3

BOOK THREE

Business,
LegalandCorporate
Responsibility
2007

The complete EADS Annual Report Suite 2007 consists of: 

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BOOK 2

BOOK 3

FACING CHALLENGES
DELIVERING RESULTS
Annual Review

FINANCIAL STATEMENTS ANDCORPORATE GOVERNANCE 2007
Registration Document Part 1

BUSINESS, LEGAL AND
CORPORATE RESPONSIBILITY 2007
Registration Document Part 2

Management & Responsibility

Risk Factors

Information on EADS Activities

Together. Facing challenges.
Delivering results.

Net Assets – Financial Position – Results

Corporate Social Responsibility

Corporate Governance

General Description of theCompany and its Share Capital

The Business Year 2007
EADS Drivers
Useful Informationwww.eads.com
The online version of theAnnual Report Suite 2007 is available atwww.reports.eads.com

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Business,
LegalandCorporate
Responsibility

EA DS REGIS T RAT ION DOCUMEN T 2 0 07 - PART 2

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EADS REGISTRATION DOCUMENT - PART 2

Business, Legaland Corporate Responsibility (BOOK 3)

European Aeronautic Defence and Space Company EADS N.V. (the “Company” or “EADS” and together
with its subsidiaries, the “Group”) is a Dutch company, which is listed in France, Germany and Spain.
Given this fact, the applicable regulations with respect to public information and protection of investors,
as well as the commitments made by the Company to securities and market authorities, are describedin this registration document (the “Registration Document”).
This Registration Document was prepared in accordance with Annex 1 of EC Regulation
809/2004, ﬁled in English with, and approved by, the Autoriteit Financiële Markten(the “AFM”) on 24 April 2008 in its capacity as competent authority under the Wet op het
ﬁnancieel toezicht (as amended) pursuant to Directive 2003/71/EC. The Registration Document
is composed of two parts which must be read together: (i) this document entitled Business,
Legal and Corporate Responsibility – (Registration Document Part 2) and (ii) the document
entitled Financial Statements and Corporate Governance – (Registration Document Part 1).
This Registration Document may be used in support of a ﬁnancial transaction as a document
forming part of a prospectus in accordance with Directive 2003/71/EC only if it is supplemented
by a securities note and a summary approved by the AFM.

EADS BU S I NES S , LEG A L A N D CO R P O R AT E R E S P O N S I B I L I T Y

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Business,
LegalandCorporate
Responsibility
1

INFORMATION ON EADS ACTIVITIES2CORPORATE SOCIAL RESPONSIBILITY

3

GENERAL DESCRIPTION OF THE COMPANY
AND ITS SHARE CAPITAL

4

ENTITY RESPONSIBLE
FOR THE REGISTRATION DOCUMENTEA DS B USINESS, LEG A L A ND CORP ORAT E RESP ONSIB ILIT Y

1TABLE OF CONTENTS | REGISTRATION DOCUMENT PARTS 1 AND 2

REGISTRATION DOCUMENT | PART 1

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Financial Statements
and Corporate Governance(BOOK 2)
NONACTIVE SUMMARY. PLEASE, GO TO BOOK 2RISK FACTORS

7

1.

Financial Market Risks

8

2.

Business-Related Risks

10

3.

Legal Risks

15

4.

Industrial and Environmental Risks

17

1

NET ASSETS, FINANCIAL
POSITION AND RESULTS

Consolidated Research and Development Expenses
Consolidated Other Income and Other Expenses
Consolidated Share of Proﬁt from Associates
Accounted for under the Equity Method
and Other Income from Investments
Consolidated Interest Result
Consolidated Other Financial Result
Consolidated Income Taxes
Consolidated Minority Interests
Consolidated Net Income (Loss) (Proﬁt (loss) for
the Period Attributable to Equity Holders of the Parent)
Earnings per Share (EPS)
1.1.6

19
1.1.7

1.1

1.1.1

1.1.2

1.1.3

1.1.4

1.1.5

2

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

20

CERTAIN INFORMATION
Exchange Rate Information
Ratings

20
20
20

OVERVIEW
1.1.2.1 Signiﬁcant Programme and Restructuring
Developments in 2006 and 2007
1.1.2.2 Trends

21

CRITICAL ACCOUNTING CONSIDERATIONS,POLICIES AND ESTIMATES
1.1.3.1 Scope of and Changes
in Consolidation Perimeter
1.1.3.2 Employee Beneﬁts — IAS 19
1.1.3.3 U.K. Pension Commitments
1.1.3.4 Fair Value Adjustments
1.1.3.5 Impairment/Write-down of Assets
1.1.3.6 Research and Development Expenses
1.1.3.7 Accounting for Hedged Foreign Exchange
Transactions in the Financial Statements
1.1.3.8 Foreign Currency Translation
1.1.3.9 Accounting for Sales Financing Transactionsin the Financial Statements
1.1.3.10 Provisions for Loss-Making Contracts

21
22

EA DS BU S I NES S, L E G A L AN D CO R P O R AT E R E S P O N S I B ILIT YHEDGING ACTIVITIES
1.1.8.1 Foreign Exchange Rates
1.1.8.2 Interest Rates

49
49
50

1.2

Financial Statements

51

1.2.1

EADS N.V. CONSOLIDATED FINANCIAL
STATEMENTS (IFRS)Basis of Presentation
Notes to the Consolidated Income Statements (IFRS)
Notes to the Consolidated Balance Sheets (IFRS)
Notes to the Consolidated Statementsof Cash-Flows (IFRS)Other Notes to the Consolidated Financial
Statements (IFRS)

103

Appendix “Information on Principal
Investments” – Consolidation Scope

128

AUDITOR‘S REPORT ON THE CONSOLIDATEDFINANCIAL STATEMENT (IFRS)
Report on the Consolidated Financial Statements
Report on other legal and regulatory requirements

134
134
135

1.2.2

COMPANY FINANCIAL STATEMENTS

136

1.3

Statutory Auditors’ Fees

146

1.4

Information Regarding
the Statutory Auditors

147

27
28

33
33
36
36

39
40
40

1.1.8

26
26

EADS RESULTS OF OPERATIONS
Consolidated Revenues
Consolidated Cost of Sales
Consolidated Selling and Administrative Expenses

38
38

41
41

23
24
24
25
25
25

28
28
30
30

37
37
37
38
38

LIQUIDITY AND CAPITAL RESOURCES
1.1.7.1 Cash Flows
1.1.7.2 Consolidated Cash and Cash Equivalents
and Securities
1.1.7.3 Consolidated Financing Liabilities
1.1.7.4 Sales Financing

23

MEASUREMENT OF MANAGEMENT’SPERFORMANCE
1.1.4.1 Order Backlog
1.1.4.2 Use of EBIT*
1.1.4.3 EBIT* Performance by Division

CHANGES IN CONSOLIDATED TOTAL EQUITY(INCLUDING MINORITY INTERESTS)
IAS 39 Related Impact on AOCI
Currency Translation Adjustment Impact on AOCI

36
37

43
44
44

52
57
70
80
101

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NONACTIVE SUMMARY. PLEASE, GO TO BOOK 22CORPORATE GOVERNANCE

149

3

FINANCIAL CALENDAR

185

2.1

Management and Control

153

2008 Calendar of Financial Communication

186

2.1.1

BOARD OF DIRECTORS,CHAIRMAN AND CHIEF EXECUTIVE OFFICER

153

2.1.2

AUDIT COMMITTEE

164

2.1.3

REMUNERATION AND NOMINATION COMMITTEE 164

2.1.4

STRATEGIC COMMITTEE

165

2.1.5

EXECUTIVE COMMITTEE

165

2.1.6

INTERNAL CONTROLAND RISK MANAGEMENT SYSTEMS
167
2.1.6.1 Overview
167
2.1.6.2 RM System
168
2.1.6.3 IC System
168
2.1.6.4 Business Processes Covered by the IC System 169

2.2Interests of Directors
and Principal Executive Ofﬁcers

2.2.1

COMPENSATION GRANTED TO DIRECTORSAND PRINCIPAL EXECUTIVE OFFICERS
2.2.1.1 General Principles
2.2.1.2 Compensation of the Membersof the Board of Directors
2.2.1.3 Compensation of the Membersof the Executive Committee

172
172
172
173
175

2.2.2

LONG TERM INCENTIVES GRANTEDTO THE CHIEF EXECUTIVE OFFICER

176

2.2.3

RELATED PARTY TRANSACTIONS

176

2.2.4

LOANS AND GUARANTEESGRANTED TO DIRECTORS

176

Employee Proﬁt Sharing
and Incentive Plans

177

EMPLOYEE PROFIT SHARINGAND INCENTIVE AGREEMENTS

177

2.3.2

EMPLOYEE SHARE OWNERSHIP PLANS
2.3.2.1 ESOP 2000
2.3.2.2 ESOP 2001
2.3.2.3 ESOP 2002
2.3.2.4 ESOP 2003
2.3.2.5 ESOP 2004
2.3.2.6 ESOP 2005
2.3.2.7 ESOP 2007

177
177
177
178
178
178
179
179

2.3.3

LONG TERM INCENTIVE PLANS

179

2.3
2.3.1

EA DS B USINESS, LEG A L A ND CORP ORAT E RESP ONSIB ILIT Y

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REGISTRATION DOCUMENT | PART 2

Business, Legaland Corporate Responsibility(BOOK 3)

1

INFORMATIONON EADS‘ ACTIVITIES

1.1

Presentation of the EADS Group

8

1.1.1

OVERVIEW

81.1.2

AIRBUS

13

1.1.3

MILITARY TRANSPORT AIRCRAFT

21

1.1.4

EUROCOPTER

25

1.1.5

DEFENCE & SECURITY

29

1.1.6

ASTRIUM

35

1.1.7

OTHER BUSINESSES

40

1.1.8

INVESTMENTS

42

1.1.9

INSURANCE

43

1.1.10LEGAL AND ARBITRATION PROCEEDINGS

44

2.3.1

POLICY68

2.3.2

ORGANISATION

68

2.3.3

PERFORMANCE AND BEST PRACTICES

69

2.4

Human Resources: Employer –Employee Relationship72

WORKFORCE INFORMATIONAND ORGANISATION OF WORK

72

2.4.2

HUMAN RESOURCES ORGANISATION

73

2.4.3

HUMAN RESOURCES POLICIESAND PERFORMANCE
74
2.4.3.1 Health and Safety: Providing a Safe Workplacefor EADS Employees and Subcontractors
74
2.4.3.2 Caring for EADS Employees and EADS KnowHow
74
2.4.3.3 Diversity: Commitment to Ensure Equal
Opportunity for all EADS Employees
75
2.4.3.4 Career Development: Efﬁcient Managementof Skills and Know-How
77
2.4.3.5 Employee Relations: A Proactive Dialogue80

2.5

Corporate Citizenship

81

2.5.1

MAINTAINING AN OPEN DIALOGUEWITH EADS’ STAKEHOLDERS
2.5.1.1 Policy
2.5.1.2 Organisation
2.5.1.3 Performance and Best Practices

81
81
81
81

ENCOMPASSING COMMUNITY INTERESTSIN EADS’ GLOBAL STRATEGY
2.5.2.1 Policy
2.5.2.2 Organisation
2.5.2.3 Performance and Best Practices

82
82
82
82

1.1.11

INCORPORATION BY REFERENCE

45

1.2

Recent Developments

45

2

CORPORATE SOCIALRESPONSIBILITY

2.1

Business Ethics

52

2.1.1

PROPER BUSINESS PRACTICES
2.1.1.1 Policy
2.1.1.2 Organisation
2.1.1.3 Performance and Best Practices

52
52
52
53

2.1.2

EXPORT COMPLIANCE
2.1.2.1 Policy
2.1.2.2 Organisation
2.1.2.3 Performance and Best Practices

55
55
55
55

2.1.3

COMPLIANCE WITH LAW REGARDING
ALL EADS ACTIVITIES
2.1.3.1 Policy
2.1.3.2 Organisation
2.1.3.3 Performance and Best Practices

56
56
56
57

CORPORATE GOVERNANCE STANDARDS
2.1.4.1 Policy
2.1.4.2 Organisation

57
58
58

2.1.4

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EA DS BU S I NES S, L E G A L AN D CO R P O R AT E R E S P O N S I B ILIT Y

2.2

Sustainable Growth

58

2.2.1

PRODUCT QUALITYAND CUSTOMER SATISFACTION
2.2.1.1 Policy
2.2.1.2 Organisation
2.2.1.3 Performance and Best Practices

58
58
58
59

2.2.2

SUSTAINING AND PROTECTING INNOVATION
2.2.2.1 Innovation Strategy
2.2.2.2 Protecting Innovation: Intellectual Property

60
60
63

2.2.3

SUPPLIER MANAGEMENT:FOSTERING A MUTUALLY BENEFICIAL
RELATIONSHIP WITH EADS’ SUPPLIERS
2.2.3.1 Policy
2.2.3.2 Organisation
2.2.3.3 Performances and Best Practices

64
64
64
65

Environmental Care

68

2.3

2.4.1

49

2.5.2

TABLE OF CONTENTS | REGISTRATION DOCUMENT PARTS 1 AND 2

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3

GENERAL DESCRIPTION
OF THE COMPANY
AND ITS SHARE CAPITAL

3.3.2

85

General Description of the Company

86

3.1.1

COMMERCIAL AND CORPORATE NAMES,SEAT AND REGISTERED OFFICE

86

3.1.2

LEGAL FORM

86

3.1.3

GOVERNING LAWS
3.1.3.1 Periodic Disclosure Obligations
3.1.3.2 Ongoing Disclosure Obligations

86
87
88

DATE OF INCORPORATION AND DURATION
OF THE COMPANY

89

3.1.5

OBJECTS OF THE COMPANY

89

3.1.6

COMMERCIAL AND COMPANIES REGISTRY

89

3.1.7

INSPECTION OF CORPORATE DOCUMENTS

90

3.1.8

FINANCIAL YEAR

90

3.1.9

ALLOCATION AND DISTRIBUTION OF INCOME
3.1.9.1 Dividends
3.1.9.2 Liquidation

90
90
90

3.1.4

3.1.10 GENERAL MEETINGS
3.1.10.1 Calling of Meetings
3.1.10.2 Right to attend Meetings
3.1.10.3 Majority and Quorum
3.1.10.4 Conditions of Exercise of Right to Vote

90
90
91
92
92

3.1.11 DISCLOSURE OF HOLDINGS

92

3.1.12 MANDATORY TENDER OFFERS
3.1.12.1 Takeover Directive
3.1.12.2 Dutch Law
3.1.12.3 Articles of Association

93
93
94
94

100

3.3.3

FORM OF SHARES

105

3.3.4

CHANGES IN THE SHAREHOLDING OF
THE COMPANY SINCE ITS INCORPORATION105PERSONS EXERCISING CONTROLOVER THE COMPANY

107

3.3.6

SIMPLIFIED GROUP STRUCTURE CHART

108

3.3.7

PURCHASE BY THE COMPANY
OF ITS OWN SHARES
3.3.7.1 Dutch Law and Information
on Share Buy-Back Programmes
3.3.7.2 French Regulations
3.3.7.3 German Regulations
3.3.7.4 Spanish Regulations
3.3.7.5 Description of the Share Buy-Back
Programme to be Authorised by
the Annual General Shareholders’ Meeting
to be held on 26th May 2008

3.3.5

110
110
110
110
111

111

3.4

Dividends

114

3.4.1

DIVIDENDS AND CASH DISTRIBUTIONS PAID
SINCE THE INCORPORATION OF THE COMPANY 114

3.4.2

DIVIDEND POLICY OF EADS

114

3.4.3

UNCLAIMED DIVIDENDS

114

3.4.4

TAXATION

114

3.5

Annual Securities Disclosure Report

116

4

ENTITY RESPONSIBLE FOR THE
REGISTRATION DOCUMENT
117

4.1

Entity Responsible
for the Registration Document

118

Statement of the Entity Responsible
for the Registration Document

118

3.2

General Description of the Share Capital 95

3.2.1

MODIFICATION OF SHARE CAPITAL OR RIGHTSATTACHED TO THE SHARES

95

3.2.2

ISSUED SHARE CAPITAL

96

3.2.3

AUTHORISED SHARE CAPITAL

96

4.3

Information Policy

118

3.2.4

SECURITIES GRANTING ACCESS TO THE
COMPANY’S CAPITAL

96

4.4

Undertakings of the Company
regarding Information

119

CHANGES IN THE ISSUED SHARE CAPITALSINCE INCORPORATION OF THE COMPANY

97

4.5

Signiﬁcant Changes

119

3.3

Shareholdings and Voting Rights

98

3.3.1

SHAREHOLDING STRUCTURE

98

3.2.5

4.2

EA DS B USINESS, LEG A L A ND CORP ORAT E RESP ONSIBILIT Y

CONTENTS FOR THIS BOOK

3.1

RELATIONSHIPS WITH PRINCIPALSHAREHOLDERS

5

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Information
on EADS‘ Activities

1

1.1

Presentation of the EADS Group

8

1.1.1

OVERVIEW

81.1.2

AIRBUS

13

1.1.3

MILITARY TRANSPORT AIRCRAFT

21

1.1.4

EUROCOPTER

25

1.1.5

DEFENCE & SECURITY

29

1.1.6

ASTRIUM

35

1.1.7

OTHER BUSINESSES

40

1.1.8

INVESTMENTS

42

1.1.9

INSURANCE

43

1.1.10LEGAL AND ARBITRATION PROCEEDINGS

44

1.1.11

INCORPORATION BY REFERENCE

45

1.2

Recent Developments

45

EA DS B USINESS, LEG A L A ND CORP ORAT E RESP ONSIBILIT Y

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INFORMATION ON EADS ACTIVITIES
1.1 | Presentation of the EADS Group

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1.1 Presentation of the EADS Group
1.1.1

OVERVIEW

Due to the nature of the markets in which EADS operates and theconfidential nature of its businesses, any statements with respect to
EADS’ competitive position set out in paragraphs 1.1.1 through1.1.8 below have been based on EADS’ internal information
sources, unless another source has been specified below.
With consolidated revenues of €39.1 billion in 2007, EADS isEurope’s premier aerospace and defence company and thesecond largest aerospace and defence company in the world.
In terms of market share, EADS is among the top two
manufacturers of commercial aircraft, civil helicopters,commercial space launch vehicles and missiles, and a leading
supplier of military aircraft, satellites and defence electronics.
In 2007, it generated approximately 77% of its total revenues in
the civil sector and 23% in the defence sector.

2007 Highlights
2007 was a year of continued commercial success for EADS.
Order intake amounted to approximately €136.8 billion forthe year and was driven by strong performances at Airbus andEurocopter in particular, causing EADS’ order backlog to reacha historical high of €339.5 billion at the end of 2007. Airbus
marked a major milestone with the delivery of its 5000th
aircraft, including the ﬁrst delivery of the A380 to launchcustomer Singapore Airlines.
EADS also considerably simpliﬁed its management structure in
2007, marking an important step in its development. A single
chairman and a single chief executive ofﬁcer were appointed tolead the Group, while the Board of Directors’ independence
was reinforced through the appointment of new outside
members. In the future, the Board of Directors will seek tofurther improve its decision-making procedures whileproviding increased transparency to stakeholders.
Despite these successes, EADS encountered signiﬁcantindustrial challenges on key aircraft development programmes
during 2007. Delays were announced in respect of the A400M
and NH90 programmes, while Airbus continued to face strong
headwinds in the ramp-up of A380 production. With respect
to the A400M programme in particular, EADS announced a six
to twelve month delay in the ﬁrst delivery of the aircraft,resulting in cost overruns and other charges totalling€1.4 billion in 2007.
Continued U.S. dollar weakness has also reinforced thenecessity of the “Power8” restructuring programme, which
Airbus launched at the beginning of 2007. Airbus has already
8

EADS BU S I NES S , LEG A L A N D CO R P O R AT E R E S P O N S I B I L I T Y

taken several steps towards its implementation, including theselection of preferred bidders for six Airbus aerostructure sitedivestments. At the same time, further depreciation of the
U.S. dollar against the Euro since the launch of Power8 (which
was based on an exchange rate of $1.35 per Euro) has
highlighted the need for EADS to develop additional measures
to adapt to this new business environment.
EADS’ business environment in 2007 was characterised byanother strong year for the aviation industry. Nevertheless,the overall business environment remains volatile going
forward. The depreciation of the U.S. dollar against the Eurohas reached unforeseen levels and therefore increasingly places
European companies at a competitive disadvantage, while highoil prices put pressure on EADS’ customers. In defence,procurement budgets remain under pressure. At the same time,governmental initiatives to strengthen defence and homeland
security capabilities in order to counter increasing threats may
create new opportunities for the long-term. The same may
prove true in respect of space activities, as industry players
await the outcome of a European Space Agency ministerial
conference scheduled for November 2008 to provide needed
momentum. Commercial space activities remain under highprice pressure.
Airbus surpassed its previous records in terms of both orders
and deliveries in 2007. Reinforcing its backlog, Airbus won
1,458 ﬁrm new gross orders, exceeding the previous recordof 1,111 orders set in 2005. Fast-growing airlines in the Asia-Paciﬁcregion, India and the Middle East were the chief driver of neworders. Demand also remained strong from low cost and legacy
carriers in Europe and the United States, which aremodernising and expanding ﬂeets. The A380 won 33 new ﬁrm
gross orders, with existing customers reafﬁrming theirconﬁdence in the aircraft and new customers placing their ﬁrst
orders. At year-end, total ﬁrm orders for the A380 stood at 189.
The A350 XWB received 290 ﬁrm orders from 12 customers,
demonstrating the market’s positive response to the new design
reﬁnements. Airbus delivered 453 aircraft in 2007, 19 morethan the previous year.
The Military Transport Aircraft Division experienced delays in
the industrial production of its ﬂagship A400M heavytransport aircraft in 2007, overshadowing its other activities
and negatively affecting its ﬁnancial results. Althoughmitigation measures such as a change in management,
reorganisation of responsibilities and shortening of the chainof command have been implemented, EADS continues to faceINFORMATION ON EADS ACTIVITIES

1

1.1 | Presentation of the EADS Group

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signiﬁcant challenges in achieving ﬁrst ﬂight in summer 2008
and meeting the revised delivery schedule.

risk reduction of a modular reconnaissance and surveillance UAV
by Germany, France and Spain.

At the same time, the Military Transport Aircraft Division’s
medium-weight turboprop aircraft range had a good year in2007. Defence forces from Poland to Colombia ordered a totalof eleven C-295 aircraft, the Spanish Interior Ministry bought
two CN-235 aircraft to perform border patrol missions and the
U.S. Coast Guard’s Deepwater programme ordered a further
ﬁve CN-235 aircraft. Saudi Arabia became the latest customer
for the A330 Multi-Role Tanker Transport (MRTT), ordering
three aircraft in December (to be booked in 2008). In addition,
the AirTanker consortium (in which EADS owns a 40%
interest) launched a ﬁnancing competition to raiseapproximately £2.2 billion in capital to fund construction of 14
A330 MRTTs for the U.K.’s Future Strategic Tanker Aircraft(FSTA) programme.

Finally, following several years of innovation and efﬁciency
improvement, Astrium’s strong competitive position is reﬂected
in its full order book and increased EBIT* for 2007.
The Paradigm business’ landmark Skynet 5 project made important
progress, with the launch of two out of the three contracted
secure telecommunications satellites. This is expected to allow
EADS to provide secure communications for the U.K. Ministryof Defence using the new Skynet 5 network from 2008 onwards.
Astrium Satellites also won a signiﬁcant share of the market in2007, as did Astrium Space Transportation. The latter
manufactured six of the powerful Ariane 5 ten-ton satellite
launchers during the year, with Arianespace signing apreliminary order for the delivery of 35 Ariane 5 launchers from2010. Galileo, the planned European satellite navigation system,
was also reorganised and is now expected to be back on track.

In 2007, Eurocopter maintained its leadership by capturing
more than 50% of the civil market in terms of deliveries andby achieving strong growth in its military order book.
With a record order intake of 802 new helicopters, Eurocopter’sbacklog reached a historical high of more than €13 billion at
the end of 2007. Orders were driven by the oil and gas
segment, parapublic orders and orders for the NH90 and Tiger.
Moreover, following a 76% rise in deliveries over the past three
years from 279 to 488 helicopters, management began toreorganise the industrial base to prepare for future volume
increases. The NH90 medium-weight, multi-role militaryhelicopter was a particular focus. NH90 production was steppedup, but the large number of model variants has resulted inconsiderable complexity. In response, management of the
NH90 programme has been restructured — with a focus on
simpliﬁcation of processes, clearer allocation of responsibility
and increased responsiveness — in seeking to bring the
programme back on track. At the same time, the army versionof the NH90 was delivered to Australia, Sweden and Italy
in 2007.
Defence & Security beneﬁted from the Saudi Arabian order for
72 Euroﬁghter aircraft in 2007, while MBDA reinforced its
position as a world-leading missile systems company. Importantsuccesses were achieved in security areas including securecommunications, with more than 35 new professional mobile
radio contract wins, and global security. Defence & Security won
signiﬁcant contracts as a security Lead Systems Integrator. Qatar
contracted with EADS to build its National Security Shield
System. Important steps were taken in areas of potentially highgrowth, such as Unmanned Aerial Vehicles (UAVs). The German
Ministry of Defence awarded Defence & Security the researchand technology programme for the Agile UAV in network-centric
environments to analyse and reﬁne enabling technologies andoperating concepts. EADS was also tasked for the study on theStrategy
In order to maximise value for its shareholders, Management
intends to reinforce EADS’ position as a leader in major global
aerospace and defence markets. Beyond addressing current
operational challenges, EADS will continue to focus onproviding superior value to its customers through innovative
product and service solutions. EADS has deﬁned the following
long-term objectives for the future:●

Improve portfolio balance between Airbus and other EADS
activities. In 2007, revenues at Airbus represented 64.5% of
EADS’ consolidated revenues for the year. As a result, theGroup remains highly vulnerable to commercial aircraft
cycles, the ﬁnancial burden and risk associated with aircraft
programmes and U.S. dollar exchange rate ﬂuctuation. EADS
will therefore seek to increase the contribution to revenues
by other divisions in future years while still maintaining
long-term parity with Boeing in the commercial aircraft
segment. In particular, EADS will seek to increase theproportion of revenues emanating from its defence andsecurity businesses, which tend to be less cyclical and morepredictable in nature. Within this area, EADS will focus on
further strengthening its presence in platforms, systems anddefence electronics. The Group will consider all options forachieving such growth, including targeted acquisitions orpartnerships that enhance its overall competitive position
and add capabilities to its portfolio, in particular in the U.S.
and Asia;●

Increase profitability. Through better internal cost control,
lightened capital intensity, enhanced programme and risk
management and a more streamlined industrial organisation,
EADS has taken initial steps towards restoring its* Earnings before interest and taxes, pre-goodwill impairment and exceptionals.

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proﬁtability. EADS intends to increasingly focus on its core
activities, which means moving towards a new businessmodel and reallocating resources away from certain non-corelegacy activities. Through more optimal resource allocationand stronger development of more proﬁtable segments,
EADS will strive to establish a level of proﬁtability that isboth attractive to its shareholders and sufﬁcient to fund its
future development initiatives;
●

●

●

●

10

Expand its services offering. Historically, EADS’ growth has
been driven by the sale of technologically advanced products
and solutions, which will also help to sustain growth for the
future. Development of the new A350 XWB is but one
example. At the same time, Management is focused onincreasing EADS’ presence in the high value services
market, given its countercyclical nature and opportunities forsustained growth. Factors supporting this market include therapid expansion of EADS’ in-service commercial and defence
ﬂeet — which will require support throughout its life cycle— as well as the increasing tendency on the part of defence
and governmental agencies to outsource various key
functions. EADS will seek the provision of high valueadded services related to both platforms and communication
systems, including product support, systems support andmission outsourcing, such as integrated logistics support,
tests and simulation, training and upgrades;
Become a truly global industrial group. A signiﬁcant portionof EADS’ suppliers, facilities and employees are based inEurope, while the majority of its revenues originate outsideof Europe. In order to ensure continued access to certain
markets and technology, optimise its costs and hedge against
future U.S. dollar volatility, EADS will aim to implement a
long-term industrial strategy that corrects this imbalance by
expanding its industrial footprint in key markets outside ofEurope, including the U.S., China, Russia and India. In the
U.S., the goal is to establish a ﬁrm industrial and commercial
presence in the world’s largest defence and homeland
security market. Early 2008 marked a key milestone, as the
U.S. Air Force selected Northrop Grumman’s KC-45A(based on an A330 MRTT) as its new tanker. See “1.2Recent Developments”;
Continue to innovate. Innovation in product, technology,
manufacturing and customer offerings will deﬁne EADS’
future. With development cycles shortening and newcompetitors emerging in all ﬁelds, EADS must maintain its
technological edge and cover a broad spectrum of capabilities
in order to remain a market leader. To maintain its innovativeedge, EADS will seek to systematically employ the latest
digital design and engineering tools in order to complete
major platform developments more quickly, and will seek toaccelerate the pace at which it reviews its core technologies
so as to close gaps against the competition;
Focus on the environment. EADS will seek to anticipate andaddress future environmental challenges as part of its

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commitment to reconciling environmental responsibility
with economic success. Most EADS sites have ISO 14001
environmental certiﬁcation, and Airbus has become the ﬁrst
aerospace company to receive certiﬁcation covering not only
its European sites but also product-related processes. Being
greener, cleaner, quieter and smarter, the A380 has alreadyset new standards for air transport and the environment.
EADS will pursue additional initiatives in the future
in order to render eco-efﬁciency a competitive advantage
over the long-term.

Organisation of EADS Businesses
EADS organises its businesses into the following ﬁve operating
divisions: (1) Airbus, (2) Military Transport Aircraft,(3) Eurocopter, (4) Defence & Security and (5) Astrium.
The chart set out in “— 3.3.6 Simpliﬁed Group Structure
Chart” illustrates the allocation of activities among these ﬁve
divisions.
AirbusAirbus is one of the world’s two leading suppliers ofcommercial aircraft of more than 100 seats. Since it was
founded in 1970 and up to the end of 2007, Airbus hasreceived orders for 8,438 aircraft from approximately
290 customers around the world. Its market share of annual
deliveries worldwide has grown from 15% in 1990 to 51%
in 2007. At 31st December 2007, Airbus’ backlog of orders(3,421 aircraft) stood at approximately 80% of total EADS
worldwide backlog. Gross order intake was 1,458 aircraft andafter accounting for cancellations, net order intake for 2007 was
1,341 aircraft. In 2007, Airbus recorded revenues of€25.2 billion, representing 64.5% of EADS’ total consolidated
revenues. See “— 1.1.2 Airbus”.
Military Transport Aircraft
The Military Transport Aircraft Division (the “MTA
Division”) produces and sells special mission aircraft, which
are derived from existing aircraft platforms and are dedicatedto specialised military and security tasks such as in-ﬂight
refuelling capabilities, maritime surveillance and antisubmarine
warfare. The MTA Division is responsible for the European
heavy military transport A400M project, and also develops,
manufactures and sells medium and light military transport
aircraft. Finally, the MTA Division designs and manufactures
aerostructure elements. In 2007, the MTA Division recorded
revenues of €1.1 billion, representing 2.9% of EADS’ total
consolidated revenues. See “— 1.1.3 Military Transport
Aircraft”.
Eurocopter
Through Eurocopter, EADS is one of the global leaders in theworldwide civil and military helicopter market. Management
expects that sales in the military market in particular will

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increase substantially in the future, given the start of deliveryof the NH90 military transport helicopter and the Tiger attack
helicopter, the strong global backlog and the increasing demandin international military and homeland security export markets.
In 2007, Eurocopter maintained its leadership by capturing
more than 50% of the civil market in terms of deliveries and byachieving strong growth in its military order book. In 2007,
the Eurocopter Division recorded revenues of €4.2 billion,
representing 10.7% of EADS’ total consolidated revenues.
See “— 1.1.4 Eurocopter”.
Defence & Security
The Defence & Security Division (the “DS Division”) is activein the ﬁeld of integrated defence and security solutions
including missile systems, combat aircraft, defence electronics,
military communications and homeland security. Its customers
are military forces and law enforcement agencies worldwide.
The Military Air Systems unit is a leading partner in theEuroﬁghter consortium and is also active in the UAV ﬁeld.
The DS Division is also a leading supplier of defence
electronics in Europe and plays a signiﬁcant role in the secureand encrypted military communications market. In 2007,
the DS Division recorded revenues of €5.5 billion,
representing 14.0% of EADS’ total consolidated revenues.
See “— 1.1.5 Defence & Security”.

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Astrium
Astrium designs, develops and manufactures satellites, orbital
infrastructures and launcher systems and provides space
services. It is the third largest space systems manufacturing
company in the world after Boeing and Lockheed Martin andthe leading European supplier of satellites, orbital
infrastructures, launchers and associated services. Astrium has
three main business units: Astrium Satellites, Astrium SpaceTransportation and Astrium Services. Astrium also provides
launch services through its shareholdings in Arianespace(Ariane 5 launcher), Starsem (Soyuz launcher) and Eurockot(Rockot launcher), as well as services related totelecommunications and Earth observation satellites throughwholly owned subsidiaries such as Paradigm Secure
Communications and Infoterra, and joint ventures such as Spot
Image. In 2007, Astrium recorded revenues of €3.6 billion,
representing 9.1% of EADS’ total consolidated revenues.
See “— 1.1.6 Astrium”.
Investments
Among its signiﬁcant investments, EADS holds a 46.3% stake in
Dassault Aviation, a major participant in the world market for
military jet aircraft and business jets. See “— 1.1.8 Investments”.

Summary Financial and Operating Data
The following tables provide summary ﬁnancial and operating data for EADS for the past three years.
CONSOLIDATED REVENUES BY DIVISION FOR THE YEARS ENDED 31 ST DECEMBER 2007, 2006 AND 2005
Year ended 31st December 2007

AirbusYear ended 31st December 2006

Year ended 31st December 2005

Amount in €bn

In percentage*

Amount in €bn

In percentage*

Amount in €bn

In percentage*

25.2

63.8%

25.2

62.5%

22.2

64.3%

Military Transport Aircraft

1.1

2.9%

2.2

5.5%

0.8

2.2%

Eurocopter

4.2

10.5%

3.8

9.4%

3.2

9.3%

Defence & Security**

5.5

13.8%

5.9

14.6%

5.6

16.4%

Astrium

3.6

9.0%

3.2

8.0%

2.7

7.8%

Total Divisional
Revenues

39.5

100%

40.3

100%

34.5

100%

Other Businesses

1.3

1.3

1.1

Headquarters/
Consolidation***

(1.7)

(2.1)

(1.4)

Total

39.1

39.4

34.2

(*)
Before “Other Businesses” and “Headquarters/Consolidation”.
(**) MBDA proportionally consolidated at 37.5% in 2007, 50% in 2006 and 2005. See “Part 1/1.1 Management’s Discussion and Analysis of Financial Condition and Results of Operations”.
(***) Includes inter-company eliminations and headquarters sales.

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4

CONSOLIDATED REVENUES BY GEOGRAPHICAL AREA FOR THE YEARS ENDED 31 ST DECEMBER 2007, 2006 AND 2005
Year ended 31st December 2007

Year ended 31st December 2006

Year ended 31st December 2005

Amount in €bn

In percentage*

Amount in €bn

In percentage*

Amount in €bn

In percentage*

Europe

17.4

44.4%

17.1

43.6%

13.6

39.7%

North America

7.9

20.3%

9.4

23.9%

9.0

26.4%

Asia/Pacific

8.8

22.6%

7.9

19.9%

7.7

22.6%

Rest of the World**

5.0

12.7%

5

12.6%

3.9

11.3%

Total

39.1

100%

39.4

100%

34.2

100%

(*)
(**)

Percentage of total revenues after eliminations.
Including the Middle East.

CONSOLIDATED ORDERS BOOKED FOR THE YEARS ENDED 31 ST DECEMBER 2007, 2006 AND 2005
Year ended 31st December 2007

Year ended 31st December 2006

Year ended 31st December 2005

Amount in €bn

In percentage*

Amount in €bn

In percentage*

Amount in €bn

In percentage*

Orders booked**
117.3

86%

53.4

77%

78.3

84%

Military Transport Aircraft

Airbus***

0.8

1%

1.6

2%

1.8

2%

Eurocopter

6.6

5%

4.9

7%

3.5

4%

Defence & Security****

7.5

5%

5.2

8%

6.7

7%

Astrium

4.5

3%

4.4

6%

2.3

3%

136.7

100%

69.5

100%

92.6

100%

Total divisional orders
Other Businesses

1.7

1.5

1.9

Headquarters/
Consolidation

(1.6)

(1.9)

(2)

136.8

69.1

92.6

Total

(*)
Before “Other Businesses” and “Headquarters/Consolidation”.
(**) Without options.
(***) Based on catalogue prices for commercial aircraft activities.
(****) MBDA proportionally consolidated at 37.5% in 2007, 50% in 2006 and 2005. See “Part 1/1.1 Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

CONSOLIDATED BACKLOG FOR THE YEARS ENDED 31 ST DECEMBER 2007, 2006 AND 2005*
Year ended 31st December 2007

Year ended 31st December 2006

Year ended 31st December 2005

Amount in €bn

In percentage**Amount in €bn

In percentage**Amount in €bn

In percentage**

Airbus****

283.8

81%

210.1

77%

202.0

77%

Military Transport Aircraft

19.9

6%

20.3

8%

21.0

8%
4%

Backlog***

Eurocopter

13.5

4%

11.0

4%

10.0

Defence & Security*****

17.9

5%

17.6

6%

18.5

7%

Astrium

12.9

4%

12.3

5%

10.9

4%

348.0

100%

271.3

100%

262.4

100%

Total Divisional Backlog
Other Businesses

2.4

2.3

2.1

Headquarters/
Consolidation(10.9)(10.8)(11.3)

Total

339.5

262.8

253.2

(*)
For a discussion on the calculation of backlog, see “Part 1/1.1.4.1 Order Backlog”.
(**) Before “Other Businesses” and “Headquarters/Consolidation”.
(***) Without options.
(****) Based on catalogue prices for commercial aircraft activities.
(*****) MBDA proportionally consolidated at 37.5% in 2007, 50% in 2006 and 2005. See “Part 1/1.1 Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

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Relationship Between EADS N.V. and the GroupEADS N.V. itself does not engage in the core aerospace, defenceor space business of its Group but coordinates related businesses,
sets and controls objectives and approves major decisions for its
Group. As the parent company, EADS N.V. conducts activities
which are essential to the Group activities and which are an
integral part of the overall management of the Group. In
particular, ﬁnance activities pursued by EADS N.V. are insupport of the business activities and strategy of the Group. In
connection therewith, EADS N.V. provides or procures theprovision of services to the subsidiaries of the Group. General

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management service agreements have been put in place with thesubsidiaries and services are invoiced on a cost plus basis.
For management purposes, EADS N.V. acts through its
Board of Directors, Executive Committee, and Chief Executive
Ofﬁcer in accordance with its corporate rules and procedures
detailed in “Part 1/Chapter 2 — Corporate Governance”.
Within the framework deﬁned by EADS, each division,business unit, and subsidiary is vested with full
entrepreneurial responsibility.

