leases

15

154

220

389

Others(1)

31 December 2016

989

1

0

990

1,687

3,522

5,269

10,478(1) Included in “others” are financing liabilities to joint ventures.

Long-term financing liabilities, mainly comprising bonds andliabilities to ﬁnancial institutions, increased by € 193 million to€ 8,984 million (2016: € 8,791 million). The increase in long-term
ﬁnancing liabilities is mainly related to the issuance of bonds.
The increase in bonds corresponds principally to bonds issued
on 10 April 2017, for a total of US$ 1.5 billion, with a 10 yearmaturity tranche of US$ 750 million at ﬁxed coupon of 3.150%,
and a 30 year-maturity tranche of US$ 750 million at a ﬁxed
coupon of 3.950%.

Short-term financing liabilities increased by € 525 million to€ 2,212 million (2016: € 1,687 million). The increase in short-term
ﬁnancing liabilities is mainly related to the reclassiﬁcation ofan Euro Medium Term Note programme (“EMTN”) bond fromlong-term to short term due to maturity in September 2018.
The Company has issued several euro-denominated bonds under
its EMTN and three stand-alone US dollar-denominated bondson the US institutional market under Rule 144A. It has also issued
a euro-denominated convertible bond and euro-denominatedexchangeable bonds into Dassault Aviation shares.

FINANCIAL STATEMENTS 201765

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

Fur thermore, the Company has long-term US dollardenominated loans outstanding with the European Investment
Bank (“EIB”) and the Development Bank of Japan (“DBJ”).
The Company can issue commercial paper under the so called“billet de trésorerie” programme at ﬂoating 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 2017,
there were no outstanding amounts under this programme.

The Company established in April 2015 a US$ 2 billion
commercial paper programme which has been increased to
US$ 3 billion in April 2016. The commercial paper issuanceactivity was limited in the course of the year 2017.
Financing liabilities include outstanding debt of € 46 million(2016: € 85 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”).

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

Principal
amount31 December(In million)

2017

€ 500

US$ Bond 10 years US$ 1,000

EMTN 15 years

Issuancedate

Couponor interest
rate

Effective
interest
rate

Maturity
date

Additional features

512

533 Sep 2003

5.50%

5.58%

Sep 2018

Interest rate swapped
into 3M Euribor +1.72%

818

940

Apr 2013

2.70%

2.73%

Apr 2023

Interest rate swapped
into 3M Libor +0.68%

2016

EMTN 10 years€ 1,000

1,031

1,052

Apr 2014

2.375%

2.394%

Apr 2024

Interest rate swapped
into 3M Euribor +1.40%

EMTN 15 years

€ 500

517

526

Oct 2014

2.125%

2.194%

Oct 2029

Interest rate swapped
into 3M Euribor +0.84%

Convertible bond
7 years

€ 500

470

464

Jul 2015

0.00%

1.386%

Jul 2022

Convertible into
Airbus SE shares at€ 99.54 per share
Issued at 102%EMTN 10 years

€ 600

584

589 May 2016

0.875%

0.951% May 2026

Interest rate swapped
into 3M Euribor

EMTN 15 years

€ 900

851

861 May 2016

1.375%

1.49% May 2031

Interest rate swapped
into 3M Euribor

Exchangeablebonds 5 years€ 1,078

1,054

1,048

Jun 2016

0.00%

0.333%Jun 2021

Exchangeable into
Dassault Aviation sharesissued at 103.75%

US$ Bond 10 years

US$ 750615

0

Apr 2017

3.15%

3.16%

Apr 2027

Interest rate swapped
into 3M Libor +0,87%

US$ Bond 30 years

US$ 750611

0

Apr 2017

3.95%

4.02%

Apr 2047

Interest rate swapped
into 3M Libor +1,61%

7,063

6,013

Jan 2011

3M USLibor+1.15%Jan 2021

Interest rate swapped
into 4.76% fixed

Aug 2011

3M USLibor+0.85%

Aug 2021

Interest rate swapped
into 3.2% fixed

Feb 2020

Bonds

DBJ 10 years

EIB 10 years

US$ 300

US$ 721

250

343

285

488

EIB 7 years

US$ 406

339

385

Feb 2013

3M USLibor+0.93%

EIB 10 years

US$ 627516

591

Dec 2014

2.52%

2.52% Dec 2024

Dec 2015

6M USLibor+0.559%Dec 2025

EIB 10 years

US$ 320

OthersLiabilities to financial
institutions

267

304

297

370

2,012

2,423

Interest rate swapped
into 3M Libor +0.61%

2

66

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.7 Capital Structure and Financial Instruments

Reconciliation of liabilities arising from ﬁnancing liabilities:
Non-cash movements
Balance at
1 January
2017

Bonds

6,013

Liabilities to financial institutions

2,423
663

(In € million)

Loans

Cash flows

Changes inscope

Foreignexchange
movement

1,316

0

(266)

(199)

0

(118)

(11)

Others(1)

Balance at
31 December
2017

0

7,063

(212)

0

2,012

5

(10)

529

Liabilities from finance leases

389

7

(27)

(27)

0

342

Others

990

278

(44)

26

0

1,250

10,478

1,284

(82)

(474)

(10)

11,19631 December 2017(1) Included in “other assets and liabilities and others” in the Statements of Cash Flows.

The aggregate amounts of ﬁnancing liabilities maturing during the next ﬁve years and thereafter as of 31 December 2017 and2016, are as follows:
31 December(In € million)

2017

2016

1 year

2,212

1,687

2 years249

829

3 years

621

271

4 years

1,719

703

5 years

672

1,719

Thereafter

Total

5,723

5,269

11,196

10,47835. 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 risk, 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.
The ﬁnancial risk management of Airbus is generally carried out
by the Treasury department at Airbus under policies approvedby the Board of Directors or by the Chief Financial Ofﬁcer. The
identiﬁcation, evaluation and hedging of the ﬁnancial risks isin the joint responsibility of an established speciﬁ c Foreign
Exchange Committee, including the Airbus Divisions.
Airbus uses financial derivatives solely for risk mitigating
purposes (“hedging”) and applies hedge accounting for asigniﬁcant portion of its hedging portfolio.

Market Risk
Foreign exchange risk — Foreign exchange risk arises
when future commercial transactions or ﬁrm commitments,
recognised monetary assets and liabilities and net investments
in foreign operations are denominated in a currency that is not
the entity’s functional currency.
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 toFINANCIAL STATEMENTS 201767

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

generate 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 dollar 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
the actual gross US dollar cash inﬂ ows received at aircraft
delivery in a particular month exceed the portion designatedas being hedged in that month. However, if the monthly US
dollar cash inﬂows received at aircraft delivery are expected tobe, or prove to be, less than the notional amount of the hedges
maturing in that month, the excess portion of the hedge notional
will disqualify for hedge accounting and the related fair valuechanges or settlement gains or losses will be recognised inﬁnancial result.
Airbus also hedges its expected foreign currency exposure
arising from US dollar or pound sterling cash outﬂows in thecommercial aircraft business on a ﬁrst outﬂow basis, though toa much lesser extent than US dollar cash inﬂows.
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 ﬂows to behedged can cover up to 100% of the equivalent of the net US
dollar exposure at inception. The coverage ratio considers thevariability in the range of potential outcomes taking into accountmacroeconomic movements affecting spot rates and interest
rates as well as the robustness of the commercial cycle.
In situations where the payment dates for hedged firmly
committed cash ﬂows are not ﬁxed and subject to potentiallysigniﬁcant delays, Airbus may use rollover strategies, usually
involving foreign exchange 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.
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.

2

68

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.7 Capital Structure and Financial Instruments

Commodity price risk — Airbus is exposed to risk relating
to ﬂ uctuations 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 to mitigate the risks associated with the purchaseof raw materials. To the extent that the gains or losses of thederivative and those of the hedged item or transaction do
not match in terms of proﬁ t or loss, Airbus applies cash ﬂ ow
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 to equity 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 theuse of equity derivatives that qualify for hedge accounting
and have been designated as hedging instruments in a cash
ﬂ ow hedges.
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
for market price movements.

Airbus’ VaR computation includes Airbus’ ﬁnancial debt, shortterm and long-term investments, foreign currency forwards,
swaps and options, commodity contracts, ﬁ nance leasereceivables and liabilities, foreign currency trade payables andreceivables, including intra-Airbus payables and receivables
affecting Airbus proﬁ t and loss.
Although VaR is an important tool for measuring market risk,
the assumptions on which the model is based give rise tosome 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% conﬁ dence level does not reﬂ ect losses that may
occur beyond this level. Even within the model used there
is a 5% statistical probability that losses could exceed thecalculated VaR;■
T he use of historical data as a basis for estimating thestatistical behaviour of the relevant markets and ﬁ nallydetermining 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 todetermine the riskiness of its ﬁ nancial instrument portfolio
and in order to optimise the risk-return ratio of its ﬁ nancial
asset portfolio. Further, Airbus’ investment policy deﬁ nes a
VaR limit for the total portfolio of cash, cash equivalents andsecurities. The total VaR as well as the different risk-factor
speciﬁc VaR ﬁgures of this portfolio are measured and serve
amongst other measures as a basis for the decisions of Airbus’
Asset Management Committee.

FINANCIAL STATEMENTS 201769

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 2017 and 2016 is as follows:

Total VaR

Equityprice VaR

Foreign exchange hedges for forecast transactions
or firm commitments

872

0

913

0

89

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

74

17

70

0

21

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

49

0

24

0

42

Commodity contracts

2

0

0

2

0

(In € million)

Currency Commodity
VaR
price VaR

Interest
rate VaR

31 December 2017

Equity swaps

2

2

0

0

0

Diversification effect

(182)

(3)

(157)

0

(68)

All financial instruments

817

16

850

2

84

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 and liabilities, foreign currency
trade payables and receivables

81

0

15

0

86

Commodity contracts

4

0

1

4

0

Equity swaps

4

4

0

0

0

31 December 2016

Diversification effect

(276)

(1)

(127)

0

(70)

All financial instruments

1,671

60

1,820

4

215

The decrease of the total VaR as of 31 December 2017 is mainly attributable to a strong decrease of market volatilities, in particularforeign exchange volatility €/US$, in combination with a decrease in net foreign exchange portfolio, in comparison to year-end
2016. Airbus uses its derivative instruments entirely for hedging purposes. As a result, the respective market risks of these hedging
instruments are – depending on the hedges’ actual effectiveness – offset by corresponding opposite market risks of the underlying
forecast transactions, assets or liabilities. Under IFRS 7, the underlying forecast transactions do not qualify as ﬁnancial instruments
and are therefore not included in the tables shown above. Accordingly, the VaR of the foreign exchange hedging portfolio in theamount of € 872 million (2016: € 1,778 million) cannot be considered as a risk indicator for Airbus in the economic sense.

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 2017 and 2016) 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.