1.1.2 AIRBUS
Introduction and Overview

Strategy

Airbus is one of the world’s two leading suppliers ofcommercial aircraft of more than 100 seats. Since it was
founded in 1970 and up to the end of 2007, Airbus hasreceived orders for 8,438 aircraft from approximately
290 customers around the world. Its market share of annual
deliveries worldwide has grown from 15% in 1990 to 51%
in 2007. In 2007, Airbus recorded revenues of €25.2 billion,
representing 64.5% of EADS’ total revenues.

Airbus’ primary goal is to deliver strong results in a sustainedmanner, while commanding between 40% and 60% of the worldcommercial aircraft market over the long-term. To achieve thisgoal, Airbus is actively:

With 453 aircraft deliveries in 2007 (434 in 2006), Airbus wasfor the ﬁfth consecutive year the largest supplier of commercial
aircraft in the world. Airbus received 1,458 gross orders in 2007
(compared to 824 gross orders in 2006). After accounting forcancellations, net order intake for 2007 was 1,341 aircraft(compared to 790 aircraft in 2006). At 31st December 2007,
Airbus’ backlog of orders was 3,421 aircraft, representing
approximately 80% of total EADS’ worldwide backlog.
Airbus marked a major milestone in 2007 through the delivery of
its 5000th aircraft, including the ﬁrst delivery of the A380
to launch customer Singapore Airlines. Nevertheless, Airbus still
faces several challenges, including persistent U.S. dollar weakness,a demanding ramp-up schedule on the A380 and production
difﬁculties related to the A400M programme. From a ﬁnancial
perspective, the delay in A400M production in particular had anegative effect on Airbus’ earnings before interest and taxes, pregoodwill impairment and exceptionals (“EBIT*”) of €(1.2) billion
in 2007. See “Part 1/1.1 Management’s Discussion and Analysisof Financial Condition and Results of Operations”.
In order to address these challenges and meet its future
investment needs, Airbus launched the Power8 restructuring
programme at the beginning of 2007, as discussed below.
Airbus SAS is a wholly owned subsidiary of EADS.

Building a leaner, more fully integrated company
In order to address the challenges posed by persistent U.S. dollar
weakness, increased competitive pressures and the ﬁnancial
burden related to the A380 and A400M delays, and to meet its
future investment needs, Airbus launched a four-year
restructuring programme at the beginning of 2007 referred toas Power8. Power8 consists of several measures aimed atmaking the Company leaner, more competitive and more fully
integrated, including: Putting the Customer First, Develop
Faster, Smart Buying, Lean Manufacturing, Reduce Overhead
Costs, Maximise Cash, Restructure Industrial Set up,
Streamline Final Assembly Line, Focus on Core Business.
Together, these measures are aimed at transforming Airbus’
business model and developing a global network of partners.
The transformation is expected to occur progressively over
several years and includes the further expansion of Airbus’
global footprint.
As part of Power8, Airbus management is seeking to implement
strong cost reduction and cash generating efforts with the goal ofachieving EBIT* contributions of €2.1 billion from 2010 onwards
and an additional €5 billion of cumulative cash ﬂow from 2007
to 2010. A large part of the cost savings is expected to be realised
through the reduction of Airbus’ headcount by 10,000
employees (including temporary and on-site supplier employees).
The planned measures to reduce overhead costs, and speciﬁcally
headcount, required a restructuring expense of €(624) million to
be recorded in 2007. See “Part 1/1.1 Management’s Discussion
and Analysis of Financial Condition and Results of Operations”.

* Earnings before interest and taxes, pre-goodwill impairment and exceptionals.

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By the end of 2007, Airbus had already taken several steps
towards the implementation of Power8. Speciﬁcally, it reduced
the former eight mostly national Centres of Excellence to four
fully transnational organisations, reinforced the engineering
focus on aircraft architecture and integration and centralised
various support functions such as ﬁnance and human resources.
EADS and Airbus also selected preferred bidders for six Airbus
aerostructure site divestments. See “— Production — Industrial
Organisation” and 1.2 “Recent Developments”.
Developing the most comprehensive line of products in
response to customer needs
Airbus continuously seeks to develop and deliver new products
to meet customers’ evolving needs. In this regard, Airbus iscurrently pursuing (i) implementation of the current A380
delivery schedule, (ii) the development of the new A350 XWBFamily of highly advanced medium capacity long-range aircraft,(iii) the gradual expansion of relevant freighter applications acrossthe range of Airbus aircraft, by developing the A330-200F and
the A320 passenger-to-Freighter, (iv) the continuous improvementof existing models’ competitive edge in their respective markets,(v) the entry into the military business through new aircraft suchas the A400M or the development of military derivatives
products such as the Multi Role Tanker Aircraft based on theA330 airframe, and (vi) research on the development of new
aircraft in the short- and medium range sector.
Focusing on key geographic markets
Airbus is seeking to expand its global presence and to increase
its market share in key emerging markets such as China, Russia
and India. As part of this strategy, Airbus is developing a
number of international industrial partnerships and is building
strategic relationships with strong industry partners.
In 2007, for example, Airbus began construction of an A320
Family ﬁnal assembly line in Tianjin, China, and signed
a memorandum of understanding to allocate 5% of theA350 XWB airframe to the Chinese aviation industry. In Russia,
Airbus formed a joint venture with the United Aircraft
Corporation (UAC), Irkut and Elbe Flugzeugwerke GmbH (EFW)
for development of a conversion business of A320 Family aircraft
into freighter aircraft in Russia and Germany. In Bangalore,
India, Airbus created two new wholly owned subsidiaries,
Airbus Engineering Centre India (AECI) and Airbus Training
India. AECI is the ﬁrst offshore engineering centre thatspecialises in non-speciﬁc design, while Airbus Training India isa pilot and maintenance training centre. Finally, Airbus selected
ﬁve Indian companies as prime suppliers of engineering services
for various aircraft programmes in 2007.
Expanding its customer services offering
Airbus seeks to remain at the forefront of its industry by
expanding its customer services offering to meet customers’

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evolving needs. As a result, Airbus has designed acomprehensive portfolio of services named Air+ by Airbus.
See “— Products and Services — Customer Service”. It is throughthis interface that Airbus aims to satisfy all of its customers’
pre-delivery and in-service support requirements throughindividually tailored packages.

MarketCyclicality and Market Drivers
The main factors affecting the aircraft market include passenger
demand for air travel, national and international regulation (andderegulation), and the rate of replacement and obsolescenceof existing ﬂeets. The performance, competitive postureand strategy of aircraft manufacturers, airlines, cargo operatorsand leasing companies as well as wars, political unrest andextraordinary events may also precipitate changes in demandand lead to short-term market imbalances.
In recent years, China and India have emerged as signiﬁcant
new aircraft markets. According to internal estimates, they are
expected to constitute the second and ﬁfth most important
markets for aircraft deliveries, respectively, in the next twenty
years. As a result, Airbus has sought to strengthen its
commercial and industrial ties in these countries. At the endof 2007, for example, Airbus and the Chinese authorities
announced a further agreement with the China Aviation
Supplies Import and Export Group Corporation (CASGC)
for the order of 110 A320 Family aircraft and 40 A330-200
for operation by Chinese airlines.
The no-frills/low-cost carriers also continue to emerge as asigniﬁcant sector, and are expected to continue growing aroundthe world, particularly in Asia. Airbus single aisle aircraftcontinue to be a popular choice for these carriers. As someof these carriers begin testing the market with new long-hauloperations, demand for Airbus’ range of twin aisle aircraft may
also increase. For example, AirAsia, already a large customer for
single aisle aircraft, placed an order for its new long haul carrierfor 15 A330-300 aircraft in 2007.
Overall Growth. The long-term market for passenger aircraft
depends primarily on passenger demand for air travel, which isitself primarily driven by economic or gross domestic product(“GDP”) growth, fare levels and demographic growth.
Measured in revenue passenger kilometres, air travel increased
every year from 1967 to 2000, except for 1991 due to the Gulf War,resulting in an average annual growth rate of 7.9% for theperiod. Demand for air transportation also proved resilient in
the years following 2001, when successive shocks, including
9/11 and SARS in Asia, dampened demand. Nevertheless,the market quickly recovered, with more than 36% trafﬁc
growth recorded over the past six years (source: International
Civil Aviation Organization (ICAO) world trafﬁc data for 2001,
Airbus internal estimate for world trafﬁc in 2007).

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In 2007, Airbus projected that air travel would grow at 4.9%
per annum during the period 2007-2026. Airbus therefore
expects passenger trafﬁc, as measured in revenue passenger
kilometres, to more than double in the next twenty years.
Cyclicality. Although those in the industry producing longterm demand forecasts believe that long-term growth in air
travel is secure, the market for aircraft has proven to be cyclical,
due to the volatility of airline proﬁtability and cycles of theworld economy. Isolated events — such as 9/11 and SARS —may also have an impact on aircraft demand and exacerbate any
downturn. When cyclical downturns have occurred in the past,
aircraft manufacturers have typically experienced decreases inaircraft orders and have made fewer deliveries. This has
generally been followed by a period of sustained new order anddelivery activity. Accordingly, while total worldwide orders foraircraft of 100 seats or more reached a cyclical low of 524
in 2003, the number of new orders rebounded to an industry
record of 2,881 in 2007 — which likely represents the peak of
the current market cycle. Orders during the recent market cycle
have been driven in part by leasing companies seeking to growtheir portfolios and airlines seeking to replace less eco-efﬁcient
aircraft in their ﬂeets with new generation aircraft such as theA350 XWB and 787, many of which will be delivered in 2013
and beyond.
Currently, there are signs that airlines are exercising morecaution in placing new aircraft orders, as high fuel prices
continue to negatively affect their proﬁtability and production
slots for new aircraft move beyond typical planning horizons.
Airbus continues to monitor events closely for any further
signs of reduced aircraft demand.
Regulation/Deregulation. National and international regulation(and deregulation) of international air services and majordomestic air travel markets affect demand for passenger aircraft
as well. In 1978, the United States deregulated its domestic airtransportation system, followed by Europe in 1985. The
recently negotiated “Open Skies Agreement” between the
United States and Europe, which will become effective inMarch 2008, will allow any European or U.S. airline to ﬂy any
route between any city in the E.U. and any city in the UnitedStates. Other regions and countries are also progressively
deregulating, particularly in Asia. This trend is expected tocontinue, facilitating and in some cases driving demand. In
addition to providing greater market access (which may haveformerly been limited), deregulation may allow for the creationand growth of new airlines or new airline models, as has been
the case with the no-frills/low-cost airline model, which has
increased in importance throughout major domestic and intra
regional markets since deregulation (e.g., in the U.S. andEurope).
Airline Network Development: “Hub” and “Point-to-Point”
Networks. Following deregulation, major airlines have sought to

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tailor their route networks and ﬂeets to continuing changes incustomer demand. Accordingly, where origin and destination
demand prove sufﬁciently strong, airlines often employ direct,
or “point-to-point” route services. However, where demand
between two destinations proves insufﬁcient, airlines havedeveloped highly efﬁcient “hub and spoke” systems, which
provide passengers with access to a far greater number of air
travel destinations through one or more ﬂight connections.
The chosen system of route networks in turn affects aircraft
demand, as hubs permit ﬂeet standardisation around both
smaller aircraft types for the short, high frequency and lower
density routes that feed the hubs (between hubs and spokes)
and larger aircraft types for the longer and higher density
routes between hubs (hub-to-hub). As deregulation has led
airlines to diversify their route network strategies, it has at thesame time therefore encouraged the development of a wider
range of aircraft in order to implement such strategies.
Airbus, like others in the industry, believes that route
networks will continue to grow through expansion of capacity
on existing routes and through the introduction of new routes,
which will largely be typiﬁed by having a major hub city atleast at one end of the route. These new route markets are
expected to be well served by Airbus’ latest product offering,
the A350 XWB, which has been designed with them in mind.
The A380, now in revenue service, is designed primarily tomeet the signiﬁcant demand between the major hub cities, very
often also the major centres of population such as London,
Paris, New York and Beijing for example. Airbus has identiﬁed
32 such cities in its market analysis. Airbus believes that it iswell positioned to meet current and future market requirements
given its complete family of products, from the 107-seat A318
to the 525-seat A380.
Alliances. The development of world airline alliances has
reinforced the pattern of airline network development
described above. According to data from Airclaims, a U.K.based aviation industry consultancy, more than one third of theworld’s jetliner ﬂeet of over 100 seats was operated by just
20 airlines as of January 2007. In the 1990s, the major airlines
began to enter into alliances that gave each alliance member
access to the other alliance members’ hubs and routings,
allowing airlines to concentrate their hub investments while
extending their product offering and market access. Airlines
have also begun to explore different merger possibilities
in recent years. Examples include the merger of Air France andKLM and U.S. Airways and America West, with talks between
other airlines currently ongoing.
Governmental Funding. A 1992 bilateral agreement between the
E.U. and the U.S. provided for ceilings on reimbursable launch
investments (typically used by European governments) of 33%
of the total development costs of new large civil aircraft
programmes. It also set a ceiling at 3% of industry revenues for

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1.1 | Presentation of the EADS Group1indirect support in relation to the development or productionof large civil aircraft (typically the Department of Defence andNational Aeronautics and Space Administration (“NASA”)
mechanisms used in the U.S.). This bilateral agreement
provided a level playing ﬁeld for government support, reﬂecting
the needs of both Europe and the U.S.
However, the unilateral withdrawal from the 1992 agreementby the U.S. government in late 2004 eventually led to formal
claims and counterclaims being made by the U.S. and the E.U.,
respectively, with the World Trade Organisation (WTO).
The E.U. and the U.S. have conducted negotiations to seek aformal settlement of the issues pending before the WTO.
Absent agreement between the parties, the WTO tribunal
hearing the dispute will issue reports evaluating the legalityof any governmental funding provided to Boeing and Airbus.
These reports and any associated recommendations will be
addressed to the WTO members (i.e., national governments),
and not to Boeing, Airbus or EADS directly.
Market Structure and Competition
Market Segments. According to a study conducted by Airbus, a
total of 13,284 aircraft with more than 100 seats were in service
worldwide at the end of 2007 (as compared to 12,676 aircraft at
the end of 2006). Currently, Airbus competes in each of thethree principal market segments for aircraft with more than
100 seats. “Single aisle” aircraft, such as the A320 Family, have100-210 seats, typically conﬁgured with two triple seats per row
divided by one aisle, and are used principally for short-range
and medium-range routes. “Twin aisle” or “wide body” aircraft,such as the A330/A340/A350 XWB Families, have a wider
fuselage with more than 210 seats, typically conﬁgured witheight seats per row and with two aisles. The A330/A340/
A350 XWB Families are capable of serving all short to longrange markets, with the A340-500/600 designed for ultra-longrange operations in particular. “Very large aircraft”, such as theA380 Family, are designed to carry more than 400 passengers,
non-stop, over very long-range routes with superior comfort
standards and with signiﬁcant cost-per-seat beneﬁts to airlines.
Freight aircraft, which form a fourth, related segment, are often
converted ex-passenger aircraft. See “— 1.1.7 Other Businesses— Aircraft Conversion and Floor Panels”.
Airbus also competes in the corporate, VIP business jet market
with the ACJ, an A319-based Corporate Jetliner, and the A318
Elite. It has also recently sold the A320, A340 and A380 toserve the business jet market in private, corporate shuttle andin government/VIP roles.
Geographic differences. The high proportion of single aisle aircraft
in use in both North America and Europe reﬂects the
predominance of domestic short-range and medium-range ﬂights,
particularly in North America due to the development of hubs
following deregulation. In comparison with North America andEurope, the Asia-Paciﬁc region uses a greater proportion of twin
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aisle aircraft, as populations tend to be more concentrated in
fewer large urban centres. The tendency towards use of twin
aisle aircraft is also reinforced by the fact that many of
the region’s major airports limit the number of ﬂights, due either
to environmental concerns or to infrastructure constraints that
limit the ability to increase ﬂight frequency. These constraints
necessitate higher average aircraft seating capacity per ﬂight.
However, Airbus believes that demand for single aisle aircraftin Asia will grow over the next 20 years, particularly as domestic
markets in China and India continue to develop. This is expected
to occur at the same time that Asian demand for larger/longrange aircraft continues to increase.
Competition. Airbus has been operating in a duopoly since
Lockheed’s withdrawal from the market in 1986 and Boeing’s
acquisition of McDonnell Douglas in 1997. As a result,the market for passenger aircraft of more than 100 seats is now
effectively divided between Airbus and Boeing. According
to the manufacturers’ published ﬁgures, in 2007 Airbus andBoeing, respectively, accounted for 51% and 49% of total
deliveries, 51% and 49% of total gross orders, and 50% and 50%of the total year-end backlog.
The high technology and high value nature of the businessmakes aircraft manufacturing an attractive industry in which
to participate, with China recently expressing its interest in thelong-term manufacturing of large commercial aircraft. However,signiﬁcant barriers to entry into the market for passenger
aircraft of more than 100 seats make it unlikely that a
newcomer will be able to compete effectively with either of theestablished aircraft manufacturers for a considerable numberof years.
Customers
As of 31st December 2007, Airbus had 287 customers,
5,017 Airbus aircraft had been delivered to operators worldwide
since the creation of Airbus, and 3,421 aircraft were on order.
The table below shows Airbus’ largest commitments in termsof total gross ﬁrm orders, by number of aircraft, for the year
2007.
Customer

Firm Orders*

U.S. Airways

97

Emirates

85

Qatar Airways

83

GECAS

60

Hong Kong Airlines

51

AirAsia50

Qantas50

Tiger Airways

50

Wizz Air50

Aviation Capital Group

45

(*)

Options are not included in orders booked or year-end backlog.

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Organisation of Airbus
Management and Integration of Airbus Activities
Following changes aimed at simplifying EADS’ organisational
structure, Tom Enders, previously co-CEO of EADS, wasappointed President and Chief Executive Ofﬁcer (CEO) of
Airbus, effective 1st September 2007. He reports to the soleCEO of EADS, Louis Gallois.
A new Airbus Executive Committee (EC) comprised of nine
members has also been appointed. EC members include
Fabrice Brégier (Chief Operating Ofﬁcer), Harald Wilhelm(Chief Financial Ofﬁcer), John Leahy (COO Customers),
Tom Williams (Executive Vice President (EVP) Programmes),
Patrick Gavin (EVP Engineering), Gerald Weber (EVP Operations),Thierry Baril (EVP Human Resources), Klaus Richter (EVP
Procurement) and Christian Scherer (EVP Strategy and Future
Programmes). The new, leaner management structure isdesigned to enable faster decision-making and better integrationof processes and functions across the Company.
In order to integrate Airbus’ National Entities (NatCos) in thedaily life of Airbus, Airbus has also announced that National
Representatives will be members of the Airbus Executive
Committee. Fabrice Brégier will act as National Representativefor France, Gerald Weber for Germany, and Tom Williams
for the U.K.. Manuel Hita-Romero remains the National
Representative in Spain and reports, like the other National
Representatives, in this function directly to Tom Enders.
They will be supported by country managers at their main sites.

Products and Services
Airbus Aircraft Family Overview
Technological innovation has been at the core of Airbus’
strategy since its creation. Each product in the Airbus family
is intended to set new standards in areas crucial to airlines’
success, such as cabin comfort, cargo capacity performance,
economic performance, environmental impact and operationalcommonality. Airbus innovations often provide distinct
competitive advantages, with many becoming standard in theaircraft industry. Key examples include ﬂy-by-wire controls,
aircraft commonality and the introduction of widebody twinengine aircraft.
A300/A310 Family
The A300 was the original aircraft launched by Airbus in 1969,
and was the world’s ﬁrst twin-engine twin aisle commercial
aircraft at the time. From the 250-300 seat A300 the family
expanded to include the 200-250 seat A310, new build andconverted freighters, combi/mixed conﬁguration aircraft, airtankers and military transport versions.

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Following delivery of the last A300-600 Freighter (A300-600F)
in July 2007, the A300 /A310 Family is no longer inproduction. However, Airbus continues to provide in service
support to this aircraft family with airlines around the globe.
In 2007, six A300-600Fs were delivered.
A320 FamilyWith more than 5,800 aircraft sold and 3,302 currently inservice, the A320 Family has proven extremely popular withcustomers, offering high standards of cabin comfort,
technology and economic performance. Its success with low-costairlines in particular demonstrates the economic appeal of theA320 Family.
Within this family, four identical aircraft of different lengths,
the A318, A319, A320 and A321, share the same systems,
cockpit, operating procedures and cross-section. The A320
Family covers the market from 100 to 220 seats, ﬂying routes
up to 3,000nm/5,700km.
In 2007, Airbus received 914 ﬁrm orders for the A320 Familyof aircraft, and delivered 367 to customers.
A330/A340 FamilyWith more than 1,200 aircraft sold and 856 currently inservice, the A330 /A340 Family is Airbus’ solution forregional, long-range and ultra long-range travel, designed tocarry between 250 to 350 passengers. The A330/A340 Family
concept is unique: one airframe is powered by either two or
four engines. The twin-engine A330 offers attractive economic
performance for regional up to long-range routes, while thefour-engine A340 can perform on the most demanding long-range
and ultra long-range routes.
The A330 /A340 Family is composed of six passenger versions.
Each shares the same 222-inch fuselage cross-section, cockpit
and other advanced features, delivering the commonality thatencourages airlines to adopt the most efﬁcient mix of aircraft
for their networks. The A330/A340 Family offers high levelsof passenger comfort as well as large under-ﬂoor cargo areas.
Following the launch of industrial production in 2007, theA330-200F is Airbus’ new freighter offering for mid-size
markets. Capable of carrying 64 tonnes over
4,000nm/7,400 km, or 69 tonnes up to 3,200nm/5,930km,
the A330-200F is aimed at replacing the ageing 50 to 70 tonne
aircraft in the market (such as ageing DC8Fs and DC10Fs).
The A330-200F will offer airlines the opportunity to increase
services in low frequency long-haul markets currently servedwith much larger aircraft, develop new routes and respondto market growth. Entry into service is planned for the second
half of 2009.

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In 2007, Airbus received 221 ﬁrm orders for the A330 /A340
Family of aircraft, including 66 orders for the A330-200F.
The customer base increased from 85 to 89 customers.
A350 XWBAt the end of 2006, Airbus launched its new offering in themedium capacity long-range aircraft market, the A350 XWB
series, which will accommodate between 270 to 350 passengers
and is expected to enter service in 2013.
The A350 XWB is an all new design with more than 50% of
the airframe to be built using composite materials to reduceweight and maintenance costs. The A350 XWB will featureinteractive A380 cockpit technology and beneﬁt from A380
systems development. It is designed for a higher cruise speed,with the latest generation engines. The A350 XWB is designed
to deliver superior levels of fuel and economic efﬁciency, withlow environmental impact.
The A350 XWB received 290 ﬁrm orders in 2007, including
renewed and occasionally enlarged orders from nine of theairlines that had previously committed to the prior A350 design.
A380
The A380 is the most spacious aircraft ever conceived, andrepresents Airbus’ entry into the very large aircraft market.
Its new cross-section provides ﬂexible and innovative cabin
space, allowing passengers to beneﬁt from wider seats, wider
aisles and more ﬂoor space, tailored to the needs of each airline.
Seating 525 passengers in three classes and with a range
of 8,000nm/19,400km, the A380 offers superior economic
performance, lower fuel consumption, less noiseand reduced emissions.
Following a difﬁcult year in 2006 in which Airbus twice revised
its delivery schedule for the A380 — incurring signiﬁcant costs
and charges as a result (see “Part 1/1.1 Management’s Discussion
and Analysis of Financial Condition and Results of Operations”)— the year 2007 marked the beginning of Airbus’ industrial
recovery. The highlight was the ﬁrst delivery of the A380 toSingapore Airlines in October 2007, followed by a smooth entry
into commercial service between Singapore and Sydney. Despite
the completion of this and other milestones, Airbus continues toface signiﬁcant challenges as it seeks to ramp-up A380
production, and is currently focused on meeting its delivery
commitments for 2008.

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In addition to the passenger version, Airbus plans to eventuallydevelop a freighter version of the A380, the A380F. Following
UPS’ cancellation of its order for ten A380Freighters in early
2007, however, Airbus has suspended development of the
A380F for the time being.
At the end of 2007, Airbus had 189 ﬁrm orders for the
A380 from 16 customers.
The Family Concept – Commonality across the Fleet
Airbus’ aircraft families promote ﬂeet commonality.
This philosophy takes a central aircraft and tailors it to create
derivatives to meet the needs of speciﬁc market segments.
This approach means that all new-generation Airbus aircraft(i.e., excluding the A300 /310) share the same cockpit design,
ﬂy-by-wire controls and handling characteristics. Pilots cantransfer among any aircraft within the Airbus family withminimal additional training. Cross-crew qualiﬁcation (CCQ)
across families of aircraft provides airlines with signiﬁcant
operational ﬂexibility. In addition, the emphasis on ﬂeet
commonality permits aircraft operators to realise signiﬁcant costsavings in crew training, spare parts, maintenance and aircraftscheduling.
The extent of cockpit commonality within and across familiesof aircraft is a unique feature of Airbus that, in Management’s
opinion, constitutes a sustainable competitive advantage.
Technical Product Overviews
Short- and medium-range single aisle aircraft: the A320 Family.
Airbus’ family of single aisle aircraft, based on the A320
(which entered service in 1988 following a development
programme launched in 1984), includes the A318, A319 andA321 derivatives, as well as the A319- based Airbus Corporate
Jetliner and A318 Elite business jet, which Airbus launched
in 1997 and 2005, respectively.
At 3.96 metres diameter, the A320 Family has the widest
fuselage cross-section of any competing single aisle aircraft.
This provides a roomy passenger cabin, a high comfort level
and a more spacious underﬂoor cargo volume than its
competitors. The A320 Family incorporates digital ﬂy-by-wire
controls, an ergonomic cockpit and a lightweight carbon ﬁbre
composite horizontal stabiliser. The use of composite material
has also been extended to the vertical stabiliser. The A320
Family’s competitor is the Boeing 737 series.

SINGLE AISLE TECHNICAL FEATURES
Model

Entry into service

Passenger capacity*

Maximum range (km)Length (metres)

Wingspan (metres)

A318

2003

107

6,000

31.4

34.1

A319

1996

124

6,800

33.8

34.1

A320

1988

150

5,700

37.6

34.1

A321

1994

185

5,600

44.5

34.1

(*)

18

Two-class layout.

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Medium-range, midsize freighter: the A300/A310 Family.
The A300/A310 Family has spanned over 30 years of
production, with over 800 aircraft delivered. The A300-600
Freighter was launched in 1991 based on the A300-600R
passenger variant, which incorporated the lightweight carbon

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ﬁbre composite horizontal stabilizer initially developed for
the A310. Following closure of the A300-600F production line
in July 2007, the A300/A310 Family is no longer in production.
However, Airbus continues to provide in service support tothis aircraft family with airlines around the globe.

A300-600F TECHNICAL FEATURES
Model

Entry into service

Typical Capacity

Maximum range (km)Length (metres)

Wingspan (metres)

1994

54.6 tonnes

4,850

54.1

44.8

A300-600F

Medium- to ultra-long-range twin aisle aircraft: the A330/A340/
A350 XWB Families. Airbus developed the twin-engine A330
and the four-engine A340 with the same all-new wing design forboth aircraft and retained the fuselage cross section of the
A300/A310. In 1997, Airbus began development of the ultralong-range A340-500 and the high capacity A340-600 derivative
version. The A340-500 ﬂies over extremely long ranges, including
non-stop ﬂights such as Los Angeles – Singapore. The A340-600
made its ﬁrst ﬂight in 2001 and deliveries began in 2002.

In 2006, Airbus announced the commercial launch of theA350 XWB Family, a new extra-wide body medium capacity
long-range family. The A350 XWB features A380 technology,
a wider fuselage than that of competing new generation aircraft
and a greater use of composite material.
The competitors of the A330, A340 and A350 XWB are the
Boeing 767, 777 and 787 aircraft series.

A330/A340/A350 XWB TECHNICAL FEATURES
Model*

Entry into service

Passenger capacity*

Maximum range (km)Length (metres)

Wingspan (metres)

A330-200

1998

253

12,50059.0

60.3

A330-300

1994

295

10,50063.7

60.3

A340-300

1992

295

13,70063.7

60.3

A340-500

2002

313

16,70067.8

63.6

A340-600

2002

380

14,60075.3

63.6

A350-800

2014

270

15,40061.0

64.0

A350-900

2013

314

15,00067.3

64.0

A350-1000

2015

350

14,800

74.3

64.0

(*)

Three-class layout.

Very large aircraft: the A380Family. A signiﬁcant milestone in thehistory of Airbus and the aviation industry was met when the ﬁrst
A380 was delivered to Singapore Airlines on 15th October 2007.
New standards for systems, structure, power plant and cabin
facilities have enabled Airbus to deliver the most economic aircraft

ever and one that exceeds the challenging performance andenvironmental targets initially set for it.
The A380’s main competitor is the 400 seat Boeing 747-8.

A380 TECHNICAL FEATURES
Model*

Entry into service

Typical capacity*

Maximum range (km)Length (metres)

Wingspan (metres)

2007

525

15,00073.0

79.8

A380-800(*)

Three-class layout.

New Product Development: A400M
Airbus’ Military Programme Directorate performs research anddevelopment related to the A400M project as an outsource
provider to Airbus Military S.L. The Military Transport
Aircraft A400M is described in “— 1.1.3 Military Transport
Aircraft — Products — Military Transport Aircraft/Special

Mission Aircraft on Transport Aircraft Platforms — Airbus
A400M”. In 2007, the delay in A400M production had anegative effect on Airbus’ EBIT* of €(1.2) billion. See“Part 1/1.1 Management’s Discussion and Analysis of Financial
Condition and Results of Operations”.

* Earnings before interest and taxes, pre-goodwill impairment and exceptionals.

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1

Asset Management
The Airbus Asset Management Division was establishedin 1994 to manage and re-market used aircraft acquired by
Airbus, originally as a result of customer bankruptcies, andsubsequently in the context of certain buy-back commitments.
The Division operates with a dedicated staff and manages aﬂeet comprised of Airbus aircraft across the range of models.
Through its activities, the Asset Management Division helps
Airbus respond more efﬁciently to the medium and long-term
ﬂeet requirements of its customers.
Its key roles comprise the commercial and risk managementof the Airbus portfolio of used aircraft. Most of the aircraft areavailable to customers for cash sale, while some can only beoffered on operating lease, depending on the ﬁnancing attachedto such aircraft. At the end of 2007, the Airbus AssetManagement portfolio contained 14 aircraft, a net reductionof eight aircraft compared to the end of 2006. The AssetManagement Division also provides a full range of support
services, including assistance with entry into service, interior
reconﬁguration and maintenance checks.
Sales Finance
Airbus favours cash sales, and does not envisage sales ﬁnancing
as an area of business development. However, Airbus
recognises the commercial need for manufacturers to assist
customers in arranging ﬁnancing of new aircraft purchases, andin certain cases to participate in such ﬁnancing itself.
An extension of credit or assumption of exposure is subject tocorporate oversight and monitoring, and follows stringent
standards of discipline and caution. Airbus’ dedicated sales
ﬁnance team has accumulated decades of expertise in aircraft
ﬁnance. When Airbus ﬁnances a customer, the ﬁnanced aircraft
generally serve as collateral, with the engine manufacturer
participating in the ﬁnancing. These elements assist in reducing
the risk borne by Airbus. Airbus’ sales ﬁnancing transactions
are designed to facilitate subsequent sell-down of the exposure
to the ﬁnancial markets, third party lenders or lessors. Airbus’
ﬁnancing exposure is counter-cyclical and currently Airbus isable to conclude signiﬁcant sell-down of its exposure.
Management believes, in light of its experience, that the levelof provisioning protecting Airbus from default costs is
adequate and consistent with standards and practice in theaircraft ﬁnancing industry. See “Part 1/1.1.7.4 Sales Financing”.
Customer Service
Airbus Customer Services provides a full range of support
services to airlines so that they can operate their Airbus ﬂeet
safely, efﬁciently and on schedule. The Airbus Customer
Services directorate heads an engineering and technical support
group, a technical documentation organisation, a network of
training centres, spare parts support centres, customer support
teams and ﬁeld services teams that are based at customer airlines.
Airbus thereby aims to satisfy all of its customers’ pre-delivery
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and in-service support requirements, including engineering andtechnical support, training and ﬂight operations support andmaterial and logistics support. Airbus Customer Services
currently supports approximately 4,800 Airbus aircraft, ranging
from the smallest short range A318 to the large double deck A380.
Airbus has packaged its customer service offering into
a comprehensive portfolio of support and services named“Air+ by Airbus”. Thanks to the Air+ by Airbus “à la carte”
approach, customers can select the products they need fromthe wide offering. Complemented by Airbus partners’ offerings,
it covers all airline technical operations. With Air+ by Airbus,
the support provided is adapted to different outsourcing
policies and business models, helping operators to signiﬁcantly
reduce their operating costs, increase their aircraft availability
and enhance the quality of their operations.
Airbus launched several innovations in the area of customer
support during 2007, such as AirPl@n, a new generation ofmaintenance programme and planning services that reduces anoperator’s maintenance costs and increases aircraft availability.
Airbus also launched a new in-service enhancement package(ISEP), which consists of an avionics upgrade package for inservice A320 Family aircraft. ISEP includes Airbus Service
Bulletins relating to ﬂeet harmonisation, aircraft performance
optimisation, reduction of maintenance costs and increased
residual value of the in-service ﬂeet.
Finally, in response to the fast growing number of Airbus
operators in all regions of the world, including new start-up
airlines that do not have their own training services, Airbus
launched the Airbus Maintenance Training Network in 2007,
an extension of Airbus’ existing Maintenance and Repair
Organisation (MRO) Network. Through this new initiative,
Airbus operators will have access to aircraft maintenancetraining courses close to their base. The training courses are
based on a new generation of training tools and methods andprovide the same standard of training as currently provided by
any Airbus training centre.

Production
Industrial Organisation
Each task in the building of Airbus aircraft (from design,deﬁnition and production to product or operational support) is
allocated to a designated Centre of Excellence (“CoE”)
according to its specialised expertise. The nurturing anddevelopment of centres of excellence constitutes an essential
feature of Airbus manufacturing.
In connection with the implementation of Power8, as discussed
above, Airbus proceeded in 2007 to reduce the former eight
mostly national CoEs to four fully trans-national organisations.
The reorganised CoEs cover Fuselage and Cabin, Wing and
Pylon, Aft Fuselage and Empennage and Aerostructures.

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In addition, engineering has been restructured to strengthen
the focus on aircraft architecture and integration, while
procurement has been reorganised around transnational multifunctional teams. Support functions, such as human resources
and ﬁnance, have also been fully centralised for the ﬁrst timesince Airbus’ creation.
Another major change in 2007 was the creation of new process
and methods organisations for Engineering and Operations,a ﬁrst step towards the adoption of common policies, methods
and processes to be used across Airbus going forward. As aresult, all Airbus factories and assembly lines will use the same
tools, policies and processes, thus fully beneﬁting from bestpractices, experience and lessons learned from all Airbus sites.
This harmonisation has also been applied to other areas such as
supply chain, logistics and transport.
Finally, in an effort to build a network of partners for the
future and focus its resources on core activities, Airbus
announced at the end of 2007 that it had selected preferredbidders for divestment of six aerostructure sites in France,
Germany and the U.K. Latécoère has been selected for Méaulte
and St. Nazaire Ville in France, MT Aerospace (OHB
Technology) for Nordenham, Varel and Augsburg in Germany
and GKN for the Filton wing component and sub-assembly
manufacturing facility in the U.K. The EADS Board of
Directors has authorised the management of EADS and Airbus
to enter into negotiations with the preferred bidders on
remaining issues and the required ﬁnal due diligence with thetarget to achieve a ﬁnal agreement as soon as possible.
See “1.2 Recent Developments”.
Engineering
Airbus engineers work on speciﬁc and non-speciﬁc aircraft designs
to create solutions that meet customer needs, using a working
practice known as Airbus Concurrent Engineering (“ACE”).
Engineering innovation at Airbus is driven by Centres ofCompetence (“CoCs”), which develop general aircraft
technologies and provide functional design leadership for
speciﬁc aircraft components. The CoCs operate transnationallywith engineers from each CoC present at all Airbus sites.

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An important part of the Airbus engineering organisation is
the Architect and Integration centre, which ensures, together
with a team of senior aircraft architects and the programmechief engineers, that a consistent and multi-disciplinary
approach is applied during aircraft development.
The Airbus Engineering testing centre gathers all major
systems and integration laboratories as well as the ﬂight test
centre in order to have a common approach towards testingof the critical aircraft systems. Over the course of the last
seven years, Airbus has opened engineering centres in Wichita(Kansas), U.S., in Moscow, Russia, and in Beijing, China,
through which it has gained access to a large pool ofexperienced aerospace engineers. The Wichita engineering
centre began operations in early 2001 and has already made asigniﬁcant contribution to Airbus wing design. The engineering
centre in Russia, organised as a joint venture with Kaskol, wasinaugurated at the end of 2002 and the engineering centre
in China was inaugurated in late 2005. A fourth engineering
centre opened in Mobile (Alabama), U.S. in 2006. A ﬁfth
engineering centre was opened in 2007 in Bangalore, India.
This centre’s focus will be on non-speciﬁc design work.
Manufacturing Facilities and Production Flow
The CoEs are responsible for the design and manufacturing offully equipped and tested deliverables, ranging from speciﬁcparts to major aircraft components. Aircraft components aretransferred between the network of sites and the ﬁnal assemblylines using Airbus’ ﬁve custom built A300-600 “Beluga” Super
Transporters. To support the A380 production ﬂow, Airbus has
integrated road, river and sea transport, including the speciallycommissioned “Ville de Bordeaux” ship. Typical production leadtimes for single aisle aircraft are 7-8 months, and 9-12 months
for long-range twin aisle aircraft.
Expected Deliveries in 2008
Airbus delivered 453 aircraft in 2007 (compared to 434 in 2006)
and expects to deliver approximately 470 aircraft in 2008.
Any major production, market disruption or economic
downturn could lead to revision of these ﬁgures.

1.1.3 MILITARY TRANSPORT AIRCRAFT
Introduction and Overview
The Military Transport Aircraft Division (the “MTA
Division”) produces and sells special mission aircraft, which
are derived from existing aircraft platforms and are dedicated to
specialised military and security tasks such as in-ﬂight
refuelling capabilities, maritime surveillance and antisubmarine
warfare. The MTA Division is responsible for the European

heavy military transport A400M project, and also develops,
manufactures and sells medium and light military transport
aircraft. Finally, the MTA Division designs and manufactures
aerostructure elements.
In 2007, the MTA Division recorded revenues of €1.1 billion,
representing 2.9% of EADS’ total revenues.