2

70

Financial Statements 2017 - AIRBUS
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:(In € million)

Carrying
amountContractual
cash flows< 1 year

1 year2 years

2 years3 years

3 years4 years

4 years5 years> 5 years(25,600)(27,519)(2,271)(3,063)(16,403)

(516)

(836)

(1,952)(882)(6,930)(1,167)

(835)

(184)

(3)

(2)

(872)

(27,871)(30,582)(17,570)(1,351)(1,020)(1,955)(884)(7,802)(23,994)(25,293)(14,903)(1,268)

(458)

(886)

(1,923)(5,856)31 December 2017
Non-derivative financial liabilities
Derivative financial liabilities

Total
31 December 2016
Non-derivative financial liabilities
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 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 € -5,901 million at 31 December 2017 (€ -7,070 million at 31 December 2016) 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.
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.
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 ﬁnancing transaction, Airbus takes into accountthe airline’s credit rating and economic factors reﬂecting therelevant ﬁnancial market conditions, together with appropriate
assumptions as to the anticipated future value of the ﬁnanced
asset.
The booked amount of ﬁnancial assets represents the maximum
credit exposure. The credit quality of ﬁnancial assets can beassessed by reference to external credit rating (if available)
or internal assessment of customers’ (such as airlines’)
creditworthiness by way of internal risk pricing methods.

FINANCIAL STATEMENTS 201771

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

The following table breaks down the gross carrying amount of loans and receivables including ﬁ nance leases, separately
showing those that are impaired, renegotiated or past due:(In € million)

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

Total

31 December 2017
Customer financing

93

0

767

3

3

3

63

3

935

Trade receivables

7,285

226

151

228

163

144

64

369

8,630

Others

2,214

0

254

65

145

31

180

228

3,117

Total

9,592

226

1,172

296

311

178

307

600 12,682

31 December 2016
Customer financing

846

0

209

4

3

86

0

0

1,148

Trade receivables

6,057

27

198

1,049

235

285

78

437

8,366

Others

1,313

9

285

111

48

182

22

466

2,436

Total

8,216

36

692

1,164

286

553

100

903

11,950The 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 Governments. 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 Statements 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 Statements forthe period. Interest earned on the investment is presented asinterest income in the Consolidated Income Statements using theeffective interest method. Dividends earned on investment arerecognised as other income (other expense) from investmentsin the Consolidated Income Statements 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 Statements, theimpairment loss is reversed through the Consolidated Income
Statements.
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

72

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.7 Capital Structure and Financial Instruments

The following table presents the carrying amounts and fair values of ﬁnancial instruments by class and by IAS 39 measurement
category as of 31 December 2017:
Fair value
through profit
or loss

Fair value
for hedge Availablerelations
for-saleHeld fortrading Designated(In € million)

Fair
value

Loans andreceivables andfinancial liabilities
at amortised cost

Fair Amortised
value
Cost

Other

Fair
value

Financial
instruments
total
Book
Value

Fair
value

2,441

2,441

AssetsOther investments and otherlong-term financial assets
Equity investments (1) (2)

0

(3)

0

0

2,441

0

0

0

0

0

0

0

695

704

76

770

780

Other loans

0

0

0

0

1,521

1,521

0

1,521

1,521

Trade receivables

0

0

0

0

8,358

8,358

0

8,358

8,358

Derivative instruments (6)

66

0

3,498

0

0

0

0

3,564

3,564

Non-derivative instruments

0

0

0

0

1,395

1,395

0

1,395

1,395

0

0

0

12,57100

012,571

12,571

Customer financing

Other financial assets

Securities
Cash and cash equivalents

Total

0

6,256

0

2,085

3,675

3,675

0

12,016

12,016

66

6,256

3,498

17,097

15,644

15,65376

42,63742,64600

00(7,063)(7,363)0(7,063)(7,363)Liabilities
Financing liabilities
Issued bonds andcommercial papers
Liabilities to banks andother financing liabilities

0

0

0

0

(3,791)(3,838)0(3,791)(3,838)

(4)

0

0

0

0

0

0

(342)

(342)

(342)

Derivative instruments (7)

(239)

0

(2,032)

0

0

0

0

(2,271)(2,271)

European Governments
refundable advances (5)

0

0

0

0

(5,901)(5,901)0(5,901)(5,901)

Other

0

0

0

0

(961)

(961)

0

(961)

(961)

0

0

0

0

(13,444)(13,444)0(13,444)(13,444)(239)

0(2,032)0(31,160)(31,507)

Finance lease liabilities
Other financial liabilities

Trade liabilities

Total(342) (33,772) (34,119)(1) Other than those accounted for under the equity method.
(2) For certain equity investments for which price quotes are not available the range of reasonable fair value estimates determined based on valuation techniques is significant andthe probabilities of the various estimates within the range cannot be reasonably assessed. These equity investments are accounted for at cost, and their fair values as reported
in the table above equal their carrying amounts. As of 31 December 2017, the aggregate carrying amount of these investments was € 478 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 € -5,901 million are measured at amortised cost. Fair values cannot be reliably measured because their risk sharing natureand the uncertainty of the repayment dates give rise to a broad range of reasonable fair value estimates and make it impossible to reasonably assess the probabilities of 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 € -36 million, of which € -36 million is recognised in OCI.
(7) This includes debit value adjustments of € 18 million, of which € 18 million is recognised in OCI.

FINANCIAL STATEMENTS 201773

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
through profit
or loss

Fair value
for hedge Availablerelations
for-saleHeld fortrading Designated(In € million)

Fair
value

Loans andreceivables andfinancial liabilities
at amortised cost

Fair Amortised
value
Cost

Other

Fair
value

Financial
instruments
total
Book
Value

Fair
value

2,091

2,091

AssetsOther investments and otherlong-term financial assets
Equity investments (1) (2)
(3)

0

0

0

2,091

0

0

0

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

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

Securities

0

0

0

11,44800011,448

11,448Cash and cash equivalents

0

5,513

0

1,535

3,095

3,095

0

10,143

10,143

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)

Customer financing

Other financial assets

Total
Liabilities
Financing liabilities
Issued bonds andcommercial papers
Liabilities to banks andother financing 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)

0

0

0

0

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

(38)

0

0

0

(946)

(946)

0

(984)

(984)

0

(12,532)(12,532)

Other financial liabilities
Derivative instruments (7)European Governments
refundable advances (5)Other
Trade liabilities

Total

0

0

0

0

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

0(10,671)0(30,637)(30,851)(389) (42,084) (42,298)(1) Other than those accounted for under the equity method.
(2) For certain equity investments for which price quotes are not available the range of reasonable fair value estimates determined based on valuation techniques is significant andthe probabilities of the various estimates within the range cannot be reasonably assessed. These equity investments are accounted for at 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.

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.

2

74

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.7 Capital Structure and Financial Instruments

Depending on the extent the inputs used to measure fair values
rely on observable market data, fair value measurements may
be hierarchised according to the following levels of input:■
Level 1: quoted prices (unadjusted) in active markets for
identical assets and liabilities;■
Level 2: inputs other than quoted prices that are 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 2017 and 2016, respectively:
31 December 2017
(In € million)

Level 1

Level 2

Level 3

1,963

0

0

3,564

31 December 2016
Total

Level 1

0

1,963

1,597

0

3,564

0

Level 2

Level 3

Total

0

0

1,597

1,148

3

1,151

Financial assets measured at fair value
Equity instruments
Derivative instruments
Securities

10,9951,576

012,571

11,4462

0

11,448Cash equivalents

6,256

2,085

0

8,341

5,513

1,535

0

7,048

19,2147,225

026,43918,5562,685

321,244

Derivative instruments

0(2,214)(3)(2,217)0(11,009)(11)(11,020)

Other liabilities

0

0

0

0

0

0

(38)

(38)

0

(2,214)(3)(2,217)0(11,009)(49)(11,058)

Total
Financial liabilities measured at fair value

Total

The development of Level 3 instruments is not disclosed as they are negligible, as are any changes in fair value that may arise
from changing the inputs.

Financial Assets Designated at Fair Value through Profit or Loss
The following types of ﬁnancial assets held at 31 December 2017 and 2016, respectively, are designated at fair value throughproﬁt or loss:(In € million)

Nominal amount at
initial recognition
as of 31 December
2017

Fair value as of
31 December
2017

Nominal amount at
initial recognition
as of 31 December
2016

Fair value as of
31 December
2016

6,256

6,256

5,513

5,513

Designated at fair value through profit
or loss at recognition:
Money market funds
Foreign currency funds of hedge funds

5

0

6

0

Foreign currency funds of fixed income funds

11

11

0

0

6,272

6,267

5,519

5,513

Total

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 € 1,186 million (2016: € 705 million).

FINANCIAL STATEMENTS 201775

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

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. For cer tain
unquoted equity instruments the range of reasonable fairvalue estimates determined using valuation techniques issignificant and the probabilities of the various estimates within
the range cannot be reasonably assessed. Those instruments
are measured at cost, and their carrying amounts used asa 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 asreasonable estimates of fair value because of the relatively
short period between the receivables’ origination and theirmaturity.
Securities — The fair values of securities reﬂect their quoted
market price at the end of the reporting period.
Cash and cash equivalents include cash in hand, cash inbanks, checks, ﬁ xed 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.
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 2017 and 2016:31 December
2017

2016

2017

€

(Rate in %)

2016

2017

US$

6 months(0.32)(0.26)

1 year

(0.22)

5 years

0.25

10 years

0.81

0.54

2016
£

1.91

1.31

0.87

0.60

(0.11)

2.18

1.62

0.90

0.81

(0.06)

2.24

1.97

1.03

0.87

2.39

2.35

1.27

1.23

2

76

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.7 Capital Structure and Financial Instruments

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 2017 and 2016, respectively:Grossamounts
recognisedGrossamounts
recognised
set off inthe financial
statements

Net amounts
presented in
the financial
statements

Financial assets

3,564

0

Financial liabilities

2,271

0

Financial assets

1,363

Financial liabilities

10,879Derivative Instruments(in € million)

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

Cashcollateral
received

Net amount

3,564(2,068)

44

1,540

2,271

(2,068)

0

203

0

1,363

(1,358)050

10,879(1,358)0

9,521

31 December 201731 December 201635.4 Notional Amounts of Derivative Financial Instruments
The contract or notional amounts of derivative ﬁnancial instruments shown below do not necessarily represent amounts exchangedby the parties and, thus, are not necessarily a measure for the exposure of Airbus through its use of derivatives.
The notional amounts of foreign exchange derivative financial instruments are as follows, speciﬁed by year of expected maturity:
Remaining period(In € million)

1 year

2 years

3 years

4 years

5 years

6 years

7 years > 7 years

Total

18,568

16,596

14,007

8,304

2,356

241

0

0

60,072

0

3,160

3,865

1,401

0

0

0

0

8,426

31 December 2017
Net forward sales contracts
Foreign exchange options
Purchased US-dollar put options
Written US-dollar put options
Foreign exchange swap contracts

0

3,160

3,865

1,401

0

0

0

0

8,426

(610)

0

0

0

0

0

0

0

(610)

22,482

22,163

18,416

11,839

5,496

1,291

(11)

0

81,676

0

0

4,079

4,198

740

0

0

0

9,017

0

0

4,079

4,198

740

0

0

0

9,017

(104)

0

0

0

0

0

0

0

(104)

31 December 2016
Net forward sales contracts
Foreign exchange options
Purchased US-dollar put options
Written US-dollar put options
Foreign exchange swap contracts

FINANCIAL STATEMENTS 201777

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

In 2017, new hedge contracts of US$ 12.4 billion (2 016:
US$ 20.4 billion) were added at an average rate of 1.22 US$/€(2016: 1.19 US$/€).

and covers a major portion of the foreign exchange exposure
expected over the period of the operative planning. The averageUS$/€ hedge rate of the US$/€ hedge portfolio until 2023
amounts to 1.23 US$/€ (2016: 1.25 US$/€) and for the US$/£hedge portfolio until 2023 amounts to 1.43 US$/£ (2016: 1.49
US$/£).