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Strategy
The MTA Division’s strategy is to further develop its corebusinesses and increase market share by leveraging EADS’technology know-how, while at the same time enhancing
proﬁtability. Accordingly, the MTA Division is actively:
Consolidating its position as a major supplier of special
mission aircraft

As a supplier of special mission aircraft, the MTA Divisionsatisﬁes customers’ mission-speciﬁc requirements by relying on
its own specialised technologies as well as those of EADS’
wide range of platforms. The MTA Division will seek further
consolidation of its position in this market in the future, inparticular following selection of the KC-45A tanker (based on
the A330 Multi-Role Tanker Transport) by the U.S. Air Forcein 2008. See “1.2 Recent Developments”.
Maintaining its leadership for modern tactical transport
aircraft

The MTA Division is already a global leader in the market
segments for light and medium-sized military transport aircraft.
Through the addition of the A400M heavy transport aircraft,
the MTA Division is seeking to broaden its range of heavytactical military transport aircraft and to capture a market withhigh replacement potential.
MarketSpecial Mission AircraftSpecial mission aircraft are derived from existing platforms andare adapted to particular missions, generally for military andsecurity customers. This is a market of advanced technology
and high added value solutions where customers are
increasingly demanding comprehensive systems tailored to their
speciﬁc operational requirements. Modern defence and warfare
require independent access to complex forms of information invarious operational theatres. This development and European
defence and security needs are expected to boost demand forspecial mission aircraft in the near term. The MTA Divisionbelieves that it is well positioned in this market, as it has
efﬁcient solutions based on its own platforms as well as thoseof Airbus.

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market for military transport aircraft during the next ten years
is expected to amount to approximately U.S.$52 billion.
Heavy Military Transport. This market segment has been driven
historically by U.S. policy and budget decisions, and therefore
has been dominated by U.S. manufacturers, in particular
Lockheed Martin’s C-130 Hercules. The A400M represents
the MTA Division’s entry into this market, at a time when
the U.S. and Europe are expected to begin upgrading andreplacing their existing ﬂeets. In the upper part of the segment,
the A400M competes against the C-17 from Boeing.
Medium Military Transport. Management believes that thismarket will continue to grow at a moderate rate. MTA aircraft
are leaders in this segment, speciﬁcally the CN-235 andC-295 aircraft, which have a combined average market shareof 64% over the last ten years. Their competitors are the C-27J
Spartan, manufactured by the joint venture LMATTS(Lockheed Martin Alenia Tactical Transport System), and
the An-32, manufactured by Antonov. Recently, the C-27J has
been promoted by Global Military Aircraft Systems (GMAS),a group of companies consisting of Alenia, L-3 and Boeing.
Light Military Transport. This is a mature market that isdiminishing in size as countries develop economically and areable to afford medium military transport aircraft. The C-212
has historically led this market segment, with an average
market share of 26% over the last ten years. The MTA
Division’s main competitors in this segment are the M-28 from
Polskie Zaklady Lotnice, Mielec and the Do-228 from HAL(Hindustan Aeronautics Limited).
Products
Tankers and other Special Mission Aircraft

The MTA Division offers special mission aircraft derived fromexisting Airbus platforms and adapted to particular missions,generally for military customers. Adaptations to the platform
require thorough knowledge of the basic airframe, which
generally only the aircraft manufacturer possesses. In thissense, the “Multi-Role Tanker Transport” (“MRTT”), based on
the A330 derivative, is a low-risk and cost-effective platformthat offers a greater supply capacity than other competing
solutions. The skills necessary for the overall systems
integration into the aircraft are extensive and the number ofparticipants in the world market is very limited.

Military Transport Aircraft

Governments and national organisations constitute the main
customers in the market for military transport aircraft. This
market consists of three segments: (i) light transport aircraft,with a payload of one to four tonnes, (ii) medium transport
aircraft, with a payload of ﬁve to fourteen tonnes, and (iii) heavytransport aircraft, with a payload of ﬁfteen tonnes or more.
According to an analysis by the Teal Group — an independent
aerospace and defence industry consulting ﬁrm — the global
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EADS BU S I NES S , LEG A L A N D CO R P O R AT E R E S P O N S I B I L I T YStrategic Tanker Aircraft. In light of the estimated worldwide
market of approximately 600 tanker aircraft, management
assumes that strategic tanker aircraft offer an attractive
opportunity for EADS.
The MTA Division leads a technological programme aimed atdeveloping a new “air-to-air refuelling boom system”(“ARBS”). The new ARBS is designed to provide a refuellingINFORMATION ON EADS ACTIVITIES

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performance that is substantially faster than that of thecompetition — a considerable advantage given the vulnerabilityof the aircraft during the refuelling procedure. The ﬁrst ARBS
dry in-ﬂight contact was successfully performed using an F-16
combat aircraft last December 2007 and the wet contact isplanned for early 2008.
KC-30 Tanker Programme (U.S. Air Force). The U.S. Air Forcehas been conducting a programme to replace its ageing ﬂeet of
air-to-air refuelling aircraft. EADS NA Tankers has teamed up
with Northrop Grumman (as prime contractor) in preparing a
proposal to satisfy the U.S. Air Force’s requirements. The teamhas proposed a KC-30 tanker, which is based on an
A330 MRTT with cargo door and boom. In early 2008,
the U.S. Air Force announced that it had selected the KC-30(renamed the KC-45A) as its future tanker. See “1.2 Recent
Developments”.
A330 MRTT (Royal Australian Air Force). The contract signed
in 2004 with the Royal Australian Air Force for the delivery of
ﬁve A330 MRTTs equipped with underwing pods and ARBS
to replace its existing Boeing 707 ﬂeet remains on schedule.
The ﬁrst A330 is scheduled for entry into service in 2009.
A310 MRTT (German Air Force/Canadian Air Force). In 2007,
MTA completed activities related to the conversion kits.
A330 Future Strategic Tanker Aircraft (FSTA) (United Kingdom
Royal Air Force). EADS, Rolls Royce, Cobham, VT and Thales
are cooperating through the AirTanker consortium as thepreferred bidder for the U.K. MoD’s “Future Strategic Tanker
Aircraft” (“FSTA”) programme. Structured as a private ﬁnanceinitiative, this programme would replace ageing VC10 and
Tristar tankers, currently operated by the Royal Air Force, witha system based on an A330-200 aircraft. The programme calls
for the delivery of 14 aircraft to provide air-refuelling service
for 27 years. In 2007, AirTanker launched a ﬁnancing
competition to raise approximately £2.2 billion capital to fundthe programme, with the goal of securing ﬁnancing andentering into a ﬁnal contract with the U.K. MoD in 2008.
See “1.2 Recent Developments”.
A330 MRTT (Royal Saudi Air Force). In December 2007, theMTA Division signed a contract for three A330 MRTTs as the
new air-to-air refuelling aircraft for the Royal Saudi Air Force.
This contract will be booked in 2008 upon receipt by MTA ofthe ﬁrst down payment.
A330 MRTT (United Arab Emirates). The A330 MRTT has
been selected by the UAE Air Force, and a memorandum of
understanding was signed with the MTA Division in 2007.
Contract negotiations are ongoing in 2008.

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Military Transport Aircraft/Special Mission Aircraft on
Transport Aircraft Platforms

Airbus A400M. The A400M is designed to meet the future
large aircraft requirements of seven European nations seeking to
replace their ageing C-130 Hercules and C-160 Transall ﬂeets.
In addition to fast and ﬂexible intercontinental force projection,
the new aircraft is intended to respond to changing geopoliticalrequirements (including increased humanitarian andpeacekeeping missions). Management believes that the A400M
programme will allow EADS to leverage its state-of-the-art
commercial aircraft technology in order to access a new andattractive market, while mitigating the impact of civil aircraft
market commercial cycles.
The A400M integrates a number of features from existing
Airbus platforms, including a cockpit for two crew members,
ﬂy-by-wire controls and advanced avionics. Additionally,
the A400M will beneﬁt from Airbus maintenance procedures.
Airbus Military, a Spanish sociedad limitada, is dedicated to thedevelopment, manufacturing, sale, delivery and support of the
A400M aircraft. Shares in Airbus Military are currently heldby Airbus SAS (69.44%), EADS CASA (20.56%), Tusas
Aerospace Industries Incorporated of Turkey (5.56%) and Flabel
Corporation NVSA of Belgium (4.44%). The Chief Executive
Ofﬁcer in charge of the MTA Division also acts as Chief
Executive Ofﬁcer of Airbus Military, bringing the MTA
Division’s experience in military transport aircraft programmemanagement and its extensive client network to the A400M
programme.
Airbus Military has subcontracted to Airbus the overallmanagement of the A400M development, to be exercisedthrough a central programme management ofﬁce (“CPMO”)
headquartered in Toulouse with additional ofﬁces in Madrid.
For the production phase of the A400M programme, managed
by the MTA Division, the CPMO will be headquartered in
Spain.
In May 2003, the Organisation Conjointe en Matièred’Armement (“OCCAR”) signed a contract with Airbus
Military to order 180 A400M aircraft on behalf of sevennations: Germany committed to 60 aircraft, France to 50, Spain
to 27, the U.K. to 25, Turkey to 10 and Belgium to 8 (including
one on behalf of Luxembourg). In addition to the initial
180 aircraft, export orders (8 for South Africa and 4 for
Malaysia) bring the total order book for the A400M aircraft to
192 at the end of 2007.
In October 2007, EADS informed its A400M customers thatthe ﬁrst deliveries of the aircraft would be delayed by six
months with a risk of further slippage of up to half a year.
The re-scheduling of the programme is due primarily to the slow
progress on engine development, which stands on the critical
path to achieving ﬁrst ﬂight, schedule overruns on systems

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1.1 | Presentation of the EADS Group1development, and a ﬂight test programme that differs
signiﬁcantly from that of commercial Airbus aircraft. Althoughmitigation measures such as a change in management,
reorganisation of responsibilities and shortening of the chain ofcommand have been implemented, EADS continues to facesigniﬁcant challenges in achieving ﬁrst ﬂight in summer 2008
and meeting the revised delivery schedule.
From a ﬁnancial perspective, the delay in A400M production
had a negative effect on EADS’ EBIT* in 2007. See “Part 1/1.1
Management’s Discussion and Analysis of Financial Condition
and Results of Operations”.
CN-235 — Medium Military Transport. The ﬁrst version in the
CN-235 family, the S-10, entered into service in 1987.
The latest one, the Series 300, is a new-generation, twinturboprop, pressurised aircraft. The CN-235-300 is capable oftransporting a payload of up to 6,000 kg, accommodating(i) 36 paratroopers, (ii) 18 stretchers plus three medical attendants,(iii) four of the most widely used types of freight pallets, or(iv) oversized loads such as aircraft engines or helicopter blades.
Paratrooper operations can be performed through the two lateral
doors in the rear part of the aircraft or over the rear ramp.
Variants of the CN-235-300 are used for other missions such as
maritime patrol or pollution control, among others.
C-295 — Medium Military Transport. Certiﬁed in 1999, theC-295 has a basic conﬁguration similar to the CN-235, with astretched cabin to airlift a 50% heavier payload at greater speed
over longer distances. The C-295 is equipped with integrated
avionics incorporating digital cockpit displays and a ﬂight
management system, enabling tactical navigation, planning andthe integration of signals from several sensors.
Both the CN-235 and the C-295 have been designed ascomplements or replacements for the ageing C-130 Hercules,
accomplishing most of their missions at a much lower operatingcost.
In 2007, the MTA Division signed a contract with theColombian Air Force for the supply of four C-295 transport
aircraft. Poland and the Spanish Air Force ordered two
additional C-295 transport aircraft each, with deliveriesscheduled for 2008.
During 2007, the MTA Division delivered two CN-235s to L3,
a U.S. company, as well as four C-295 aircraft to Brazil as partof a contract for twelve C-295 aircraft signed in 2005. In
addition, two C-295 aircraft were delivered to Poland.
C-212 — Light Military Transport. The C-212 was designed as asimple and reliable unpressurised aircraft able to operate from* Earnings before interest and taxes, pre-goodwill impairment and exceptionals.

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makeshift airstrips in order to perform both civilian andmilitary tasks. The ﬁrst version, the S-100, entered into service
in 1974. The latest version, the S-400, incorporates several
improvements such as new avionics and engines for enhanced
performance in hot climates and high altitudes, as well as
improved short take-off and landing performance. In addition,
the C-212’s rear cargo door provides multi-mission capability
with a conﬁguration that can be changed quickly and easily,
thereby reducing turnaround times.
Maritime Patrol Aircraft. The MTA Division provides different
solutions ranging from maritime surveillance to anti-submarine
warfare missions through aircraft based on the C-212, CN-235,
C-295 or P-3 Orion platforms. The accomplishment of thesemissions is achieved by means of a Fully Integrated Tactical
System (FITS), a new generation, open architecture, proven,reliable and cost efﬁcient solution.
In 2007, the Chilean Navy ordered three C-295 aircraft, one formaritime patrol missions and two for anti-submarine warfaremissions. The Spanish Ministry of Interior ordered two
maritime patrol CN-235 aircraft equipped with FITS, which
will be operated by the “Servicio Aéreo de la Guardia Civil”.
The Brazilian Air Force placed a repeat order for a P-3 upgrade
based on the FITS installation, while the U.S. Coast Guard
ordered ﬁve additional CN-235 aircraft as part of the“Deepwater” programme.
In 2007, the MTA Division delivered two CN-235 aircraft to
the U.S. Coast Guard, as well as three maritime patrol
CN-235 aircraft to SASEMAR (Spanish Maritime Safety
Agency). The modernisation of two CN-235 aircraft on behalfof the Irish Air Corps and the conversion of six CN-235
military transport aircraft into maritime patrol aircraft onbehalf of the Spanish MoD are progressing on schedule.
In both cases, the ﬁrst deliveries took place at the end of 2007.
Aerostructures

EADS-CASA has signiﬁcant expertise in the utilisation ofcomposite materials for aerostructures manufacturing andadvanced automation processes. Based on this expertise,
the MTA Division is actively involved in the design,
manufacture and certiﬁcation of complex aeronautical structures.
Production
The C-212, CN-235 and C-295 are manufactured at a facility
located at the San Pablo airport in Seville. In 2007, the assemblyof the A400M started in a new facility in Seville.
Aerostructures are produced at Puerto de Santa María in Cádiz
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1.1.4 EUROCOPTER
Introduction and Overview
Through Eurocopter, EADS is one of the global leaders in theworldwide civil and military helicopter market. Management
expects that sales in the military market in particular will
increase substantially in the future, given the start of deliveryof the NH90 military transport helicopter and the Tiger attack
helicopter, the strong global backlog and the increasing demandin international military and homeland security export markets.
In 2007, Eurocopter maintained its leadership by capturing
more than 50% of the civil market in terms of deliveries and byachieving strong growth in its military order book.
For 2007, the Eurocopter Division recorded revenues of€4.2 billion, representing 10.7% of EADS’ total revenues.

Strategy
The Eurocopter Division aims at further developing businesses
and markets identiﬁed by Management as having the potential
for sustained proﬁtable growth. To this end, Eurocopter isactively:
Pursuing internal growth and international expansion
Management is focused on strengthening Eurocopter’s positionin the markets where it has traditionally held a strong position,such as the U.S. civil and homeland security market, andfurther developing its presence in potential growth markets
such as China, India and Eastern Europe. Part of its strategy
relies on the offering of new or enhanced products in various
markets, such as the ﬁrst successful sale of important quantitiesof helicopter systems to the U.S. Army. In 2007, Eurocopter
built on this success by receiving production authorisation forand delivering the ﬁrst U.S.-made light utility helicopters to
the U.S. Army.
Eurocopter will seek to pursue expansion through eitherorganic growth or through acquisitions. For example, at the endof 2007 Eurocopter acquired the entire share capital of
McAlpine Helicopters Limited in the U.K. — now known as
Eurocopter U.K. — in which it previously held a 10% stake.
Eurocopter will also seek to capitalize on its experience ofcooperation with local industries for program development andjoint production projects. This approach has already enabled
Eurocopter to build solid foundations in promising growthmarkets, in particular in Asia. Finally, Eurocopter intends topursue its industrial deployment strategy in the United States,
where it already has two major industrial and services facilities.

Implementing an ambitious product and services policy
In order to maintain market leadership and technologicalsuperiority, Eurocopter must continuously invest in and renew
its comprehensive product line of civil and military helicopters.
Accordingly, Management is currently focused on(i) strengthening the market position of certain key products
such as the Écureuil family, the Dauphin, the EC135, the EC 145
and the EC 225/725, (ii) promoting Eurocopter’s most recent
products (e.g., entry into service and customisation for exportof the Tiger and NH90), and (iii) enhancing its product line (e.
g., co-development of the medium lift EC175 with China andpartnership with Korean industry to develop the militaryutility Korean Helicopter Programme (“KHP”)). Through the
combination of core technological solutions with high-value
customisation capabilities, Eurocopter seeks to offer a cost
efﬁcient solution to the multiple mission needs of an array ofcivil and military customers throughout the segmented
helicopter market.
To maintain its position as a technological leader, Eurocopter
also seeks to engage in technology leveraging programmes, suchas the Heavy Transport Helicopter and Vertical Take Off andLanding Tactical Unmanned Aerial Vehicle (VTUAV)
platforms, and research programmes emphasising technologies
that enhance the safety, operational scope, mission effectivenessand economic performance of its aircraft. Eurocopter iscurrently focused on innovation in ﬁelds such asenvironmental-friendliness, all-weather ﬂying ability andeconomic affordability throughout an aircraft’s lifecycle.
Finally, because customer service is an important component ofcustomer satisfaction and source of revenue for the Division,
Eurocopter remains committed to strengthening and expanding
its network of marketing, distribution and support services,
through its “global offer” proposal. The worldwide services
network currently serves close to 10,000 Eurocopter aircraftwith more than 2,500 operators located in 142 countries. In the
future, Eurocopter will seek a signiﬁcant expansion in its
service offering so as to enhance aircraft availability and costeffective mission performance on behalf of clients, while at thesame time increasing margins on longer-term contracts throughthe provision of higher value added services. Eurocopter is also
considering further development of its training and software
maintenance activities, which have been identiﬁed as key
drivers for the future.

MarketIn 2007, the value of helicopters delivered worldwide wasestimated at over €8.8 billion, a ﬁgure that Management
believes may grow to €14.6 billion by 2009. According to

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1.1 | Presentation of the EADS Group1market forecasts by The Teal Group, Honeywell and Rolls
Royce, between 5,200 to 5,800 civil helicopters and 5,500
to 6,000 military helicopters are expected to be built globallyfrom 2006 to 2015. This forecast, particularly with respect
to the military segment, depends to a large extent on the large
U.S. development programmes.
Military demand for new helicopters is principally driven bybudgetary and strategic considerations, and the need to replaceageing ﬂeets. Management believes that the advanced age ofcurrent ﬂeets, the emergence of a new generation of helicopters
equipped with integrated systems and the ongoing introductionof combat helicopters into many national armed forces willcontribute to increased military helicopter procurement overthe next several years. Recent large-scale military programmes,
such as those conducted by Australia, Brazil, Spain, the U.K.
and the Nordics Standard Helicopter Project, have conﬁrmed
this trend. Demand from the military segment has historically
been subject to large year-to-year variations, due to evolving
strategic considerations.
Military helicopters, which are usually larger and have moresophisticated systems than commercial helicopters, accounted
for 49% of the total value of Eurocopter deliveries in 2007.
The military segment is highly competitive and is characterizedby competitive restrictions on foreign manufacturers’ access tothe domestic defence bidding process, sometimes to the virtual
exclusion of imports. Nevertheless, with the introduction of
the Tiger, NH90 and EC725 and with a more aggressive
approach to international industrial cooperation, Eurocopter’sshare of the global market for military helicopters has
increased, and the market in 2007 was more balanced between
competitors.
In the military segment, Eurocopter’s main competitors are
Agusta-Westland in Europe, and Bell Helicopter (a division of
Textron Inc.), Boeing and Sikorsky in the United States.

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Additionally, the Russian manufacturers have reappeared after acomplete reorganisation on commercial and industrial fronts.
They have been very aggressive in markets in Asia and Latin
America in particular.
Helicopters sold in the civil sector provide transport forcorporate executives, offshore oil operations, diverse
commercial applications and state agencies, including coast
guard, police, medical and ﬁre-ﬁghting services. Management
expects that the value of global civil deliveries will continue togrow at an average rate of 10% in the next three years and will
thereafter stabilize. Market data indicates that in 2007,
worldwide deliveries of civil turbine helicopters stood at
approximately 836 units.
Eurocopter’s main worldwide civil competitors are Bell
Helicopter, Agusta-Westland and Sikorsky. The civil helicopter
market has grown more competitive in recent years, with
Sikorsky and Agusta-Westland having increased their market
share in the heavy and medium helicopter classes.

Products and Services
Existing Products. Management believes that Eurocopter
currently offers the most complete and modern range ofhelicopters, which cover nearly the entire civil and military
market spectrum. Eurocopter’s product range includes lightsingle-engine, light twin-engine, medium and medium-heavy
helicopters, and is based on a series of new-generation
platforms designed to be adaptable to both military and civil
applications. In addition, products share multiple technicalfeatures as part of a family concept approach.
Eurocopter continuously updates its product line with leadingedge technologies in order to assure its modernity. This was
highlighted in 2007 through the certiﬁcation of the AS355NP,
a new derivative of the successful AS355N light twin helicopter,and through a signiﬁcant payload increase in the AS350.

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The following table sets forth Eurocopter’s existing product line, consisting of optimised products for different mission types thatremain adaptable to evolving mission needs:
Helicopter TypePrimary Missions

Light Single Engine
EC120 “Colibri”

Corporate/Private, Civil & Military Training

Single Engine (“Écureuil” Family)
AS350 “Ecureuil”/AS550 “Fennec”

Parapublic*, Civil & Military Utility**, Corporate/Private

EC130

Tourism, Oil & Gas, Corporate/Private

Light Twin Engine
AS355NP/AS555

Parapublic*, Utility, Corporate/Private

EC135/EC635

Emergency Medical, Parapublic*, Oil & Gas, Corporate/Private

EC145/UH145

Civil & Military Utility**, Emergency Medical, Parapublic*, Shuttle

Medium (“Dauphin” Family)
AS365 “Dauphin”/ AS565 “Panther”
EC155

Parapublic* (in particular Coast Guard & SAR), Oil & Gas
Corporate/Private, VIP, Oil & Gas, Parapublic*, Shuttle

Medium Heavy
AS332 “Super Puma”/ AS532 “Cougar”
EC225/EC725
(*)
(**)

Military Transport, Oil & Gas, Shuttle
SAR, Combat-SAR, Military Transport, Oil & Gas, VIP

Parapublic includes homeland security, law enforcement, ﬁre ﬁghting, border patrol, coast guard and public agency emergency medical services.
Civil Utility includes different kinds of commercial activities such as aerial works, ENG (Electrical New Gathering), passenger and cargo transport.

Civil range. Eurocopter has made a consistently strong effort to
update and renew its civil product line in order to enhance anddefend its leading competitive position in the civil segment,with the result that its share of the world market currently
exceeds 50%. Eurocopter has successfully introduced into theinternational market such new products as the light singleengine EC120 and the light twin-engine EC135, and suchmajor product upgrades as the EC155, the latest evolution of
the medium-class Dauphin, and the EC145.
The latest addition to the heavy-class family is the EC225. It is
designed for passenger transport, in particular Oil & Gas and
VIP, but also for public service missions, such as search andrescue (SAR). The arrival of this highly modern and safe
aircraft was well timed to meet the currently strong demand of
the Oil & Gas market.
LUH program. The U.S. Army has selected the UH-72A Lakota(a military derivative of the commercial EC145) as its nextgeneration Light Utility Helicopter (LUH), with a requirement
for up to 322 aircraft in a 10-year program with a total lifecycle value of over $2 billion. The U.S. Army ordered
42 aircraft in 2006, followed by an additional order for
43 aircraft in 2007. As of the end of 2007, 18 aircraft had beendelivered to the U.S. Army, including the ﬁrst U.S.-madeaircraft in August 2007 following the production authorisation
granted by the U.S. Federal Aviation Administration. All
deliveries were made from American Eurocopter’s Columbus,
Mississippi facility.

Products in Development. Current product development
programmes in the military and civil segment include (i) theNH90, a military transport helicopter with more than 20
versions for tactical, naval and combat-search and rescue
applications, (ii) the HAD version of the Tiger helicopter, and(iii) the KHP for civil and military applications, and (iv) theEC175, as discussed below.
NH90. Designed for modern multi-mission capabilities andcost effectiveness throughout its lifecycle, the NH90 was
developed as a multi-role helicopter for both tactical transport(TTH) and naval (NFH) applications. The programme,principally ﬁnanced by the governments of France, Germany,
Italy and the Netherlands, was jointly developed by Eurocopter,
Agusta-Westland of Italy and Fokker Services of theNetherlands as joint partners in Nato Helicopter Industries(“NHI”) in direct proportion to their countries’ expressed
procurement commitments. Eurocopter’s share of NHI is 62.5%.
Production of the ﬁrst lot of 243 helicopters and 55 optionalhelicopters to be delivered to the four partner countries started
in 2000, with the ﬁrst deliveries occurring in 2006 (three toGermany), followed by eight deliveries in 2007 (three toGermany, two to Sweden, two to Australia and one to Italy).
The NH90 has rapidly become the reference militarytactical helicopter for armed forces worldwide. 95 aircraft
were ordered in 2007 (45 for Spain, 42 for Germany andeight for Belgium). In addition, a contract was signed in
December 2007 with the French Defence Procurement
Agency DGA for 68 NH90, which became effective in

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mid-January 2008. At the end of 2007, the NH90’s backlog
stood at 495 ﬁrm orders and 102 options.
The unprecedented commercial success of the NH90, combinedwith the complexity of such a modern aircraft and the
management of relationships between industry and customers
has generated a signiﬁcant increase in programme management
challenges. The development of 23 versions for 14 customers,
instead of two versions for four customers as initially planned,
demonstrates the challenge. This has directly impacted
management of the development schedule and of the steep
industrial ramp-up on the programme.
In order to better manage these challenges, Eurocopter haslaunched a dedicated action plan to revisit programme
governance (including industry re-organisation), reframe
customers’ contract management, and restructure industry
processes (with a focus on simpliﬁcation, clearer allocation of
responsibility and increased responsiveness).
In 2007, technical issues on the development of the NFH
version of the helicopter forced a rescheduling of certain
deliveries and the recording of an associated charge.
See “Part 1/1.1 Management’s Discussion and Analysis ofFinancial Condition and Results of Operations”.

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EC175, a civil helicopter in the six tonne category, which will
broaden both partners’ product ranges. The 5-year development
phase began in 2006, with the two ﬁrst milestones passed
according to plan. The new civil helicopter is due to make its
ﬁrst ﬂight in 2009, with European certiﬁcation set for 2011 andChinese certiﬁcation for 2012. Production is due to begin in
2011. In serial production, each partner will have its own
assembly line. Sales forecasts for this latest-generation
helicopter call for 800 units to be sold worldwide over the next
20 years.

Customer Support
As of 31st December 2007, Eurocopter products constituted theworld’s second largest manufacturer ﬂeet, with more than
10,000 helicopters in service worldwide. As a result, customer
support activities to service this large ﬂeet generated 33% ofEurocopter’s revenues for 2007. Eurocopter’s customer support
activities consist primarily of training, technical support,
maintenance, repairs and spare parts supply. To provide efﬁcientworldwide service, Eurocopter has established an international
network of subsidiaries, authorised distributors and service
centres. Furthermore, in order to meet globalising customer
demand, Eurocopter is extending the range of services it
provides to its customers.

Tiger. The Tiger combat attack helicopter programme
development is nearing completion. It includes four variants
based on the same airframe: the 40 HAP (turreted gun, rockets
and air-to-air missile) for France; the 80 UHT (antitank missile,
air-to-air missile, axial gun and rockets) for Germany; the22 ARH (antitank missile, turreted gun and rockets) for
Australia; and the 24 HAD for Spain and 40 HAD for France(antitank missile, air-to-air missile, turreted gun, rockets andupgraded avionics and engines). The manufacturing ramp-up
of the programme is reﬂected by the total delivery of 33 Tigers
as of the end of 2007, with 10 deliveries in 2007.

For example, in 2007 American Eurocopter opened a new west
coast regional support facility in Long Beach, California as partof its overall plan to bring its maintenance and repair services
closer to its customers and to improve customer support.
In addition, in furtherance of its commitment to improving
ﬂight safety, Eurocopter created a tailor-made directorate
entirely dedicated to the safety of the ﬂights for its whole ﬂeet.
The directorate is based on three main areas and tasked withinitiating, coordinating and harmonising all company actions
related to ﬂight safety.

KHP. The Korean government chose Eurocopter as the primarypartner of Korea Aerospace Industries (“KAI”) in the new
KHP programme for the development of Korea’s ﬁrst militarytransport helicopter in the eight metric tonne class. The 6-year
KHP development phase will run from 2006 to 2011. In thefollowing 10-year production phase, 245 helicopters are to be
manufactured. As the primary partner of KAI, Eurocopter has
a stake of 30% in the development phase and 20% in
the production phase. This programme is groundbreaking
for urocopter in a previously U.S.-dominated Korean market.
Eurocopter and KAI have agreed to establish a 49% EC/51%
KAI subsidiary to market the export version of the KHP,
which has a forecasted worldwide demand of 250 helicoptersover 20 years.

Customers and Marketing

EC175. Eurocopter and Chinese AVIC II Corporation launched
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Approximately 2,600 operators worldwide currently operate
Eurocopter helicopters, forming a broad base for Eurocopter’scustomer support activities. 85% of Eurocopter’s customers
have ﬂeets of between one and four helicopters. Eurocopter’s
principal military clients are European MoDs, as well as MoDs
in Asia and the U.S. In the civil and parapublic market,
Eurocopter has a leading market share in Europe, the U.S.
and Canada.
The versatility and reliability of Eurocopter products have madethem the preferred choice of the most prominent customers.
The U.S. Coast Guard operates 96 Dolphin (Dauphin)helicopters and has ordered ﬁve more. The world’s largest
offshore operators (Bristow, CHC, Era, PHI, etc.) use
Eurocopter helicopters for passenger transport and offshore oil
industry support. In the Emergency Medical Service market

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1.1 | Presentation of the EADS Group1segment, Eurocopter helicopters dominate the ﬂeets of large
operators such as Air Methods in the U.S. and ADAC in
Germany. Agencies with high service ability requirements,
including police and armed forces, also rely on Eurocopter
products.
Eurocopter’s global marketing strategy is reﬂected in the scaleof its large international network. Eurocopter’s network
currently encompasses 17 foreign subsidiaries, complemented
by a network of authorised distributors and service centres
aimed at a large number of existing and potential clients.
Eurocopter strengthened its subsidiary network in 2007
through the commencement of operations at Eurocopter China
in Shanghai (a wholly owned subsidiary created in
December 2006), and through the acquisition of the entire
share capital of McAlpine Helicopters Limited in the U.K. —now known as Eurocopter U.K.. In addition, Eurocopter has
developed expertise in production licensing, joint production
and subcontracting agreements, and has been developing links
with industrial partners and suppliers in more than 35
countries.

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Inaugurated in 2007, the new Eurocopter España plant in
Albacete will be responsible for the production of the rearfuselages of the EC135 and Tiger as well as the front fuselageof the NH90. The plant will house the ﬁnal assembly lines for
the EC135 intended for the Spanish market, the Spanish HAD
version of the Tiger from 2008 and the NH90 in TTH version
for the Ministry of Defense.
The Columbus, Mississippi plant of American Eurocopter
continued to undergo major expansion in 2007 to support LUH
production, assembly and delivery. Industrial activity
commenced in 2006 with LUH assembly and delivery and is in
the process of transitioning to full-scale production following
the production authorisation granted by the Federal Aviation
Administration in August 2007. In addition, activity at the
Columbus plant includes production and assembly of theAS350 and EC120 for U.S. Customs and Border Protection as
well as support for the U.S. Coast Guard’s modernisation of its
Dolphin helicopter ﬂeet.

Production

In Brisbane, Australian Aerospace opened a ﬁnal assembly line
for the NH90 in April 2007, in addition to the existing ﬁnal
assembly lines for the EC120 and Tiger. Australian Aerospace isalso currently investing in a composite facility in Queensland.

Eurocopter’s industrial activities have traditionally been
conducted in four primary locations, two in France and two in
Germany. The French sites are Marignane, in southern France,and La Courneuve, near Paris. The German sites are located in
Donauwörth and Ottobrunn, near Munich. In 2007, Eurocopter
further developed its home activities by opening a new
industrial site in Spain (Albacete), while at the same time
accelerating its international expansion in the U.S. (Columbus,
Mississippi) and Australia (Brisbane).

Overall, serial helicopter deliveries increased by approximately
25% in 2007, in line with the further ramp-up planned for2008. In order to meet the challenging ramp-up ahead,
Eurocopter will continue to pursue expansion of its global
supply chain with an emphasis on dollar-based and low-costsourcing in particular. It is also actively seeking to restructure
its supply network (from 2,600 suppliers to 300 ﬁrst tiersuppliers) and streamline its internal industrial organisation.

1.1.5 DEFENCE & SECURITY
Introduction and Overview

Strategy

The Defence & Security Division (the “DS Division”) serves
as the main pillar of EADS’ defence and security activities.
By combining its Defence and Communications Systems,
Defence Electronics, Military Air Systems and missile systems(consisting of EADS’ 37.5% stake in MBDA) business units
within one division, EADS has streamlined its defence andsecurity business to better meet the needs of customers that
require integrated defence and security solutions.

The DS Division seeks to offer its customers full-service
packages and integrated solutions that support theirtransformation process from a focus on defence to broader
defence and security needs. At the same time, it continues topursue new ways in which to generate internal synergies andcost savings. To this end, the DS Division is actively:

In 2007, the DS Division recorded revenues of €5.5 billion,
representing 14.0% of EADS’ total revenues.

Building strong centres of competence
Having streamlined the organisational structures of Defence
and Communications Systems and Defence Electronics in past
years, the DS Division is currently working on the ﬁnal
restructuring of its Military Air Systems business unit. As partof the process, over 600 employees within Military Air

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Systems were relocated to Manching (Germany), the site of
EADS’ Military Air Systems Centre, in 2007. The DS Division
will seek to complete the restructuring in 2008, thereby
consolidating the military air systems support centres as well as
the development centre for advanced unmanned aerial vehicles.
Supporting the transformation process of customers
Through already existing programmes with NATO, the French
Defence Ministry and the U.K. MoD, among others, the DS
Division is actively promoting European and NATOtransformation. The DS Division also participates in the
Network Centric Operations Industry Consortium (NCOIC),
an industry-based collaborative forum formed to recommend anarchitectural approach for system and platform developers
within a global network environment. In the future, the DS
Division will continue to work closely with industry andcustomer working groups to help deﬁne and deliver systemsolutions geared towards customers’ capacity requirements andtransformation needs.

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market sectors, including platform, systems, security,
operational support and defence electronics.

Defence and Communications Systems (DCS)
DCS is the EADS “Systems House”. Its mission is to develop
complete communication and information system solutions(including platforms) and provide the means for theirimplementation. DCS offers its customers comprehensive andtailored solutions, including the ability to design, develop andimplement Lead Systems Integration (LSI) and link the widest
possible range of individual platforms and subsystems into asingle effective network. Systems integration has become
increasingly important for customers engaged in border control
and coastal surveillance, as well as for non-military customers
in areas such as homeland security, all of which are areas ofmajor focus for DCS.
In 2007, DCS generated 24% of the DS Division’s total
revenues.

Consolidating its position in home markets and targeting
selective expansion, in particular the U.S.
The DS Division will seek to sustain growth by consolidating
its position in its home markets of France, Germany, Spain andthe U.K. Within these markets, further efforts in the platform,
missiles, and security businesses will remain a strategic goal
towards proﬁtable growth. At the same time, the DS Division
will seek to expand its presence in developing markets,
including the Middle East, India, Asia and South Africa.

Market
DCS faces competition from large U.S. and European companies
that also specialise in its markets. Major competitors are
Lockheed Martin, Thales, Motorola and SAIC. Key customers
for DCS’ business primarily include governmental customers,such as MoDs and Ministries of Interior in its home markets ofFrance, Germany and the U.K., with an increasing focus onother European countries, the Middle East, South Africa, Asiaand the U.S.

Increasing its market share in the U.S. defence and security
market is also a major priority for the DS Division, in
coordination with EADS North America Defense Company(NA DefCo), which seeks contracts with the U.S. Departmentof Defense and large U.S. industrial companies. Accordingly,
the DS Division is currently:

Products and Services
Defence. DCS offers comprehensive mission systems andsolutions in the areas of air dominance, battle space systems,
intelligence solutions and naval systems, as well as overallsystems support. It is a leading provider for full systems design
architecture and systems integration responsibility for militaryland-, sea-, air- and space-based systems. DCS delivers airspacedominance systems for defensive, offensive and support
operations in a combined, joint environment, thereby realising
ﬂexible, network enabled capabilities. DCS designs, integrates
and implements secure ﬁxed, tactical, theatre and mobile
information infrastructure solutions, including all of theservices needed to support integrated mission systems andsolutions. DCS is also a major designer and supplier of C3I
systems to the armed forces in France and Germany, and the
Joint Staffs in France, Germany and NATO.

●

Pursuing speciﬁc market segments in the U.S. in which it
can offer superior products and technologies, such as the
HELLAS obstacle avoidance system for helicopters and theﬁre control radar electronics of the air defence system
MEADS. The DS Division has also made headway in themarket for professional mobile radio by demonstrating its
P25 technology to U.S. states like Wisconsin;●

Building strong transatlantic industrial partnerships with
U.S. prime contractors to explore new opportunities driven
by military transformation, including Northrop Grumman(Euro Hawk®), Lockheed Martin (MEADS, Deepwater,
Littoral Combat Ship, COBRA, Missile Defence) andRaytheon (Missile Defence); and●30

Seeking acquisitions and new partnerships to expand the DS
Division’s industrial presence in the U.S. across several

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The business unit is focused on customers’ need for
information infrastructure solutions. Its expertise includes adetailed understanding of the technology necessary to achievethis, including interfaces, gateways and the use of open systemarchitectures.