As of 31 December 2017, the total hedge portfolio with maturities
up to 2023 amounts to US$ 88.7 billion (2016: US$ 102.4 billion)

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

2 years

3 years

4 years

5 years

6 years

1,101

950

7

675

4

1,001

1,523

2,000

7,261

0

0

0

0

0

0

0

0

0

Interest rate contracts

36

1,096

989

7

988

4

949

3,771

7,840

Interest rate future contracts

130

0

0

0

0

0

0

0

130

(In € million)

7 years > 7 years

Total

31 December 2017
Interest rate contracts
Interest rate future contracts
31 December 2016

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 2017

53

21

13

8

2

97

31 December 2016

270

41

16

6

0

333

4 years> 4 years

Total(In € million)

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

2 years

31 December 2017

52

49

19

0

0

120

31 December 2016

76

52

49

19

0

196

(In € million)

3 years2

78

Financial Statements 2017 - AIRBUS
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 2017 and 2016 is asfollows:
Equity attributable
to equity ownersof the parent

NCI

Total

Balance as of 1 January 2016

(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 change 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)

Balance as of 31 December 2016

(7,153)(41)(7,194)

Unrealised gains and losses from valuations, gross

8,143

2

8,145

Transferred to profit or loss for the period, gross

2,447

44

2,491

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

10,59046

10,636

Changes in fair values of hedging instruments recorded in AOCI, tax(2,843)(11)(2,854)(In € million)

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

10

0

10

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

7,757

35

7,792

Balance as of 31 December 2017

604

(6)

598

In 2017, an amount of € 2,491 million (2016: € -3,265 million) was reclassiﬁed from equity mainly to revenues resulting from matured
cash ﬂow hedges in an amount of US$ 25.3 billion (2016: US$ 23.5 billion) of hedges matured at an average rate of 1.29 US$/€(2016: 1.32 US$/€).
In addition, a loss of € -96 million was recognised in the proﬁt for the period in 2017 (2016: loss of € -27 million) on derivatives thatwere designated as hedging instruments in a fair value hedge, and a gain of € +91 million (2016: gain of € +12 mil lion) attributable
to the hedged risk was recognised in the proﬁt for 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 2017 and 2016, respectively, are as
follows:
2017(In € million)

Foreign currency contracts - cash flow hedges
Foreign currency contracts - not designated in a hedge relationship

2016

AssetsLiabilities

AssetsLiabilities

3,386(1,888)946(10,398)

1

(5)

4

(25)

Interest rate contracts - cash flow hedges

0

(11)

0

(26)

Interest rate contracts - fair value hedges

69

(84)

122

(38)

Interest rate contracts - not designated in a hedge relationship

31

(35)

59

(71)

Commodity contracts - cash flow hedges

5

(9)

2

(27)

Commodity contracts - not designated in a hedge relationship

2

(3)

3

(34)

Equity swaps - cash flow hedges

38

0

15

(3)

Embedded bonds conversion option - not designated in a hedge relationship

0

(196)

0

(122)

Embedded foreign currency derivatives - cash flow hedges

0

(39)

0

(179)

Embedded foreign currency derivatives - not designated in a hedge relationship

Total

32

(1)

0

(97)

3,564

(2,271)

1,151(11,020)

FINANCIAL STATEMENTS 201779

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 2017 and 2016, respectively, are as follows:(In € million)

2017

2016

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

603

(451)

Designated on initial recognition

(214)

50

Available-for-sale financial assets

(268)

15

Loans and receivables (1)

(17)

(160)

1,303

(249)

Financial liabilities measured at amortised cost
(1) Contain among others impairment losses.

Net gains of € +398 million (2016: net losses of € -50 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 2017 and 2016, respectively:
2017

2016

Equity instruments

(64)

(12)

Customer financing

(10)

(123)

(4)

(10)

(In € million)

Other investments and other long-term financial assets:

Other loans
Trade receivables

Total

(54)

(34)

(132)

(179)

2.8 Other Notes

2

36. Litigation and Claims

Litigation and claims — Various legal actions, governmental
investigations, proceedings and other claims are pending or
may be instituted or asserted in the future against the Company.
Litigation is subject to many uncertainties, and the outcomeof individual matters is not predictable with certainty. The
Company believes that it has made adequate provisions tocover current or contemplated litigation risks. It is reasonably
possible that the 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 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.

80

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.8 Other Notes

WTO

Euroﬁghter Austria

Although Airbus is not a party, Airbus is supporting theEuropean Commission in litigation before the WTO. Following
its unilateral withdrawal from the 1992 EU-US Agreement
on Trade in Large Civil Aircraft, the US lodged a request on
6 October 2004 to initiate proceedings before the WTO. On
the same day, the EU launched a parallel WTO case against
the US in relation to its subsidies to Boeing. On 19 December
2014, the European Union requested WTO consultations on theextension until the end of 2040 of subsidies originally grantedby the State of Washington to Boeing and other US aerospaceﬁrms until 2024.

In March 2012, the Munich public prosecutor, following arequest by the Vienna public prosecutor, launched a criminal
investigation into alleged bribery, tax evasion and breach oftrust against 16 individuals, among them former and current
employees of EADS Deutschland GmbH (renamed on 1 July
2014 Airbus Defence and Space GmbH) and Eurofighter
Jagdﬂugzeug GmbH. The proceedings are related to the saleof Euroﬁghter aircraft to the Republic of Austria in 2003. After
having been informed of the investigation in 2012, Airbus
retained the law ﬁrm Clifford Chance to conduct an independent
fact ﬁnding review. Upon concluding its review, Clifford Chancepresented its fact ﬁnding report to Airbus in December 2013.
Airbus provided the report to the Munich public prosecution.
Airbus has been fully cooperating with the authorities. Regarding
the question of deductibility of payments made in connection
with the Euroﬁ ghter Austria campaign, Airbus Defence andSpace GmbH settled with the tax authorities in August 2016.

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 bringits 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
Project Management Ltd. (“GPT”), a subsidiary that Airbus
acquired in 2007. The allegations called into question a service
contract entered into by GPT prior to its acquisition by Airbus,
relating to activities conducted by GPT in Saudi Arabia. PwC’s
report was provided by Airbus to the UK Serious Fraud Ofﬁce(the “SFO”) in March 2012. In the period under review and basedon 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 continuingengagement with the authorities.

Since the result of the investigation by the public prosecution
did not conﬁrm the allegations of bribery, the Munich publicprosecution (Staatsanwaltschaft München I), in order to conclude
the investigation in relation to Airbus Defence and Space GmbH(Company), has issued an administrative penalty noticeagainst the Company under the German Act on Administrative
Misdemeanours (“Ordnungswidrigkeitengesetz”). The notice isbased on the allegation of a negligent breach of supervisory
duties of non-identiﬁ ed members of the Company’s former
management. The notice alleges that former management
negligently failed to ensure proper internal controls that would
have prevented employees from making payments to business
partners without proven documented services. The monetary
penalty amounts to € 81.25 million (comprising an administrative
ﬁ ne of € 250,000 and € 81 million of disgorged proﬁ ts). The
notice explicitly acknowledges the efforts of Airbus and its
management to successfully install a completely overhauled
compliance system starting in 2012. The Company, supported
by its direct group shareholders and ultimately Airbus SE, haswaived any remedy against the notice.
In February 2017, the Austrian Federal Ministry of Defence raised
criminal allegations against Airbus Defence and Space GmbHand Euroﬁghter Jagdﬂugzeug GmbH for wilful deception andfraud in the context of the sale of the Euroﬁghter aircraft toAustria and respective damage claims. After the Austrian Federal
Ministry of Defence raised its criminal allegations, the Austrian
public prosecutor opened an investigation against Airbus
Defence and Space GmbH, Euroﬁghter Jagdﬂugzeug GmbHand former and current employees of the two entities. On
18 September 2017, Airbus ﬁled a submission to the Vienna
Public Prosecutor in response to the allegations of deception
in the procurement of Euroﬁ ghter combat aircraft made by
the Austrian Defence Minister. Airbus is cooperating fully withthe authorities.

FINANCIAL STATEMENTS 201781

Notes to the IFRS Consolidated Financial Statements
2.8 Other Notes

Investigation by the UK SFO and France’s PNF

Other Investigations

In the context of review and enhancement o f 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 it had discovered.
Airbus made a similar disclosure to the UK Serious Fraud
Ofﬁce (“SFO”). In August 2016, the SFO informed Airbus thatit had opened an investigation into allegations of fraud, bribery
and corruption in the civil aviation business of Airbus relating
to irregularities concerning third party consultants (business
partners). In March 2017, France’s Parquet National Financier(“PNF”) informed Airbus that it had also opened a preliminary
investigation into the same subject and that the two authorities
would act in coordination going forward. Airbus is cooperating
fully with both authorities including in respect of potential issues
across Airbus’ business. As part of Airbus’ engagement with
the US authorities, the latter have requested information
relating to conduct forming part of the SFO/PNF investigationthat could fall within US jurisdiction. Airbus is cooperatingwith the US authorities in close coordination with the SFO
and PNF. The SFO and PNF investigations and any penalties
potentially levied as a result could have negative consequences
for Airbus. The potential imposition of any monetary penalty(and the amount thereof) or other sanction including tax liability
arising from the SFO and PNF investigations will depend on
the ultimate factual and legal ﬁ ndings of the investigation,and could have a material impact on the ﬁnancial statements,
business and operations of Airbus. However, at this stage it
is too early to determine the likelihood or extent of any suchpossible consequence. 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.

In 2014, the Munich public prosecutor investigated potential
irregularities in relation to a project of Tesat-Spacecom GmbH &Co. KG. The Munich public prosecutor launched administrative
proceedings in the context of this investigation against TesatSpacecom GmbH & Co. KG. In January 2018, the publicprosecutor terminated the investigation against individuals
as well as the administrative ﬁne procedure relating to TesatSpacecom GmbH & Co. KG.

ECA Financing
The ﬁ nancing environment remains healthy. A high level ofliquidity is available in the market at good rates for our attractive
portfolio of products. In 2017, ECA ﬁ nancing had not been
made available to Airbus but Airbus and the ECAs have now
reached agreement on a process under which we are able toresume making applications for ECA-backed ﬁnancing for ourcustomers across the Group on a case-by-case basis. We
anticipate a return to ECA cover in 2018 for a limited number oftransactions while the level of appetite for commercial ﬁnancing
remains high.

In April 2017, the Munich public prosecutor terminatedad m in istrati ve p ro c e e d in g s ag a inst fo r m e r E A DS
Deutschland GmbH (now Airbus Defence and Space GmbH) withregard to border security projects in Romania and Saudi Arabia.
Already in 2016, corresponding investigations against former
and current employees of the EADS group were terminated.
Airbus is cooperating with a judicial investigation in France related
to Kazakhstan. Airbus is not a party to these proceedings. Airbus
is cooperating with French judicial authorities pursuant to arequest for mutual legal assistance made by the government of
Tunisia in connection with historical aircraft sales.
Following a review of its US regulatory compliance procedures,
Airbus has discovered and subsequently informed relevant US
authorities of its ﬁndings concerning certain inaccuracies in ﬁlings
made with the US Department of State pursuant to Part 130 of
the US International Trafﬁc in Arms Regulations (“ITAR”) (a US
export control regulation). Airbus is cooperating with the US
authorities. Airbus is unable to reasonably estimate the time it
may take to resolve the matter or the amount or range of potential
loss, penalty or other government action, if any, that may be
incurred in connection with this matter.

Review of Business Partner Relationships
In light of regulatory investigations and commercial disputes,
including those discussed above, Airbus has determined toenhance certain of its policies, procedures and practices,
including ethics and compliance and export control. Airbus isaccordingly in the process of revising and implementing improved
procedures, including those with respect to its engagement ofconsultants and other third parties, in particular in respect of sales
support activities and is conducting enhanced due diligence as apre-condition for future or continued engagement and to inform
decisions on corresponding payments. Airbus engaged legal,
investigative, and forensic accounting expertise of 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 lightof advancements in regulatory standards. Several consultants
and other third parties have initiated commercial litigation andarbitration against Airbus seeking relief. The comprehensive
review and these enhancements of its controls and practices
has led to additional commercial litigation and arbitration
against Airbus and may lead to other civil law or criminal law
consequences in the future, which could have a material impact
on the ﬁnancial statements, however at this stage it is too early
to determine the likelihood or extent of any liability.

2

82

Financial Statements 2017 - AIRBUS
Notes to the IFRS Consolidated Financial Statements
2.8 Other Notes

Commercial Disputes
In May 2013, Airbus was notiﬁ ed 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 by the Republic of China (Taiwan) alleging
liability for refunding part of the purchase price of a large
contract for the supply of missiles by subsidiary Matra Défense
S.A.S., which the customer claims it was not obliged to pay. An
arbitral award was rendered on 12 January 2018 with a principal
amount of € 104 million plus interest and costs against Matra
Défense S.A.S. Airbus is studying the award and considering
the next steps.

37. Auditor Fees

With reference to Section 2:382a (1) and (2) of the Netherlands Civil Code, the following fees for the ﬁnancial year 2017 have been
charged by EY to the Company, its subsidiaries and other consolidated entities:(In € thousand)

2017

2016

Audit of the financial statements

9,238

6,578

810

1,226

Other audit engagements
Tax services
Other non-audit services

Total

690

362

5,416

6,870

16,15415,036

Other audit ﬁrms have audit fees related to audit process, certiﬁcation and examination of individual and consolidated accountsof € 5 million in 2017 (2016: € 4 million).

38. Events after the Reporting Date

On 7 February 2018, Airbus has signed a DOI with the A400M Launch Customer Nations (Germany, France, United Kingdom,
Spain, Turkey, Belgium, Luxemburg) deﬁning the framework for achieving a mutually binding contract amendment later in the year
(see “— Note 10: Revenues and Gross Margin”).
On 9 February 2018, in line with standard airworthiness procedures the European Aviation Safety Agency (“EASA”) has publishedan Emergency Airworthiness Directive following an issue identiﬁed on a limited number of recently delivered Pratt & Whitney (“P&W”)
GTF engines. Airbus has informed its affected A320neo family customers and operators. Airbus and P&W are investigating theroot cause of this recent ﬁnding.
These Consolidated Financial Statements have been authorised for issuance by the Board of Directors on 14 February 2018.

Infoterra Limited(UK)

Airbus Operations
Limited(UK)

AirbusOperations, S.L.
(Spain)Paradigm
Services Limited(UK)

MBDA Group

ArianeGroup

Airbus Helicopters

Airbus Defence
and Space
Limited(UK)

Premium Aerotec
GmbH(Germany)

Airbus Operations
GmbH(Germany)

Airbus Operations
SAS(France)

Airbus Defence and SpaceElbe
FlugzeugwerkeGmbH(Germany)

45%

Airbus Defence 11,98%
and Space, GmbH
(Germany)

24,20%

Airbus Group
Limited(UK)

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

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

50%

13,73%DADC Luft-und
Raumfahrt
Beteiligungs GmbH
(Germany)

99,99%

50%*

4,59%

37,5%*

Airbus Defence
and Space Holding 50%
France SAS(France)

Airbus Defence
and Space SAS(France)

Airbus Defence
and Space HoldingSAS
95,96%(France)

Stelia Aerospace(France)

Airbus Group
Inc.
(USA)

Airbus SAS(France)

ATR GIE(France)

4,04%

4,97%

90,43%

Airbus Americas
Inc.
(USA)

Airbus DS
Holdings B.V.
(The Netherlands)(The Netherlands)

AIRBUS SE

ArianeGroup

MBDA Group

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

Computadoras,Redese Ingenieria, S.A.
(Spain)Airbus Helicopters(France)

Airbus Helicopters
DeutschlandGmbH(Germany)

5%

95%

Airbus Helicopters
Holding(France)

EADS Casa
France(France)

EADS Casa
Holding(France)

Airbus Defence
and Space, S.A.
(Spain)FINANCIAL STATEMENTS 201783

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

2.9 Appendix “Simpliﬁed Airbus Structure”

2

84

Financial Statements 2017 - AIRBUS

Chapter3

FINANCIAL STATEMENTS 201785

Airbus SE
IFRS Company
Financial Statements

IFRS Company Income Statements
for the years ended 31 December 2017 and 2016

86

IFRS Company Statements of Comprehensive Income
for the years ended 31 December 2017 and 2016

86

IFRS Company Statements of Financial Position
at 31 December 2017 and 2016

87

IFRS Company Statements of Cash Flowsfor the years ended 31 December 2017 and 2016

88

IFRS Company Statements of Changes in Equity
for the years ended 31 December 2017 and 2016

89

3

86

Financial Statements 2017 - AIRBUS
Airbus SE IFRS Company Financial Statements

IFRS Company Income Statements
for the years ended 31 December 2017 and 2016

(In € million)

Note

2017

2016

Operating income

656

531

Operating expenses

(841)

(652)

Income from investments

614

4,021

428

3,900

Total operating result

4Interest income

211

204

Interest expense

(159)

(120)

Other financial result
Total financial result

5

Profit before income taxes
Tax income (expense)

(1)

(101)

51

(17)

479

3,883

3

17

483

3,900

6

Profit for the period

IFRS Company Statements of Comprehensive Income
for the years ended 31 December 2017 and 2016

(In € million)

Profit for the period

2017

2016

483

3,900

101

138

5

4

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
Other comprehensive income, net of tax

106

142

Total comprehensive income for the period

589

4,042

FINANCIAL STATEMENTS 201787

Airbus SE IFRS Company Financial Statements

IFRS Company Statements of Financial Position
at 31 December 2017 and 2016

Note

2017

2016

Investments in subsidiaries and associates

7

16,576

15,545Long-term financial assets

8

3,040

3,296

Non-current other financial assets

8

3,898

7,602

5

4

(In € million)

AssetsNon-current assets

Non-current other assets
Deferred tax assets

6

22

9

Non-current securities

12

10,812

9,670

34,35336,126

Current assets
31

102

Current other financial assets

Trade receivables
8

1,938

4,656

Current accounts Airbus companies

8

9,581

9,409

124

160

Current other assets
Current securities

12

1,576

1,489

Cash and cash equivalents

12

11,038

8,758

Total assets

24,28824,57458,64160,700775773

Equity and liabilities
Stockholders’ equity

11

Issued and paid up capital
Share premium

2,826

2,745

Retained earnings

6,903

4,014
353

Legal reserves

459

Treasury shares

(2)

(3)

Result of the year

483

3,900

11,444

11,782

Non-current liabilities
Long-term financing liabilities

12

8,106

7,934

Non-current financial liabilities

8

4,055

7,698

12,161

15,632Current liabilities
Short-term financing liabilities

12

660

98

Current accounts Airbus companies

832,12728,557

Current financial liabilities

8

1,730

4,543

519

88

Current other liabilities

Total equity and liabilities

35,03633,286

58,64160,7003

88

Financial Statements 2017 - AIRBUS
Airbus SE IFRS Company Financial Statements

IFRS Company Statements of Cash Flowsfor the years ended 31 December 2017 and 2016

(In € million)

Note

Profit for the period (Net income)

2017

2016

483

3,900

(211)

(204)

Adjustments to reconcile profit for the period to cash provided
by operating activities:
Interest income
Interest expense

159

120

Interest received

209

231

Interest paid

(209)

(104)

Valuation adjustments

(345)

(102)

Deferred tax (income) expense

(18)

(17)

Change in income tax assets, income tax liabilities and provisions
for income tax

120Change in current and non-current provisions

(31)

12

Change in other operating assets and liabilities:

525

(136)

Trade receivables

106

(126)

Trade liabilities

406

(9)

Other assets and liabilities

13

(1)

575

3,700

Cash provided by (used for) operating activities
Investments:
Acquisitions of subsidiaries, joint ventures, businesses andnon-controlling interests

7

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

(260)

(921)

(327)

(642)

0

11

164

1,340

Payments for investments in securities(3,742)(2,037)

Proceeds from disposals of securities

2,400

2,300

Cash provided by (used for) investing activities(1,765)51

Draw-down in financing liabilities

1,399

2,580

Repayment of financing liabilities(88)(1,607)

Repayments of other long-term financial assets

Change in current accounts Airbus companies

3,118

(797)

Cash distribution to Airbus SE shareholders(1,043)(1,008)Changes in capital

83

60

Share buyback

1

(736)

Cash (used for) provided by financing activities

3,470(1,508)Net increase in cash and cash equivalents

2,280

2,243

Cash and cash equivalents at beginning of period

8,758

6,515

11,038

8,758

Cash and cash equivalents at end of period

12

FINANCIAL STATEMENTS 201789

Airbus SE IFRS Company Financial Statements

IFRS Company Statements of Changes in Equity
for the years ended 31 December 2017 and 2016

Legal reserves (1)(In € million)

Balance at 1 January 2016

Capital
stock

Share
premium

Retainedearnings

Availablefor-salefinancialassetsCash flow
hedgesTreasurysharesTotalequity

785

3,484

4,993

221

(10)

(303)

9,170

Profit for the period

0

0

3,900

0

0

0

3,900

Other comprehensive income

0

0

0

138

4

0

142

Total comprehensive income for 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 SE shareholders

00(1,008)00

0(1,008)Change in treasury shares

0

0

(2)

0

0

(511)

(513)

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

Profit for the period

0

0

483

0

0

0

483

Other comprehensive income

0

0

0

101

5

0

106

Total comprehensive income for the period

0

0

483

101

5

0

589

Capital increase

2

81

0

0

0

0

83

Share-based payments (IFRS 2)

0

0

32

0

0

0

32

Cash distribution to Airbus SE shareholders

00(1,043)00

0(1,043)

Change in treasury shares

0

0

0

0

0

1

1

775

2,826

7,386

460

(1)

(2)

11,444

Balance at 31 December 2017
(1) The distribution of legal reserves is restricted by Dutch law.

3

90

Financial Statements 2017 - AIRBUS

Chapter4

FINANCIAL STATEMENTS 201791

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

92

Financial Statements 2017 - AIRBUS
Notes to the IFRS Company Financial Statements

CONTENTS

4.1 Basis of Presentation

93

1.
2.
3.

The Company
Signiﬁcant Accounting Policies
Related Party Transactions

93
93
94

4.2 Company Performance

95

4.
5.
6.

95
95
96

Total Operating Result
Total Financial Result
Income Tax

4.3 Operational Assets and Liabilities

97

7.
8.
9.

97
99
100

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

4.4 Employees

100

10.