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Global security. DCS provides fully integrated global security
solutions and services in the areas of border security, maritime
security, crisis and emergency management, criticalinfrastructure protection and large event protection, such as the
Asian Games in Qatar. Due to the increased connections
between different areas of threat and in light of the growinginterdependence of internal and external security in particular,
the seamless collaboration of different security organisations
has become increasingly important. The DS Division seeks tomaximise efﬁciencies through the optimised use of data andinformation together and across these different security
organisations.
Professional Mobile Radio. DCS is a leading provider of digitaland non-digital professional mobile radio (PMR) and secure
networks. DCS solutions for PMR enable professionalorganisations in various areas — such as public safety, civil
defence, transport and industry — to communicate effectively,
reliably and securely. DCS offers its customers specialised PMR
solutions based on TETRAPOL, TETRA and P25 technologies,
amongst others.
APSYS: Safety Engineering
APSYS is a DS subsidiary and is managed by the DCS business
unit. In 2007, APSYS strengthened its position in the Frenchmarket for consulting, training and studies services in technicalrisk management. New expertise was developed to address
speciﬁc markets and maintain the competitive edge of APSYS,
such as software quality insurance, communication systems
security, 3D phenomena modeling and transportation scheme
performance analysis.
Dornier Consulting GmbH
Dornier Consulting GmbH is a DS subsidiary and is managed
by the DCS business unit. Dornier Consulting is a company
for future-oriented transportation and technology consultingwith a focus on trafﬁc, transportation and logistic concepts,
system speciﬁcation and integration, modern technologies forthe management of natural resources as well as professional
full-service project management. It is an independent
consulting and engineering company with clients in the public
and private sector in Germany, Central and Eastern Europe,
Central Asia and the Near and Middle East. Major clients
include national and international institutions (World Bank,
UNDP, E.U., KfW, GTZ), governments, authorities, theGerman Railways (Deutsche Bundesbahn), Daimler and EADS
as well as a spectrum of private companies. As part of its future
strategy, Dornier Consulting will seek to develop additional
opportunities for other EADS units while also focusing on
international growth.

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Sofrelog
Sofrelog is a DS subsidiary and is managed by the DCS business
unit. Sofrelog provides integrated mission critical real-timesystems using radar and other wide area sensors, mostly formaritime applications, typically vessel trafﬁc services and costal
surveillance. These systems are based on Sofrelog’s unique
SYTAR™ product, which has set the technical standard in themaritime world: more than 450 radars have been connected,
with Sofrelog having design responsibility on more than
50 control centres in 30 different countries around the world.
Sofrelog is well positioned for growth in its core markets:
building on the award of Qatar and Tanger Med port security
in 2007, Sofrelog plans to further contribute to DS’ global
security growth.
ATLAS ELEKTRONIKATLAS ELEKTRONIK GmbH, headquartered in Bremen(Germany), is a joint venture of ThyssenKrupp (51%) and
EADS (49%). The year 2007 was characterised by the realisationof the change of shareholders in August 2006 and especially by
the integration of EADS activities. In February 2007, theintegration of DS’ naval activities began – primarily in the ﬁeldof surface vessels – which led to 140 employees beingtransferred over to ATLAS ELEKTRONIK GmbH. Another
175 employees were transferred by means of integrating EADS
subsidiary companies.
In 2007, ATLAS ELEKTRONIK achieved important successes,
including orders for the command and weapon control system
as well as the tactical data link for the new German frigate
F125, the delivery of submarine command systems for the
Indian Navy, orders by the Finnish Navy in the ﬁeld of mine
hunting and orders by international customers within the
sector of maritime safety and security. The company took
important steps to assert itself ﬁrmly in a market that –although growing – is characterised by increasing competitionand cost pressures.

Defence Electronics (DE)As the “Electronic Warfare, Avionics and Sensors House” of
EADS, DE provides mission-critical elements for electronic
warfare and self-defence and for data gathering, data processing
and distribution. It also provides sensors and subsystems that
address the market for surveillance and reconnaissance, military
mission management, protection of military units and criticalcivil areas, network-enabled capabilities as well as security andmilitary forces support.
In 2007, DE generated 15% of the DS Division’s total revenues.
MarketDE’s main competitors in defence electronics are large andmedium-sized U.S. and European companies (i.e., Raytheon,
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Northrop Grumman, Thales, BAE Systems, Galileo Avionica,
Indra and Saab) as well as competitors from Israel. DE’s key
customers include MoDs, interior ministries, military services,
security forces, the in-house EADS systems suppliers and other
LSI’s worldwide. Through various joint ventures, participations
and cooperations, DE has access to customers in every NATOcountry, in particular in Germany, France, the U.K., Spain and
Italy, and to important export markets, such as the U.S.,
Turkey, India and South Africa.
Products and Services
Electronic Warfare and Self Defence. Growth in electronic
warfare (EW) and self-defence is a key strategic goal for DE in
the future. DE supplies electronic self-protection systems foraircraft, ships and armoured vehicles, such as laser warning,
missile warning and active electronic countermeasure units,
including directed infrared countermeasures, self-protection
jammers and towed decoys. For example, DE delivers corecomponents to the “EuroDASS” defensive aids subsystem of
the Euroﬁghter and supplies additional avionics components tothe wider Euroﬁghter programme. It has subsystem
responsibility for the A400M’s self-protection system, also
supplying core EW equipment such as the infrared missile
warning system MIRAS. For military mission aircraft,
helicopters (NH90, Tiger) and VIP aircraft, DE is developing
solutions to counter threats posed by infrared-guided missiles
in particular. To date, DE has sold approximately 5,600 units of
its missile warning sensor (MILDS), which is deployed ona variety of helicopters and transport aircraft.
Avionics. As a major partner in the ﬁeld of military mission
avionics for the A400M, DE assumes subsystem responsibility
for mission management and defensive aids. The DE portfolio also
comprises avionics equipment, such as digital map units (EuroGrid),
ﬂight data recording units and obstacle warning systems forhelicopters. In addition, DE is developing multi-sensor integrationand data fusion technology, which is a key future technology
for network-enabled capabilities. For example, DE is in chargeof sensor fusion software on the NATO AWACS E3A and thesimilar Australian “Wedgetail” and the Turkish “Peace Eagle”
programmes. Additional products offered by DE in the ﬁeld ofcommunication and identiﬁcation include wide-band modular
data links.
Sensors. DE is a principal partner in the development of
airborne multi-mode radars such as the Captor radar in theEuroﬁghter programme, and also provides integrated logistics
support, maintenance and upgrades. DE is also heavily involved in
the technological development and application of next-generation
active electronically scanning (AESA) radars for air, naval andground applications. In 2007, an AESA radar demonstrator
demonstrated its capabilities in ﬂight on Euroﬁghter for the ﬁrst
time. In the area of air defence, EADS produces mid-range
radars for ship (TRS-3D) and land (TRML-3D) applications.
DE also takes a lead role in developing and manufacturing
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synthetic aperture radars (SAR), which are considered essential
for future reconnaissance and surveillance operations. In thisﬁeld, EADS has developed the European stand-off SAR sensor
for wide-area surveillance (SOSTAR-X) and provides theTandem-X space-borne Earth observation satellites with uniqueradar components.
Test & Services. The Test & Services product range covers theentire life cycle of equipment and systems and includes
comprehensive solutions that rely on test services and systems.
The solutions are either integrated or sold as stand-alone
elements: instrumentation, system software and application
software. The versatility of Test & Services systems means thata multitude of equipment and systems can be tested.
Accordingly, the same airline can use a single model test bench
for maintaining both its Airbus and Boeing ﬂeets, while theFrench Army uses the same test system for numerous weapon
systems. Already present worldwide with its civil and militaryequipment testers, Test & Services is consolidating its
development strategy on the international stage with new
locations in France, Germany, Spain, the U.K. and the UnitedStates, as well as a global distribution network.

Military Air Systems (MAS)The MAS unit focuses on the development, production anddelivery of the Euroﬁghter combat aircraft (46% owned by
EADS), maintenance, repair and overhaul, logistics support,
upgrade of existing combat air systems, provision of publicly or
privately ﬁnanced training services and construction andmanufacturing of Airbus and A400M aerostructures.
In addition, MAS designs light combat/training aircraft andunmanned aerial vehicles (UAV). In 2007, MAS continued tocentralise its military systems activities at its Manching site inGermany in order to increase its competitiveness and establish
a military air systems centre.
In 2007, MAS generated 39% of the DS Division’s total
revenues.
Products and Services
Eurofighter. Euroﬁghter, known as “Typhoon” for export outside ofEurope, is a network-enabled, extremely agile, high-performance
multi-role combat aircraft optimised for swing-role operations incomplex air-to-air and air-to-surface combat scenarios. Euroﬁghter
is designed to enhance ﬂeet efﬁciency through a single ﬂying
weapon system capable of fulﬁlling supersonic, beyond-visual-range
combat, subsonic close-in air combat, air interdiction, air defence
suppression and maritime and littoral attack roles. The tacticalrequirements of the aircraft include all-weather capability, shorttake-off and landing capability, high survivability andoperational readiness. The Euroﬁghter was designed to beadapted and improved over the long-term, as new avionics andweapons evolve, to provide for an extended service life.

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The Euroﬁghter programme is organised through the NATOEuroﬁghter and TORNADO Management Agency (NETMA)
via participating nations. NETMA contracts with Euroﬁghter
GmbH, the programme management company for theEuroﬁghter programme. The Euroﬁghter GmbH shareholders
and subcontractors are EADS (46% share), BAE Systems(33% share) and Alenia Aerospazio, a division of Finmeccanica(21% share). With regard to series production, the respective
production workshares of the participating partners within theEuroﬁghter consortium stand at 43% for EADS, 37.5% for BAE
Systems and 19.5% for Alenia, reﬂecting the relative number ofaircraft ordered by each country’s programme participant.
EADS is responsible for the centre fuselage, the ﬂight control
systems, the manufacturing of the right wing and leading edge
slats, as well as the ﬁnal assembly of the 180 aircraft ordered by
the German Air Force and 87 aircraft ordered by the Spanish
Air Force. The ﬁnal assembly of the Euroﬁghter takes place inthe relevant contracting country: Manching in Germany, Getafein Spain, Warton in the U.K. and Torino in Italy.
In January 1998, NETMA signed an umbrella Euroﬁghter contract
for 620 aircraft: U.K. 232 (with 65 options); Germany 180;
Italy 121 (with 9 options); and Spain 87 (with 16 options).
The umbrella contract, while ﬁxing a maximum price for theoverall programme, also stipulates that production agreements
are to be awarded in three tranches, with production expected
to continue until 2015. The programme includes thedevelopment, production investment and series production of
the aircraft. Currently, 384 aircraft are ﬁrmly on order within
the core programme.
Out of the ﬁrst tranche of 148 aircraft, 141 aircraft (including
six instrumented production aircraft) had been delivered as ofthe end of 2007, with the rest in ﬁnal assembly. Final assemblyof the ﬁrst Tranche 2 aircraft has also begun, with 18 inadvanced ﬁnal assembly at the end of 2007. Euroﬁghter has
already sold 15 aircraft to Austria, with ﬁve deliveries in 2007,
and further export opportunities are believed to exist in Europe
and the Far East. A government-to-government agreement has
been reached between the U.K. and the Kingdom of Saudi
Arabia on the purchase of Euroﬁghter aircraft, marking the ﬁrst
export success of the aircraft outside Europe. The respective
contract between the two governments regarding the deliveryof 72 aircraft was signed in September 2007.
UAV, Advanced UAV Systems. In response to Germany’s need
for wide-area surveillance and stand-off reconnaissance, MAS
and its U.S. partner Northrop Grumman are, through their joint
venture EuroHawk GmbH, supplying it with the HALE-UAV
System “Euro Hawk”. Euro Hawk is a high-altitude unmanned
aerial system for signal intelligence (SIGINT) that has been
specially equipped to meet national requirements. It is based on
the Global Hawk RQ4-B platform developed by Northrop
Grumman. MAS is responsible for the overall mission system
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and modiﬁcations. Procurement of the ﬁrst Global Hawk
platform to be converted into a full-scale demonstrator (FSD)of the Euro Hawk was approved by the German Parliament in2007. The Euro Hawk project calls for the integration ofnational sensors developed by DE into a total of ﬁve systems.
The German air force plans to start operational ﬂying with theEuro Hawk FSD by 2010.
MAS is also working on developing other major new
programmes in the area of UAVs, including a technology
demonstrator project to develop new technology for future
UAVs. EADS is also working on a research and technology
programme for the analysis and reﬁnement of enabling
technologies and concepts of unmanned aerial reconnaissancevehicles (URAV). The primary objective is the development of
a new system-of-systems approach within a network-centric
operations context.
Pilot Training and Training Aircraft and Services. The training
and light combat aircraft market is competitive, with offerings
from BAE Systems (Hawk 128), KAI/Lockheed Martin (T-50),
Aermacchi (AM-346) and others. MAS’ entry in this ﬁeld isthrough the proposed High Energy Aircraft Trainer (HEAT).
The HEAT is intended to close the growing gap between the
demands made on pilots by modern ﬁghter aircraft and thetraining opportunities provided by aging in-service trainers.
While MAS will not launch a full-scale design phase for thetime being, efforts to win customers and industrial partners
will continue.
Nevertheless, MAS has already contributed to the developmentof a pilot training programme for European ﬁghter jets: in 2007,
it launched the new European Advanced Training Jet Pilot
School at Talavera together with the Spanish Air Force. The
school will provide comprehensive jet pilot training using an
upgraded F-5 with near latest-generation combat aircraft
performance characteristics and sophisticated groundequipment.
Pursuant to a ten-year multi-services contract signed in 2006,
MAS also manages “ab-initio” pilot training for future military
aircrews at the French Air Force’s ﬂying school in Cognac.
The contract includes the procurement of new aircraft, line andbase aircraft maintenance as well as ground-based training
devices. ECATS (EADS Cognac Aviation Training Services),as the programme has become known, was ofﬁcially inaugurated
in April 2007 with the arrival of the ﬁrst of 18 new Grob 120A
trainer aircraft.
Military Air Systems Support Services and Upgrades. In addition
to providing after-sales services to existing customers, MASalso offers its clients the possibility of upgrading their military
air systems. Upgrading of military air systems is a particularly
attractive alternative for countries with limited national defence
budgets, such as those in Central and Eastern Europe, Latin

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America, North Africa and some Asian regions. For thesenations, the purchase of new multi-role aircraft is either
politically or economically unfeasible, making upgrading ofexisting airframes the most cost-effective solution. MAS hasdeveloped expertise in the ﬁeld of military air systems
upgrades through programmes for such aircraft as the Tornado,
F-4 Phantom, F-18, F-5, MiG-29, Mirage F-1, C101 Aviojet,
Harrier AV-8B, E-3A AWACS, P-3C Orion, C-160 Transall andBreguet Atlantic 1.

transatlantic cooperation on programmes such as MEADS, asdiscussed below.

In the area of support services, MAS is strengthening its
cooperation with the German Air Force by establishingadditional joint weapon system support centres (for the
Tornado, Transall, and other systems to be operational in thenear future, such as the A400M and Euro Hawk) that will
operate in coordination with the existing Euroﬁghter national
support centre.

●

The need to replace older generation missile systems and todevelop new capabilities (such as ground-based air defence
systems, precision and deep strike weapons and naval
superiority integrated combat systems);●

The entry into service of new missile carrying platforms(Rafale, Euroﬁghter/Typhoon, Gripen, Tiger helicopter, newfrigates and aircraft carriers and in due course other new
platforms such as the F-35 Lightning II Joint Strike Fighterand UCAVs);●

The appearance of new requirements for future weapon
systems based on new operational tasks and lessons learned
from past conﬂicts, in particular Network Centric Warfare
related systems as well as indirect line of sight or beyond
visual range target acquisition systems.

Four principal defence contractors are active in the worldwide
market for tactical missiles and missile systems. The current
worldwide market for missile systems is estimated to exceed€12 billion, with a downward trend forecast until 2010/2011.
Thereafter, the worldwide market is nevertheless expected tostrengthen due to:Missile Systems
MBDA (a joint venture between EADS, BAE Systems andFinmecannica with stakes of 37.5%, 37.5% and 25% respectively)
is the missile systems group within the DS Division (which
beginning in 2007 consolidates 37.5% of MBDA’s sales). MBDA
offers superior capabilities in missile systems and covers thewhole range of solutions for air superiority, land control andsea power missions, while also providing the most advanced
technological solutions in strike weapons and missile defence.
The further integration of the four home markets (France,
Germany, Italy and the U.K.), the consolidation of the businessand increased efforts in the export market remain the principal
goals for 2008.
In 2007, MBDA completed its acquisition of Bayern-Chemie/Protac, the German missile propulsion system company.
In addition, MBDA sold its interest in the French aerospacegroup ALKAN, except for ALKAN’s countermeasures activities,
which represented 20% of that company’s turnover in 2006.
The divestiture forms part of MBDA’s continued strategy of
optimising investments in its core missile systems business.
Finally, MBDA signed an important contract with the U.K.
MoD in 2007 to maintain the U.K. armed forces’ Rapier air
defence system and ensure its readiness and availability for
deployment.
In 2007, MBDA generated 21% of the DS Division’s total
revenues.
MarketMBDA has a geographically diverse customer portfolio. Beyond
its four national home markets, the Group has direct access tothe other important European markets, Spain and Sweden.
It also has a stable foothold in growing export markets such as
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Products and Services
The broad range of MBDA products covers all six principal
missile system categories: air-to-air, air-to-surface, ground-toair, surface-to-air, anti-ship and surface-to-surface. MBDA’s
product range also includes a portfolio of airborne
countermeasures such as missile warning and decoying systems
and decoy dispensers, airborne combat training andcountermining systems. The most signiﬁcant programmes
currently under development are the Aster PAAMS naval air
defence system, the METEOR air superiority missile systemand the Scalp NAVAL ship and submarine launched deep strikeweapon, while those in production include Aster SAMP/T air
defence, Storm Shadow/SCALP and Taurus stand-off missile
systems.
Aster Family. The FSAF Phase 3 contract signed with OCCAR(Organisation Conjointe de Coopération en matière d’Armement)
in 2003 is worth €3 billion (€2.3 billion thereof to be allocatedto MBDA). This contract covers the series production of
approximately 1,400 Aster missiles and associated missile
systems and represents Europe’s ﬁrst advanced naval andground-based air defence missile system with Anti-Tactical
Ballistic Missiles (ATBM). Aster SAMP/T, the ground-based
variant, is already in series production with the ﬁrst deliveries
to the French and Italian armed forces having occurred in 2007,
while Aster PAAMS, the naval variant, is well advanced in its
development programme.

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METEOR. METEOR is a highly ﬂexible, visual and beyond
visual range, agile, air-to-air weapon system that provides acomprehensive operational capability in the most complex
combat scenarios. METEOR was ordered by the U.K. MoD and
ﬁve other European nations (France, Germany, Italy, Spain and
Sweden) to meet their future air-to-air requirements. In 2006,
the ﬁrst air-launched demonstration ﬁrings of METEOR werecarried out. The test ﬁring programme continued in 2007 witha high altitude supersonic launch that successfully
demonstrated the missile’s integrated boost, ramjet sustain
motor and control systems during extended free ﬂight andmanoeuvring.
Scalp NAVAL. Beneﬁting from the effort already invested indevelopment of the Storm Shadow/SCALP European airlaunched cruise missile programme, MBDA is developing Scalp
NAVAL to provide the French Navy’s FREMM frigates andBarracuda class submarines with superior deep strike capability.
In January 2007, MBDA received the contract notiﬁcation fromthe French DGA for 250 of these missiles, a contract worth€910 million to MBDA.
Storm Shadow/SCALP. Already in service in the U.K., France
and Italy, the Storm Shadow/SCALP was also selected by
Greece in 2004. The Hellenic Air Force has ordered 34 Storm
Shadow/Scalp missile systems. Deliveries have also been madeto the UAE air force, where the missile is known as “Black
Shaheen”.
Taurus KEPD 350. MBDA Deutschland and SAAB Bofors areworking together through Taurus Systems GmbH to create anddeliver the Taurus KEPD 350, a precision stand-off guided
missile system for Tornado, Gripen and Euroﬁghter aircraft.
Taurus KEPD 350 is in series production for the German Air
Force, with which the weapon is now in service. During 2007,
the 300th Taurus missile left the production line in
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to procure 43 Taurus KEPD 350 missiles for its F/A-18 andEuroﬁghter aircraft, with the ﬁrst two missiles delivered in 2007.
MEADS. MEADS (Medium Extended Air Defense System), a
ground-based tactical air defence system, is a good example ofdynamic and successful cooperation on a transatlantic level.
MEADS will protect troops during out-of-area missions within
the scope of homeland defence. The ﬁnancial share of the
programme is 58% U.S., 42% European (German and Italian).
The technical workshare of the companies involved – MBDA
Deutschland, MBDA Italia and Lockheed Martin (UnitedStates) – corresponds to the respective cost contribution
percentages. MBDA’s activities are coordinated through thejoint venture company euroMeads GmbH, which, like
Lockheed Martin, has a 50% share in MEADS International Inc.
(MI). On 1st June 2005, MI formally signed a contract to designand develop MEADS. The contract value is approximately$2 billion plus €1.4 billion for the programme’s design anddevelopment (D&D) phase.
Production — System Design Centre (SDC)
Within the DS Division, the System Design Centre (withbranches in France, Germany and the U.K.) supports defence
and security customers in designing, developing and testing
their products and system architectures through use ofadvanced modelling and simulation techniques. The SDC
thereby provides a framework for systems design and related
skills on behalf of the DS Division and EADS as a whole.
Thanks to its use of standardised methods (such as thearchitecture frameworks used by the U.S. Department of
Defense and the U.K. Ministry of Defence) and other systemdevelopment tools, the SDC also helps to reinforce the DS
Division’s strategy of improving capabilities in LSI moregenerally. One tool at the SDC’s disposal in this regard is atransnational networked experimentation and test environment,
referred to as Network Centric Operations Simulations Centres(NetCOS).

1.1.6 ASTRIUM
Introduction and Overview
Astrium designs, develops and manufactures satellites, orbital
infrastructures and launcher systems and provides space
services. It is the third largest space systems manufacturing
company in the world after Boeing and Lockheed Martin andthe leading European supplier of satellites, orbital
infrastructures, launchers and associated services. In 2007,
Astrium recorded revenues of €3.6 billion, representing 9.1% of
EADS’ total revenues.

Astrium has three main business units: Astrium Satellites,
Astrium Space Transportation and Astrium Services. Astriumalso provides launch services through its shareholdings in
Arianespace (Ariane 5 launcher), Starsem (Soyuz launcher) andEurockot (Rockot launcher), as well as services related totelecommunications and Earth observation satellites throughwholly owned subsidiaries such as Paradigm Secure
Communications and Infoterra, and joint ventures such as Spot
Image.

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StrategyWith an established presence in ﬁve European countries withactive space programmes (France, Germany, United Kingdom,
Spain and the Netherlands), Astrium is the only European
company to offer comprehensive expertise in all areas of thespace industry (satellites, launchers, orbital infrastructure andservices). Astrium’s strategy is to build on these key strategic
assets and to strengthen its position in the market.
Generate profitable growth in a flat market
Institutional and military spending on space activities is ﬂat inEurope due to existing budget constraints. There is also intensecompetition in commercial markets for launchers andtelecommunication satellites, in particular given the historicallows reached by the U.S. dollar against the Euro in 2007.
Within this difﬁcult market context, Astrium is pursuing
the following strategy:●●With respect to the Ariane launcher and M51 missile
systems, Astrium Space Transportation has sought torationalise and streamline its activities by assuming the roleof prime contractor (as opposed to a main supplier andindustrial architect only). This has strongly contributed toincreasing the reliability and cost effectiveness of theseproducts. In addition, Astrium is currently the second
largest shareholder of Arianespace with a 30.5% stake.
Astrium Space Transportation will seek to build on thisleadership to better serve both customers;
With respect to satellites and services, Astrium has sought
in recent years to move from being solely a systems supplier
to a leader of satellite service provision in securecommunications and navigation. The successful developmentof a secure global military satellite communications systemon behalf of the U.K. Ministry of Defence by Paradigm
Secure Communications (“Paradigm”) — expected to be
fully operational in 2008 — represents an important ﬁrst
step. Going forward, Astrium will seek to expand its
offering of innovative, highly competitive end-to-end
tailored solutions in the ﬁeld of secure communications.
It will also seek to enhance its presence in the satellite
navigation ﬁeld as well, in particular following thereorganisation of development of a European global satellite
navigation system, “Galileo”, as discussed below.

Attain European benchmark profitability
Following the extensive restructuring actions that were
implemented in 2003 and 2004 (rationalisation andspecialisation of sites, reduction of workforce by 30%,
reorientation towards institutional customers) and ambitious
innovation investments, Management is currently working
towards implementation of additional measures to enhance
proﬁtability (Innovex ’08 for Astrium Satellites, Boost ’08 for
Astrium Space Transportation and Impact ’08 for Astrium

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Services). These measures are expected to result in continued
margin improvement between now and the end of the decade.

Astrium Satellites
Overview
Astrium Satellites is a world leader in the design andmanufacture of satellite systems, payloads, groundinfrastructure and space equipment for a wide range of civil
and military applications. Prime contractor for over
70 communications satellites, Astrium Satellites is a partner ofchoice for many of the world’s most prestigious operators.
Astrium Satellites’ business covers the four categories ofsatellite systems described below:●

Telecommunications satellites, which have multiple
applications, such as long-distance and mobile telephone
links, television and radio broadcasting, data transmission,
multimedia and Internet trunking. They may be used for
civil or military applications;●Observation satellites, which allow the collection of
information for various ﬁelds, such as cartography, weather
forecasting, climate monitoring, agricultural and forestry
management, mineral, energy and water resource
management and military surveillance applications;●

Scientific satellites, which are tailor-made products adapted tothe speciﬁc requirements of the mission assigned to them.
They have applications such as astronomical observation ofradiation sources within the universe, planetary explorationand Earth sciences; and●Navigation satellite systems, which deliver signals that enable
users to determine their geographic position with highaccuracy, and are increasingly signiﬁcant in many sectors ofcommercial activity, such as airlines, transport operators onland, sea and air, emergency services, agriculture andﬁsheries, tourism and telecommunications networks.

Market
The commercial telecommunications satellite market isextremely competitive, with customer decisions based
principally on price, technical expertise and track record.
Astrium Satellites has a worldwide market share of
approximately 30% according to internal estimates, and its maincompetitors are Boeing, Lockheed Martin and Loral of theUnited States and Thales Alenia Space (TAS) of France and
Italy. Management views the telecommunications satellite
market as one of slow but sustained growth, supported byfactors such as (i) increased telecommunications demand,
including Internet, multimedia and military needs, and(ii) greater demand to replace aging products. In the face ofcontinued strong competition, Astrium Satellites will seek toconsolidate its position in this market.

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In the market for observation, scientiﬁc and navigation
satellites, competition in Europe is organised either on anational or multinational (European Space Agency (ESA),
Eumetsat) level. In the latter instance, a fair return principle
pursuant to which contracts are awarded to national suppliers
in proportion to the respective ﬁnancial contribution made by
their governments is often employed. There is also sizable
export demand for Earth observation systems, for which EADS
is currently the sole signiﬁcant European provider.
Furthermore, civil state agencies, including the ESA, havedisplayed increased needs for Earth observation satellites in theframework of European environmental programmes. EADS
expects the scientiﬁc satellite market to remain stable over the
medium term.
In the market for navigation satellites, the primarydevelopment in 2007 was the decision by the European Union
to move ahead with development of a European global satellite
navigation system named “Galileo”. The ESA has been charged
with direct procurement of the various necessary components(space segment, ground segment, system support, launchers,etc.) with full deployment targeted for 2013. For the spaceindustry and its customers, the Galileo programme’s economic,
industrial and strategic importance is paramount. This
programme is expected to be a driver of innovative user- andcustomer-oriented solutions, creating new markets fornavigation-related services.
Finally, in the market for military satellites, demand fortelecommunications and observation satellites has strengthened.
In recent conﬂicts, the shortcomings of European militarycapabilities in these areas became apparent, while the need for
preparedness in the face of elusive threats has only grown.
The Skynet 5/Paradigm contract in the United Kingdom,
the Satcom BW contract in Germany, the Yahsat contract in the
U.A.E. and other development contracts in France demonstrate
the growth trend in this market.
Products
Astrium offers turnkey satellite systems to its customers
through an array of wholly owned subsidiaries such as(i) Astrium Spain, which supplies platforms, space-borne
antennas, deployment mechanisms and harness subsystems fortelecommunication satellites, (ii) Tesat (Germany), which is incharge of telecommunication electronic equipment andsubsystems, (iii) EADS Sodern (France), which provides
satellites sensors, and (iv) Dutch Space (Netherlands), which
provides solar arrays and other specialised items.
Telecommunications Satellites. Astrium Satellites produces
telecommunication satellites for ﬁxed and mobile applications
and direct-to-home broadcast services. EADS’ geostationary
telecommunications satellites are based on the EUROSTAR
family platforms (54 ordered to date), the latest version ofwhich is EUROSTAR 3000.

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Astrium Satellites won six commercial satellite orders in 2007
(for a 30% worldwide market share), all based on the
EUROSTAR platform (Hot bird 10 for Eutelsat, Amazonas 2for Hispasat, Arabsat 5A and Badr 5 for Arabsat, Alphasat for
ESA/Inmarsat, Ka Sat for Eutelsat). In addition, EADS won acontract (together with Thales Alenia Space) from Mubadala
Development Company in Abu Dhabi for the construction of asecure satellite communications system based on two Astrium
satellites.
Observation and Science Satellites. Astrium Satellites is theleading European supplier of Earth observation satellite
systems for both civil and military applications. In this ﬁeld,
Astrium Satellites derives signiﬁcant beneﬁts from the common
elements of its civil and military programmes.
Astrium Satellites designs and manufactures a wide range ofhighly versatile platforms, optical and radar instruments, andground segment equipment for the complete scope of remotesensing applications, operations and services. Astrium Satellites
is one of the global market leaders in the ﬁeld of Earthobservation satellites, and the prime contractor for many of the
ESA’s and CNES’ principal observation programmes.
In particular, it is the prime contractor for (i) the Spot
multi-mission platform series, in use in 15 European Earthobservation satellites and recognised as an industry standard,(ii) Metop, a next-generation polar-orbiting meteorologicalsatellite, with the ﬁrst of three having been launched in 2006,(iii) Pleiades, two small and highly agile Earth observation
satellites for civil and military applications, expected to belaunched in 2008 and 2009, (iv) Swarm, a climatology satellite
monitoring the evolution of the Earth’s magnetic ﬁelds,(v) Cryosat 2, a radar satellite designed to monitor the thicknessof polar ice caps, and (vi) Tandem X, an imagery satellite.
In the export market, Astrium Satellites signed a contract in2005 with South Korea to provide the communication andEarth observation satellite Coms (together with the associatedground segment to be delivered in 2009), as well as contract in2006 with Algeria to provide two observation micro-satellites.
Finally, TerraSAR-X, a radar-based observation satellite orderedby the German space agency DLR, was successfully launchedfrom Baikonur in June 2007 and Theos, an observation satellite
for Thailand, is in the ﬁnal stage of launch preparation.
In 2007, Astrium Satellites won a contract to build the radarimaging payload for the Sentinel-1 satellite. Observation of the
Earth’s surface, oceans, the European marine environment andice-covered regions are the main targets of the Sentinel-1
mission for systematic imaging and monitoring.
Navigation Satellites. Following the decision reached by theEuropean Union at the end of 2007 to move ahead with thedevelopment of Galileo, the ESA has been placed in charge ofdirect procurement of the various necessary components (spacesegment, ground segment, system support, launchers, etc.).

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With respect to the satellites needed for the validation phase of
the programme, Astrium Satellites has been appointed prime
contractor for the Giove B satellite, which will be launched in
the ﬁrst quarter of 2008.
Military Satellites. In addition to military Earth observation
activity, Astrium Satellites is active in the market for various
other advanced applications. These systems demonstrate
Astrium’s leading role in complex systems offers, reﬂecting the
efﬁcient use of synergies between Astrium’s space and defence
activities.

Astrium Space Transportation
Astrium Space Transportation is the European space
infrastructure and space transportation specialist. It designs,
develops and produces Ariane 5 launchers, the Columbus
laboratory and the ATV cargo carrier for the International
Space Station (ISS), ballistic missiles for France’s deterrence
forces, propulsion systems and space equipment.

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Astrium Space Transportation is also the prime contractor forthe development and construction of the ATV, designed tocarry fuel and supplies to the ISS and to provide reboost
capability and a waste disposal solution. The ATV will be theﬁrst European vehicle to carry out a rendezvous in space anddock automatically with an orbital station. The ﬁrst ATV, theJules Verne, was transferred to Kourou in 2007. It is currently
ready for launch and expected to be deployed in the ﬁrst
quarter of 2008. Additional ATV missions are scheduled
through 2013. See “1.2 Recent Developments”.
Launchers & Launch Services
Space systems (including satellites, orbital infrastructureelements and interplanetary probes) depend on rocket propelled
multi-stage launchers, which are consumed during the launch
process, to place them into orbit. Astrium Space Transportationis active in two distinct businesses: (i) designing andmanufacturing launchers for both civil and military purposes,and (ii) providing launch services through its interests in
Arianespace, Starsem and Eurockot.

Orbital Infrastructure
The orbital infrastructure segment in which Astrium SpaceTransportation operates comprises manned and unmanned
space systems. The ISS, together with related vehicle andequipment development programmes and services, constitutes
the predominant ﬁeld of activity in this segment. Astrium
Space Transportation is the prime contractor under an ESA
contract relating to two key elements of the ISS: the Columbus
Orbital Facility laboratory (COF) and the Automated Transfer
Vehicle (ATV).

Astrium Space Transportation is the sole prime contractor for
the Ariane 5 system, with responsibility for the delivery to
Arianespace of a complete and fully tested vehicle. Astrium
Space Transportation also supplies all Ariane 5 stages, theequipment bay, the ﬂight software, as well as numerous
sub-assemblies. Additionally, Astrium Space Transportation is
the prime contractor for ballistic missile systems to the French
State. It is responsible for the development, manufacturing andmaintenance of the M45 and M51 submarine-launched missiles
and related operating systems.

MarketDemand for orbital infrastructure systems originates solely
from publicly funded space agencies, in particular from ESA,
NASA, Roscosmos (Russia) and NASDA (Japan). Such systems
are usually built in cooperation with international partners.
In addition to the COF and ATV projects, ESA is responsible
for additional ISS components for the station’s construction andoperational phases. National space agencies, such as DLR and
CNES, are also involved in the development of experimental
facilities to be used on the ISS.

MarketManagement believes that the commercial market for launchservices will likely remain stable at 20/25 payloads per year,
relating primarily to the launch of geostationary
telecommunications satellites. However, due to various factors(e.g., technology advances and consolidation of customers), thisﬁgure remains highly volatile. This market does not include
institutional launch services for the U.S., Russian and Chinese
military and governmental agencies.

Products
Astrium Space Transportation is the prime contractor for thedevelopment and integration of the COF. The COF is apressurised module with an independent life-support system.
It will provide a full-scale research environment under
microgravity conditions (material science, medicine, humanphysiology, biology, Earth observation, ﬂuid physics andastronomy) and will serve as a test-bed for new technologies.
The COF was lifted to the ISS on the shuttle ﬂight of
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The commercial market for launch services has changed
signiﬁcantly in recent years. Russian companies and stateagencies have increased their prices dramatically, thereby
making other launchers more competitive in the market.
In the area of national defence, Astrium Space Transportation
has been the exclusive supplier of ballistic missiles to the
French State since the early 1960s. In addition to conducting
production and state-ﬁnanced development work, Astrium
Space Transportation performs substantial maintenance workon the ballistic missile arsenal to ensure system readiness overthe life span of the equipment, which may stretch over several

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decades. Astrium Space Transportation also provides on-site
support to the French military. Finally, Astrium SpaceTransportation is working in partnership with others on a
NATO contract relating to theatre missile defence architecture.
Products and Services
Launch Services. Astrium Space Transportation is active in theﬁeld of launch services through its shareholdings in
Arianespace (for heavy-lift launchers), Starsem (for medium-liftlaunchers) and Eurockot (for small-lift launchers).
Arianespace. Astrium Space Transportation is Arianespace’s
second largest shareholder (after CNES) with a 30.5% stake(direct and indirect), and its largest industrial shareholder.
Arianespace is the world’s largest commercial launch service
provider in terms of total order book. At the end of 2007,
Ariane had launched a total of 254 satellites. Arianespacemarkets and sells the Ariane launcher worldwide and carries
out launches from the Kourou space centre in French Guyana.
In 2007, Arianespace won 13 new commercial contracts,
representing 50% of the available market, and conducted six
Ariane 5 launches, which placed ten satellites (eightcommercial and two institutional) into orbit. Since 1999, when
the ﬁrst Ariane 5 commercial launch occurred, 31 Ariane 5
rockets have been successfully launched.
Starsem. Astrium Space Transportation directly owns 35% ofStarsem, a French corporation, along with Arianespace (15%),
the Russian space agency (25%) and the Russian state-owned
Central Specialised Design Bureau “Progress” (25%). ThroughArianespace, Starsem markets launch services by Soyuz
launchers for medium-weight spacecrafts into low or sunsynchronous orbits as well as for interplanetary missions.
Although no new contracts were signed in 2007, there were
two commercial launches and one institutional launch
performed from Baikonur. Work is also progressing on a newlaunch pad at Kourou, with the ﬁrst launch (to be operated by
Arianespace) scheduled for early 2009.
Eurockot. Astrium Space Transportation (51%) and Khrunichev(49%) jointly control Eurockot Launch Services, which provides
launch services for small, low-Earth orbit satellites with Rockot
launchers derived from SS-19 ballistic missiles.
Commercial Launchers. Astrium Space Transportation
manufactures launchers and performs research and development
for the Ariane programmes. Member states, through the ESA,
fund the development cost for Ariane launchers and associatedtechnology.
Astrium Space Transportation has been the sole prime
contractor for the Ariane 5 system since 2004. Given thecommercial success of Ariane 5, Astrium Space Transportation
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the production of 35 Ariane 5 launchers, in addition to thebatch of 30 Ariane 5 launchers ordered in 2004.
Ballistic Missiles. Astrium Space Transportation is the only
company in Europe which designs, manufactures, tests andmaintains ballistic missiles. Under its contracts with the French
State, Astrium Space Transportation has produced thesubmarine launched MSBS family (M1, M2, M20, M4 andM45) and developed the launch facilities at the Brest naval
base. The M45 is deployed onboard France’s new-generation
nuclear-powered ballistic missile submarine. Astrium SpaceTransportation manages the operational maintenance of theM45 missile system, assisting the French armed forces until theend of its operational service. Astrium Space Transportation isunder contract to develop the M51, a new submarine-based
strategic missile system with increased technical andoperational capabilities. The second test ﬂight of this new
missile was conducted in June 2007 and was fully successful.
At the end of 2004, the French MoD awarded Astrium SpaceTransportation a contract for the M51 production phase andtest range facilities with a frame-contract in excess of€3 billion. At the end of 2006 a contract for an enhanced
upper-stage was awarded by the French MoD for an amount of
more than €200 million, helping to secure Astrium SpaceTransportation’s technical capabilities in this ﬁeld for the longterm.
Management believes that the development and production of
the M51 will provide Astrium Space Transportation with highquality work over the long term. In addition, the relative
predictability of demand provides some stability to theotherwise volatile launcher market.