100

Number of Employees

4.5 Capital Structure and Financial Instruments

100

11.
12.
13.
14.

100
102
104
109

Total Equity
Cash, Securities and Financing Liabilities
Information about Financial Instruments
Events after the Reporting Date

FINANCIAL STATEMENTS 201793

Notes to the IFRS Company Financial Statements

4.1 Basis of Presentation
1.

The Company

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

2.

listings at the European Stock Exchanges in Paris, Frankfurt
am Main, Madrid, Barcelona, Valencia and Bilbao. The
IFRS Financial Statements were authorised for issue by theCompany’s Board of Directors on 14 February 2018. 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 SE, unlessotherwise disclosed, the same accounting principles have been
applied as set out in the Notes to the Consolidated Financial
Statements, except for the valuation of the investments aspresented under investments in subsidiaries and associates in
the Company Financial Statements. These policies have been
consistently applied to all years presented.
In the Company Financial Statements, the investments in
subsidiaries and associates are recorded at acquisition cost.
In the Company Statement of Income, dividend received frominvestments is recorded as dividend income.
Due to this application, the Company equity and net result
are not equal to the consolidated equity and net result. A
reconciliation of the total shareholders’ equity and proﬁt for theperiod is presented in Note 11 “Total Equity” to the Company
Financial Statements.
The Company Financial Statements have been prepared on ahistorical cost basis, 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 Consolidated Financial
Statements. No material changes is expected in the Company
Financial Statements of Airbus SE from the implementation of
the new standards. Further information about Share-Based

Payments and Employee Stock Ownership Plans (ESOP) ispresented in Note 30 and information about Remuneration
is presented in Note 31 of the Consolidated Financial
Statements.
The information with regard to Capital Management is disclosed
in Note 33, further information about Litigation and Claims refers
to Note 36 and Events after the Reporting Date are disclosed in
Note 38 of the 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.

4

94

Financial Statements 2017 - AIRBUS
Notes to the IFRS Company Financial Statements

3.

Related Party Transactions

Key Management PersonnelIntercompany Transactions

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

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

The following table discloses the related party intercompany transactions in 2017 and 2016:
Transactions
with subsidiaries
2017

Transactions
with associates
2017

Transactions
with subsidiaries
2016

Transactions
with associates
2016

Rendering of services, dividend income
and interest income

772

28

4,634

33

Purchases of services, investment charge
and interest expenses

(728)

(2)

(736)

(2)

Intercompany receivables due
as of 31 December

12,72987

12,88683

Intercompany payables due
as of 31 December(35,422)(1,005)(32,403)(666)

Hedge relationships receivable
as of 31 December

5,640

0

10,7300

Hedge relationships payable
as of 31 December

5,784

0

(1,344)0(In € million)

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

FINANCIAL STATEMENTS 201795

Notes to the IFRS Company Financial Statements

4.2 Company Performance4.

Total Operating Result(In € million)

Operating income

2017

2016

656

531

Corporate services rendered to Airbus companies

656

531

Operating expenses

(841)

(652)

Service fees charged by Airbus companies

(698)

(596)

Administrative expenses

(143)

(56)

Income from investments

614

4,021

Dividends received from Airbus companies

13

4,021

Impairment reversal

601

0Total operating result

428

3,900

2017

2016

52

84

Interest income from available-for-sale securities

92

89

Others(40)(5)

Other financial result

(1)

(101)

Option liability exchangeable bond

(19)

(64)

5.

Total Financial Result(In € million)

Interest result (1)Equity instruments

49

5Interest rate hedging

(16)

(16)

Financing income (expense)(8)3Foreign exchange revaluation

(6)

(29)

Total financial result

51

(17)

(1) In 2017, the total interest income amounts to € 211 million (2016: € 204 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 € -159 million (2016: € -120 million) are recognised as total interest expenses. Both amounts are calculated 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

96Financial Statements 2017 - AIRBUS
Notes to the IFRS Company Financial Statements

6.

Income Tax

The Company is tax registered in the Netherlands. The Company
is heading a ﬁscal unity, which also includes Airbus Finance
B.V., Airbus DS Holdings B.V. and Airbus Defence and Space
Netherlands B.V. and therefore the Company is severally andjointly liable for income tax liabilities of the ﬁscal unity as 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:
2017(In € million)

2016

Current tax expense

00

Deferred tax income (expense)

3

17

Total

3

17

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

2017

2016

Profit before income taxes

479

3,883

Corporate income tax rate

25%

25%

Expected (expense) for income taxes

(120)

(971)

Non-taxable income from investments

153

1,005

Option liability exchangeable bond

(5)

(16)

Income from other companies within the fiscal unity

(3)

(6)

Impairment

(12)

0

Other

(10)

5

3

17

Other
movements

Movement
throughincomestatement

31 December 2017
Deferredtax
assetsDeferredtax
liabilities

Reported tax income (expense)

The ﬁrst tranche of tax loss carry forwards (€ 20 million) will expire by the end of 2023.
Deferred income taxes as of 31 December 2017 are related to the following assets and liabilities:

1 January 2017

(In € million)

Deferredtax
assetsDeferredtax
liabilities

OCI

OthersDeferredtax benefit(expense)

Securities

0

(43)

12

0

0

0

(31)

Financial instruments

0

(1)

(2)

0

(6)

0

(9)

Net operating loss and tax loss
carry forwards

53

0

0

0

10

62

0

Deferred tax assets (liabilities)
before offsetting

53

(44)

10

0

3

62

(40)

Set-off

(44)

44

0

0

0

(40)

40

9

0

10

0

3

22

0

Net deferred tax assets (liabilities)

FINANCIAL STATEMENTS 201797

Notes to the IFRS Company Financial Statements

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

1 January 2016

(In € million)

Other
movements

Movement
throughincomestatement

31 December 2016

Deferredtax benefit(expense)

Deferredtax
assetsDeferredtax
liabilities

Deferredtax
assetsDeferredtax
liabilities

OCI

OthersSecurities

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

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

Available-for-sale investments
Cash flow hedges

Total

2017

2016

(31)

(43)

0

2

(31)

(41)

4.3 Operational Assets and Liabilities
7.

Investments in Subsidiaries, Associates and Participations(In € million)

Balance at 1 January 2016

Subsidiaries

Associates

Participations

Total

14,26821

232

14,521

Additions

136

0

785

921

Share-based payments (IFRS 2)

31

0

0

31

Fair value changes through AOCI
Balance at 31 December 2016

0

0

72

72

14,43521

1,089

15,545Additions

261

0

0

261

Release Impairment

601

0

0

601

Share-based payments (IFRS 2)

32

0

0

32

Fair value changes through AOCI

0

0

137

137

Other adjustments

33

0

(33)

0

15,362

21

1,193

16,576

Balance at 31 December 20174

98

Financial Statements 2017 - AIRBUS
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.
An indication for impairment of the investments in subsidiaries
and associated companies may include, respectively,
management’s downward adjustment of the strategic plan ora signiﬁcant decrease in the share price of a publicly listedcompany. Further indications for impairment of its investments
may include other areas where observable data indicates that
there is a measurable decrease in the estimated future cash
ﬂows. These determinations require signiﬁcant judgement. In
making this judgement, management evaluates, among otherfactors, the ﬁnancial performance of and business outlook for
its investments, including factors such as industry and sector
performance, changes in technology and operational andﬁnancing cash ﬂow.
If any indication for impairment exists, the recoverable amountof the investments is estimated in order to determine the extent,
if any, of the impairment loss. An investment is impaired if therecoverable amount is lower than the carrying value. The
recoverable amount is deﬁned as the higher of an investment’s
fair value less costs to sell and its value in use.
The determination of the investment’s value in use is basedon calculations using pre-tax cash ﬂow projections based on
ﬁnancial budgets approved by management covering a ﬁve-year
period. Cash ﬂows beyond the ﬁve-year period are extrapolatedusing estimated growth rates. The discounted cash ﬂow method
is used to determine the recoverable amount of a CGU to which
its investments in subsidiaries and associated companies
belongs to. The discounted cash ﬂow method is particularly
sensitive to the selected discount rates and estimates of future
cash ﬂows by management. Key assumptions used to determine
the recoverable value of the CGU are the expected future labour
expenses, future interest rates, future exchange rates to convert
in euro the portion of future US dollar and pound sterling which
are not hedged and the estimated growth rate of terminal values.
If the recoverable amount of an investment is estimated to be lessthan its carrying amount, the carrying amount of the investment
is reduced to its recoverable amount. Any impairment loss isrecognised immediately in the Income Statement.

Impairment losses recognised in prior periods shall be reversed
only if there has been a change in the estimates or external market
information used to determine the investment’s recoverable
amount since the last impairment loss was recognised.
The recoverable amount shall not exceed the carrying amountthat would have been determined had no impairment loss beenrecognised in prior years.

Change of Investments in Subsidiaries
On 27 January 2017, Airbus SE made a further capital
contribution of € 100 million into Airbus Bank GmbH.
On 16 November 2017, Airbus SE contributed its 100% subsidiary
Airbus Group Inc to its subsidiary Airbus SAS for a total amountof € 605 million. In return for this contribution, Airbus SE received
additional shares in Airbus SAS for an equivalent amount. The
valuation of Airbus Group Inc made for the contribution show avalue of the company above the book value, allowing Airbus SE
to release the impairment made in 2014 for € 601 million.
On 19 December 2017, Airbus SE internally acquired 2.43%of the shares in Airbus DS Holding BV for a total amount of€ 140.3 million.
During the year 2017, Airbus SE made further capital
contributions into Airbus Group Ventures Fund for a total amountof € 20 million (2016: € 14 million).
On 26 January 2016, Airbus SE made a further capital
contribution of € 100 million into Airbus Bank GmbH.
On 26 September 2016, Airbus 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.
On 23 December, 2016, Airbus 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 SE received additional shares in Airbus SAS for anequivalent amount.

Change of Investments in AssociatedCompanies and Participations
On 13 September 2016, Airbus SE internally acquired 9.05%
of the shares in Dassault Aviation SA for a total amount of€ 785 million. The acquisition of these shares in Dassault Aviation
SA is related to the issuance by the company of an exchangeablebond 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. Please refer to the list of participations at the Chamberof Commerce.

FINANCIAL STATEMENTS 201799

Notes to the IFRS Company Financial Statements

INFORMATION ON PRINCIPAL INVESTMENTS OF THE COMPANY
2017

2016
Company

Head office

50.90

Aero Ré S.A.

Bertrange (Luxembourg)

50.10

66.08

Airbus Defence and Space GmbH

Taufkirchen (Germany)

100.00100.00Airbus Defence and Space S.A.

Madrid (Spain)

100.0097.57

Airbus DS Holdings B.V.

Leiden (Netherlands)

100.00100.00Airbus Bank GmbH

Munich (Germany)

100.00100.00Airbus Finance B.V.

Leiden (Netherlands)

0.00

100.00Airbus Group Inc.

Herndon, VA (USA)100.00100.00Airbus Group Ltd.

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

Leiden (Netherlands)

99.00

99.00

Airbus Group Ventures Fund I, L.P.

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

Marignane (France)

90.26

90.26

Airbus S.A.S.

Toulouse (France)

100.00100.00DADC Luft-und Raumfahrt Beteiligungs GmbH

Taufkirchen (Germany)

9.93

10.00

Dassault Aviation S.A.

Paris (France)

100.00100.00Premium Aerotec GmbH

Augsburg (Germany)(1)(in % )

50.90

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

8.

Financial Assets and Liabilities

Financial assets and liabilities at 31 December 2017 and 2016 consist of the following:
31 December(In € million)

2017

2016

Long-term financial assets

3,040

3,296

Long-term loans Airbus companies

3,040

3,296

Non-current other financial assets

3,898

7,602

Positive fair values of derivative financial instruments

3,898

7,602

Current other financial assets

1,938

4,656

Positive fair values of derivative financial instruments

1,744

4,551

Current portion long-term loans Airbus companies

194

105

(22,546)(19,148)

9,581

9,409

Current accounts Airbus companies(1)

Receivables from subsidiaries
Liabilities to subsidiaries(32,127)(28,557)

Non-current financial liabilities(4,055)(7,698)

Negative fair values of derivative financial instruments(4,055)(7,698)Current financial liabilities(1,730)(4,543)

Negative fair values of derivative financial instruments(1,730)(4,543)(1) The receivables from and liabilities to subsidiaries include mainly transactions in connection with the cash pooling in Airbus SE. Terms and conditions are in agreement withthe prevailing market environment.

4

100

Financial Statements 2017 - AIRBUS
Notes to the IFRS Company Financial Statements

9.

Commitments and Contingencies

Off-Balance Sheet Commitments
Airbus SE issued guarantees on behalf of Airbus companies
in the amount of € 7,227 million (2016: € 5,849 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 Airbus
companies in the amount of € 54 million (2016: € 54 million).

On 8 December 2015, Airbus SE entered into a partnershipagreement to establish a corporate venture capital fund, dubbed
Airbus Group Ventures, as well as a technology and business
innovation center in Silicon Valley with a total commitment
amount of US$ 150 million. On 25 November 2015, a ﬁ rst
investment of US$ 5 million has been made into this fund. During
the year 2017, Airbus SE made further capital contributions into
Airbus Group Ventures Fund for a total amount of US$ 14 million.

4.4 Employees
10. Number of Employees

The average number of the persons employed by the Company in 2017 was 2 (2016: 2).

4.5 Capital Structure and Financial
Instruments
11. Total Equity

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

Issued as at 1 January
Issued for ESOP
Issued for exercised options
Cancelled
Issued as at 31 December

2017

2016

772,912,869

785,344,784

1,643,193

1,474,716

0

224,500

0(14,131,131)

774,556,062

772,912,869

Treasury shares as at 31 December(129,525)(184,170)

Outstanding as at 31 December

774,426,537

772,728,699

Authorised shares

3,000,000,000

3,000,000,000

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

FINANCIAL STATEMENTS 2017101

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 € 0 (2016: € 224,500) incompliance with the implemented stock option plans and by
employees of € 1,643,193 (2016: € 1,474,716) under the Employee
Stock Ownership Plans (“ESOP”).
Share premium mainly results from contributions in kind in
the course of the creation of Airbus, cash contributions fromthe Initial Public Offering, capital increases and reductions dueto the issuance and cancellation of shares as well as cash
distributions to Airbus SE shareholders.
Retained earnings include mainly the proﬁt of the period andand cash dividend payments to Airbus SE shareholders.
On 12 April 2017, the Shareholders’ General Meeting decided to
distribute a gross amount of € 1.35 per share, which was paidon 20 April 2017. For the ﬁscal year 2017, the Board of Directors
proposed a cash distribution payment of € 1.50 per share.
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. During 2017, the number of treasury
stock held by the Company decreased to 129,525 compared
to 184,170 as of 31 December 2016. No shares were sold backto the market nor cancelled in 2017 (2016: 14,1231,131 shares).

Authorisations Granted by the Shareholders’
General Meeting of Airbus SE Held on
12 April 2017
On 12 April 2017, the Annual General Meeting (“AGM”) of theCompany authorised the Board of Directors, for a period
expiring at the AGM to be held in 2018, to issue shares andto grant rights to subscribe for shares in the Company’s sharecapital for the purpose of:■
ESOPs and share-related LTIPs, provided that such powers
shall be limited to an aggregate of 0.14% of the Company’s
authorised share capital (see Note 30 “Share-Based
Payment”);■
funding the Company and its subsidiaries, provided thatsuch powers shall be limited to an aggregate of 0.3% of
the Company’s authorised share capital (see Note 34.3
“Financing Liabilities”).
For each operation, such powers shall not extend to issuingshares or granting rights to subscribe for shares if there is nopreferential subscription right and for an aggregate issue pricein excess of € 500 million per share issuance.
Also on 12 April 2017, the AGM authorised the Board of
Directors for an 18-month period to repurchase up to 10% of
the Company’s issued share capital at a price not exceeding
the higher of the price of the last independent trade and thehighest current independent bid on the trading venues of
the regulated market of the country in which the purchaseis carried out.
Furthermore, the AGM authorised both the Board of Directors
and the CEO, with powers of substitution, to establish the exact
number of the relevant shares to be cancelled.

4

102

Financial Statements 2017 - AIRBUS
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 2017 and 2016 is as follows:
31 December
2017

2016

Consolidated equity

13,348

3,657

AOCI - Restatement of investments from Consolidated
to Company Financial Statements(In € million)(2,283)

5,198

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

(436)

2,713

Retained Earnings - Valuation investments at historical cost

1,487

1,487

Retained Earnings - Impairment of financial assets(672)(1,273)

11,444

11,782Company’s equity

The difference between the net income according to the Consolidated Financial Statements and Company’s Financial Statements
for the year ended 31 December 2017 and 2016 is as follows:(In € million)

2017

2016

Consolidated net income

2,873

995

Income from investments according to Consolidated Financial Statements(3,014)(1,118)

Income from investments according to Company Financial Statements

614

4,021

Other valuation differences

10

2

483

3,900

Company’s net income (Profit for the period)

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)

2017

2016

Bank accounts

2,697

1,710

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

6,256

5,513

Short-term securities (available-for-sale)

2,085

1,535

11,038

8,758

Total cash and cash equivalents

Only securities with a maturity of three months or less from the date of the acquisition, that are readily convertible to known
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)

2017

2016

Current securities (available-for-sale)

1,576

1,489

Non-current securities (available-for-sale)

10,812

9,670

Total securities

12,388

11,159Included in the securities portfolio as of 31 December 2017and 2016, respectively, are corporate and government bonds
bearing either ﬁxed rate coupons (€ 12,062 million nominal value;

2016: € 10,458 million) or ﬂoating rate coupons (€ 321 million
nominal value; 2016: € 359 million) and foreign currency fundsof hedge funds (€ 5 million nominal value; 2016: € 6 million).

FINANCIAL STATEMENTS 2017103

Notes to the IFRS Company Financial Statements

12.3 Financing Liabilities
Current and non-current classiﬁcation — A ﬁnancial asset or liability is classiﬁed as current if it is settled within 12 months
after the reporting date, and as non-current otherwise.
Financing liabilities comprise obligations towards ﬁnancial institutions, issued corporate bonds, and payables due to related parties.
The Company has received several euro-denominated loans and one US dollar-denominated loan from Airbus Finance B.V.
(“AFBV”). It has also issued a convertible bond in euro. 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
amount31 December(in million)

2017

2016

Coupon orinterest
rate

Effective
interest
rate

Maturity

3M Euribor at variable+1.85%
rate

Sept. 2018

Additional features

Loans from Airbus Finance B.V.
AFBV 15 years(EMTN)

€ 500

€ 500

€ 499

AFBV 10 years(US$ Loan)

US$ 1,000

€ 818

€ 940

2.72%

2.80%

Apr. 2023

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

AFBV 10 years(EMTN)€ 1,000€ 1,031€ 1,052

2.40%

2.45%

Apr. 2024

Interest rate swapped
into 3M Euribor +1.40%

AFBV 15 years(EMTN)

€ 500

€ 517

€ 526

2.15%

2.24%

Oct. 2029

Interest rate swapped
into 3M Euribor +0.84%

AFBV 10 years(EMTN)

€ 600

€ 584

€ 589

0.91%

0.95%

May 2026

Interest rate swapped
into 3M Euribor

AFBV 15 years(EMTN)

€ 900

€ 851

€ 861

1.41%

1.49%

May 2031

Interest rate swapped
into 3M Euribor

Loans from financial institutions
DBJ 10 years

US$ 300

€ 250

€ 285

3M US-Libor+1.15%

4.84%

Jan. 2021

Interest rate swapped
into 4.76% fixed

EIB 10 years

US$ 721

€ 343

€ 488

3M US-Libor+0.85%

3.20%

Aug. 2021

Interest rate swapped
into 3.2% fixed

EIB 7 years

US$ 406

€ 339

€ 385

3M US-Libor at variable+0.93%
rate

Feb. 2020

EIB 10 years

US$ 627

€ 516

€ 591

EIB 10 years

US$ 320

€ 267

€ 304

€ 500

€ 470

€ 464

2.52%

2.52%

Dec. 2024

6M US-Libor at variable+0.56%
rate

Dec. 2025

Interest rate swapped
into 3M Euribor +0.61%

Bond
Convertible bond
7 years

0.00%

1.39%

July 2022

Convertible into Airbus SE
shares at € 99.54 per share

Exchangeable bond
5 years€ 1,078€ 1,054€ 1,048

0.00%

0.33%

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

US$ Bond
10 years

US$ 750

€ 615

€0

3.15%

3.16%

Apr 2027

Interest rate swapped
into 3M US-Libor +0.87%

US$ Bond
30 years

US$ 750

€ 611

€0

3.95%

4.02%

Apr 2047

Interest rate swapped
into 3M US-Libor +1.61%€ 8,765€ 8,032

thereof non-current
financing liabilities€ 8,106€ 7,934

thereof current
financing liabilities

€ 660

€ 98

Total

The increase in long-term financing liabilities is mainly due tothe issuance in April 2017 of two bonds under the Company’s
EMTN-Programme for a total amount of US$ 1.5 billion, maturing
in 2027 and 2047.

Included in the short-term financing liabilities is the bondunder the Company’s EMTN-Programme that mature in
September 2018 for an amount of € 500 million as well as
the part of the EIB loan maturing in 2018 for an amount of
US$ 193 million

4

104

Financial Statements 2017 - AIRBUS
Notes to the IFRS Company Financial Statements

The Company can issue commercial paper under the so called“billet de trésorerie” programme at ﬂoating 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 2017,

there was no outstanding amount under the programme. The
Company established in April 2015 a US$ 2 billion commercial
paper programme which has been increased to US$ 3 billion in
April 2016. The commercial paper issuance activity was limitedin the course of the year 2017.

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 Statements 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’ ﬁrm commitments and highly probable forecast
transactions. As explained above, owing to the Company’s
back-to-back approach, its own exposure to foreign exchange
risk is very limited.

Interest rate risk — The Company uses an asset-liability
management approach with the objective to limit its interest
rate risk. The Company undertakes to match the risk proﬁleof its interest-bearing assets with those of its interest-bearing
liabilities, the remaining net interest rate exposure being
managed through several types of interest rate derivatives.
If the derivative instruments qualify for hedge accounting in
the Company Financial Statements the Company applies
cash ﬂow hedge accounting or fair value hedge accounting.
For more information on the risk management and hedging
strategies used by Airbus 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 is exposed under its long-term incentive
plan (LTIP) to the risk of Airbus share price movements. In order
to limit these risks for Airbus’, the Company enters into equity
derivatives that reference the Airbus SE share price.
Sensitivities of market risks — T he approach used tomeasure and control market risk exposure within Airbus’
ﬁnancial instrument portfolio is amongst other key indicators
the value- at- risk (“VaR”). For information about VaR andthe approach used by the Company to assess and monitor
sensitivities of market risks please refer to section 35.1 “Financial
Risk Management” of the Notes to the Consolidated Financial
Statements.
The Company is part of Airbus’ risk management process,which is more fully described in section 35.1 “Financial Risk
Management” of the Notes to the Consolidated Financial
Statements.