Astrium Services
Overview
Astrium Services offers innovative, highly competitive end-to-end
tailored solutions in the ﬁelds of secure communications andsatellite navigation. The European “one-stop-shop” provider for
military satellite communications services, Astrium Services
delivers secure military satellite services to a number ofcountries. It also intends to be a major player in the satellite
navigation ﬁeld through work on Galileo, following
the renewed commitment to the programme made by
the European Union at the end of 2007.
Products and Services
Military Communications. In 2003, the U.K. MoD selected
Paradigm to deliver a global military satellite communications
service for its next-generation Skynet 5 programme.
This groundbreaking contract, pursuant to which Paradigm
currently owns and operates the U.K. military satellite
communications infrastructure, allows the U.K. MoD to placeorders and to pay for services as required. Offering a catalogue
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Back to Contentsof services, Paradigm delivers tailored in-theatre and back-to-basecommunication solutions for voice, data and video services,
ranging from a single voice channel to a complete turnkey
system incorporating terminals and network management.
Paradigm also provides welfare services, ensuring that deployedtroops can call home and can use the Internet. The ﬁrst two
Skynet 5 satellites were launched in 2007, with full operational
service scheduled for 2008.

Navigation. Following extensive negotiation and discussion, theEuropean Union decided at the end of 2007 to move ahead
with development of the Galileo programme. The ESA has
been placed in charge of direct procurement of the various
necessary components (space segment, ground segment, system
support, launchers, etc.) with full deployment targeted for2013. Astrium Services intends to be a major player in the
reorganised programme.

In Germany, a team led by Astrium Services will be providing
Germany’s ﬁrst dedicated satellites for a secure communications
network, due to be operational from 2009. Two militaryfrequency satellites and a comprehensive user ground terminal
segment will give the German Armed Forces (Bundeswehr) a
secure information resource for use by units on deployed
missions, with voice, fax, data, video and multimedia
applications. The programme is well on track, with the deliveryof the ﬁrst ground station in 2007. Astrium Services, through a
joint venture with ND Satcom (Astrium Services: 75%, ND
Satcom: 25%) will operate the system on a long-term basis andprovide additional capacity from commercial operators.

The Galileo programme is a major step forward for Europe,
representing the ﬁrst major European-level infrastructure
procurement programme with a global dimension that willbring numerous beneﬁts to the continent and the rest of theworld. The market potential is promising, as global demand forsatellite navigation services and derivative products is growing
at approximately 25% a year.

In 2007, Astrium Services (together with Thales Alenia Space)signed a contract with Mubadala Development Company in
Abu Dhabi for the construction of a secure satellite
communications system. Astrium Services will manage theprogramme, supply the space segment (except for the payload)
and 50% of the ground segment. Full delivery is expected
in 2011.
Finally, Astrium Services extended its international presence bybuying GPT from Ericson in early 2007. GPT is a Saudi
Arabian company that provides secured communications to the
Saudi National Guard.

Earth Observation Services. Infoterra provides geoinformation
products and services to customers including international
corporations, governments and authorities around the world.
The successful launch of TerraSAR-X in 2007 — a new radarbased Earth observation satellite that provides high-quality
topographic information — signiﬁcantly expands its capabilities
in this ﬁeld. Infoterra also has access to the imagery capabilitiesof the Spot satellites, through its 40% shareholding in Spot
Image.

Production
Astrium currently operates production facilities located in
France (Vélizy, Les Mureaux, Bordeaux, Toulouse), Germany(Backnang, Bremen, Friedrichshafen, Lampoldshausen,
Ottobrunn, Rostock, Trauen), Spain (Madrid), the United
Kingdom (Portsmouth, Stevenage), the Netherlands (Leiden)
and French Guyana (Kourou).

1.1.7 OTHER BUSINESSES
Regional Aircraft – ATR
ATR (Avions de Transport Régional) is a world leader in themarket for regional turboprop aircraft of 40 to 70 seats. ATR
Integrated is a consortium composed of EADS and Alenia, inwhich each hold a 50% stake. The EADS ATR business unit,
which represents EADS’ 50% share of ATR Integrated, is under
the responsibility of Airbus.
Market and Outlook
The regional aircraft industry has experienced growing
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manufacturers merged, closed or ceased production of regional
aircraft, leading to the withdrawal from the market of BAE
Jetstream, Beechcraft, Fokker, Saab and Shorts. As of
31st December 2007, the worldwide market for turboprop
aircraft of 40-70 seats in production was dominated by two
manufacturers: ATR and Bombardier.
After a number of years of relatively low activity, the regional
turboprop market has grown dramatically since 2005, due inlarge part to the advantages of turboprop aircraft over jet
aircraft in terms of fuel efﬁciency and CO2 emissions. In 2007,
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recorded orders for 113 new aircraft (compared to 63 in 2006).
ATR had a backlog of 195 aircraft at 31st December 2007, anincrease of approximately 60% over 2006. ATR’s market sharein 2007 was over 60%. The relative fuel efﬁciency and reduced
CO2 emissions of turboprop engines, as well as soaring fuelprices, are expected to lead to sustained market activity over the
coming years. The market for second-hand aircraft also
remained strong in 2007, which led to a further increase in theresidual value of used ATR aircraft.

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Production
The ATR production facilities are located near Naples, Italy andat Merignac and Saint-Martin near the Toulouse airport inFrance. Final assembly, ﬂight-testing, certiﬁcation and delivery
occurs at the Toulouse site. ATR outsources certain areas of
responsibility to the Airbus Division, including wing design
and manufacture, ﬂight-testing and information technology.

General Aviation
Products and Services
ATR 42 and ATR 72 Series Aircraft. Commencing with the
ATR 42, which entered service in 1985, ATR has developed afamily of high-wing, twin turboprop aircraft in the 4070 passenger market that are designed for optimal efﬁciency,
operational ﬂexibility and comfort. In 1996, in order to respondto operators’ increasing demands for comfort and performance,
ATR launched a new generation of aircraft, the ATR 72-500
and ATR 42-500. Like Airbus, the ATR range is based on thefamily concept, which provides for savings in training,
maintenance operations, spare parts supply and CCQ. In its
effort to improve its product performance and value for airlines,
ATR launched a new version in 2007, the ATR-600 family,
with new glass cockpit and improved engine performance.

EADS Socata
EADS Socata manufactures a range of business aircraft for boththe private civil aircraft market and government ﬂeets.
The company is also specialised in aerostructure subcontracting,pursuant to which it produces materials and subassemblies for
major international aviation programmes, including, but notlimited to, EADS programmes.

Customer Service. ATR has established a worldwide customer
support organisation committed to supporting the aircraft overits service life. Service centres and spare parts stocks are locatedat Toulouse, in the vicinity of Washington D.C. and in
Singapore. An e-market place designed to enhance support
services developed with Embraer is also available to customers.

To strengthen its market position in business and private
aviation, EADS Socata has also launched an improved versionof the TBM aircraft — the six-seat TBM 850 — featuring
increased power, speed and range, brand new digital avionics
and new interiors.

ATR Asset Management. Consistent with industry practice, asigniﬁcant portion of orders received by ATR is conditional on
its assistance in ﬁnancing these orders either through leasing orloan guarantee arrangements. ATR Asset Management manages
the resulting risk and employs a strategy of consistent
reduction of sales ﬁnancing exposure.
ATR Asset Management also responds to the growing market
for second-hand aircraft by assisting in the placement andﬁnancing of used and end-of-lease aircraft. By providing quality
reconditioned aircraft at attractive prices, ATR AssetManagement has helped both to broaden ATR’s customer base,in particular in emerging markets, and to maintain the residual
values of used aircraft. In the past, clients for such used aircraft
have subsequently purchased new aircraft as they have gained
experience in the operation of ATR turboprops. Returned
aircraft generally remain out of service for approximately ﬁvemonths as they await reconditioning and resale or leasing,subject to market conditions.

Over the past 20 years, EADS Socata has developed a range ofpiston engine aircraft, the TB family, as well as the single
turboprop pressurised TBM 700 for the business market. As aresult of continuous development and use of innovativetechnologies, EADS Socata products rank among the best in
the industry.

The latest TBM 850 model offers a jet-like maximum cruise
speed with maximum security and comfort thanks to the new
glass cockpit avionics. The single engine turboprop provides all
the advantages of a light jet at lower direct operating costs.
Since the launch of its aerostructures activity in the early
1960s, EADS Socata has positioned itself as a tier one global
subcontractor for complete assemblies. Its engineering
department carries out development and design for key
components for major aviation programmes, including Airbus(A400M, A380, etc.), Dassault (F7X), Eurocopter and Embraer.
EADS Socata’s core skills are in sheet metal forming andstretching, composite materials and semi-manual structuralassembly for aeronautic programmes.
EADS Socata is also experienced in the use of composite
materials for aircraft structural elements, in particular for the
Airbus A330/A340, as well as in metal-composite combination
technology and forming of large-dimension metal panels.
EADS Socata carries out design work for a number of European
aviation programmes, including Airbus, Eurocopter and Falcon
aircraft.

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In order to maintain its competitiveness in the aerostructurebusiness, EADS Socata established a low-cost facility based in
Casablanca, Morocco in 2007.

Aircraft Conversion and Floor Panels
EADS Sogerma
On 10th January 2007, EADS Sogerma completed the sale ofthree of its subsidiaries dedicated to global support andmaintenance — Sogerma Services, Sogerma America Barﬁeld
B.C. and EADS Sogerma Tunisie — to the TAT Group. EADS
Sogerma will continue to conduct some maintenance activities
through its subsidiaries SECA and REVIMA until they are
sold. EADS Sogerma also sold its corporate jet outﬁtting
activities to Airbus in August 2007, which in turn created a
dedicated subsidiary: ACJC. Currently, EADS Sogerma is
focused on its core businesses: aerostructures and cabin interior
activities.
In the aerostructures ﬁeld, EADS Sogerma engages in thedesign, manufacturing and assembly of Airbus aircraft sections(A318/A320/A330/A340), manufacturing and assembly of
ATR wings, design and manufacturing of the A400 ramp door
as well as design and manufacturing of pilot and co-pilot seats.
In the cabin interior segment, EADS Sogerma designs andmanufactures ﬁrst and business class seats for Airbus andBoeing platforms.
EADS Sogerma owns three sites in France (Rochefort, Bordeaux
and Toulouse) and beneﬁts from a low cost subsidiary in
Morocco (Maroc Aviation) as well as two subsidiaries
specialised in composites: CAQ (Composite Aquitaine) in
France and CAL (Composite Atlantic) in Canada.
EADS Elbe Flugzeugwerke GmbH – EFW
EFW has two main business activities: the conversion ofcommercial passenger aircraft into freighters and the productionof ﬂat sandwich aerostructures for all Airbus models.

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The conversion of passenger aircraft into freighter aircraft(“P to F”) is a common heavy modiﬁcation undertaken on
behalf of commercial aircraft owners. The market for aircraft
freighter conversion encompasses freight service airlines suchas FedEx, airlines with small aircraft ﬂeets and ﬁnance groups.
Two considerations drive the decision of aircraft operators toconvert existing passenger aircraft to freighters: ﬁrst, conversion
is the most efﬁcient way to obtain a modern freighter; second,it maintains the residual value of an aircraft at a high level byextending the revenue-generating service life. Aircraft
converted at EFW are very similar to Airbus serial freighter
versions.
According to Airbus estimates, airfreight is expected to growfaster than passenger trafﬁc in the next 20 years. Approximately
3,800 dedicated cargo aircraft should meet this total airfreight
demand, of which roughly 75% are forecasted to come fromP to F conversion.
EFW’s main competitors in the freighter conversion businessare independent maintenance, repair and overhaul (MRO)
providers, which offer P to F conversions of Boeing aircraft
either for their own account or as subcontractors of Boeing. As
the only provider of P to F conversions for Airbus aircraft,
EFW holds a strong market position in this area. EFW’s current
civil programmes comprise A300-600 and A310 conversions
and accompanying heavy maintenance services. In a joint
venture with Airbus, Irkut and UAC, EFW is also preparing
for the P to F conversion of A320 and A321 aircraft. For
military customers, EFW converts passenger aircraft to multirole tanker transport (MRTT) aircraft based on the A310.
These aircraft can be operated in several different conﬁgurations:
troop transport, cargo transport, a combination of both, and as aﬂying hospital. At the same time, the aircraft can deliver air-to-air
refueling support.
In the aerostructures ﬁeld, EFW is the supplier of ﬁbre
reinforced ﬂat sandwich panels for all Airbus models.
Its product range covers ﬂoor and ceiling panels, cargo linings
and bullet-proof cockpit doors. EFW’s engineering department
is a certiﬁed design organisation that works to develop future
products.

1.1.8 INVESTMENTS
Dassault Aviation
EADS holds a 46.3% stake in Dassault Aviation (listed on theEurolist of Euronext Paris), with Groupe Industriel Marcel
Dassault holding a 50.55% stake and a free ﬂoat of 3.15%.
Dassault Aviation is a major player in the world market for
military jet aircraft and business jets. Founded in 1945,
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Dassault Aviation has delivered more than 7,500 military andcivil aircraft to purchasers in more than 75 countries. On thebasis of its experience as designer and industrial architect ofcomplex systems, Dassault Aviation designs, develops andproduces a wide range of military aircraft and business jets.
In order to avoid any potential conﬂict between the military
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Euroﬁghter) and to facilitate a “Chinese wall” approach, EADS’
Dassault Aviation shareholding is managed by EADS
Corporate, whereas the Euroﬁghter programme is managed by
EADS’ Defence & Security Division.
2007 was another record year for Dassault Aviation, withorders totalling €6.3 billion, including 212 ﬁrm orders received
worldwide for Falcon business jets. Consolidated revenues
amounted to €4.1 billion in 2007, with an operating resultof €503 million (12.3% margin).
Military Jet Aircraft
Dassault Aviation offers wide expertise in the design andmanufacture of the latest generation military combat aircraft.
Rafale. The Rafale is a twin-engine, omni-role combat aircraft
developed for both Air Force and Navy applications. According
to government budgetary documents, France is considering theacquisition of 294 Rafale, 234 for the Air Force and 60 for theNavy, for a total programme cost of €32.3 billion. 120 aircraft havealready been ordered; of these, 82 are destined to the Air Force,and 38 to the Navy.
Mirage 2000. The Mirage 2000 family reached the end of its
production phase in 2006. Today, approximately 600
Mirage 2000 aircraft are in service worldwide.
nEUROn. Dassault Aviation is the prime contractor for thedevelopment of the UCAV (Unmanned Combat Air Vehicle)

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demonstrator, nEUROn. The programme was open to European
cooperation and ﬁve countries have decided to join in and sharethe skills of their aerospace industries: EADS CASA (Spain),
SAAB (Sweden), HAI (Greece), RUAG (Switzerland) andAlenia Aeronautica (Italy). The nEUROn demonstrator isscheduled to ﬂy in 2011.
Business Jets
Dassault Aviation offers a wide range of products at the top
end of the business jet sector. Over 1,700 Falcon business jets
have been delivered since the ﬁrst Falcon 20 delivery in 1965.
In-service Falcons currently operate in over 65 countries
worldwide, ﬁlling corporate, VIP and governmenttransportation roles. The family of Falcon jets currently
includes four tri-jets: the Falcon 50EX, 900C, 900EX and 7X,
the twin-engine Falcon 2000 and the Falcon 2000EX EASy.

Dasa-Dornier Luftfahrt
DADC, which is 75% held by EADS, holds a 97.2% stake in
Dornier GmbH, which in turn holds a 1.6% stake in the capitalof Fairchild Dornier Luftfahrt Beteiligungs GmbH, which isthe sole shareholder of Dornier Luftfahrt GmbH. Through thisminority interest, EADS is not involved in any businessdecision regarding Dornier Luftfahrt GmbH. Furthermore,
Dornier Luftfahrt GmbH is currently involved in an insolvency
proceeding.

1.1.9 INSURANCEEADS Corporate Insurance Risk Management (“IRM”),
centralised at EADS headquarters, is responsible for all
corporate insurance activities and related protection for theGroup. It includes continuous and consistent identiﬁcation,
evaluation, prevention and protection of insurable risks.
Insurance techniques are used to manage these risks
professionally and to protect the assets and liabilities of EADS
against ﬁnancial consequences due to unexpected events.
Harmonised insurance policies and standards are in place for all
insurable risks underwritten by the Group.
An integrated reporting and information system is in place toenable IRM, in close relationship with insurance managers
named by the EADS Business Divisions and Business Units, torespond to insurance related risks of the Group. EADS pursues
an insurance risk management strategy that includes operatingprocedures as well as policies regarding procurement and sales
agreements.

A systematic review and monitoring procedure is in place toasses the exposure and protection systems applicable to all
EADS sites, (i) ensuring comprehensive and timely
identiﬁcation and evaluation of risks, (ii) the initiation of
appropriate mitigation and risk avoidance measures (iii) and/or
related adjustments of insurance coverage.
EADS’ insurance programmes cover high risk (Core) and low
risk (Non-Core) exposures.
Core Insurance Policies underwritten by IRM for the Group
cover risks such as:●

Property Damage and Business Interruption;●

Aviation Third Party Liabilities including Product Liabilities;●

Manufacturer’s Aviation Hull Insurance up to thereplacement value of each aircraft;●

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Commercial General Liabilities including non-aviation andnon-space Product Liabilities and risks related toenvironmental accidents; and●Directors & Ofﬁcers Liability.

Claims related to Property Damage are covered up to a limit of€2 billion per loss and €2 billion as an annual aggregate.
Aviation Liability Coverage is provided up to a limit of€2 billion per loss, with an annual aggregate cap of €2 billion
for product liability claims. Certain sub limits are applicable forCore Insurance Policies as outlined above.
Non Core Insurance Policies cover risks such as:●

Personal Accidents;●

Company Automobiles;●

Personal and property exposures during business trips; and●Life insurance.

Insurance amounts for Non Core Insurance Lines adequately
cover the respective exposure.

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EADS follows a policy of obtaining external insurance coverage
for all main and individual risks that can be insured at reasonablerates, on sufﬁcient terms and limits provided by the international
insurance markets. All insurance policies are required to satisfy
EADS’ mandatory standards of insurance protection.
However, to be more independent from the volatilities of theinsurance markets, EADS uses the capabilities of a corporateowned reinsurance captive as a strategic tool with respect to theProperty Damage, Business Interruption Programme andAviation Insurance Programme. The captive is sufﬁciently
capitalised and protected so as to ensure its ability to reimburse
claims without limiting the scope of coverage of the original
insurance policies and not additionally exposing ﬁnancial assets
of EADS.
The insurance industry is still undertaking efforts to reduce its
overall exposure. These efforts include increasing premiums,
raising deductible amounts and limiting the scope of coverage.
Furthermore, the number of insurers having the capabilities andﬁnancial strength to underwrite industrial risks is still shrinking.
No assurance can be given that EADS will be able to maintain its
current levels of coverage on similar ﬁnancial terms in the future.

1.1.10 LEGAL AND ARBITRATION PROCEEDINGSEADS is involved in a number of claims and arbitrations thathave arisen in the ordinary course of business. EADS believes
that it has made adequate provisions to cover current orcontemplated general and speciﬁc litigation risks.
Although EADS is not a party, EADS is supporting theEuropean Commission in litigation before the WTO. Following
its unilateral withdrawal from the 1992 E.U.-U.S. Agreement
on Trade in Large Civil Aircraft, the U.S. lodged a request on
6th October 2004 to initiate proceedings before the World
Trade Organisation (“WTO”). On the same day, the E.U.
launched a parallel WTO case against the U.S. in relation to its
subsidisation of Boeing. On 31st May 2005, the U.S. and the
E.U. each requested the establishment of a panel. At its
meeting on 20th July 2005, the Dispute Settlement Body
established the panels. Between November 2005 and thepresent, the parties ﬁled numerous written submissions andattended several oral hearings in both cases. The parties
continue to provide input in response to the WTO’s written
questions in advance of issuance of the WTO panels’ reports.
Exact timing of further steps in the WTO litigation process
is subject to ruling of the panels and to negotiations between
the U.S. and the E.U.. Unless a settlement, which is currently
not under discussion, is reached between the parties, the WTO
panels will render their reports probably sometime in 2008.

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The French Autorité des marchés financiers (the “AMF”) and
the German Federal Financial Supervisory Authority (the“BaFin”) began investigations in 2006 for alleged breaches ofmarket regulations and insider trading rules with respect to, in
particular, the A380 delays in 2005 and 2006. However, theBaFin formally notiﬁed EADS on 3rd March 2007 that it had
discontinued its investigations for suspected breaches of market
regulations. Upon referral by the BaFin, German publicprosecutors are currently conducting investigations regarding
suspected insider offences against a few individuals.
Furthermore, in Germany, several individual shareholders haveﬁled civil actions against EADS to recover their alleged losses
in connection with the disclosure of A380 program delays.
Following criminal complaints ﬁled by a shareholders
association and by an individual shareholder (including a civil
claim for damages), French investigating judges are carrying out
investigations on the same facts. For further information
related to developments in the AMF investigation in 2008,
including the notiﬁcation by the AMF of charges against EADS
and certain of its executives, see “1.2 Recent Developments”.
EADS belives that the ﬁnancial risk associated with the AMF
procedure and its possible consequences is not material.
On 3rd October 2006, the EADS Board of Directors decided to
conduct an independent assessment of individual discharge of
duties in the situation that led to the A380 delays. This
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at the management level. This investigation concluded that noindividual failed to discharge his duties under appropriate legal
standards and no personal liability of members of the top
management of EADS and Airbus was identiﬁed.
EADS is not aware of any governmental, legal or arbitration
proceedings (including any such proceedings which are pendingor threatened of which EADS is aware), during a period covering
at least the previous twelve months which may have, or have hadin the recent past signiﬁcant effects on EADS and/or the Group’s
ﬁnancial position or proﬁtability, except as stated above.

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EADS recognises provisions for litigation and claims when (i) it
has a present obligation from legal actions, governmental
investigations, proceedings and other claims resulting from past
events that are pending or may be instituted or asserted in the
future against the Group, (ii) it is probable that an outﬂow ofresources embodying economic beneﬁts will be required tosettle such obligation and (iii) a reliable estimate of the amountof such obligation can be made. For the amount provided forrisk due to litigations and claims, see Note 22 c.) “Other
provisions”.

1.1.11 INCORPORATION BY REFERENCE
The English versions of the following documents shall bedeemed to be incorporated in and form part of this Registration
Document:●“Part 2/1.1 Presentation of the EADS Group” of theRegistration Document ﬁled in English with, and approved
by, the AFM on 26th April 2006; and●“Part 2/1.1 Presentation of the EADS Group” of theRegistration Document ﬁled in English with, and approved
by, the AFM on 25th April 2007.

Copies of the above-mentioned Registration Documents areavailable free of charge upon request in English, French,
Spanish and German languages at the registered ofﬁce of theCompany and on www.eads.com. Copies of the ﬁnancial
statements referred to above are also available in English on
www.eads.com and for inspection at the Chamber ofCommerce of Amsterdam.

1.2 Recent Developments
EADS North America acquires PlantCML
nd

On 22 April 2008, EADS announced the acquisition of
California-based PlantCML, a leading provider of emergency
response solutions, from Golden Gate Capital, a San Franciscobased private equity fund, for approximately $350 million.
Based on the good underlying proﬁtability of PlantCML,
the acquisition is earning per share (EPS) accretive (on a pre fairvalue amortisation) in the ﬁrst year. Leveraging the synergies
between the companies is expected to create additional value inthe following years. The acquisition was made through
EADS’ U.S. operating subsidiary, EADS North America, andwill become part of the North America business portfolio.
PlantCML provides call management and radio dispatch
products for emergency call centres, along with emergency
notiﬁcation services, Computer Aided Dispatch (CAD)
applications and mapping services. PlantCML has the largest
installed base in U.S. public safety answering points.

Notification by AMF of Charges Against EADS andCertain of Its Executives
On 1st April 2008, the AMF announced the notiﬁcation of
charges against EADS and certain of its executives for breach of
market information duties and breach of insider trading rules,
respectively. EADS, as well as the concerned EADS and Airbus
executives, take notice of the decision of the AMF College toinitiate proceedings.
In the ﬁrst step of what is likely to be a long process, the AMF
College has considered that the elements gathered during theinvestigative phase of the enquiry, as interpreted by AMF’s
investigators, do not justify a dismissal of the case. The AMF
will notify EADS and the executives concerned of the natureof the charges against them.
For the ﬁrst time, EADS and the persons involved will be able
to confront the AMF’s interpretation with their explanation of
the facts of the case. They intend to vigorously exercise theirdefence rights with the support of EADS, in front of the
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Sanction Commission of the AMF which will decide whether
to impose ﬁnes after due hearing of the parties.
Considering the fact that there is no decision on the substanceso far, EADS insists that the principle of presumption of
innocence be upheld. EADS believes that the ﬁnancial risk
associated with this procedure and its possible consequences is
not material. However, it recognises that these proceedings may
have signiﬁcant consequences on its image and reputation.

Airbus Continues Site Divestment Strategy Despite
the End of Preferred Bidder Negotiations with
OHB/MT Aerospace
Airbus has terminated negotiations with the OHB/MT
Aerospace consortium regarding the sale of the Airbus sites in
Nordenham, Varel and the EADS site in Augsburg since a
viable industrial and ﬁnancial solution was not achievable.
Airbus will continue searching for other solutions and, inparallel, will proceed with the carve-out of the three sites.
The negotiations concerning the partial sale of Filton, thepartnering for Meaulte/Saint Nazaire-Ville and the sale of
Laupheim continue.
However, the volatility of the ﬁnancial markets and an
exchange rate of nearly $1.60 per Euro — as opposed to $1.35
per Euro when the divestment process was started — havecreated difﬁcult market conditions that are not conducive to aneasy and smooth implementation of this process. In thisenvironment, Airbus will have to consider different approaches
or interim steps that will ﬁnally lead to the same goal.

EADS-led AirTanker Consortium Signs 27-year Air
Refuelling Contract with the U.K. Ministry of
DefenceOn 27th March 2008, AirTanker, the EADS-led consortium,
signed a 27-year contract with the U.K. Ministry of Defence
for the provision of air transport and air refuelling capability to
the Royal Air Force. The AirTanker consortium has also
completed its ﬁnancing for the programme, raising approx£2.5 billion (€3.2 billion) for investment in the ﬂeet, a newstate-of-the-art operational base and associated infrastructure.
The Future Strategic Tanker Aircraft (FSTA) programme
includes the provision of a ﬂeet of 14 new tanker aircraft, basedon the latest generation Airbus A330-200 to enter service from2011, replacing the previous ﬂeet of VC-10 and Tristar
refuelling aircraft. The contract also includes provision for allnecessary infrastructure, training, maintenance, ﬂight
management, ﬂeet management and ground services to enable
the Royal Air Force to ﬂy air-to-air refuelling and transport
missions worldwide.

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U.S. Air Force Selects the KC-45A Tanker
On 29th February 2008, the U.S. Air Force awarded Northrop
Grumman Corp. a contract for the development andprocurement of up to 179 KC-45A tanker aircraft with anestimated contract value of approximately U.S.$40 billion.
The initial KC-45A contract with Northrop Grumman covers
four system design and development aircraft and is valued at
U.S.$ 1.5 billion.
EADS North America is the partner to Northrop Grumman on
the new tanker, with responsibility for assembling airframes
and providing completed ﬂight-qualiﬁed aircraft and refuelling
sub-systems. The KC-45A Tanker is based on the EADS A330
MRTT (Multi Role Tanker Transport). Its airframe is derived
from the popular A330 jetliner produced by Airbus.
The Military Transport Aircraft Division is responsible within
the EADS Group for all military derivative programmes basedon Airbus platforms, including tankers. Starting in 2011,
production of KC-45A airframes will be performed at Airbus’
new Mobile, Alabama aerospace centre of excellence which willhouse the Airbus KC-45A ﬁnal assembly facility. In addition,
the ﬁnal assembly of Airbus A330 civilian freighters will be
performed at the same centre, providing a robust ﬁnal assemblyline to ensure low risk, high efﬁciency and increased capacity
for both the U.S. Air Force and commercial Airbus customers.
On 10th March 2008, Boeing announced that it intended tochallenge the U.S. Air Force’s award of the tanker contract toNorthrop Grumman. The Government Accountability Ofﬁce(GAO), the investigative arm of the U.S. Congress, has up to
100 days to review the challenge and make a determination
whether to dismiss or uphold it. If it upholds the challenge,
the GAO could require the U.S. Air Force to hold anothercompetition.

Airbus Delivers Third A380 to Singapore Airlines
The third Airbus A380 was handed over to Singapore Airlines
on 11th March 2008. The third aircraft for the ﬁrst A380
operator follows the delivery of the ﬁrst A380 on 15th October2007 and the second delivery on 11th January 2008. The thirdaircraft is ﬁtted with the same spacious and luxurious cabininterior Singapore Airlines revealed on the occasion of thedelivery of their ﬁrst A380, also featuring 471 seats in threeclasses.

Eurocopter Enjoys Strong Demand for the EC175
Eurocopter encountered strong demand at the world’s mostimportant Helicopter Exhibition, Heli-Expo 2008 in Houston,for its brand new EC175. Eurocopter signed intentions to buy
with 13 different customers for a total of 111 units. All ofthese customers intend to use the EC175 mainly for offshore

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oil and gas missions as well as search and rescue operations.
Eurocopter also booked 120 orders for the rest of its range,
marking its continued success in extremely active North
American and international markets.

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Columbus Successfully Docks with the International
Space Station
Europe’s space laboratory Columbus is in space: it successfully
docked with the ISS on 11th February 2008. The module wasbuilt by Astrium for the European Space Agency ESA.

Ariane 5 ES Sends the ATV to the International
Space Station
On 9th March 2008, an Ariane 5 ES placed the AutomatedTransfer Vehicle (ATV) supply vessel Jules Verne into orbit on
the very ﬁrst attempt.

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Corporate Social
Responsibility

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Business Ethics

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2.1.1

PROPER BUSINESS PRACTICES

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2.1.2

EXPORT COMPLIANCE

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2.1.3

COMPLIANCE WITH LAW REGARDING
ALL EADS’ ACTIVITIES

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2.1.4

CORPORATE GOVERNANCE STANDARDS

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2.2

Sustainable Growth

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2.2.1

PRODUCT QUALITYAND CUSTOMER SATISFACTION

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2.2.2

SUSTAINING AND PROTECTING INNOVATION

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2.2.3

SUPPLIER MANAGEMENT:FOSTERING A MUTUALLY BENEFICIAL
RELATIONSHIP WITH EADS’ SUPPLIERS

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2.3

Environmental Care

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2.3.1

POLICY68

2.3.2

ORGANISATION

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2.3.3

PERFORMANCE AND BEST PRACTICES

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2.4

Human Resources: Employer –Employee Relationship

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2.4.1

WORKFORCE INFORMATIONAND ORGANISATION OF WORK

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2.4.2

HUMAN RESOURCES ORGANISATION

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2.4.3

HUMAN RESOURCES POLICIESAND PERFORMANCE

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2.5

Corporate Citizenship

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2.5.1

MAINTAINING AN OPEN DIALOGUEWITH EADS’ STAKEHOLDERS81

ENCOMPASSING COMMUNITY INTERESTSIN EADS’ GLOBAL STRATEGY

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EADS was founded seven years ago, as the result of a European
industrial ambition to create a world leader in the ﬁeld of
aeronautics, defence and space. Built as a challenger and driverof change, EADS is at the head of some of the greatest
European achievements, such as Airbus, Ariane, Euroﬁghter orEurocopter. A part of this ambition and vision are its sharedvalues of integrity and social and ethical responsibility.
The Group is committed to the principles and values that arelaid down in its Code of Ethics as well as to the Corporate
Social Responsibility (“CSR”) policies which were formalisedin 2004. Since then, these policies are being progressively
cascaded down, and continuously updated in order to take into
account the environment and the challenges faced by theGroup and to reafﬁrm its commitment towards its values.
2007 has seen remarkable achievements with a reshaped
governance structure, Power8’s ﬁrst results, international
deployment initiatives, as well as commercial successes.
Yet, the Company has faced technical and industrial challenges
over the past two years. EADS believes that its dedication
to corporate responsibility policies contributes to the Group’s
initiatives for long-term competitiveness and performance.

The Group’s strategy envisages a sustainable balance between
economic performance, consideration of stakeholders’ interests
and respect for the environment. Hence, EADS strives to:●Move towards eco-efﬁciency and become a front-runner indeveloping the most advanced green technologies;●

Deliver value through developing fruitful relationships withstakeholders, with the aim of being a responsible and sought
after partner; and●Sustain economic performance while promoting benchmark
ethical standards.

EADS’ Approach to CSR
The EADS approach to CSR takes into account the Group’s
structure and speciﬁcities, it builds upon the Group’s expertise.
The EADS approach to CSR:●

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Is coordinated by the Group’s Corporate Secretary who (1) isthe architect of a comprehensive group-wide organisation toaddress CSR questions in a structured way; (2) coordinates
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an internal CSR network to ensure visibility and consistency
of EADS’ approach both internally and externally;(3) identiﬁes and explores emerging issues facing the ﬁeld of
CSR, and deﬁnes the means to respond accordingly;(4) makes proposals and recommendations to the EADS
management regarding all CSR matters, (5) represents EADS
before outside networks and maintains the dialogue withstakeholders, and (6) the Group’s Corporate Secretary is inaddition in charge of coordinating and managing Ethics andCompliance matters at Group level;●

Provides a framework setting out guidelines for theDivisions and BUs that are responsible for the day to day
business and that ensures dialogue with their direct
stakeholders;●Addresses the EADS CSR key challenges such as export
compliance: As a defence company, EADS Group speciﬁcallyacknowledges its responsibility in selling defence products
and providing services to nations that contribute to theirsecurity during peace time. EADS delivers products andintegrated solutions pursuant to customer speciﬁcation.
These products have to comply with the applicable laws put
in place by the responsible government (arms export laws,
embargo rules, Ottawa agreement, and anticorruption
policy); and●Incorporates the speciﬁc nature of the Group’s products,
such as the average lifecycle of over 30 years which requires
a continuous long-term approach.

Through its Vision 2020, EADS has clearly reafﬁrmed its
commitment to further develop and integrate its CSR policies
within the daily business.
EADS indeed considers that recognition of its social and ethicalresponsibility is a key enabler to long term value creation.
EADS acknowledges that the Group’s responsibilities include
serving all its stakeholders: customers, employees, shareholders,
but also society as a whole through contributing to the wellbeing of individuals as well as to the prosperity ofcommunities.

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The present chapter aims at illustrating that the EADS CSR
policies are already increasingly incorporated into daily
business, by describing best practices identiﬁed throughout theGroup and reporting performance indicators. A number ofquantitative and qualitative Key Performance Indicators(“KPI”), based upon the Global Reporting Initiative, theGlobal Compact principles and the French Nouvelles
Régulations Économiques and tailored to EADS’ business wereindeed deﬁned, starting with the 2004 report, and reﬂect someof EADS’ CSR achievements.

EADS Code of Ethics
At the time of the creation of EADS, the Code of Ethics wasestablished and communicated to the employees of the Group.
This Code of Ethics aimed at emphasising values that were key
success factors for achieving an efﬁcient integration of different
companies into one group. In 2005, more than four years after
the creation of EADS, in light of its establishment as a market
leader in many of its businesses, and considering the evolving
legal environment relating to business ethics, EADS updated
the Code of Ethics in order to reﬂect practices recommended byvarious codes and laws and to align with best practice.

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The enhanced EADS Code of Ethics sets out in one single
comprehensive document the Group’s business guidelines
related to the ethical standards that the Group adheres to.

EADS is committed to implementing the principles describedin this Code, in particular through entrusting an EADS Ethics
Committee with compliance responsibility in ethics matters.

The Code of Ethics serves as a core EADS business guidelineof an architecture of documents in which the code also refers topre-existing, detailed policies as laid out in the EADS
Corporate Handbook as well as Division or BU speciﬁc policies
and processes. It is based on EADS’ underlying values and isfully in line with internationally recognised standards as laidout in charters, declarations or guidelines, such as the Universal
Declaration of Human Rights, the International Labour
Organisation’s Declaration and OECD Convention. EADS, as asignatory of the United Nations Global Compact, is committed
to promoting, within its sphere of inﬂuence, the application of
fundamental values regarding Human Rights, Labour,
Environment and Anticorruption. EADS is willing to report on
the Group’s success in implementing its sustainable
development strategy.

The Code of Ethics describes the missions of the Ethics
Committee set up by the EADS Board of Directors. In
particular, the Ethics Committee will offer guidance to the
EADS Chairman, the Board of Directors and its Committees,
the CEO, and Executive Committee, as well as management atlarge regarding all ethical questions. The Committee willsubmit at least annually a report to the EADS Board of
Directors with respect to each year’s activities. It will also
implement appropriate coordination with the compliancefunctions of EADS and its Divisions.

Since April 2006, the Code of Ethics is available in the four
EADS languages on the Group intranet and can be downloaded
from the EADS web site www.eads.com.
The Code of Ethics covers the full scope of EADS’ CSR
policies, addressing in its ﬁve chapters the principal lines of
ethical behaviour:●“Creating a positive working climate” describes EADS’
principles in terms of, e.g. dialogue and representation,equal opportunities policy, and management of HR
development;●“Doing business ethically” discusses issues such as conﬂicts
of interest, export control and contracting withgovernments, as well as the hiring of government ofﬁcials;●“Fostering sustainable growth” deals with proper use of
information and intellectual property rights, as well as
relationships with suppliers;●“Respecting the environment” covers developing
environmentally sound processes and products; and●“Living in our communities” describes the ways in which
EADS contributes to the life and development ofcommunities where it operates.

The Code of Ethics, therefore, gives guidance to all employees
about appropriate conduct in their professional environment.

In 2006, EADS initiated a review of its compliance activities
and processes; its ﬁndings were that EADS had a solid base ofcompliance practices, compliance processes existing for each of
the CSR domains relevant to the business. Within theaerospace and defence industry, the overall level of compliancein the CSR domains is globally rated average or above averageby rating agencies. The level of achievement by EADS of theseagencies’ expectations varies among the covered topics,
depending upon the compliance levels that the Group has
already completed e.g. the international compliance programme(see infra 2.1.1) is well perceived by EADS’ stakeholders for it
provides clear compliance rules, a structured complianceorganisation and the implementation of compliance processes issubstantiated by KPIs. Notwithstanding, the Group is
considering to further develop its compliance approach andthus, is studying the possible implementation of acomprehensive group-wide compliance organisation to address
overall compliance in a structured way. This organisation would
also aim at further developing the awareness of the principles
laid down in the Code of Ethics as well as at ensuring that
individual behaviour is in line with the Group’s commitments
and policies. The contemplated organisation shall incorporate
an ethics alert system.

EADS CSR policies
EADS’ policies have been designed to support and implement
EADS’ long-term vision and strategy in terms of CSR and aresupported by an internal control system in areas such ascompliance with OECD rules, export restrictions, IP
protection, research and development etc. (See “Part 1/
2.1.5 Internal Control and Risk Management Systems”). They
give guidance for day-to-day business and are in accordancewith EADS’ underlying values.

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CSR POLICIES ON DOMAINS IDENTIFIED AS MOST RELEVANT FOR EADSCSR Domains

Business Ethics

Sustainable Growth
Environmental Care

Employer-Employee Relationship

Corporate CitizenshipSpecific Policy Items

Proper business practices
Export Compliance
Compliance with the laws regarding all EADS’ activities
Corporate Governance standards
Product quality and customer satisfaction
Sustaining and protecting innovation
Fostering a mutually beneficial relationship with EADS’ suppliers
Minimising environmental impacts of EADS’ activities throughout the products’ life cycle
Promoting environmental consciousness and maintaining constant dialogue with stakeholders
Providing a safe workplace for EADS’ employees and subcontractors
Caring for EADS employees and know-how
Ensuring equal opportunity for all EADS employees
Ensuring efficient management of skills and know-how
Promoting proactive dialogue with EADS’ employees
Maintaining an open dialogue with EADS’ stakeholders
Encompassing community interests in EADS’ global strategy

The policies and related practices are set out in more detail below.

2.1 Business Ethics
2.1.1

PROPER BUSINESS PRACTICESDoing international business requires being especially vigilant
so as to ensure that all companies belonging to the EADSGroup always comply with all applicable laws and regulations
relating to international sales, as well as with very highbusiness ethics and integrity standards. EADS aims at setting
standards to govern its business ethics and integrity policies
which often go beyond applicable laws and regulations.
To achieve this aim, EADS has been implementing acomprehensive set of rules and processes since 2000 aimed atensuring compliance with such laws, regulations and businessethics and integrity standards.

2.1.1.1 Policy●“EADS is active in sectors which are strictly ruled by national
and international regulations. EADS is committed to absolutecompliance with applicable regulations wherever its entities
operate.

●Fighting against corruption and economic crime in foreign
trade has become a major challenge for all international
companies. In order to meet this challenge, EADS is fullycommitted to complying with applicable national andinternational legislation, including the OECD Convention ofNovember 1997, as incorporated into the legislation of

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37 countries. EADS’ International Compliance Programme(also known as the “Rules relating to Foreign Trade”) is a
corporate policy, applicable to all international operations of
EADS and its affiliated companies, intended to detect andprevent bribery and unfair dealing.
●

EADS is often involved in proposals, bid preparations orcontract negotiations with governmental authorities because of
the nature of its products and services. The Group’s policy is tocompete fairly and legally for all business opportunities as wellas to conduct negotiations and perform contracts when awardedin compliance with all applicable requirements, specifications
and contractual obligations.”

2.1.1.2 Organisation
The EADS Rules for Foreign Trade
EADS has implemented a detailed corporate policy, the EADS
Rules relating to Foreign Trade, which applies to all international
operations of the Group’s entities, and which is intended todetect and prevent bribery and unfair dealing in internationalsales. This policy has been published in EADS’ Corporate
Handbook and is incorporated in the EADS Code of Ethics,
which is available to all employees through the Company
intranet.

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The policy entails effective control of international operations,through the conduct of appropriate due diligence of business
partners, regular audit and reporting mechanisms and enhanced
training sessions within all BUs. It also sets out appropriate
guidelines regarding the acceptance of gifts and hospitality.
The main pillars of the Rules for Foreign Trade are the following:●Transparency in the selection of all business partners.
All business partners engaged by an EADS company
have undergone a strict engagement procedure, based on (i) adue diligence aimed at conﬁrming that the prospective
business partner is reputable and qualiﬁed to work for
EADS, (ii) internationally recognized standards (location,
credentials, ethical track record, etc.) and (iii) a commitment
to abide by the Group’s policies prohibiting corruption andpayment of bribes;●“Appropriate remuneration for legitimate services”. EADS isvery keen to ensure that all payments due and payable toany business partner are justiﬁed by legitimate services
rendered and do not exceed sound market practices; and●Monitoring of the contractual relationships with suchbusiness partners (and the related payments) until
satisfaction of all contractual duties.

Those policies and procedures shall apply to all operations
directly or indirectly relating to foreign trade.
The Group’s business partners must respect these policies andprocedures, and any failure to do so shall lead to earlytermination of the contract in place.
Furthermore, EADS conducts regular audits of implementationof all related agreements entered into by BUs to verify thatGroup policies and procedures are properly implemented andthe BUs are instructed to report on a yearly basis on theimplementation of such policies and procedures. This isespecially the case concerning the payments made to thebusiness partners, which must at all times be fully justiﬁable.
In 2007, EADS has a network of 42 International ComplianceOfﬁcers (“ICOs”) representing each BU. ICOs are responsible
for ensuring the correct application of the policies andprocedures within their respective BUs. They are also in chargeof nominating appropriate “ICO correspondents” in each BU’s
controlled entity with a view to properly cascading thecompliance duties in all operating countries.
Partnerships and initiatives
EADS is also developing regular contacts with international
bodies such as the OECD, the International Chamber ofCommerce (“ICC”) and the European Union (“GRECO”) andpeer companies with a view to setting and promoting integrity
standards in the aerospace and defence sector. In this respect,

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EADS works closely with the European Aerospace & Defence
Industries Association of Europe (“ASD”) and its members(such as CIDEF and GIFAS in France, BDLI in Germany,
ATECMA & AFARMADE in Spain or SBAC in the U.K.), andalso with major European aerospace and defence companies.
As a consequence, ASD has produced, in 2007, a “Common
Industry standards” document (“CIS”) approved by the ASD
Council, to promote and enhance integrity practices amongst its
members. This document deﬁnes the principles aiming at
setting high standards, exchanging best practices, promoting
training and compliance programmes, and more generally
generating and disseminating common European industry
positions on ethics and anti-corruption issues to observe andapply national legislation on anti-corruption rules
implementing the 1997 OECD Convention against corruption
and the United Nation Convention Against Corruption(“UNCAC”) as well as any other applicable laws. The largest
international aerospace and defence companies and associations
have adhered to the CIS.
EADS promotes and opens dialogue with other companies andindustry associations, especially those belonging to OECD
countries (e.g. U.S.), but also non-OECD countries at a laterstage. As a matter of fact, EADS views such an international
initiative as a perfect opportunity to enhance the level playing
ﬁeld which the OECD Convention, and thereafter the UN
Convention, have started to establish i.e. criminalise corrupt
practices, develop national institution’s to prevent corrupt
practices and to prosecute the offender, cooperate with othergovernments to recover stolen assets and help each other toﬁght corruption, reduce frequency and reinforce integrity.
EADS is also maintaining a relationship with the ICC anticorruption Commission and the French Corruption Monitoring
Council (Service central de prévention de la corruption), which
signed a convention with EADS in 2003.
According to a survey conducted by Novethic and the SCPC(Service Central de Prévention de la Corruption) in 2006, only
seven companies amongst those belonging to the French
CAC 40 are reported as being transparent and meetinginternational standards. EADS is one of these companies.

2.1.1.3 Performance and Best Practices
In December 2005, EADS made a ﬁrst amendment of theRules for Foreign Trade, as a result in particular of advice
received from reputable international experts in business ethics
and anticorruption laws and practices. The main objective of
these amendments was to adapt the Rules to the evolution of
the Group, and to disseminate the identiﬁed best practices
across the Group as a whole. With the aim to constantly
monitor the Rules according to the industry standards and bestpractices, a new update is planned in 2008.

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EADS conducts regular assessments and audits to detect andspread Group best practices in international business ethics.
In addition, the Group has developed a comprehensive
training policy so as to disseminate an awareness culture
within all BUs. All employees dealing with international
business attend such training sessions. In order to communicate
and explain the Group’s corporate values and policies to allconcerned, around 87 training sessions took place in 2007
across EADS, sometimes with the attendance of third parties(prosecutors, representatives of international bodies, lawyers,etc.). This represents a very high number of training sessions,which demonstrates that the dissemination of the EADS
compliance culture in all BUs is a key element of EADS’management system.
The Group has issued a leaﬂet entitled “EADS Business Ethics
Policy For Consultant Agreements: Transparency& Substantiation”, which is given to all prospective
international marketing consultants. This leaﬂet summarises
Group policies and procedures regarding selection ofinternational business partners. Such international business
partners are also invited to attend speciﬁc training sessions
when deemed apropriate.
The Group’s ICOs meet periodically to share concerns and bestpractices. An annual ICO Conference has been organised since2003 involving more than 100 people involved in foreign tradebusiness and operations. The last “International ComplianceOfﬁcers Workshop” held on June 2007 in Paris was focused on
the EADS Rules dedicated to:●

The Offset Providers with a dedicated Offset Service
Provider Procedure; andConsultants & other business partners files audited*

●

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The International Business Engineering Projects with theselection and validation process through the Companies
Development & Selection Committee (“CDSC”).

The workshop also details the achievements made regarding theimplementation of the Rules Relating to Foreign Trade within
the BUs, including countries’ information on Public Ofﬁcials
Code of Conduct relating to “Gifts & Hospitality”.
EADS also releases Group-wide internal bulletins on a regularbasis, the so-called ICP Info Newsletters (International
Compliance Programme Newsletters). These focus on theevolution of the regulatory environment for foreign trade andhighlight information reported by international media
regarding the ﬁght against corruption and economic crimeworldwide. These bulletins complete and update theinformation given to EADS employees during the training
sessions.
In relation with its international businesses, EADS uses third
parties, such as consultants and international business partners
in order to provide appropriate assistance and expertise to BUs
on current or potential business for EADS and/or promote
EADS products or services in various countries.
The contractual arrangements for such services are governed byinternal rules and policies that describe the entire contractual
process, from the selection of the partner to theimplementation and execution of the agreed service. In order toensure that the rules are understood and strictly applied,consultant and service providers agreements are audited.
The purpose of these audits is to check the substantiation of
the contractual duties delivered by the third party in exchange
for remuneration. The table below presents information
concerning the percentage of consultant ﬁles audited in eachof the past three years. None of the audits have revealed any
material deﬁciencies.
2007

2006

2005

94.9%

91.9%

92.3%

Number of ICP Info Newsletters issued

3

3

3

Number of training sessions held by ICOs

87

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Scope: EADS.
(*)
Total audited ﬁles/Total active ﬁles of consultants and other international business partners (2005 ﬁgure has been re-calculated accordingly).
Improvement of the Rules’ implementation process within existing, and new, EADS controlled entities, has increased the number of Consultants and other Business Partners ﬁles received by EADS International
Operations.
Adjustment in EADS perimeter would lead to additional audits in 2008.

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2.1.2 EXPORT COMPLIANCE
2.1.2.1 Policy●“EADS complies with all national import and export control
regulations that govern the exports and imports of commodities,
technical data and technical support (including national
commitments regarding E.U. and U.N. obligations).

●

EADS follows the compliance guidelines of the applicable
export control administrations. The Group always obtains
export licenses and other government approvals prior toexporting products and technology controlled by governmentsor the E.U..

●

EADS is committed to implementing industry best practices;
the Company complies with EADS internal policies and allbusiness objectives worldwide, which may exceed therequirements of national laws and regulations.”

According to the particular nature of the industries that it isactive in, EADS has put a special focus on the overall
compliance with export control regulations and laws. Especiallyin the area of defence and dual use goods, governments areimportant customers; EADS has established a cascading systemof export control procedures and policies, also taking into
account that export policy is an important element of foreign
policy of the governments of EADS’ home countries.

In each of its home countries, EADS is known as a reliable
exporter. It works closely together with the government in theultimate goal of preventing proliferation of sensitive goods andtechnologies to non reliable countries or persons. For any
delivery, EADS checks the reliability of the end use and theend users according to various criteria.
In recognition of EADS seriousness and reliability, the Groupis a privileged partner to the governments of its homecountries and e.g. holds Global Project Licences and simpliﬁed
approval and exporting procedures.
Although the responsibility and liability for exports is in thehands of its BUs, the CEO reserves personally the assessmentof any export in sensitive countries by a special directive andspecial procedures. This procedure is based on a case by casereview in which EADS’ Strategy and Marketing organisation
provides EADS’ top management with legal elements andgeo-politics inputs for the ﬁnal review.
If a planned export may be of concern for one of EADS’ homecountries, the political situation is checked in close connection
with governmental authorities.

2.1.2.3 Performance and Best Practices
2.1.2.2 Organisation
In the Western world, export legislation has a high degree ofcommonality and export control rules are harmonised byvarious international export control regimes by governments.
Therefore, the ultimate decision for exports is always in thehands of relevant governments and EADS does not export any
product without a respective export licence.
Within EADS, there are national export control
organisations in each country, assuring compliance with therespective national laws and regulations. They give approval or
advice for all export activities (prospecting, negotiation, offers,
proposals, licensing, shipment…) at the earliest possible point
in time. These organisations are also responsible for adequate
education and training of all export control ofﬁcers in the
Divisions and communication of applicable laws andregulations. They also ensure harmonised licensing procedures
according to the respective national regulations. Meetings
between the national export control organisations are held on aregular basis.
In addition, in each of the Divisions there is a cross country
export control organisation in place handling both thebusiness speciﬁc issues and the day to day business andcontrolling compliance with licenses at the ﬁnal stage of thedelivery of the goods, technologies or services.

Export Control Committee
The national heads of Export Control and the Divisions’ headsof Export Control form the Export Control Committee whichholds quarterly meetings for exchanging information, andestablishing speciﬁc cross country procedures tailored to theoperative business (space, defence, aeronautics).
The Export Control Committee has prepared an EADS
Compliance Directive in export matters and maintains theinformation about sensitive countries up to date. The national
heads of Export Control are responsible for issuing andmaintaining national export control compliance manuals on thebasis of EADS common principles and rules.
Training and Education
The export control professionals hold training and education
sessions for employees and managers of all operative
organisations involved in export control (e.g. procurement,
sales, engineering and project management). Export control
education is also part of EADS’ management development
programmes.

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Procurement Directive
Due to the extraterritorial application of export and re-export
regulations of some countries (e.g. U.S.), EADS is forced andcommitted to comply with these laws and regulations. In orderto ensure compliance and to manage economic risks, EADS has
issued a procurement directive. This directive asks for export
classiﬁcation of foreign products already in the phase of
procurement in order to be able to be compliant during thewhole supply chain and to minimise economic risks ofcompliance cost for further phases.

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AuditsThe EADS export compliance system is regularly audited andapproved by governmental authorities. Also external ex-postcontrols of compliance with laws and regulations are
performed.
In 2005, a comprehensive internal audit took place for theexport control systems in each country and in each Division.
There were no major ﬁndings, neither by external audits, nor
by the internal audits concerning legal compliance. A numberof proposed operational improvements were implemented
in 2006 and 2007.

2.1.3 COMPLIANCE WITH LAW REGARDING ALL EADS ACTIVITIES
Compliance and veriﬁcation of compliance with all the laws
and regulations of the countries where the Group does
business is a must at EADS. Rapid changes in the industry andthe overall global environment constantly present new legal or
regulatory requirements which call for robust internal controls
in the ﬁeld of legal compliance.

2.1.3.1 Policy●“EADS is committed to complying with antitrust andcompetition as well as humanitarian law, when applicable,
in all of its activities and throughout the Group.

●

EADS screens new customers and suppliers to ensure that they
do not do banned business.”

The overall compliance with the law programme: Amongst
the various areas of the law which require constant monitoring,
it is worth mentioning a few examples that are of particularimportance to EADS, although the list is only indicative.
Examples of this permanent monitoring process are: compliancewith the laws and regulations governing competition,
protection of the environment, public sector procurement andaccounting and ﬁnancial reporting.
Compliance with Corporate Governance standards is anotherarea of focus. Governance practices are developed andmonitored to fulﬁl the Board’s responsibility towards
customers, shareholders and employees, to oversee the work ofmanagement in the conduct of the Company’s business, and toserve the long-term interest of stakeholders.
Insider Trading Rules: The Dutch AFM, as well as otherstock exchange authorities (the French AMF, the German
BaFin, and the Spanish CNMV), which regulate the markets on
which EADS securities are listed, impose certain rules upon
EADS and require it to enforce these rules internally. Hence,
EADS adopted in 2000, its Insider Trading Rules. EADS’

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Insider Trading Rules belong to the best practise processes andapply to all EADS employees and even for some time after
people retire or leave the Company. The guiding principle isthat employees should freely perform any EADS securities
transactions provided that they act in accordance with EADSGroup’s policies which are set out in EADS’ Insider Trading
Rules. According to the rules, more than 2,500 managers arestrictly subject to no-trading periods over the year. People inhigher and top management functions have only very limited
trading windows after each quarterly results publication.
On top of this, those concerned also have to inform the Insider
Trading Rules Compliance Ofﬁcer in order to proceed with thetransactions. All No-Trading Periods are widely communicatedamongst the respective communities and people are personallyinformed by mail when they are subject to such trading
restrictions.

2.1.3.2 Organisation
From an organisational standpoint, EADS Legal Affairs, incoordination with the Divisions’ and BUs’ legal departments, is
responsible for designing, implementing and overseeing thepolicies and processes aimed at ensuring that EADS’ activities
abide by all applicable laws and regulations. Teamwork amongst
all the legal players is aimed at ensuring consistent andcomprehensive legal processes in compliance with national
requirements. Corporate Legal Affairs is also responsible foroverseeing all litigation affecting the Group, as well as for thelegal safeguarding of the Group’s assets, including intellectual
property.
Extended networks of professionals (e.g. intellectual property…)
located close to operational players drive legal complianceactivities. These professionals are capable of handling therequirements of the many jurisdictions that are relevant to
EADS, not only in its “home countries” but abroad as well.

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The CFO is the Insider Trading Rules Compliance Ofﬁcer.
The Corporate Secretary with the support of the Legal
Affairs departments also plays an essential role in the setting
up and administration of EADS Corporate Governanceprocedures as well as legal documentation underlying
delegation of powers and responsibilities.
Finally, all those activities are audited by the Corporate Audit
department which consists of a team of dedicatedprofessionals who are familiar with the requirements andchallenges of the Company’s international business.

2.1.3.3 Performance and Best Practices
Whatever the legal environment they are subject to, BUs are
extremely vigilant in monitoring legal risks. They constantly
ensure that regulations are applied and track any infringement
risks so as to prevent them. This is based on basic processes:●

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4by solid infrastructure for legal compliance, training
initiatives and general employee awareness actions as well.
●

Identifying and mitigating legal risks: Whatever thesource of the legal compliance risk may be, EADS takes
responsibility for ﬁnding the facts and analysing theapplicable laws; measures are then taken to deal with thesituation in a proactive manner.

Sharing information, especially within the community of legal
professionals is designed to help the Company learn frommistakes, if any, thus using its experience to continue raising
the bar in its processes.
The EADS Insider Trading Rules are regularly updated inorder to take into consideration recent changes in European
regulations as well as to ensure EADS’ adherence to best-inclass corporate governance standards. The EADS Insider
Trading Rules are provided to the relevant Market Authorities
for veriﬁcation and conﬁrmation.

Training and awareness: a preventive approach is based on
the combination of Company policies and values supported
2007

2006

2005

Court decisions regarding cases pertaining
to antitrust and monopoly regulations

None

None

None

Descriptions of policy, procedures/management
systems, and compliance mechanisms
for preventing anticompetitive behaviouri) EADS Code of Ethics including but
not limited to all relevant provisions ofCode of Ethics relating to compliancewith competition law; and ii) Regularlegal risk analysis as issues come up.

i) EADS Code of Ethics including
but not limited to all relevant
provisions of Code of Ethics relating
to compliance with competition
law; and ii) Regular legal risk
analysis as issues come up.

i) EADS Code of Ethics including
but not limited to all relevant
provisions of Code of Ethics relating
to compliance with competition
law; and ii) Regular legal risk
analysis as issues come up.

Scope: EADS.

2.1.4 CORPORATE GOVERNANCE STANDARDS
Compliance with Corporate Governance standards is an area ofspeciﬁc focus at EADS.
In addition to being a Dutch registered company, EADS islisted in multiple countries. This implies the necessity for
EADS to comply with different regulations.
As a consequence, the Group is permanently monitoring thelaws and regulations, as well as the current market practices in
the countries it is based in, in order to ensure its conformity
with the evolution of Corporate Governance in general.
Governance practices are developed and monitored to fulﬁl the
Board’s responsibility towards shareholders, to oversee thework of management in the conduct of the Company’s businessand to seek to serve the long-term interest of shareholders.

EADS, in its continuous efforts to adhere to the highest
standards, applies the provisions of the Dutch Corporate
Governance Code (“Dutch Code”), which includes a numberof non-mandatory recommendations and, if the case arises, thereason for non-application of such provisions are explained, in
accordance with the Dutch Code’s “Apply or Explain”
principle. The few non-compliance matters with regards torecommendations of the Dutch Code mostly result from EADS
being aligned with general market practices in the countries it
is listed in and its particular governance structure, as laid downin its Articles of Association.
Since its creation in 2000 and until 22nd October 2007, EADS
was led by a dual-headed management structure, with two
Chairmen and two co-Chief Executive Ofﬁcers, which hasprovided the necessary balance and stability required for a

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company with such a unique industrial and multi-national
heritage.
On 16th July 2007, Daimler*, the French Government andLagardère decided, together with the EADS management team, toimplement a new management and leadership structure.
The German Government was also consulted. Guiding principlesof this modiﬁcation were efﬁciency, cohesiveness andsimpliﬁcation of EADS’ management and leadership structure,
towards corporate governance best practices while maintaining
a balance between the French and the German coreshareholders. Under the simpliﬁed management structure,
EADS is now led by a single Chairman and a single Chief
Executive Ofﬁcer.
The core shareholders also concluded that it was in the bestinterest of the Group to recommend an increase in the numberof independent members on the Board of Directors toappropriately reﬂect the global proﬁle of EADS by conforming
to international corporate governance best practices. In thisrespect, both Daimler and Sogeade relinquished two seats on
the Board of Directors and four independent directors were

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elected during the Extraordinary General Meeting of
Shareholders held on 22nd October 2007. Apart from the Chief
Executive Ofﬁcer, the Board no longer comprises executive
directors.

2.1.4.1 Policy●“EADS is determined to set the standard of excellence in thefield of Corporate Governance. EADS is committed to meetand even exceed social, legal and statutory requirements toensure transparent management and recording.

●

EADS commits to providing the most accurate and reliable
information and records in all decision-making processes andbusiness relations, both inside and outside EADS. To achieve
the highest standard of reliability, EADS continuously
improves its Internal Control and Risk Management
procedures.”2.1.4.2 Organisation
See “Part 1/Chapter 2 Corporate Governance”.

2.2 Sustainable Growth
EADS supplies some of today’s most advanced technology inthe ﬁeld of aerospace and defence. EADS strives to meet thecustomers’ requirements for competitive, cost effective andinnovative technology. The Group’s development relies on its

ability to deliver products and services that meet customers’
requirements. Sustaining this development requires focus on
the product quality, continuous innovation and the best
supplier management.

2.2.1 PRODUCT QUALITY AND CUSTOMER SATISFACTION
As an industry leader in aerospace and defence, EADS isconstantly striving to build upon its solid reputation for
excellence in its products, processes and people. With a focus
on continual improvement and on building customer conﬁdence
by improving On-Time and On-Quality Delivery (“OTOQD”),
EADS demands that every area of its operational businesschallenges and improves its levels of Quality and Operational
Excellence, internally and throughout the supply chain.

2.2.1.1 Policy“EADS is fully committed to achieving the highest levels ofcustomer satisfaction, driving continuous improvements in thequality of its products, processes and people and deploying themost demanding Quality Management Systems.

●

*

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Formerly “DaimlerChrysler”.

EADS BU S I NES S , LEG A L A N D CO R P O R AT E R E S P O N S I B I L I T Y●

EADS actively seeks key customer feedback through astructured Group-wide process of Customer Reviews.”

2.2.1.2 Organisation
The Chief Quality Ofﬁcer (“CQO”), reporting to the Chief
Technology Ofﬁcer (“CTO”), is in charge of stimulating,coaching and supporting the BUs to implement continual
improvements in operational level OTOQD performance and tomaintain and improve customer conﬁdence in EADS.
In particular, he chairs an EADS Quality Council with seniorlevel representatives from each BU to agree on actions andpriorities and to drive OTOQD deployment in all BUs.

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CQO animates, supports and drives a network of BU
operational level experts to ensure that the EADS Improvement
Programme (“EIP”) is tuned directly to the needs, priorities
and maturity of each BU in line with EADS 2020 Vision.
CQO also represents EADS in relevant Quality, Standards andRegulatory bodies at both National and International levelcommensurate with the status of EADS as a global aeronautic,
space and defence company.

2.2.1.3 Performance and Best Practices
A major initiative, the EIP, was launched to deliver enhanced
Customer conﬁdence and satisfaction through driving
operational improvements in those industrial processes which
contribute to achieving OTOQD of products and services to
end customers. In 2006, the EADS Improvement Programme
was deployed throughout all EADS BUs.
This EIP acts on four key areas for improvement:
Customer Confidence
EADS operates in a business where long term relationship isneeded with Customers. An EADS products’ average life span
is 40 to 50 years. Customer conﬁdence is therefore absolutely
key.
A common methodology was introduced in early 2005, with aview to deploying it consistently throughout the Group.
This Customer Review process (“CRp”) methodology is basedon a structured series of interviews targeting the key decision
makers at EADS’ strategic customers. These interviews are
performed by the BUs’ top management.
The goal is to measure the level of customer conﬁdence, which
is more important than satisfaction in determining its loyalty.
EADS aims to assess and to continuously improve therelationships between the Group and each of its customers.
Improvement plans which result from these interviews arereported to the interviewees.
A total of more than ﬁfteen CRps have been launched from the
beginning of the programme.
More complex CRps are implemented for Defence customers.
They are conducted at national level rather than at BU level,
governments’ procurement activities being by nature cross-BUs.
A Defence CRp was performed in each of the four EADS
home nations.
The approach has been warmly welcomed by Customers
worldwide. In some cases, the EADS culture of “actively
listening to the Customer” supported the Group in winning
new contracts.

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The French and U.K. MoD praised and valued EADS’“Customer attitude” and fully support the continuing process.
Most BUs have now engaged in the process and some second
rounds are being launched when results from the previous
rounds can be witnessed by Customers.
The Customer mindset is spread throughout the Company
with the target of embedding it in EADS’ culture and Quality
Management System.
Programme & Risk Management
In order to tackle and improve OTOQ delivery, and therefore
boost customer conﬁdence, EADS launched a group wide
project in 2006 to improve Programme & Risk Management(“P&RM”) performance.
In 2007, a dedicated P&RM Council was created, comprising
members from each of the EADS Divisions and involved
corporate functions.
The P&RM Council developed the P&RM framework: acommon referential deﬁning the key characteristics of theprocesses for managing programmes, and the basis for acommon EADS P&RM language and terminology. Based on arecognized worldwide standard, it addresses key areas such as
managing risks & opportunities, independence of phasereviews, integrated multi-programme planning and execution.
To understand and tackle the problems faced on key EADS
programmes, programme assessments have been run leading toconcrete improvement actions at programme level.
These actions include clariﬁcation of roles and responsibilities
on multi-partner programmes and pilot implementation ofmodern integrated planning methods. Experience gained fromthe technical assessments run in 2006 and 2007 is built into
the common P&RM framework.
The HR team has been very active in 2007 on the following
two subjects which have been adopted and aligned with thework of the P&RM Council:●

A Programme Managers Network (“PM Network”) was
created to engage experienced practicing programmemanagers from across EADS. This is the forum for PM’s tomeet and share their experiences, lessons learned, and bestpractices; and●A strategy was developed, with guidelines and rules forsustainable structured development giving future programmemanagers the right mix of multi-discipline, multi-functional
and transnational experience, training and skills.

In 2008, the process of spreading best-practices between
programmes and divisions will start, using the outcomes oftechnical programme assessments, technology readiness
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reviews, and other programme reviews to establish the areas
where maximum beneﬁt could be gained by cross-divisional
collaboration.
Lean Operation
Lean Operation at EADS is driving continual improvement in:●

The elimination of non value-adding activity;●

Forging closer links throughout the supply chain; and●Ensuring processes are robust in all operational workﬂows.

All EADS Divisions have been actively working in Lean-based
performance improvements in the manufacturing areas forseveral years. EADS is now focused on leveraging these
individual improvement actions to accelerate deployment acrossthe Group by actively spreading best practices (e.g. EADS LeanDay for Plant & Operations Managers on October 2007 in
Airbus) and on extending the scope to develop Lean Supply
Chain improvements in 2008.
In order to effectively drive this, EADS has created a Lean
Operations council (quarterly meetings in 2007) comprisingsenior executives from each Division having both the expertiseand authority to drive lean-based improvements within their

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respective Division and another initiative through the Lean
Development Council is starting in January 2008.
DRIVER and EADS Black Belt
EADS equips managers with an “Improvement Methodology
and Toolkit”. This is the purpose of the “DRIVER”
methodology deﬁned in 2005, along with the complete training
syllabus (more than 10 training modules and 30 tools).
DRIVER is EADS’ speciﬁc Improvement methodology. The
corresponding training can be delivered in the format of“Executive Black Belt” (0.5 day), “EADS Silver Belt” (2.5 days),“EADS Green Belt” (one week) or “EADS Black Belt” (fourweeks). To be recognised as Qualiﬁed Improvers, EADS Black
Belts must complete, on top of their training, an improvement
project that can deliver measured beneﬁts in terms of On Timeon Quality Performance, costs savings, Customer Conﬁdence ora mixture of the three elements.
A learning management system (“LMS”) supports and monitors
the programme deployment, also enabling candidates to share
best practices and use trans-BU networks for mutual support.
At the end of 2007, more that 330 people had been enrolled as
EADS Black Belts in the sessions held across EADS Divisions
and BUs. A total of 776 Executive Black Belts, 546 EADS
Silver Belts and 424 EADS Green Belts have been achieved.

2.2.2 SUSTAINING AND PROTECTING INNOVATION
2.2.2.1 Innovation Strategy
The world will change considerably in the coming decades,
requiring new products based on emerging technologies andefﬁcient processes. Products and processes must be tightly
linked to improve competitiveness and differentiation. Research& Technology (“R&T”) plays a central role in EADS remaining
competitive by being more innovative, better, cheaper and fasterin delivering products than its competitors, in view of the factthat European companies suffer from a largely fragmented andgenerally lower customer funding than e.g. their U.S. peers.
In addition, EADS and its Divisions promote cutting-edge
technologies and scientiﬁc excellence to contribute to global
progress and to deliver solutions for the challenges of societal
issues such as Environmental Protection, Mobility, Defence &Security, and Safety.
Policy“EADS’ innovation strategy aims at increasing competitivenessand profitability through promoting an innovation continuously
improving quality of services and products as well as efficiency ofprocesses.”
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Organisation
The Chief Technical Ofﬁcer’s mission is to be the EADS
focal point for R&T. The CTO ensures that business strategy
and technology strategy are closely linked and he is responsible
for the development of design and manufacturing tools andinnovation across EADS. The CTO is a member of the EADS
Executive Committee and he has the responsibility for theentire R&T budget and R&T production within EADS.
The CTO delivers shareholder value through a stringent,leading-edge R&T portfolio that enables ﬂawless introductionof new technologies on future products with strong returns-oninvestment. He also aims to maximise customer excitement by
providing high-value solutions that meet the technological,
performance, safety, and cost-competitive pressures thatchallenge the Company’s future. In addition, he addresses
societal responsibilities with solutions answering theparamount considerations of safety, security, environmental
compatibility and energy efﬁciency.
The EADS Executive Technical Council (“ETC”), chaired by
the CTO, is made up of the technical directors of the Divisions.

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The ETC is responsible for ensuring alignment with theGroup’s technology strategy and implementation through theGroup R&T road map. The ETC ensures that a balance ismaintained between the top-down strategic guidance andbottom-up expertise, creativity and responsibility. It meetsregularly to discuss and decide forward strategies and it
identiﬁes synergies.
Group Innovation Networks and their leaders (“GINs” 1-5)in the CTO’s team are in place and reporting to the Chief
Operating Ofﬁcer Innovation to ensure that the relevant
actions are implemented and that synergies are exploited
throughout the EADS Divisions and the EADS Innovation
Works. The COO Innovation is chairman of the R&T Council(“RTC”), which is made up of the R&T Directors of theDivisions/Business Units, the GIN’s, the Head of CTO R&T
Strategy, the Head of CTO Finance and the Head of EADS IPManagement. The RTC prepares the work of the ETC andassures the operational implementation of the R&T plan and its
deliverables.
The CTO steers the EADS-wide harmonisation oftransversal technical processes, methods and tools, andskills development programmes, such as Systems
Engineering, common tools for Product Life-Cycle Management(PLM/Phenix) and Systems Engineering Training and
Qualiﬁcation. He also carries out speciﬁc technical assessmentson behalf of the CEO and the EADS Executive Committee.
The head of the EADS Innovation Works reports to the
CTO. Innovation Works are in charge of the corporate R&T
production facilities that guarantee the Group’s technicalinnovation potential with a focus on the long-term horizon.
Driven by the EADS R&T strategy, they identify newtechnologies that will create value and competitive advantages.
The EADS Innovation Works have two main sites in Paris andMunich and employ approximately 600 people including
doctorates and university interns. Proximity centres aremaintained in Toulouse, Nantes and Hamburg to support theknowledge transfer to BUs in these locations. A liaison ofﬁce isoperating in Moscow, which facilitates relations with Russianscientiﬁc institutes. EADS operates a R&T centre in Singapore
and also launched a centre in Spain and in 2007, in the U.K.
The corporate EADS Innovation Works and the EADS R&T
community in the Divisions maintain and expand establishedacademic research partnerships with leading universities andhigh-tech engineering schools by employing thesis students,
post-graduate interns and doctorate candidates as well as bycontracting speciﬁc research projects.
Members in the support and R&T enabler groups of the
CTO’s organisation ensure that R&T is an integral part of thebusiness, by maintaining strong links with the business

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development organisation, human resources, ﬁnance,
intellectual property, standardisation and communication.
See also “Part 1/1.1 Management’s Discussion and Analysis ofFinancial Condition and Results of Operations”.
Performance and Best Practicesa) The R&T Strategic Approach

The key strategic obligations for EADS include the saving anddeveloping of core competencies and core technologies forplatform and platform-based systems architecture andintegration. In parallel, EADS must keep the innovation
pipeline constantly ﬁlled to replace ageing technologies andprocesses. Each Division must muster the technologies needed
to face ﬁerce international competition and pro-actively respondto customer requirements.
Building on the identiﬁcation, evaluation and clear
prioritization of critical technologies for the Group, EADS is
shaping a technological policy that strengthens group synergies
and is aimed at maintaining and, when needed, increasing the
EADS R&T effort, each Division being responsible to propose
its own targets, and at securing public and private R&T
funding.
The EADS R&T strategy is driven by:●

Shareholder Value: a stringent, leading-edge R&T portfoliothat enables ﬂawless introduction of new technology on
future products and delivers strong Return-on-Investment;●

Customer Excitement: High-value solutions that meet thetechnological, performance, safety, and cost-competitive
pressures that challenge the future;●

Social Responsibility: solutions answering the paramountconsiderations of mobility, environmental protection, safety
and security;●

Successful on-time, on-quality, on-price introduction of new
products and processes; and●Technology leadership to fuel business growth.

b) R&T Production and Management

EADS R&T activities cover a wide spectrum of technologicaldomains, they are targeted at the different levels in the value
chain and structured according to the timelines of short term/
committed programmes, medium term/optional
programmes and long term/advanced concepts for the
introduction of new technologies into the Company’s products
and processes:

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R&T for Advanced Concepts — Integrated Demonstrators
Technological/Operational Studies

Today, all EADS Divisions are working to generate new
product concepts in line with its vision and to maximise its
future business potential. These concepts explore and generatecompletely new ideas, while pushing the limits of what is
technically possible at the time.
The portfolio is currently focused around four growth axes:
Mobility (e.g. air trafﬁc management), Environmental
Protection (e.g. energy solutions, optimized platforms),
Defence, Safety and Security (e.g. illicit materials detection andaircraft communications protection), and Services.
R&T for Key Product Technologies/Global Innovation
Networks

Developing Key Product Technologies means for example,
constantly scouting for new materials and equipment, andexperimenting with and testing them on prototypes before they
are being deployed at a large scale. In doing so, the Company
develops privileged relationships and partnerships with key
suppliers. EADS R&T activities in these areas are aimed at
identifying the emerging technologies that will drive
performance, at adapting and further developing thesetechnologies and at validating them.
For key product technology categories, such as optimized
platform structure, and Information technologies, EADS has
identiﬁed the emerging technologies which will drive future
performance:
The R&T Architect’s Toolbox

The R&T Architect’s Toolbox is the development and themastering of state-of-the-art tools, which enable EADS to bean efﬁcient industrial architect with e.g. Virtual productengineering.
Disruptive Technologies

EADS is also developing a plan to leverage and further develop
its participation in venture capital funds in order to reinforce
its capacity, both throughout the technical disciplines andgeographically, to identify and source emerging technologies. It
is of key importance for EADS to detect technologies that may
disrupt the Company’s products. Through EADS Innovation
Works and through partnerships with external laboratories,
EADS monitors and evaluates closely different technologies
such as fuel cells, secure communications, photonics,
nanotechnologies and hybrid materials.
Technologies for Services

It is EADS’ ambition to grow its business in the services
related to its products. The Technologies for Services (training,
advanced product support) are needed to sustain the anticipatedvery fast growth in the new services business.
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Back to Contentsc) EADS Corporate Foundation for Research

The Corporate Foundation for Research (Fondation d’entreprise
EADS) was created in France in September 2004 to promote
multidisciplinary research in air and space technologies andfoster exchanges between researchers in government, private
industry and higher education research institutes.
With a total endowment of €24 million over 5 years, theFoundation is now in its fourth year and ﬁrmly established.
It has funded more than 50 research projects (including doctoraland post-doctoral) as well as three scientiﬁc chairs as of now.
One of the Foundation’s goals is to build up ties between the
public research community and the worlds of industry andeducation. To this end, it awards three awards each year in theﬁeld of Industrial Research Cooperation, which promotes
exemplary men and women scientists who demonstrate highstandards of excellence in their research work in collaboration
with the industrial sector. Every year, it also awards six Best
Thesis awards in different domains of mathematics, physics andcomputer science. To maximise interdisciplinary studies,representatives from all of the EADS Divisions sit on theadministrative board and a third of the members are
representatives from the outside research community in France,such as the national aerospace research centre ONERA, theresearch agency CNRS, the Atomic Energy Commission (CEA)and major universities.
The EADS Corporate Foundation for Research also supports
other organisations with which it shares common objectives,
namely the Institute for Higher Scientiﬁc Studies (IHES),
which is dedicated to advanced research in mathematics andtheoretical physics, the French Aeronautics and Space Research
Foundation, and the C. Génial Foundation, which helps topromote scientiﬁc and technical culture, particularly amongst
young people. In this context, the Foundation also supports the“Science in Schools” initiative aimed at creating a new image
for science in middle schools, grammar schools and foundation
courses.
The Foundation also works to promote gender equality as apartner in the Irène Joliot-Curie prize programme. This prize is
bestowed on women in recognition of outstandingachievements in public or private research, and is intended toencourage more young women to study science and technology
and to boost the standing of women within the French researchcommunity. The Foundation also supports public healthprojects, which frequently use technologies that haveoriginated in the aerospace sector. December 2007 saw the
fourth edition of “Envol Recherche” day, when the various
protagonists of the Foundation gathered for round-tabledebates on the scientiﬁc challenges in the aerospace, defence
and space industries and for the prize-giving ceremonies.