FINANCIAL STATEMENTS 2017

105

Notes to the IFRS Company Financial Statements

A summary of the VaR position of the Company’s ﬁnancial instruments portfolio at 31 December 2017 and 2016 is as follows:
Total VaR

Equity price VaR

Currency VaRInterest rate VaR

Foreign exchange hedges

4

0

4

1

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

30

17

12

24

Equity swaps

2

2

0

0

(In € million)

31 December 2017

Diversification effect

(5)

(3)

(1)

(1)

All financial instruments

31

16

15

24

Foreign exchange 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

31 December 2016

Diversification effect

(14)

(2)

(11)

(1)

All financial instruments

34

25

2

23

The decrease in the total VaR compared to 31 December 2016 is mainly attributable to a decrease of market volatilities inparticular foreign exchange volatility on €/US$. The equity price VaR mainly decreased due to an increase in hedge effectivenessof the exchangeable bonds against the underlying equity position. The derivative instruments entered into with Airbus-externalcounterparties are passed on a 1:1 basis to Airbus entities. As a result, the respective market risks of the Airbus-external derivative
instruments are offset by corresponding opposite market risks of intra-Airbus transactions.

Liquidity Risk
The Company’s policy is to maintain sufﬁcient cash and cash equivalents at any time to meet its own and Airbus’ present andfuture commitments as they fall due. For information on how Airbus 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

4 years- More than
5 years
5 years

31 December 2017
Non-derivative financial liabilities(8,766)(9,948)

(746)

(243)

(616)

(1,592)(672)(6,079)Derivative financial liabilities(5,784)(4,259)(1,651)(1,091)

(370)

(18)

(24)

(1,105)(14,550)(14,207)(2,397)(1,334)(986)(1,610)(696)(7,184)Non-derivative financial liabilities(8,032)(9,042)

(226)

(809)

(298)

(730)

(1,695)(5,284)

Derivative financial liabilities(12,241)(15,147)(4,762)(4,104)(3,106)(1,630)(1,127)

(418)

Total

(20,273)(24,189)(4,988)(4,913)(3,404)(2,360)(2,822)(5,702)Total
31 December 2016

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 Airbus 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 referto section 35.1 “Financial Risk Management” of the Notes to
the Consolidated Financial Statements.
In 2017, the total receivables, neither past due nor impaired
amount to € 176 million (2016: € 4,759 million).

4

106

Financial Statements 2017 - AIRBUS
Notes to the IFRS Company Financial Statements

13.2 Carrying Amounts and Fair Values of Financial Instruments
Financial instruments — The Company’s ﬁ nancial assets
mainly consist of cash, short to medium-term deposits
and securities. The Company’s financial liabilities include
intra-Airbus liabilities, obligations towards ﬁnancial institutions
and issued bonds. The Company has the same classiﬁcation
and accounting policies as Airbus. 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 2017 and 2016:
Fair value
through profit
or loss
31 December 2017
(In € million)

Fair value
for hedge
relations

Held fortrading Designated

Fair
value

Loans andreceivables andfinancial liabilities
at amortised cost

Available-for-sale
Book
value

Fair Amortised
value
cost

1,193

1,193

Fair
value

Financial
instruments
total
Book
value

Fair
value

1,193

1,193

AssetsOther investments andlong-term financial assets■

Equity instruments

■

Loans

3,234

3,856

3,234

3,856

31

31

31

31

0

0

0

5,640

5,640

Trade receivables
Other financial assets■■

Derivative instruments
Current accountAirbus companies

5,586

0

54

0

0

0

0

0

9,581

9,581

9,581

9,581

0

0

12,38812,3880012,38812,388

Securities
Cash and cash equivalents

0

0

6,256

0

2,085

2,085

2,697

2,697

11,038

11,038

5,586

6,256

54

15,666

15,666

15,543

16,165

43,10543,727

Issued bonds andcommercial papers

0

0

0

0

0

2,751

3,083

2,751

3,083

Liabilities to banks
and other financing
liabilities

0

0

0

0

0

1,715

3,081

1,715

3,081

Internal loans payable

0

0

0

0

0

4,300

4,298

4,300

4,298

5,698

0

86

0

0

0

0

5,785

5,785

0

0

0

0

0

32,12732,12732,12732,127

5,698

0

86

0

0

40,89342,59046,67948,375

Total
Liabilities
Financing liabilities■■■

Other financial liabilities■■

Derivative instruments
Current accounts
Airbus companies

Total

FINANCIAL STATEMENTS 2017107

Notes to the IFRS Company Financial Statements

Fair value
through profit
or loss
31 December 2016
(In € million)

Fair value
for hedge
relations

Held fortrading Designated

Loans andreceivables andfinancial liabilities
at amortised cost

Available-for-sale

Fair
value

Book
value

Fair Amortised
value
cost

Financial
instruments
total

Fair
value

Book
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

12,031

0

122

0

0

0

0

12,153

12,153

Other financial assets■■

Derivative instruments
Current accountAirbus companies

Securities
Cash and cash equivalents

0

0

0

0

0

9,409

9,409

9,409

9,409

0

0

0

11,15911,15900

11,15911,159

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
and other 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
Airbus companies

Total

0

0

0

0

0

28,55728,55728,55728,557

12,196

0

45

0

0

36,588 36,827

48,83049,068Fair 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 2017 and 2016, respectively:
31 December 2017
(In € million)

31 December 2016

Level 1

Level 2

Total

Level 1

Level 2

Total

1,193

0

1,193

1,056

0

1,056

Financial assets measured at fair value
Equity instruments
Derivative instruments

0

5,641

5,641

0

12,153

12,153

12,3880

12,388

11,13920

11,159

7,441

900

8,341

6,218

830

7,048

21,022

6,542

27,564

18,41313,00331,416

Derivative instruments

0

5,785

5,785

0

12,241

12,241Other liabilities

0

0

0

0

0

0

0

5,785

5,785

0

12,241

12,241

Securities
Cash equivalents

Total
Financial liabilities measured at fair value

Total

4

108

Financial Statements 2017 - AIRBUS
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
2017 and 2016, respectively:

Derivative instruments(In € million)

Gross amounts
recognised

Gross amounts
recognised set
off in thefinancialstatements

Net amounts
presented in
the financial
statements

Related amounts not set off inthe statement of financial position
Financial
instruments

Cash collateral
receivedNet
amount31 December 2017
Financial assets

2,643

0

2,643

(1,472)44

1,215

Financial liabilities

1,486

0

1,486

(1,472)0

14

Financial assets

12,1530

12,153(2,561)

0

9,592

Financial liabilities

12,241

0

12,241(2,561)09,680

31 December 201613.4 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

0

0

0

343

0

1,001

1,523

2,000

4,867

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

(In € million)

7 years > 7 years

Total

31 December 2017
Interest rate contracts
31 December 2016

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

2 years

31 December 201752

49

31 December 2016

77

52

(In € million)

3 years

4 years> 4 years

Total

19

0

0

121

49

19

0

197

FINANCIAL STATEMENTS 2017109

Notes to the IFRS Company Financial Statements

13.5 Derivative Financial Instruments and Hedge Accounting Disclosure
In addition, a loss of € -29 million was recognised in the proﬁt for the period in 2017 (2016: € -27 million) on derivatives that were
designated as hedging instruments in a fair value hedge, and a gain of € 12 million (2016: € 12 million) attributable to the hedged
risk was recognised in the proﬁt for the period on the corresponding hedged items. Corresponding with its carrying amounts,
the fair values of each type of derivative ﬁnancial instruments are as follows:
31 December
2017(In € million)

Foreign currency contracts – not designated in a hedge relationship

2016

AssetsLiabilities

AssetsLiabilities

5,504

5,513

11,941

11,962

Interest rate contracts – cash flow hedges

0

1

0

7

Interest rate contracts – fair value hedges

54

84

122

38

Interest rate contracts – not designated in a hedge relationship

30

29

23

57

Commodity contracts – not designated in a hedge relationship

16

16

52

52

Equity swaps – not designated in a hedge relationship

38

0

15

3

Option component of Exchangeable Bond

Total

0

141

0

122

5,641

5,784

12,153

12,241

13.6 Net Gains or Net Losses
The Company’s net gains or net losses recognised in proﬁt or loss in 2017 and 2016, respectively are as follows:(In € million)

2017

2016

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

200

(168)

Designated on initial recognition

(214)

49

Available-for-sale financial assets

(205)

15

(1)

(226)

(93)

Financial liabilities measured at amortised cost

448

123

4

(74)

Loans and receivables

Total(1) Contain among others impairment losses.

14. Events after the Reporting Date

There are no signiﬁcant events after the reporting date.

4

110

Financial Statements 2017 - AIRBUS

Chapter5

FINANCIAL STATEMENTS 2017

111

Other Supplementary
Information Including
the Independent
Auditor’s Report

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112

Financial Statements 2017 - AIRBUS
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 € 483 million as shown in theincome statements for the ﬁnancial year 2017 is to be added to retained earnings and that a payment of a gross amount of € 1.50
per share shall be made to the shareholders out of retained earnings.

2.

Independent Auditor’s Report

To: the shareholders and the Board of Directors of Airbus SE

Report on the audit of the Financial Statements 2017 included in the annual report
Our opinion
We have audited the ﬁnancial statements 2017 of Airbus SE (the Company), based in Amsterdam.
In our opinion the accompanying ﬁnancial statements give a true and fair view of the ﬁnancial position of Airbus SE as at 31 December
2017, and of its result and its cash ﬂows for 2017 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 2017;■
The following statements for 2017: the consolidated and Company income statement, the consolidated and Company Statementsof Comprehensive Income, changes in equity and cash ﬂows;■
The notes comprising a summary of the signiﬁcant accounting policies and other explanatory information.

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

FINANCIAL STATEMENTS 2017

113

Other Supplementary Information Including the Independent Auditor’s Report

Materiality
Materiality€ 213 million

Benchmark applied
Explanation

5% of the EBIT adjusted
We consider EBIT adjusted as the most appropriate benchmark as it best aligns with the expectationsof those charged with governance at Airbus and users of the Company’s financial statements.

We have also taken into account misstatements and/or possible misstatements that in our opinion are material for the users of
the ﬁnancial statements for qualitative reasons.
We agreed with the Audit Committee of the Board of Directors that misstatements in excess of € 10 million which are identiﬁed during
the audit, would be reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.