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Other initiatives, including foundations, are contemplated inGermany, Spain, the U.K. and the U.S. to improve links withpublic research institutes and universities.
d) Bauhaus Luftfahrt (an Aviation Research Think Tank)

EADS and the government of the German state of Bavaria
joined forces with two other German aerospace companies tofund Bauhaus Luftfahrt, a think tank for creative andinterdisciplinary research activities in the ﬁeld of aeronautics.
Bauhaus Luftfahrt will enable EADS to consider new,groundbreaking courses of action in the ﬁeld of aeronautics byadopting an innovative approach to future-oriented, visionary
solutions.
e) International partnerships

New projects have been launched with world top research
institutes and universities in India, USA, China, Russia,
Ireland, Canada, in coordination with EADS international,
EADS North America, EADS Innovation Works and Divisions.
f) Competence Management

EADS has implemented in 2005 an Expert policy in order to
identify and promote employees mastering the Group’s criticaltechnical capabilities. Experts are indeed a corner stone of
EADS’ policy to reinforce its technological leadership. About
1,150 experts, senior and executive experts from the EADS ﬁve
Divisions and covering all technical ﬁelds contribute to:●Supporting customers in complex problem solving;●

Implementing innovation in new products and services;●

Increasing and sharing technical knowledge; and●Securing it via intellectual property.

In 2007, the EADS expertise portfolio was analysed in order toprepare the next generation of experts and increase internal
synergies.
The ﬁrst female Executive Expert at EADS was nominated in2007. Her role is to manage the Expert College at EADS
Innovation Works.
g) Recognising Talent as a Strategic Human Capital

EADS held in November 2007, its ﬁrst Hall of Fame ceremony,awarding prizes to nine of its employees. The EADS Hall of
Fame aims at acknowledging and honouring the best of thebest employees.
There were four awards categories: the best inventors, thosethat are developing and patenting new technological inventions(‘the Great Inventor”); the best innovators, the people who

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implemented innovative projects during last two years that
helped generate a signiﬁcant revenue increase or competitive
advantages (“the Great Innovator”); the craftsmen, thoseindividuals with unique skills, which give the Company avaluable competitive advantage (“ the Great Craftsman”) and aSpecial Prize to a team, in order to recognise the best
improvement initiatives to generate savings, to deliver on timeor to increase quality. (in 2007: the “Best Lean Manufacturing
Team”).
The next nomination process and ceremony will take place in2009.

2.2.2.2 Protecting Innovation: Intellectual Property
Intellectual Property (“IP”), such as patents, trademarks andknow-how, plays an important role in the production andprotection of EADS’ technologies and products. IP rights are
the primary instrument for a technology-driven company.
Patent portfolio development and territorial coverage istherefore key for availability and control of technology tosupport for future growth. The use of IP rights enables EADS
to remain competitive in the market and to manufacture andsell its products freely.
Beyond the protection of innovation in traditional markets, IP
protection has to anticipate future markets and newcompetitors. Therefore the internationalisation of EADS’
business is reﬂected in the extension of IP rights in relevant
countries.
Policy● “One of EADS’ most valuable assets is its intellectual property
which includes patents, trade secrets, trademarks, copyrights
and other proprietary information. It is EADS’ policy toestablish, protect, maintain and defend its rights in allcommercially significant IP and to use those rights in
responsible ways.
●

EADS also respects the valid intellectual property rights ofothers and will not reproduce or use software or othertechnology licensed from other suppliers except as permitted by
the applicable license agreement or by law.”

Organisation
The general management of IP at EADS is conducted throughan IP council led by the EADS Chief IP Counsel. Executives
responsible for IP at the main subsidiaries sit at this council.
Every year, a meeting of the network of those responsible for
IP at the entities of the Group is held to explain EADS’ IP
strategy and policy. The IP policy and the rules are deﬁned, in
accordance with the Innovation global strategy, by this Council
which meets approximately every two months.

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EADS also promotes training about IP matters. For example,
one-day training about IP is included in the Corporate BusinessAcademy (“CBA”) training programme for the experts.

For example, all the contracts between BUs of the Group
concerning shared R&T must have provisions allowing for theﬂow of knowledge (EADS R&T Network rules).

Each of the subsidiary companies of the Group owns the IP
which is speciﬁc to its particular business and has been
generated by this subsidiary. Where IP is of common interest
throughout the Group, the subsidiary that generated it may
issue a license allowing its use elsewhere (respecting theinterests of the other shareholders when appropriate). EADS
also owns IP directly or under license agreements with its
subsidiaries. EADS coordinates the Group’s IP portfolio,
participates with the subsidiaries in its management andpromotes licensing of common IP between the subsidiaries.
EADS controls the protection of its IP made in strategic
countries.

In 2007, the EADS IP portfolio comprised approximately 6,350
inventions (approximately 5,400 in 2006), which are covered bymore than 20,600 patents throughout the world. The increasein the number of patents ﬁled during 2007 gives a good
indication of the greater momentum in R&T and productdevelopment since new management was appointed in 2006.
957 patents were ﬁled in 2007, compared with 792 in 2006. As
a result of an increased effort EADS climbed in the Wall Street
Journal’s Patent Scorecard ranking of top patent ﬁlers from 9th
to 6th in the U.S. Aerospace & Defense hit list, which isunderlining EADS’ emphasis in the U.S. market.

Performance and Best Practices
To increase the added value of the Group, the team of the
EADS CTO promotes the sharing within the Group of all theknowledge of the BUs and the sharing of resources, skills andresearch means and budget to develop new knowledge, while
respecting existing contractual and legal frameworks.

For international patent protection, EADS uses the Patent
Cooperation Treaty, which provides a simpliﬁed system forinternational patent ﬁling. In 2007, 386 international
applications were published for EADS and its Divisions
according to World Intellectual Property Organization’s annual
report. EADS is therefore the number 1 Aerospace & Defense
company in the world in terms of international patent ﬁling.

2007

New inventions filed (some of which covered by several patents)
EADS patents portfolio (year end)

2006

2005

967

792

586

20,65318,36615,036

Scope: EADS.

2.2.3 SUPPLIER MANAGEMENT: FOSTERING A MUTUALLY BENEFICIAL RELATIONSHIP
WITH EADS’ SUPPLIERS
EADS’ Sourcing Vision is to deliver a competitive advantage by
winning, integrating and developing relationships with theworld’s best suppliers and the EADS Sourcing Strategy isdesigned to support this vision.

●

EADS is committed to long term relationships and partnerships
with its suppliers, in particular in the engagement in thedevelopment of technological know-how”.

2.2.3.2 Organisation
2.2.3.1 Policy
The EADS BUs Procurement Policies reﬂect the following
statements:●“Suppliers represent a high proportion of the value of EADS’
products, and play an important part in customer satisfaction.
As such, EADS endeavours to integrate them fully in an
ethical way of doing business;●

Fostering a mutually beneficial relationship with suppliers,
EADS’ sourcing principles require all suppliers to be
responsible and to implement its standards and requirements
across all levels of the supply chain;

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Sourcing Strategy
EADS Corporate Sourcing is the strategic architect of sourcing
functions and provides overall orientation for sourcing
activities across the Group, in particular regarding the key
elements of the Sourcing Strategy, which are Procurement
Marketing and Global Sourcing, Joint Sourcing, Supplier
Evaluation and Risk and Opportunity Sharing:●

Procurement Marketing and Global Sourcing aim to
identify the best potential suppliers worldwide and toevaluate them with regard to their capabilities and theircertiﬁcations.

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Procurement marketing is becoming increasingly important
as EADS targets new global supply markets to support
EADS’ Global Industrial Development;●

Joint Sourcing activities allow purchasing power to beleveraged across EADS. A group of Lead buyers bundles
procurement volumes of selected material groups forcommon negotiation. The Joint Sourcing also allows all
EADS BUs to use a common EADS contract per supplier.

●

The EADS Supplier Evaluation and Development
process guarantees that suppliers’ performances are regularly
evaluated. Suppliers can expect that the same process andthe same criteria are applied by all BUs: Commercial,
Logistics, Quality, Technical and Customer Support.
Evaluations are shared with suppliers as a basis to discuss
further improvement and development needs and plans.
With regard to the high proportion of sourcing required for
products and the complexity of the procured systems,
equipment and structures, EADS favours long-term,
mutually beneﬁcial, reliable and stable relationships withkey suppliers. Consideration for partnerships is limited tosuppliers who continuously show excellence in theirperformance, who can demonstrate a credible long terminterest and who are able to support their business interest
with their own developments and investments. It is aprinciple for such partnerships that suppliers are involved
and integrated at the early stages of product development;●

Both business risks and opportunities should be
adequately shared with suppliers. Procurement Policies of
EADS’ BUs address all typical business risks, including
risks attached to CSR, and suggest how they should be dealt
with in EADS’ contractual agreements. Procurement Policies
also set out the principles and guidelines for conducting
business with current and prospective suppliers. These
guidelines describe how partnership relations should be
handled in an equitable manner in the interest of all parties
concerned and how disputes should be dealt withprofessionally and as quickly as possible in accordance withthe agreed partnership arrangements.

Sourcing network
Each EADS Division and BU has its own sourcing function.
The ﬁve EADS Divisions’ Chief Procurement Ofﬁcers compose
the Chief Procurement Ofﬁcers Council (“CPOC”) which
is chaired by the EADS Chief Procurement Ofﬁcer. ThisCouncil is responsible for implementing the EADS Sourcing
Strategy within each Division of EADS. To prepare and ease theimplementation of CPOC decisions regarding Joint procurement,
two boards of Procurement Directors one for Goods and Services
and another one for Material are now in place.

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EADS Divisions. Listed amongst these strategic topics, CSR is
managed by a dedicated Sourcing CSR Network.
The Sourcing CSR network, pursues the objective offormalising the EADS CSR Sourcing management processes
and associated documentation, in compliance with the EADS
Code of Ethics, values and policies. This Network is composedof focal points in each Divisions’ Procurement organisations
and is coordinated by EADS Corporate Sourcing.

2.2.3.3 Performances and Best Practices
Sourcing context in 2007
With three fourths of its revenues sourced from external
suppliers, efﬁcient and effective supplier relationshipmanagement is a key factor of EADS’ success. EADS’
procurement concentrates its attention on its major suppliers.
EADS’ top 50 suppliers already account for 62% of thesourcing volume and the top 250 suppliers account for 79%.
Complex systems and equipment account for 39% of EADS
procurement. Structures, material and product-related services
also account for 39%, while non product related material
accounts for 22%.
While EADS likes to see itself as an important customer for its
key suppliers, EADS wants them to be independent and at theedge of technological development. On average, EADS’
suppliers make no more than 10% of their revenues from
EADS.
Most of EADS’ sourcing volume is provided by large
companies. The remaining Sourcing volume (15%) is spread
across a large number of small and medium sized enterprises, as
per the European Commission deﬁnition, i.e. with less than
250 employees or less than €50 million turnover.
Sourcing activities focus on the EADS home countries France,
Germany, U.K. and Spain, and on the U.S. Sourcing outside theE.U. and North America is still limited. However, EADS sees
its global sourcing activities increasing to better use
opportunities and to support sales.
As in past years, most of EADS’ suppliers are currently locatedin the E.U. (76%) and North America (22%) regions in whichsocial, economical and environmental practices are well
regulated by applicable norms and laws. EADS’ Sourcing
contractual terms request that these suppliers shall comply at
any time with laws and regulations on economical,
environmental and social standards and anticipate or at least
make their best endeavour to anticipate forthcoming changes inthese standards.

The Chief Procurement Ofﬁcers have organised Sourcing
networks in order to coordinate other strategic topics across

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To reinforce supply chain compliance to EADS CSR related
requirements, EADS tier 1 suppliers are contractually bound to
ﬂow-down these requirements to tier 2 suppliers.
Procurement policies also reﬂect the principles of the UN
Global Compact. As a member of the UN Global Compact,
EADS has accepted responsibility to apply these principles in
its supply chain and to require its suppliers adhere to common
standards in the areas of human rights, the environment andemployment.
Influence of the Global Sourcing
As EADS targets to increase global sourcing volumes incountries where existing laws and regulations may not fully
cover EADS’ CSR requirements, procurement contractual terms
for these domains need to be written in a more extensive way.
Therefore, EADS is engaged in a process for embodying CSR
requirements into procurement contracts.
CSR activities
2007 CSR project

The EADS Vision 2020 ﬁrmly anchors sustainable
development, eco efﬁciency, and ethics within the core
responsibilities of EADS. This strongly signals the importanceof CSR compliant business practices for EADS to all
stakeholders including to Suppliers.
In 2007, the Sourcing CSR Network has validated with selectedsuppliers the different tools prepared in 2006 (the CSR
Supplier Code, a CSR Supplier evaluation Questionnaire,a CSR contractual clause – available on the EADS web sitewww.eads.net - and various metrics adapted to measure thecompliance of Suppliers to EADS CSR policies). They will be
progressively cascaded down within the BUs.
Sourcing Contractual terms related to CSR

A CSR clause is being included in the EADS General
Purchasing Conditions which are attached to Purchase Orders.
The decision to further develop CSR requirements is clearlymade and EADS has already well addressed key elements of
CSR in the sourcing contracts.
The various CSR aspects are already considered through EADS’
Sourcing Risk and Opportunities Management (“ROM”) which
recommends contractual guidelines for the key contractual
chapters. These guidelines are published in the EADS Sourcing
Information Tool which explains the principles for drafting
contracts, disclaims the typical contractual clauses and gives
practical comments for the use by the buyer. For each domain, therequirements are contractually cascaded on to sub-tier suppliers.

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For example, regarding environmental responsibility, principles
for drafting contracts state that: “The purchase contract should
provide that the supplier shall comply with all applicable laws,
regulations, etc. as well as all commitments to which EADS has
subscribed (e.g., Global Compact initiative) and end-customer
requirements, in particular: (1) suppliers are asked to support aprecautionary approach to environmental challenges; (2)undertake initiatives to promote greater environmental
responsibility; and (3) encourage the development and diffusionof environmentally friendly technology.” The recommendation
to the buyer also states that EADS encourages suppliers to
implement an environmental management system complying
with international standards such as ISO 14000 or EMAS.
Moreover, it is recommended that the contract includes EADS’
key engagements such as the support, respect and protection ofinternational human rights within the supplier’s sphere of
inﬂuence; the respect of freedom of association and theeffective recognition of the right to collective bargaining; theelimination of all forms of forced and compulsory labour; thequality of working conditions such as but not limited to,appropriate level of remuneration, and protection of health andsafety of the employees.
BUs best practices

In addition to the top-down approach described above, CSR in
Sourcing has been progressing well in 2007 as shown throughthe following examples:
AirbusAirbus now addresses the product’s environmental performancethroughout its entire life cycle. In 2006, the sites and the
products of Airbus were certiﬁed against environmental
standard ISO 14001. The supply chain plays a strategic role in
fulﬁlling ISO 14001 objectives, hence, the Airbus
environmental project received full support from Airbus
Procurement. The following main milestones took place in2006 and 2007:a)

In September 2007, the head of Airbus Procurement
conﬁrmed to all Procurement personnel the Procurement
environmental Policy which had been issued
in February 2006.

b)

An area in the intranet pages of Airbus has been dedicatedto the Environmental policies of Airbus Procurement.
Airbus Procurement staff was also invited last year to go
through e-learning modules in order to learn how to
introduce Airbus environmental requirements into
contractual agreements.

c)

The “Airbus Environmental pocket-guide” had also been
distributed to all Procurement employees in Airbus.
In this Guide, the CEO of Airbus presents the Airbus
environmental challenges and the head of Procurement

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explains the Environmental Commitment and Objectives
for Procurement, the Golden rules for environmental
contribution. This Guide shows also the organisation in
charge of Environmental Management within
Procurement.

●d)

The Suppliers have been given online access to the Airbus
environmental requirements in a speciﬁc chapter of the“Airbus Supplier Portal” in Internet.

The Environmental Health and Safety requirements of Astrium
are presented in a dedicated Intranet page for the attention of
Astrium procurement teams.

e)Various external communication events have beenorganised, in order to raise awareness about environmental
issues within the Supply Chain.

The CSR performance of more than 300 Suppliers has been
evaluated.

Astrium

CSR requirements are now considered in the Supplierpre-selection process as part of the basic Supplier requirements
which are prepared in order to ensure in particular:●

Awareness and demonstration of compliance with applicablestatutory and regulatory requirements: WEEE, RoHS,
CE Marking (which is a mandatory European marking for
certain products to indicate conformity with European
applicable standards) etc.

Sourcing data
All ﬁgures below have been calculated using the following
euro-dollar exchange rates (2007: 1.4000; 2006: 1.2556; and2005: 1.2441).

Compliance to EADS Code of Ethics and CSR policies

Importance of Sourcing Outside of EADSIn percentage of revenues

Sourcing Volume: Breakdown by Country for Top 10 Countries
In percentage of total sourcing volume

2007

2006

2005

73

74

70

2007

2006

2005

France31

32

31Germany

21

21

22

U.S.

21

20

22

U.K.

14

14

12

Spain

3

4

4

Italy

2

2

1

Netherlands

1

1

1
1

Belgium

1

1

Canada1

1

1

Switzerland

1

1

1

The geographic Sourcing breakdown is stable and centred on Western countries.
Purchasing Breakdown by Geography
In percentage of total purchase

2007

2006

2005

Europe76

77

75

North America

22

21

23

Rest of the World*

2

2

2

Scope: EADS.
(*)
Including < 1% in non-OECD countries.

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2.3 | Environmental Care

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2.3 Environmental CareEADS considers that the Environment is one of the mostimportant challenges that industries and societies have everfaced and that it must be incorporated at the core of corporate
strategies. As such, Eco-efﬁciency is one of the main objectives
of EADS’ Vision 2020. Eco-efﬁciency is about safeguarding thelong-term economic viability of the Company and – on a larger
scale – of the modern lifestyle. It is a question of attractivenessof EADS’ products, a question of competitiveness of its

business, and it is also a question of social responsibility of theaerospace and defence industry.
The Group has embarked on a continuous assessment of its
environmental performances throughout the life cycle of its
products, so as to provide employees and the public withcomprehensive information.

2.3.1 POLICY“Minimising the environmental impact of EADS’
activities throughout the products’ life cycle●●

Beyond legal compliance, EADS strives to continuously improve
its environmental impacts and to effectively monitor
environmental risks through the establishment of state-of-theart environmental management systems with the aim to coverboth the Company’s activities and product-related aspects. The
Group encourages formal ISO 14001 certifications or EMAS
registrations.

Promoting environmental consciousness and maintaining
constant dialogue with stakeholders●

EADS strives to grow awareness of environmental challenges
among its stakeholders, and encourages its employees to adopt
environmental-friendly behaviours The Group expects its
partners and suppliers to acknowledge and implement similarcommitments towards the protection of the environment.

●

EADS seeks to contribute to the establishment of aninternational industry framework based on constant dialogue
and voluntary commitments”.

EADS is committed to environmental excellence in technology
and mobilization of expertise, towards the research, the design
and the development of the cleanest and greenest technologies
and products.

2.3.2 ORGANISATION
Limiting the environmental impact of operations is organisedby the business. The management and the control ofenvironmental aspects of Group operations is, as a result, theresponsibility of the EADS BUs and entities. As part of theirrespective environmental management system, many EADS
companies have already set up appropriate environmentorganisational structures. They are accountable for the
improvement of their environmental performance throughoperational control in their relevant business and they are
responsible for ensuring compliance with applicable legal
obligations. Furthermore, they are tasked to implement the
EADS environmental policy.

EADS strengthened in 2007 an environmental network under
the responsibility of the Group’s Corporate Secretary, aimed atenhancing effectiveness of the environmental policy, deﬁning
objectives and relevant action plans, as well as providing
visibility in a transparent and consistent way.

Coordination at corporate level is organised in order toimplement a regular follow up on the Group’s environmental
performance, monitor key risks relevant for the whole Company,
promote cross-fertilisation of best practices and consistently
anticipate any new relevant regulatory framework. To this extent,●

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Towards the external, EADS strives to develop joint initiatives
within the industry in order to improve the overall
environmental performance of the sector in the most effective,
consistent and economic way. EADS is already leading or
participating in various European and international sectorial
environment-related committees or working groups such as:
ICCAIA (International Coordinating Council of Aerospace
Industries Associations — Aircraft Noise & Engine
Emissions Environment Committee: Vice Chairmanshipowned by Airbus);

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ASD (Environment Committee and REACH Working
Groups Chairmanships);●

EAQG (European Aerospace Quality Group — recently
created Environment Platform Chairmanship).

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BDLI in Germany and the SBAC in the U.K. Cooperation has
also been initiated with AIA (Aerospace Industries Associationof Americas) and SAE to develop appropriate Standards to easethe supply chain’s response to comply with the REACH
regulation.

EADS is also participating in environmental working groups ofnational industry organisations such as the GIFAS in France,

2.3.3 PERFORMANCE AND BEST PRACTICESEADS strives to continuously improve the environmental
performance of its facilities but also of its products throughout
their life cycle, from design to end of life. EADS stimulates thedevelopment of an environmental culture and eco-efﬁcient
behaviour within the Company and maintains a high degree ofefforts in research to ensure the cleanest and greenest
technologies and products are constantly proposed to its
customers.
EADS is committed to guarantee the implementation ofsustainable production means, fully compliant with applicableregulations and state of the art standard, wherever theCompany operates.

Environmental Management ISO 14001/EMASEADS encourages environmental certiﬁcation of its industrialsites. Robust certiﬁed Environmental Management systems(“EMS”) are been progressively implemented across EADS
sites, with the medium-term objective to achieve a full
European coverage of EADS.
Implementing an EADS group-wide EMS will allow the
Company to facilitate its path to eco-efﬁciency. Since 2004, thenumber of sites concerned has more than doubled and as of
31st December 2007, more than 80% of EADS’ total workforce
now operates according to an EMS.
For example during 2007, Eurocopter achieved the ISO 14001
certiﬁcation of its German sites. In June 2007, Airbus became
the ﬁrst aerospace company to receive an ISO 14001 certiﬁcationthat covers all the European sites and product related aspects allalong their lifecycle. The Site and Product oriented EMS,
as established by Airbus, covers seventeen Airbus production
sites, including the Airbus headquarters as well as all productrelated activities. It allows, through an innovative approach,to set the appropriate actions to efﬁciently minimize theenvironmental impacts where it makes sense in the life cycle.
Worldwide expansion is being currently processed in particularin China and in the U.S.
Airbus is participating in the promotion and the disseminationof its EMS throughout the aerospace community and the

supply chain as a key means to systematically address andimprove its environmental performance but also of the airtransportation sector as a whole. Airbus contributed to various
initiatives in 2007 as the survey organised through ICAOCAEP and joined forces with several other organisations(Chamber of Commerce, National Trade Associations, EADS
Germany…) towards setting rules for this new lifecycle oriented
management. Support to implement EMS within various
customers’ organizations has also been provided.

Climate Change and energy consumption
Energy consumption and Climate Change related impact are
two of the main environmental issues and key risks which need
to be monitored within the EADS Group.
A potential risk from climate change to EADS operations
comes from the ever-increasing pressure on energy costs.
However, both from a cost and an operational efﬁciency
viewpoint the Group recognises that it has a responsibility to
reduce energy usage where possible and so EADS views this as
an opportunity to make continuous improvements in this area,
particularly within environmental management systems that are
currently being set up throughout the Group.
Various improvement programmes are already implemented
across the EADS Group to reduce the overall energy footprintof the infrastructures. For example, within the DS Division,
improvements were achieved through peak load management,
demand oriented adjustment and implications of employees.
Further systematic integration of stringent requirements forenergy saving in the construction of new infrastructures (suchas Haute Qualité Environnementale — HQE in France)
together with Carbon Footprint evaluation will bring
additional savings.
EADS carefully addresses Climate Change related issues.
Whereas EADS operations and products have a relatively
limited impact in terms of greenhouse gas emissions (e.g.
according to the IPCC (Intergovernemental Panel on Climate
Change), air transport currently causes 2% of the total CO2
man-made world emissions), EADS is committed to mobilise
all necessary expertise and signiﬁcantly increase its R&T
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2.3 | Environmental Care1efforts towards the design, the development and the
manufacturing of the cleanest, greenest and lowest energy
demanding technologies and products.
Some of the EADS facilities are already part of the E.U.
Emission Trading Scheme (“ETS”) and have implemented strong
energy reduction initiatives. Anticipation of the inclusion ofaviation into the E.U. ETS is also being addressed in close
relation with the stakeholders of the air transport sector.
Convinced that Space technology provides environmental
solutions as well as business growth, a call for ideas has been
initiated in 2007 by Astrium. More than 380 highly innovative
proposals were received among which the most promising havebeen selected for further development.
In the research area, EADS participates or leads majorinternational and European technology programmes to address
climate change related matters.
●

●

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EADS actively participates to the E.U. “Clean Sky” Joint
Technology Initiative (JTI). The Clean Sky JTI is the largest
research project ever set up jointly with the European
Commission and will run over a seven year period with a
total budget of €1.6 billion (half ﬁnanced by the European
Commission and half by the industry). The “Clean Sky” JTI
is an innovative, large technological research programme thatwill radically improve the impact of air transport on theenvironment and will deliver innovative technologies andsolutions enabling step changes in the reduction of noise,emissions and consumption for the next generation of
aircraft and associated components and operations.
Its purpose is to demonstrate and validate the technologicalbreakthroughs that are necessary to reach the environmental
goals set by the Advisory Council for Aeronautics Researchin Europe (“ACARE”). ACARE goals to be met by 2020
include a 50% reduction of CO2 emissions through drastic
reduction of fuel consumption, an 80% reduction of NOxemissions and a 50% reduction of perceived noise. It also
includes research on green product lifecycle design including
manufacturing, maintenance and disposal. While Airbus
Eurocopter and EADS CASA each co-lead a speciﬁc
Integrated Technology Demonstrator (respectively Smart
Fixed-Wing Aircraft, Green Rotorcraft and Green Regional
aircraft), EADS Innovation Works and ATR participate asassociate companies. Following a 2006 agreement, the ofﬁcial
launch took place in February 2008.
Other initiatives, to which EADS participates, include the
SESAR (Single European Sky ATM Research) programme
which aims at improving the E.U. Air trafﬁc Management
through the implementation of the Single European Sky.
It should contribute to the reduction of aviation’senvironmental impacts.

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Strong efforts of research are being devoted within Airbus
in joint cooperation with key external partnerships to movetowards environmentally friendly alternatives to fossil fuels.
In 2007, Airbus signed an agreement with Qatar Airways,
Qatar Petroleum, Qatar Fuels, Qatar Science and Technology
Park, Rolls-Royce plc, and Shell International Petroleum
Company Limited to research the potential beneﬁts ofSynthetic Jet Fuel in aviation engines. This led to the ﬂight
of an A380 between Filton and Toulouse on 1st February 2008
with one engine powered by GTL (Gas To Liquid) obtained
from natural gas conversion through a Fischer-Tropschchemical process. Complementary researches are beingheavily developed in that ﬁeld but this preliminary stepdemonstrates Airbus’ dedication to a more eco-efﬁcient andcarbon neutral aviation.

Waste and Natural Resources
Various initiatives have been implemented across the Group to
further reduce the level of total water used as well as waste
produced or eliminated. Considering the expected scarcity ofsome raw materials as well as the volatility of their relevant
prices, reverse supply chain might certainly become of growinginterest.
EADS is committed to develop the most appropriate
elimination, valorisation and recovery paths together with themain Waste Management Companies. For example, recycling of
CFR composites is being carefully studied with the aim to
separate and reuse recovered Carbon Fibres in some aerospaceor secondary industry applications; promising technologies
have been already investigated.
Airbus has set up a three steps approach to develop
environmentally friendly dismantling practices. Further to apreliminary Life supported project called PAMELA (Process for
Advanced management of End of Life Aircraft), the partners(among which Airbus, EADS and Sita) have clearly evidenced
that signiﬁcant improvements can be obtained compared tocurrently developed dismantling practices. The optimised
combination of advanced 3D techniques (Decommissioning,
Disassembling and Dismantling) allows for a materials recovery
rate of over 80% compared to less than 60% today. Careful
extraction and knowledge of materials from the aircraft are
essential to comply with current E.U. regulatory framework
and respect the most environmentally friendly applicablestandards. Following this initiative, the TARMAC-AEROSAVE
company was created in 2007 to offer appropriate industrial
services in that ﬁeld and set up a worldwide dedicated network.
The company, in partnership with Airbus, should be
operational by the end of 2008.

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Air pollutants
Reducing the air pollutants from the operations processes andthroughout the life cycle has been considered a key priority
for years. The main emissions are currently associated with
Volatile Organic Compounds (VOC) as well as with other air
pollutants emitted at ground level from infrastructures or
products. Signiﬁcant reduction in VOC has been obtained
thanks to the development and the implementation of new
VOC reduced cleaning and painting processes throughout theCompany. In all Divisions ambitious programmes to substitute
some critical solvents such as trichloroethylene were conducted
and paint schemes now generally incorporate low VOC either
aqueous based or containing compounds in most coatingsprocesses.

REACH and Hazardous Substances Management
The European REACH (Registration, Evaluation andAuthorisation of Chemicals) regulation (EU No. 2007/1906)
came into force on 1st June 2007. REACH aims at improving
the protection of human health and the environment throughcloser regulation of chemical use by industry and replaces all
pre-existing E.U. regulatory framework on chemicals. REACH
will introduce a range of new obligations over a period of
11 years (up to 2018) which are intended to reduce risk that the
30,000 most frequently used chemicals may cause.
The regulation will also bring about the phased withdrawal
from use of some of the substances that are considered to beof very high concern for human health and environmental.
Taking on board the lessons learned from the management of
the RoHS and WEE directives and in order to provide a
consistent compliance approach for the whole Company andsupport its Supply Chain, a dedicated task force has beencreated as part of the EADS Environmental Network, bringing
together all local dedicated organizations within each Division.
EADS, Airbus and other Divisions are also joining forces at aninternational level (ASD, AIA) together with other major
aerospace companies (Rolls Royce, UTC, P & W, Goodrich…) tofurther structure the entire sector’s compliance approach.
As REACH would require additional ﬂows of information
throughout the supply chain, standardisation of the various
requests has been rapidly recognised as vital to limit costs anddiscrepancies. Dedicated Environmental platforms within ASD– EAQG, as well as at international level, are being created tofurther sustain standardisation initiatives on REACH.
As preliminary collective commitments to successfully supportcompliance with the REACH legislation for the whole Supply
Chain, REACH Interpretation Guidelines have been issued in2007 by the industry. They explain the ways of implementing

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its requirements through current commonly acceptedinterpretations. EADS is also strongly involved with thevarious REACH Implementation Projects’ process.
Anticipating these new constraints and possible disruption thatmight result from restrictions on some substances, ambitious
elimination plans have been initiated to get rid of these criticalsubstances. For example, at Airbus, a major project called
Airbus Chromate Free (ACF) has been launched with the aim
to develop, qualify and implement chromated free technologies
for all the concerned applications in manufacturing operations
and maintenance of civil aircraft: pickling, anodising, chemical
conversion, coatings, electronic, hard chrome… Similar
initiatives have been launched at Eurocopter and at the other
Divisions; the results are being exchanged through dedicatedplatforms. Lead Free and Cadmium Free initiatives are also
currently running. While proactively moving towards theelimination of these substances, EADS and its Divisions arecommitted to the highest achievable control of emissions, infull compliance with applicable regulatory framework.

Restriction of Hazardous Substances (RoHS)
directive
The RoHS Directive (No. 2002/95) bans the use of some heavy
metals and brominated ﬂame retardants to reduce the impact on
Health and the Environment from Waste of Electrical andElectronic Equipments (WEEE) which are landﬁlled orincinerated. Despite the fact that on board electronic equipment
has been declared out of the scope of the RoHS directive,
potential impact on the aerospace business is carefully
monitored. EADS together with its BUs has decided to develop
and further coordinate with concerned major stakeholders allnecessary research to ﬁnd suitable and reliable alternatives tothe targeted substances, the priority being put on Leadreplacement. Some projects were launched such as GEAMCOS(Green Electronics in Aerospace and Military Communication
Systems) to develop and qualify new Lead free electronics thatmatch a harsh environment. The results are being discussed
throughout an EADS dedicated working group as well as withthe supply chain and sectoral federations concerned.

Key Performance Indicators
EADS is committed to improve transparency on environmental
KPIs. In order to achieve this objective the EADS Group
undertakes efforts to implement a consolidated reporting
system based on harmonized KPIs deﬁnitions and calculation
methods throughout countries in which it operates. The scope
and the accuracy of environmental KPIs reporting will
therefore progressively be extended and improved as respective
information becomes available.

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2007

ISO 14001 certification/EMAS registration — Number of sites covered by a certificate

56

Number of sites covered by E.U.-ETS

10Total CO2 emissions (in tonnes)

542,500

Total CO2 emissions declared under E.U. ETS (in tonnes)

144,800

Direct Energy use (in MWh)

3,364,000

Volatile Organic Compound Emissions (in tonnes)

4,250*

3

Total water use (in m )5,263,000

Total water discharge volumes (in m3)

1,807,000

Total hazardous waste production (in tonnes)

38,750Total Non-hazardous waste production (in tonnes)

65,700Figures do not purport to be exact, but are as accurate as current reporting system allows.
Figures are based on available data provided by EADS subsidiaries at date of reporting.
The scope of reporting covers EADS sites of European subsidiaries with more than 100 employees. Approximately 90% of EADS work force is based at those sites.
Deﬁnitions and calculation methods for environment KPIs may differ in various countries in which EADS operates.
Except for the number of sites, all ﬁgures are rounded.
(*)
Estimate, as data were not complete at the date of reporting.

Further reporting: Airbus publishes an environmental report every two years which is available on its website at www.airbus.com.
Airbus’s ﬁfth environmental report is expected to be issued by mid 2008.

2.4 Human Resources: Employer – Employee Relationship
The HR function ensures that the EADS Group attracts,
develops, motivates, and retains a world-class workforce. In
addition, to this on-going role of business partner, the HR
function also supports the business challenges in facilitating
the continuous integration competency management andinternationalisation of the Group and the building up of acommon spirit across the Group’s organisational andoperational structures.
Maintaining high standards of health and safety in theworkplace is also a major priority of the EADS Group. In 2007,

several initiatives have been taken to be more efﬁcient in termsof competency management, shared services and to better shaperesource planning. In the ﬁeld of industrial relations, theGroup’s HR function coordinates the social dialogue at Groupand Division level.
In the context of the restructuring of Airbus and the evolutionof EADS’ organisation, the social dialogue has been intensiﬁed
and additional information and consultation procedure has been
deﬁned with staff representatives.

2.4.1 WORKFORCE INFORMATION AND ORGANISATION OF WORKAs of 31st December 2007, the EADS workforce was composedof 116,493 employees. Since 2007, MBDA workforce isconsolidated at 37.5% (instead of 50% previously), resulting in adecrease of the workforce ﬁgure for 2007. The headcount has
however globally increased by 1,199 employees compared to 2006.
In 2007, 97.9% of the workforce were permanent employees.
Depending on country and hierarchy level, the average working
time is between 35 and 40 hours a week.

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In 2007, 6,860 employees worldwide entered into employment
with EADS (8,283 in 2006). At the same time,
4,648 employees left EADS (6,261 in 2005).
In total, 96.2% of EADS’ active workforce is located in Europe
on more than 80 sites.

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Workforce by Division and by Geography
The tables below set out the number of EADS employees bybusiness sector and by geographic region. Employees of2

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4companies accounted for by the proportionate method(such as ATR, MBDA) are included in the tables on the same
proportionate basis.

“Other businesses” includes ATR, Elbeﬂugzeugwerke GmbH, EADS Sogerma, and EADS Socata.
31st December 2007

31st December 2006

31st December 2005

Airbus56,02956,96654,721

Defence & Security*

22,11323,26823,237

Eurocopter

14,65813,422

12,755

EADS Employees by Division

Military Transport Aircraft

4,459

4,212

3,976

Astrium

12,587

11,927

10,985

HQ, Innovation Works and other businesses

6,647

7,010

7,536

116,493

116,805

113,210TOTAL EADS(*)

The ﬁgures for 2007 reﬂect a change of consolidation for MBDA at 37.5% compared to 50% previously.

31st December 2007

31st December 2006

EADS employees
by geographic region

AmountIn percentage

AmountFrance44,022

37.8

Germany

43,438

37.3

Spain

9,315

U.K.
Italy
U.S.

31st December 2005

In percentage

AmountIn percentage

44,53638.1

43,28638.2

42,92036.7

41,438

36.6

8.0

8,991

7.7

8,710

7.7

13,652

11.7

14,30912.3

14,297

12.6

474

0.4

701

0.6

729

0.7

1,777

1.5

1,932

1.7

1,877

1.7

Other countries*

3,815

3.3

3,416

2.9

2,873

2.5

TOTAL EADS

116,493

100.0

116,805

100.0

113,210

100.0

(*)

The “Other countries” ﬁgure includes employees from 13 other countries.

Part Time Contracts

2007
In percentage

2006
In percentage

2005
In percentage

France

4.0

4.1

4

Germany

3.1

3.3

3.2

Spain

0.5

0.0

0.0

U.K.

1.5

1.6

1.4

U.S.

1.9

n/a

0.1

Other countries

3.2

n/a

n/a

TOTAL EADS

3.0

3.2

3.2

2.4.2 HUMAN RESOURCES ORGANISATION
Since 2006, the HR organisation has been redesigned for
greater integration of the function, in line with the Group’sbusiness requirements. A new HR board and functional
reporting lines from the Divisions to the Group’s HR head
were designed to foster a coordinated Group policy.