Scope of the Group audit
Airbus SE is at the head of a group of entities. The ﬁnancial information of this group is included in the Consolidated Financial
Statements of Airbus SE.
We are responsible for directing, supervising and performing the Group audit. In this context, we have determined the nature andextent of the audit procedures to be carried out for the entities, based on their size and/or risk proﬁle.
We scope entities into the Group audit where they are of signiﬁcant size, have signiﬁcant risks to the Company associated with themor are considered for other reasons. This resulted in coverage of 88% of total consolidated revenue and 89% of total consolidated
assets. The remaining 12% of revenues, and 11% of total assets results from entities, none of which individually represents morethan 1% of revenues except for one Company that represents 3% of the revenue. For that company we performed a limited scope
review. For the remaining entities, we performed, amongst others, analytical procedures to corroborate our assessment that there
are no signiﬁcant risks of material misstatements.
We executed an audit plan that includes participation in risk assessment and planning discussions, setting the direction of
the Group audit work (including instructions to the divisional and entity auditors), 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 the evaluation of key accounting topics, reviewing the ﬁnancial statements and participating in meetings with the
management of the Company 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 toassist the audit team, including specialists from our tax, actuarial, treasury and compliance departments.
The audit of the three Airbus Divisions is performed jointly by EY network ﬁrms and other non-EY audit ﬁrms. Meetings were heldwith the divisional auditors and divisional management to discuss the ﬁndings reported to the Group audit team. We furthermore
executed ﬁle reviews at EY network teams and other non-EY audit ﬁrms.
By performing the procedures mentioned above at Group entities, together with additional procedures at Group level, we havebeen able to obtain sufﬁcient and appropriate audit evidence about the Company’s ﬁnancial information to provide an opinion
about the Consolidated Financial Statements.

Our key audit matters
Key audit matters are those matters that, in our professional judgment, were of most signiﬁcance in our audit of the ﬁnancial
statements. We have communicated the key audit matters to the Audit Committee of the Board of Directors. The key audit matters
are not a comprehensive reﬂection of all matters discussed.
These matters were addressed in the context of our audit of the ﬁnancial statements as a whole and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.

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Financial Statements 2017 - AIRBUS
Other Supplementary Information Including the Independent Auditor’s Report

Risk description

Our audit response

Litigation and claims and risk of non-compliance with laws and regulations
A part of the Company’s business is characterised bycompetition for individual significant contracts with customers
which are often directly or indirectly associated withgovernments. The process associated with these activities
is susceptible to the risk of non-compliance with laws andregulations. In addition the Company operates in a numberof territories where the use of commercial intermediaries
is normal practice. Subsidiaries of Airbus SE remain underinvestigation by various law enforcement agencies for amongst
others alleged irregularities concerning third party consultants.
Breaches of laws and regulations in these areas can lead tofines, penalties, criminal prosecution, commercial litigation
and restrictions on future business.
Litigation and claims involve amounts that are potentiallysignificant and the estimate of the amount to be provided as
a liability, if any, is inherently subjective. The outcome of thesematters may have a material effect on the Company’s resultand financial position.
Reference is made to disclosure on Note 3 ’Key estimatesand judgements’, Note 22 ’Provisions, contingent assets andcontingent liabilities’ and Note 36 ’Litigations and claims’ of thefinancial statements.

We evaluated and tested the updated Company’s policies,
procedures and controls over the selection of intermediaries,
contracting arrangements, ongoing management, payments
and responses to suspected breaches of policy.
We evaluated the tone set by management and the Board of
Directors and the Company’s approach to managing this risk.
We discussed with the Board of Directors, the Audit Committee,
the Ethics and Compliance Committee as well as theCompany’s legal advisors the areas of potential or suspected
breaches of law, including the ongoing investigations, tocorroborate the results of those enquiries with third parties
and assessed related non-privilege documentation. We haveenquired management, the Audit Committee, the Ethics
and Compliance Committee and the Board of Directors as
to whether the Company is in compliance with laws andregulations relating to bribery and corruption.
We maintained a high level of vigilance to possible indicationsof significant non-compliance with laws and regulations
relating to bribery and corruption whilst carrying out our otheraudit procedures.
We have assessed whether the disclosure in Note 36 to thefinancial statements of the Company’s exposure to the financial
effects of potential or suspected breaches of law or regulation
complies with accounting standards.
We observed that the disclosures in the financial statements
reflect the current status of the investigation by the UK SFO
and France’s PNF as well as the review of Business Partner
Relationships.

Accounting for construction contracts, including revenue recognition and loss provision
The amount of revenue and profit recognised in a year isdependent on the assessment of the stage of completion of
construction contracts as well as estimated total revenues andestimated total cost. Significant estimates are made to assess
the stage of completion based on milestones, estimatedrevenue and costs for key programmes such as A400M and
A350 XWB. Depending on these assessments, the stage ofcompletion is determined, 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 and are recorded when it becomes probablethat the estimated total contract costs will exceed estimatedtotal contract revenues. Updates to these provisions canhave a significant impact on the Company’s result andfinancial position. The determination of these provisions isbased on best available estimates and requires significant
management’s judgement and assumptions associated withthe technical development achievement and certification
schedules, production plan (including assumptions on rampup), performance guarantees as well as expected outcome
from ongoing negotiations with customers.
Reference is made to the disclosure on Note 3 ’Key estimatesand judgements’, Note 10 ’Revenues and gross margin’
and Note 22 ’Provisions, contingent assets and contingent
liabilities’ of the financial statements.

We evaluated the design and implementation of internal
controls for accounting for construction contracts. We also
performed detailed procedures on individually significant
programs, including discussions with the individual Head ofProgramme, and evaluated management’s assumptions in thedetermination of amongst others the stage of completion ofa project, estimates to complete for both revenue and costs
and any provisions for loss making contracts. We focusedon management’s assessment of key contract risks andopportunities to determine whether these are appropriatelyreflected in the cost to complete forecasts, and paid specificattention for example to technical development, delivery planand certification schedules. We challenged management’s
assumptions by discussing and reviewing correspondencewith customers, considered the accuracy and consistency ofsimilar estimates made in previous years and corroborated theassumptions with the latest contractual information.
The assumptions and estimates used by management
regarding the A400M reflect the current understanding of thesigned Declaration of Intent between the Company and theA400M Launch Customer Nations.
Regarding the LMC provision of the A350 XWB we noticed
that management has updated the LMC provision to reflect
the latest estimate for revenue and unit costs as well as latest
settlement agreements with customers.

FINANCIAL STATEMENTS 2017

115

Other Supplementary Information Including the Independent Auditor’s Report

Risk description

Our audit response

Valuation of inventories for contracts accounted for under IAS 18 and completeness of provision for contract losses
Inventories amount in total to € 31 billion, including work inprogress of € 23 billion for key programmes (accounted forunder IAS 18 Revenue recognition, for which revenue and costof sales are recognised as each aircraft is delivered) such as
A380, A350 XWB or A320.
Estimates of total contract costs and selling price peraircraft are necessary to determine if the net realisable value
impairment or provision 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.
Due to the inherent uncertainty involved in forecasting future
costs and interpreting contractual and commercial positions
in determining impairments and provisions, this is a key audit
area. Updates to these provisions can have a significant impact
on the Company’s result and financial position.

We evaluated the design and implementation of internal controls
for identifying and recording impairments and provisions andperformed detailed procedures including inquiry of the Headof Programmes and corroboration with other audit evidence.
We evaluated management’s assumptions in the determinationof the forecast revenue to be received, cost to be incurred(including any contractual penalties) and gross margin. Ourevaluation was based on our assessment of the historicalaccuracy of the Company’s estimates in previous periods andincluded an analysis of contingencies and impact of known
technical issues on cost forecasts and provisions.
The assumptions and estimates regarding the A380 include
the recent changes in commercial perspectives.

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.

Derivative financial instruments
The Company operates in a business environment that is
exposed to currency and interest rate volatility. A significant
portion of the Company’s revenue is dominated in US dollars,
while a major part of its costs is incurred in Euro and, to alesser extent, in pounds Sterling. In response to these risks
the Company uses financial instruments (mainly currency
forwards) to mitigate the exposure to changes in market
rates. There is a high inherent risk of error in the Company
Consolidated Financial Statements, both in valuation of thefinancial instruments and in the presentation 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
the Euro could have a negative impact on the consolidated
equity of the Company via the ’mark to market’ valuation of thehedge portfolio.

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 and tested the application of the hedge accounting
rules and the resulting accounting treatment. In this process
we also assessed the delivery profile used as a basis to thehedge accounting effectiveness test.
We obtained counterparty confirmation of the outstanding
financial instruments to verify the existence and ownership.
Finally we evaluated whether appropriate disclosures relating
to financial instruments were made in the financial statements.

Reference is made to Note 35 ’Information about financial
instruments’ of the financial statements.

IFRS 15IFRS 15 ’Revenue from Contracts with Customers’ will be
adopted by Airbus starting 1 January 2018. It will have asignificant impact on equity as disclosed in Note 4 ’Changein accounting policies and disclosures’ of the financial
statements.

Airbus performed an initial assessment of the estimated equity
impact of IFRS 15 as of 1/1/17.
We reviewed the quantitative and qualitative disclosures inNote 4.

5

116

Financial Statements 2017 - AIRBUS
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.airbus.com for the board report);■
Other information pursuant to Part 9 of Book 2 of the Dutch Civil Code.
Based on the following procedures performed, we conclude that the other information:■
Is consistent with the ﬁnancial statements and does not contain material misstatements;■
Contains the information as required by Part 9 of Book 2 of the Dutch Civil Code.
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 SE on 28 April 2016, as of the audit for
the year 2016 and have operated as statutory auditor since that date.

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

Description of responsibilities for the ﬁnancial statements
Responsibilities of the Board of Directors and Audit Committee for the financial statements
The Board of Directors is responsible for the preparation and fair presentation of the ﬁnancial statements in accordance with
EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code. Furthermore, the Board of Directors is responsible for such internal
control as management determines is necessary to enable the preparation of the ﬁnancial statements that are free from material
misstatement, whether due to fraud or error.
As part of the preparation of the ﬁnancial statements, the Board of Directors is responsible for assessing the Company’s ability
to continue as a going concern. Based on the ﬁnancial reporting frameworks mentioned, the Board of Directors should prepare
the ﬁnancial statements using the going concern basis of accounting unless the Board of Directors either intends to liquidate theCompany or to cease operations, or has no realistic alternative but to do so. The Board of Directors should disclose events andcircumstances that may cast signiﬁcant doubt on the Company’s ability to continue as a going concern in the ﬁnancial statements.
The Audit Committee of the Board of Directors 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 2017

117

Other Supplementary Information Including the Independent Auditor’s Report

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

Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing theGroup audit. In this respect we have determined the nature and extent of the audit procedures to be carried out for Group entities.
Decisive were the size and/or the risk proﬁle of the Company’s entities or operations. On this basis, we selected Group entities
for which an audit or review had to be carried out on the complete set of ﬁnancial information or speciﬁc items.
We communicate with the Audit Committee of the Board of Directors regarding, among other matters, the planned scope andtiming of the audit and signiﬁcant audit ﬁndings, including any signiﬁcant ﬁndings in internal control that we identify during our
audit. In this respect we also submit an additional report to the Audit Committee in accordance with Article 11 of the EU Regulation
on speciﬁc requirements regarding statutory audit of public-interest entities. The information included in this additional report isconsistent with our audit opinion in this auditor’s report.
We provide the Audit Committee of 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 tobear on our independence, and where applicable, related safeguards.
From the matters communicated with the Audit Committee of the Board of Directors, we determine those matters that were ofmost signiﬁcance in the audit 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 extremelyrare circumstances, not communicating the matter is in the public interest.

Amsterdam, 14 February 2018
Ernst & Young Accountants LLP
signed by A.A. van Eimeren

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