The Corporate HR team operates worldwide as the strategic
leader in HR matters and works in close cooperation with theDivisions and BUs which have the operational HR
responsibility for most of the employees, except for the top
Management of each BU which is under Corporate
HR operational responsibility.
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The HR communities work closely together, they coordinate
and share best practises at a functional level. Regular meetingsof HR heads are organised at both European and national
levels. A global HR database is now available and is being
continuously developed in order to fulﬁl the needs of EADS
integration.
At corporate level, six support departments make up the global
EADS HR management: HR Improvement and Operations;Social Policy and Industrial Relations; Compensation and
Beneﬁts, Leadership Development and Learning; Talent andExecutive Management; as well as Security.

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Among other, they are responsible for:●Managing HR Development for the top 200 key positions;●

Designing policies, guidelines and tools for all group-wide
HR processes, such as appointments, job rotation,international mobility, compensation and beneﬁts, e-HRprojects, data and information systems security policies etc.;●

Organising and delivering executive education for all
executives and potential future executives through the CBA
and coordinating the training activities within the Group for
all employees; and●Improving the sharing of best practises within the EADS
HR community.

2.4.3 HUMAN RESOURCES POLICIES AND PERFORMANCE
2.4.3.1 Health and Safety: Providing a Safe
Workplace for EADS Employees
and Subcontractors
Policy● “EADS considers that protection of the health and safety of
employees in the work-place is key and a top priority for theGroup.
●EADS is committed to maintaining safe and healthy working
conditions for its employees. It is EADS BUs’ and subsidiaries’role to implement Health and Safety policies based on
evaluation, anticipation and risk management and taking into
account all specificities as well as people’s needs.”

Organisation and Performances
The management of Health and Safety is essentially dealt withat site level and it accordingly allows for prevention andprotection measures for employees, contractors and partners tobe deﬁned and implemented to meet speciﬁc requirements ofeach work place.
Reporting on health and safety obeys to national regulations
according to the sites’ locations.
However some health and safety indicators have started to be
drawn up at the Division or BU level which mainly address
work related accidents.

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2.4.3.2 Caring for EADS Employees
and EADS Know-How
Policy“Given the specific nature of the facilities of the EADS Group
which are used for many activities relating to national defence
and sensitive civil markets, the conditions governing access to andmovements inside the plants and facilities are specified inministerial orders and are based on two main principles:●

Access to a plant is subject to prior authorisation by theCompany; and●Entry into restricted and sensitive areas is regulated inaccordance with national and company regulations.”

Organisation and Performance
EADS has set up a security policy to improve the security of
its employees and to protect EADS’ expertise. A Security
Committee has been set up as a combination of Security leadersfrom each country and each Division who supervise their local
security ofﬁcers at BU and plant level, and who deal withnational security authorities and European security
organisations.
The network of security managers is there to ensure
information exchange and sharing of best practices. Working
groups are created to facilitate constant adaptation of security
measures to actual threats. Access to EADS facilities is subject
to prior authorisation, and entry into restricted and sensitive
areas is regulated in accordance with national and company
regulations. The awareness of EADS employees is addressed asa main success factor.

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The increasing development of EADS’ business outside Europe
implies reinforcing the safety of EADS employees in risky
countries and to improve the security of EADS ofﬁces abroad.

Performance and Best Practices
EADS has always promoted diversity through its existing
culture of cross-border collaboration.

In terms of IT security, appropriate steps were taken to audit
processes and improve the level of awareness of EADS’
employees to the security of the information systems. Given
the sensitive nature of the Group’s business, employees must
be able, in order to meet the business’ needs, to always work incompliance with group security policies; hence, the Group
implements, for instance, secured nomad IT solutions
facilitating mobility and business reactivity with conﬁdence.

EADS’ principles regarding respecting and promoting diversity
are listed in the Group’s Code of Ethics as well as in the“International Framework Agreement” signed with theEuropean Works Council.

Since 2006, a particular focus was developed on risk
management, addressing and challenging all the security
matters and business security needs. Particularly, newprocedures have been deﬁned and implementation to speciﬁc
applications has begun (e.g. e-HR).

Nationalities

The following examples illustrate the implementation of theseprinciples:

EADS welcomes 44 different nationalities among its employees
worldwide (each of the nationalities is represented by
10 employees at least).
Gender Diversity

2.4.3.3 Diversity: Commitment to Ensure Equal
Opportunity for all EADS Employees
Policy● “EADS commits to offering equal opportunities for all its
employees and to refraining from any discrimination against
its employees based on gender, race, religion, nationality,
political opinion, sexual orientation, social origins, age andhandicap with regard to its personnel.
●

EADS commits to developing access for women to all of its
activities and shall ensure fair professional development as wellas equal remuneration for men and women employees for skill
and work of equivalent value.”

Women at EADSThe percentage of women employed in 2007 in the Group is
about 15.3%. It has steadily increased since 2004, when theGroup started to reinforce its policy in this ﬁeld; the increasein the percentage of women was registered across all
Divisions.
As of 31st December 2007, according to the Group-wide
internal grading system, around 5% of executive positions(highest EADS management level) were held by women, and
8% of senior manager positions.

31st December 2007
In percentage

31st December 2006
In percentage

31st December 2005
In percentage

Airbus

12.9

13.2

12.7

Defence & Security

18.7

18.9

18.7

Eurocopter

14.0

13.1

12.6

Military Transport Aircraft

13.4

13

12.6

Astrium

19.6

19.6

19.2

HQ, Innovation Works and other businesses

18.5

17.6

15.7

TOTAL EADS

15.3

15.2

15

EADS has committed to a long-term plan for the promotion of
women in aerospace and has set two priorities: at least 20% of
its annual recruitment will be women, and it will have active
communication within universities and schools in order toconvince female students through lively role models andconcrete examples that the aerospace industry, and more
speciﬁcally EADS, is an attractive employer for women.

Since 1st January 2004, BUs are asked to report quarterly on
their success in recruiting women.
In 2007, the recruitment of women was 21.5% of total
recruitment, and so exceeded the Group’s target.

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The Defence & Security and Astrium Divisions as well as
EADS Innovation Works are leading the way in this ﬁeld.
●

The EADS CBA promotes diversity in all development
programmes. Since 2006, the percentage of women has
increased in these programmes to be consistent with theGroup’ recruitment target;●

A woman was nominated in 2007 as “Expert Executive”,
which is the highest level in the category of Technical
Sciences Experts. She is in charge of leading the “Collège
des Experts” and she participates as such in the Expert
Executive Committee;●

Since 2004, EADS has been involved in a partnership with
the FEMTEC university career centre for women
Berlin GmbH in Germany. Working in cooperation withwell-known companies, the aim of this cooperation between
FEMTEC and industrial companies is to promoteengineering studies among young girls and women, and tohelp high potential and specialized female students enter theaerospace industry. EADS takes an active part in careeradvice workshops designed for FEMTEC students as well as
in conference days;●

In France, EADS sponsored the Irène Joliot-Curie award
for the fourth time in 2007 (See “2.2.2 Sustaining andProtecting Innovation – Innovation Chapter”);●

Furthermore, EADS is an active member of the WIST
(Women Initiative in Science and Technology), a programme
funded by the European Commission and aiming at
exploring the partnerships between private and publicresearch, as well as the links between diversity and businessperformance;●

Airbus also agreed on a partnership with the Academy ofToulouse to facilitate contacts between female professionals
and students, to provide information to students, teachersand career advisors on technological advances and new skills,
as well as to participate in relevant events.

Other personnel marketing initiatives include:
●

●

76

In Germany, the organisation of a “girls’ day” which is an
open day for girls at the EADS German sites to allow them
to ﬁnd out more about the engineering profession;
In France, participation in the “Elles bougent” (“they move”)
initiative. Led by major French engineering universities(ENSAM, ESTACA) together with key players from the

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transportation industry (EADS, PSA, Dassault, SNCF…),
this project aims at raising young women’s awareness oftechnical studies, as well as getting them interested incomplex technologies through plant visits, conferences, aswell as regular contacts with female engineers currently
working in the member companies;●

In 2007, at the Paris Airshow, more than 500 students andyoung graduates were welcomed at the HR section of the
EADS stand to participate in the various workshops andconferences organised by the Divisions. Events such as the“Junior Programme” or “Elles bougent” special day and thenumerous tours of the EADS stand and the A380 were big
successes; and●A “Diversity Committee” was created in 2007 at the level ofthe EADS Group. It consists of 8 men and 8 women
representing various managements (Human Resources,
Marketing and Sales, Strategy, Finances, engineering,
programs, etc.) and EADS entities. Its role is to deﬁne astrategic plan and to promote actions aiming at developing
diversity within the Group.

In France, a ﬁrst agreement on gender diversity and equal
professional treatment (“Accord sur l’égalité et la mixité
professionnelle”) which was signed in 2004 with trade unions, ismonitored by each EADS company, and also at Group level,using a deﬁned set of common indicators to evaluate results
and track progress with an action plan covering the 2004-2006
period. This action plan was to be re-negotiated every three
years. Accordingly a new agreement was signed in July 2007 bygeneral management and trade unions, establishing newpriority rights and indicators of follow-up, notably for:●The harmonisation of compulsory reports;●

The implementation of salary policy and careerdevelopment;●

The promotion of aeronautics, space and defence professions
among female students;●

The feminisation of recruitment.

Age diversity

A group agreement covering EADS’ entities in France signedwith trade union organisations in 2005 aims at banning all
career development based on age criteria.

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Being concerned with the lengthening of working life, the other European entities of the EADS Group are also working on second
half of career development.
Number of employees per age group

31st December 2007

31st December 2006

31st December 2005

18-25

7,763

7,578

7,179

26-35

29,67829,621

27,30336-45

36,31537,02637,12746-55

37,32936,54535,35856-65

12,521

12,227

11,229122,606

122,997

118,196

31st December 2007

31st December 2006

31st December 2005

TOTAL EADS
Consolidated companies are counted 100%.

Average age of employees

France

41.3

41.3

41.4

Germany

42.4

42.0

42.2

Spain

42.3

42.8

42.4

U.K.

41.7

42.3

41.9
43.9

U.S.

44.7

44.2

Other countries

n/a

n/a

40.8

TOTAL EADS

41.9

41.8

41.9

2007
In years

2006
In years

2005
In years

Airbus

13.6

13.4

13.4

Military Transport Aircraft

19.3

20.1

20.8

Average length of service

Eurocopter

12.2

13.4

14.2

Defence & Security

16.4

16.3

16.7

Astrium

14.9

15

15

HQ, Innovation Works and other businesses

12.8

12.5

13.3

TOTAL EADS

14.3

14.3

14.6

2.4.3.4 Career Development: Efficient Managementof Skills and Know-How
Policy● “EADS ensures that working time, including overtime,is regulated so as to support a healthy balance
between employees’ work and their private life.
●

EADS strives to develop the skills and know-how of its
employees, for their individual benefit as well as for its
collective success. The EADS personnel development policy
aims at:−−−

Supporting training to enhance performance and quality ofwork;
Encouraging cross-border and cross functional teamwork, inthe frame of intra-Group mobility;−

Associating personnel to the performances of the Group andits subsidiaries through a success sharing scheme.”

Performance and Best Practices
Recruitment and retaining of talent

EADS strongly believes that developing close contacts withtarget universities and their students will contribute to thestudents’ growth and will efﬁciently brand the Group among
potential future recruits.
EADS demonstrates its commitment in many different ways:
by sitting on boards, advising on classroom content, preparing
case studies, giving technical lectures or on-campus
conferences, arranging plant visits, maintaining its presence at
career fairs, or by enhancing cooperation in common researchareas.

Assessing and recognising individual technical expertise via
a global scheme developed throughout the Group; andEA DS B USINESS, LEG A L A ND CORP ORAT E RESP ONSIBILIT Y

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Recruiting events and Partnerships

EADS attends numerous recruitment events such as theBonding student fairs in Germany, the Ecole Polytechnique, theEcole Centrale and the Toulouse Technology career fairs inFrance, as well as the MIT or Embry Riddle fairs in the U.S. toname but a few. Dedicated branding and recruitment meetings
are also held during major air shows such as ILA, the Paris Air
Show or the Bangalore airshow in India, thus promoting
EADS’ employer brand among real aerospace fans and attracting
talented candidates.
In the framework of the EADS Business Development policy,
HR Marketing decided to go one step deeper in the Asian
aerospace market with the aim of developing the EADS employer
brand on a group wide level in India in 2007; furthermore,
the HR team was part of the EADS Australian Show.
EADS Group is maintaining a relationship with the Pegasus
Network (Partnership of a European Group of Aeronautics andSpace Universities). EADS, together with all EADS Divisions,is present on campus in order to forge new contacts with theleading “aeronautics and space” universities in Europe as wellas to build a powerful image of EADS as a desirable employer.
In addition, discussions with faculty members, professors and
EADS engineers helped to develop ﬁrst steps into future
education and skills of students to prepare them for a
successful career within the aerospace industry.
Such partnerships also demonstrate EADS’ long-term
commitment to building and maintaining a lasting relationshipwith key universities or networks.
In addition to increasing on-site presence among students
directly at universities, EADS also organises more than
60 factory tours at most of its Divisions and BUs.
eRecruiting

The new wide eRecruiting@EADS platform has been rolled
out. This platform responds to the Company’s future workforce
requirements and brings transparency to the Group-wide job
market. Hundreds of thousands of applications are posted every
year on the EADS job platform.

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Launched in November 2006, this new recruitment platform is
now fully operational and the system was delivered to the HR
population end of 2006 and opened to candidates on theinternal and external job market on 30st January 2007. The new
eRecruiting tool responds to the Company’s workforce
requirements and grants transparency and integration on acommon platform to all Divisions.
Internships and entry options

With more than 5,000 internships offered each year in
Europe, EADS provides students with valuable technical andpersonal experience as well as with the unique opportunity tohave a closer look at the industrial world. Most of EADS’internships target students in the ﬁelds of aviation and spacetechnology, electronics, information technology, ﬁnance, ormanagement.
In order to enhance the personal skills and abilities of its
former trainees, EADS developed the Juniors programme tofollow-up all EADS interns, and thus retain and recruit highly
motivated interns.
A variety of other opportunities (depending on national
regulations and policies), including vocational training andscholarships programmes, are also offered to students.
In order to increase the efforts of integration, new speciﬁc
recruitment and development programmes have been createdinternally to contribute to the ongoing development of EADS’
workforce. A new programme called PROGRESS (PROfessional
Graduate Entry Support Scheme) consists of ﬁrst stretchingassignments for talented recruitees in addition to mobility
within the EADS Group. The recruitement started in
October 2007. Fifty participants will be selected to be part ofthe ﬁrst PROGRESS generation in September 2008.
Moreover, EADS Development Programmes (Financial
Management Development Programme and Advanced
Marketing and Sales Programme) offered to professionals
interested in joining EADS in key ﬁelds such as ﬁnance andsales have now proven their efﬁciency.

2007
In percentage

2006
In percentage

University (4 years and more)

24.5

24.4

24

University (up to 3 years)

19.4

19.3

18.9

Breakdown of employees per qualification

2005
In percentage

Higher vocational school

8.7

9.9

11.3

Vocational school

42.9

40.9

41.5

General school

4.5

5.5

4.3

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Development is a priority for EADS employees.
Personal development includes training. EADS expenses
approximately 4% of its payroll (over €150 million) in training
per year. EADS trains more than 70,000 employees every year
for a total of 2.5 million hours.

●

●

●

One of the decisions of that directorate has been to create a“Shared College” which will be the place where all theDivisions will share common training programmes andcommon resources, including internal trainers. Created in
2006, the Shared College has delivered its ﬁrst programmes
in 2007 and should ramp up very quickly to face the needs
of EADS. The ﬁrst programmes targeted within the Shared
College will be on Quality, on System engineering and on
Programme management.
In keeping with this trend of integration, EADS has decided
to create a Leadership Model based on 6 principles which
illustrate the successful way of leading and managing within
EADS. This Model is used in development with tools suchas a speciﬁc EADS 360° feedback processes, or Development
Centres.
The CBA, created in 2000 as an EADS’ Corporate
University to develop the current executives and prepare thenext generation of executives, has focused some of its
programmes to actively prepare EADS leaders on
internationalisation, improvement and innovation.

In 2007, the Centre for Executive Education of EADS(Domaine de Villepreux) close to Bordeaux hosted more than
1,300 guests for its third year (30% increase from 2006). This
centre has been designed to provide facilities to the wholeGroup for top management meetings, training sessions andexecutive seminars.
2007 was an important year for EADS in terms of promoting
innovation and reinforcing technical expertise. Signiﬁcantactions were implemented:●

the creation of the EADS Hall of Fame award(See “2.2.2 Sustaining and Protecting Innovation –Innovation Strategy”);
The award ceremony was held in Paris, at La Cité desSciences, with the participation of 160 employees, theirspouses and their managers. Two special guests, famous

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rugby players from Le Stade Toulousain, Fabien Pelous andByron Kelleher, offered an interesting parallel between
rugby, team spirit and innovation. The main beneﬁts of thisHall of Fame are a strong recognition of talents but also agood opportunity to identify and share good practices at
every level of the Company while encouraging theirprotection with patents; andDevelopment and training

To improve the effectiveness of that signiﬁcant investment,
EADS has set up a Learning Directorate with the ambition todeliver better training programmes, to share internal resources,
to be more proactive in that domain and to create more value
for the business. The Learning Directorate is managed by the
EADS head of Leadership Development and Learning.

2●

the full deployment of the Experts policy.
Recognising the development of technical expertise as amajor asset, EADS has developed a speciﬁc policy forengineering experts, who are key to EADS for maintaining
its competitive advantage through R&T developments.
Aimed at creating attractive career paths for engineeringexperts, the policy also includes development programmes
customised for the speciﬁc requirements of technical experts.
Created in 2005, the Expert policy is now entering amaturity phase. Experts have been nominated in the Group’s
main technical disciplines such as aerodynamic, composite oron board systems. The objectives are to attract, develop andretain engineers in a technical career but also to reinforceroles in organisation: technical advisory, innovation,knowledge management, intellectual property.
On a strategic point of view, the experts’ policy is also a way
to secure the EADS experts’ portfolio by two means:develop new experts on emerging technologies but alsotransfer the know-how of retiring experts.

Mobility

EADS employees are also offered a wide range of mobility
opportunities. Mobility at EADS means mobility acrossfunctions, BUs and Divisions in its four home countries,
France, Germany, Spain and the U.K., as well as appointments
to regions such as America or Asia.
As of 30th June 2007, nearly 2,200 EADS employees wererecorded as expatriates(2), 75% of them working in one of theEuropean countries.
Remuneration

The total wage bill amounted to €9.08 billion in 2007
(See “Part 1 – 1.2 Financial Statements – Note 7”).
Success Sharing Practices

EADS’ reward schemes policy is strongly linked to theachievement of individual and Company objectives, both foreach Division and for the overall Group. In 2007, aperformance and restricted shares unit plan was established forthe senior management of the Group (See “Part 1 – 2.3.3 Long
Term Incentives Plans”).

(2) Scope: approximately 90% EADS.

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The employee offering originally scheduled for June 2006 took
place in March 2007. (See “Part 1 – 2.3.2 Employee ShareOwnership Plans”).

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Since 2005, the success sharing schemes which are
implemented in EADS in France, Germany, Spain, and the U.K.
follow one set of common rules of the Group, ensuring aconsistent application in these four countries.

In the context of the preparation of the Airbus restructuring
programme and the evolution of EADS’ organisation (such as
shared services), and in addition to the legal procedure,
informal dialogue process has been agreed upon with personnel
and unions representatives. It thus results in increasing thenumber of meetings initially planned and in developing
cross–divisional coordination and information cascading down
for both the preparation and implementation phases.

2.4.3.5 Employee Relations: A Proactive Dialogue

International Framework Agreement

Policy● “EADS emphasises its belief that a continuous and highquality social dialogue is key to the Group. In particular,
the European Works Council (“EWC”) facilitates a pro-active
and fluid dialogue with employee representatives.
EADS ensures that the representation of personnel is conducted
throughout all its BUs in a constructive atmosphere.
This maintains a proper balance between the interestsof employees and the economic interests of the Group.”●

Placed in the context of the globalisation of EADS’ activities
and as an illustration of the continuous dialogue principle the
EADS Group and the Group’s European Works Council
concluded in June 2005 an International Framework
Agreement. By this agreement, the signatories expressed theircommitment to common principles and social standards which
they recognise as fundamental, and which they intend topromote worldwide, in the countries where EADS’ activities
are implemented. EADS and the Group’s European Works
Council expressed their strong belief that CSR is a key tolong-term success.

Performance and Best Practices
European Works Council

On 23rd October 2000, at an early stage of the formation of
EADS Group, EADS’ Central management and employee
representatives from the unions and works council operating
within EADS in France, Germany, Spain and U.K. signed anagreement for the establishment of the EWC.
●

The EWC meets twice a year for information and consultation
on evolution of the business and the prospects of the Group.

●

The EWC also comprises an economic committee whichmeets four times a year and focuses on economic matters.
European sub-committees have also been set up in various
BUs such as Airbus, Eurocopter, Astrium and EADS DS andreplicate the EADS EWC model.

●

Two agreements concluded in June 2007 by EADS’ Central
Management and the EADS EWC have been attached to theinitial agreement for the establishment of the EWC:
agreement on setting up the rules of information –consultation about EADS strategy and implementation of
the Group’s global industrial projects;●

agreement on setting up the rules of conﬁdentiality about
information given during the EWC sessions.

●

National committees in France, Germany, and Spain enabledialogue on national matters, under the subsidiarity principle.

The European Metalworkers’ Federation (EMF) and theInternational Metalworkers’ Federation (IMF) associatethemselves with these principles and are, accordingly,
co-signatories of the agreement.
The principles contained in the International Framework
Agreement are aligned with the general rules of ILO
conventions, the OECD Guidelines for Multinational
Enterprises and the principles laid down by the UN Global
Compact, which EADS signed in October 2003, and they arein compliance with the Code of Ethics.
They cover the ﬁelds of equal opportunities andnon-discrimination in respect of employment, of working
conditions and environmental protection, condemn recourse tochild labour, recognise the principles of freedom of associationand the protection of trade unions’ rights.
EADS expects all its suppliers to recognise and apply theprinciples of this framework agreement.
Overview of collective agreements/works agreements
signed with Unions/Works Councils since 2000

EADS Group Agreements were concluded on the following
matters:−

establishment of a European Works Council*;−linking personnel to the business performance of theGroup**; and(*) Agreement for the establishment of a European Works Council and its sub Committees for information and consultation of the workforce between EADS NV and its Employee Representatives dated 23rd October 2000.
(**) Group Agreement on implementation of a success sharing scheme within EADS- NV Group between Head of EADS NV HR and the EADS NV European Worker Council dated 29th June 2004.

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−
●

●

International Framework Agreement.

In Germany, Tariff Agreements were concluded in relation
to such matters as holiday pay, Christmas bonus, sick pay,and early retirement, as well as agreements with the works
council on success sharing, insurance package, company
pension, early retirement deferred compensation, suggestion
scheme, family and work life balance, disabled people, andtime saving system.
In France, Group Agreements were concluded in relation tosuch matters as employment issues, union’s rights and social
dialogue, pre-retirement, management of the second half ofcareers, health cost coverage, French national committee andunions coordinators, professional equality and diversity,

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working time, career-long training, new frame for healthinsurance, skills management.
●

In Spain, a collective bargaining agreement covering various
subjects regarding working time and organisation of work,
includes also social beneﬁts such as aid to children of
employees, collective transport, retirement, life insurance,loans, prize at retirement, canteens, aids to worker
association.

It has to be noted that collective agreements can be signed at
the BU level on matters directly related to their speciﬁc social
perimeters.

2.5 Corporate Citizenship2.5.1 MAINTAINING AN OPEN DIALOGUE WITH EADS’ STAKEHOLDERS
2.5.1.1 Policy“As one of the largest European companies, EADS is aware of its
duties and is willing to develop its contribution to the cultural,
educational and social background in the countries where EADS
operates. In particular, EADS aims at reinforcing project
partnerships with universities and research centres, through, forexample, the EADS Research Foundation.
EADS shall do its best to maintain an open dialogue with its
stakeholders and to provide clear answers to requests forclarifications within the limits of its obligations.”

2.5.1.2 Organisation
EADS’ contributions come in different forms; they include
sponsorships, donations, or partnerships. Wherever located,
EADS contributes to a range of activities, conferences or
institutions, which address social, educational, cultural or sport
subjects. In most cases, such activities are initiated by EADS’
local entities which are also in daily contact with relevant
stakeholders.
However, EADS has implemented donation guidelines (under
the responsibility of EADS’ Corporate Secretary) as well as
sponsoring guidelines (under the responsibility of EADS
Corporate Communications) which set out criteria for granting
contributions to projects.
The guidelines also provide certain thresholds above whichsuch activity has to be reported to the Corporate Secretary or

Corporate Communications respectively and approved at thelevel of the CEOs.

2.5.1.3 Performance and Best Practices
Sponsorships and Donations
In 2007, EADS contributed more than €2 million to social,
cultural, sport or educational projects (this ﬁgure does notinclude contributions to the EADS Foundation for Researchand similar CTO programmes).
Like in previous years, a special focus is made on industryrelated initiatives and science and educational oriented projects.
To name a few examples: EADS provided scholarships tosudents at U.K. universities for their ﬁnal year of a Master’s
Programme in Aeronautical Science; it participated in the
C Génial event which aims at promoting scientiﬁc and technicalculture among young generations; the Group partnered the
50 years of E.U. celebration in Berlin where it presented R&D
topics; EADS has also a continuing partnership with theLondon Science Museum. The opening in 2007 of its
refurbished space gallery, supported by EADS and Astrium
well demonstrates this fruitful partnership.
Furthermore, EADS contributes to humanitarian activities by
donating and giving material or providing air transportation
capacities when necessary. Among others, EADS has a long-term
partnership with “Aviation sans Frontières” (“ASF”) a non-proﬁtorganisation in France, Germany and Spain, a humanitarianorganisation which provides air transport for, in particular,
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2.5 | Corporate Citizenship1

seriously ill children. In 2007, an ASF branch was created in
the only EADS home country which was not covered yet: theU.K. All missions provided for in the association status werealready delivered in the course of the year: Wings of Smile,child escort, and air freight of medical good. The 2007
milestones include: joint missions of the German (Luftfahrt
Ohne Grenzen) and U.K. (Aviation Without Borders) branches
in Peru after the Auhust earthquake and in Bangladesh after
the July ﬂooding; and Airbus teaming up with ASF France inthe ﬁrst Wings of Smile mission in December by organising an
A320 ﬂight for disabled children. The partnership with the
ASF network was presented at the occasion of theSummerfestival of the German President, which EADS
sponsored. EADS also contributed signiﬁcantly, as in previous
years, to the RAF Charitable Trust through the sponsorship of
the Royal International Air Tattoo.
EADS encourages its employees who individually participate
actively and responsibly in local initiatives which contribute tothe overall development of local communities.

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Dialogue with Stakeholders
EADS is always ready to listen to critical voices and welcomes
constructive contribution. The Group strives to maintain an
open dialogue with any stakeholder who genuinely seeks
additional information on EADS’ businesses, operations or
CSR activities.
Particularly, in order to provide the most accurate information
to stakeholders and stockholders, the Group proactively
interacts with the main sustainability rating agencies. EADS
aims at continuously improving the ways of integrating CSR
into its day-to-day business. In keeping with this objective,
the agencies’ analyses contribute to EADS’ efforts in assessing
the Group’ strengths and weaknesses and point out possible
gaps in CSR reporting. They also provide an indication of
the benchmark positioning of EADS within the aerospace anddefence industry which is currently behind the other industries
in terms of CSR reporting.

2.5.2 ENCOMPASSING COMMUNITY INTERESTS IN EADS’ GLOBAL STRATEGY
2.5.2.1 Policy●“EADS is proud of selling its products and providing its
services to an increasing number of countries, thanks to thetrust placed by international customers in its global reputation.

●

EADS is conscious of its responsibility as a global company inthe spreading of sound international business practices that
foster the expansion of a balanced and fair globalisation
benefiting all countries.

●

EADS encourages industrial cooperation with local industries
whenever possible in order to support the development of skills
and competencies.

●

EADS supports local initiatives dedicated to the promotion of
corporate social responsibility-oriented projects.”

2.5.2.2 Organisation
A new organisation was set up early 2008, in order to fulﬁl
EADS’ Vision 2020; it seeks namely to better balance EADS’
footprint between Europe and the rest of the world. Within
the Strategy and Marketing organisation, International
Development has been created to integrate sales and industrial
development functions.

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2.5.2.3 Performance and Best Practices
EADS pursues international development through setting up
plants and engineering centres in strategic countries,
completing acquisitions or partnering with local industry.
2007 was another year of achievements in all these areas.
Airbus opened during 2007 new engineering centres in the U.S.
(Mobile) and in India (Bangalore). Both centres will each hire
more than 100 skilled local engineers by the end of 2008.
2007 is also the year when construction of the A320 China
Final Assembly Line started. Another example of EADS’industrial global deployment is the decision to set a C212 Final
Assembly Line in Brazil.
On 2nd April 2007, Airbus set up an Engineering Centre in
Bangalore, India. The purpose of this centre, which will
ultimately employ more than 250 local engineers, is to become
an Airbus pole of excellence for Advanced Methods& Simulation Tools in Flight Physics, Structure, Systems andTesting domains. The Bangalore centre employed around
30 Indian skilled engineers by the end of 2007, and should
more than double its capacity in the course of 2008. After a
training period of 3 months in Airbus’ European design ofﬁces,
Indian engineers are performing high added-value work packagetasks related to Airbus’ existing and future programs.
The performance quality fully meets worldwide standards set
by Airbus.

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In the U.S., EADS North America is committed to increasing
its investment, expanding its industrial presence, creating highvalue jobs and in-sourcing world-leading technology andproducts to the U.S. marketplace. Moreover, as a responsible
local citizen, EADS North America is contributing to theassociations and institutions where its employees live and work.

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Airbus is implementing locally a people management policythat favours quality of the job environment and careerdevelopment for local employees. The success of this policy ishighlighted by the employee attrition rate which is still equal
to zero after one year of operations.

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General Description 3of the Company
and its Share Capital
3.1

General Description of the Company

86

3.1.1

COMMERCIAL AND CORPORATE NAMES,SEAT AND REGISTERED OFFICE

86

3.1.2

LEGAL FORM

86

3.1.3

GOVERNING LAWS

86

3.1.4

DATE OF INCORPORATION
AND DURATION OF THE COMPANY

89

3.1.5

OBJECTS OF THE COMPANY

89

3.1.6

COMMERCIAL AND COMPANIES REGISTRY

89

3.1.7

INSPECTION OF CORPORATE DOCUMENTS

90

3.1.8

FINANCIAL YEAR

90

3.1.9

ALLOCATION AND DISTRIBUTION OF INCOME

90

3.1.10 GENERAL MEETINGS

90

3.1.11 DISCLOSURE OF HOLDINGS

92

3.1.12 MANDATORY TENDER OFFERS

93

3.2

General Descriptionof the Share Capital

95

MODIFICATION OF SHARE CAPITALOR RIGHTS ATTACHING TO THE SHARES

95

ISSUED SHARE CAPITAL

96

3.2.3

AUTHORISED SHARE CAPITAL

96

3.2.4

SECURITIES GRANTING ACCESS TO THE
COMPANY’S CAPITAL

96

3.2.5

CHANGES IN THE ISSUED SHARE CAPITALSINCE INCORPORATION OF THE COMPANY

97

3.2.1
3.2.2

3.3

Shareholdings and Voting Rights

98

3.3.1

SHAREHOLDING STRUCTURE

98

3.3.2

RELATIONSHIPS WITH
PRINCIPAL SHAREHOLDERS

100

3.3.3

FORM OF SHARES

105

3.3.4

CHANGES IN THE SHAREHOLDING OF
THE COMPANY SINCE ITS INCORPORATION

105

3.3.5

PERSONS EXERCISING CONTROLOVER THE COMPANY

107

3.3.6

SIMPLIFIED GROUP STRUCTURE CHART

108

3.3.7

PURCHASE BY THE COMPANY
OF ITS OWN SHARES

110

3.4

Dividends

114

3.4.1

DIVIDENDS AND CASH DISTRIBUTIONSPAID SINCE THE INCORPORATION
OF THE COMPANY

114

3.4.2

DIVIDEND POLICY OF EADS

114

3.4.3

UNCLAIMED DIVIDENDS

114

3.4.4

TAXATION

114

3.5

Annual Securities Disclosure Report

116

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3.1 | General Description of the Company

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3.1 General Description of the Company
3.1.1

COMMERCIAL AND CORPORATE NAMES, SEAT AND REGISTERED OFFICE

Commercial Name: EADS

Seat (statutaire zetel): Amsterdam

Corporate Name: European Aeronautic Defence and Space
Company EADS N.V.

Tel: +31.20.655.48.00
Fax: +31.20.655.48.01

Registered Ofﬁce: Le Carré, Beechavenue 130-132, 1119 PR,
Schiphol-Rijk, the Netherlands

3.1.2 LEGAL FORM
The Company is a public limited liability company (naamloze
vennootschap) organised under the laws of the Netherlands.

As a company operating worldwide, EADS is subject to, andoperates under, the laws of each country in which it conducts
business.

3.1.3 GOVERNING LAWS
The Company is governed by the laws of the Netherlands, inparticular by Book 2 of the Dutch Civil Code and by its
Articles of Association (the “Articles of Association”).
The shares of the Company have been admitted for trading at
the Traded but Not Listed Segment of Euronext Amsterdam.
The Company is subject to various legal provisions of the
Dutch Financial Supervision Act (Wet op het financieel toezicht)(the “WFT”). These are summarised below.
Pursuant to section 5:60 of the WFT, certain persons
discharging managerial responsibilities within the Company
and, where applicable, persons closely associated with them(together “Insiders”, as deﬁned below) must notify the
Netherlands Authority for the Financial Markets (Autoriteit
Financiële Markten (the “AFM”)) of all transactions conductedon their own account relating to shares of the Company, or toderivatives or other ﬁnancial instruments linked to them. In
principle, failure to comply with the requirements of the WFT
is a criminal offence punishable by criminal and administrative
penalties in the Netherlands.
In particular, “Insiders” include (i) members of the Board of
Directors and the Executive Committee of the Company,(ii) certain senior executives, (iii) persons closely associated withany person mentioned under categories (i) and (ii) (including
their spouses, dependent children and other relatives who have
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shared the same household), and (iv) legal entities, trusts orpartnerships whose managerial responsibilities are discharged
by any person referred to in categories (i), (ii) or (iii) or which
are directly or indirectly controlled by such a person, or thathave been set up for the beneﬁt of such a person, or whose
economic interests are substantially equivalent to those of sucha person.
Pursuant to Dutch law, EADS has adopted speciﬁc internal
insider trading rules (the “Insider Trading Rules”), in orderto ensure the conﬁdentiality of sensitive company information,
the transparency of EADS share trading and the compliance of
EADS share trading rules with share trading regulations
applicable in the Netherlands, France, Germany and Spain (forexamples of Dutch, German, Spanish and French disclosure
requirements applicable to members of the Board of Directors
and the Executive Committee, see “3.1.11 Disclosure of
Holdings – Disclosure Requirements for Members of the Boardof Directors and of the Executive Committee”). Pursuant to theInsider Trading Rules, (i) all employees and directors areprohibited from conducting transactions in EADS shares orstock options if they have inside information, and (ii) certain
persons are only allowed to trade in EADS shares or stock
options within very limited periods and have speciﬁc
information obligations to the compliance ofﬁcer of theCompany and the competent ﬁnancial market authorities withrespect to certain transactions. The updated version of theGENERAL DESCRIPTION OF THE COMPANY AND ITS SHARE CAPITAL

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3.1 | General Description of the Company

1

Insider Trading Rules effective from 1st January 2007 isavailable on the Company’s website.
Hans Peter Ring, Chief Financial Ofﬁcer of EADS, wasappointed Compliance Ofﬁcer by the Board of Directors of
EADS. The Compliance Ofﬁcer is essentially responsible forthe implementation of the Insider Trading Rules and forreporting to the AFM.
Pursuant to section 5:59 paragraph 7 of the WFT, theCompany must maintain a list of all persons working for it byvirtue of a labour relationship or otherwise, who may haveaccess to inside information. Equivalent requirements exist
under French, German and Spanish law.
In addition, given the fact that its shares are admitted for
trading on a regulated market in France, Germany and Spain,
the Company is subject to certain laws and regulations in thesethree jurisdictions. A summary of the main regulations
applicable to the Company in relation to information to bemade public in these three jurisdictions is set out below.

3.1.3.1 Periodic Disclosure Obligations
Pursuant to Directive 2004/109/EC on the harmonisation oftransparency requirements in relation to information about
issuers whose securities are admitted to trading on a regulated
market (the “Transparency Directive”), EADS is required todisclose certain periodic and ongoing information(the “Regulated Information”). The expiry date for the
implementation of the Transparency Directive by the Member
States of the European Community was 20th January 2007.
Pursuant to the Transparency Directive, EADS must
disseminate Regulated Information throughout the European
Community in a manner ensuring fast access to suchinformation on a non-discriminatory basis. For this purpose,
EADS may use a professional service provider (wire).
In addition, Regulated Information must be ﬁled at the sametime with the relevant competent market authority. EADS
must then ensure that Regulated Information remains publicly
available for at least ﬁve years.
Finally, Regulated Information must be made available forcentral storage by a mechanism that is to be ofﬁciallydesignated by the issuer’s home member state.
Dutch Regulations
For the purpose of the Transparency Directive, supervision of
EADS is effected by the member state in which it maintains its
registered ofﬁce, which is the Netherlands. In addition,
the competent market authority that assumes ﬁnal responsibility
for supervising compliance by EADS is the competent market
authority designated in the Netherlands, the AFM.

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As of the date of this document, the Netherlands has
implemented provisions of the Transparency Directive relating
to the requirements on notiﬁcation of the acquisition or
disposal of major holdings and major proportions of voting
rights held by shareholders (See “3.1.11 Disclosure of
Holdings”), but not in relation to other disclosure
requirements.
Once the Transparency Directive is fully implemented in the
Netherlands (expected: October 2008), EADS will be subject toa number of periodic disclosure requirements, such as:●

Publishing a ﬁnancial report, together with an audit reportdrawn up by an external accountant, within four months
after the end of each ﬁnancial year;●

Publishing a semi-annual ﬁnancial report covering the ﬁrst
six months of the ﬁnancial year, within two months after
the end of the ﬁrst six months of the ﬁnancial year; and●Publishing quarterly ﬁnancial information.

In addition to the requirements of the Transparency Directive,
pursuant to section 5:15 of the WFT, resulting from theimplementation of EC Directive 2003/71 dated
4th November 2003, the Company may prepare a registration
document, the purpose of which is to provide legal andﬁnancial information on the Company (shareholding, activities,
management, recent events, possible evolution and otherﬁnancial information). Such registration document must be ﬁled
for approval with the AFM and, once approved, is madeavailable to the public. In practice, the registration document of
the Company may be used as a prospectus provided it issupplemented with a securities note and a summary approvedby the AFM.
Additionally, and pursuant to section 5:24 of the WFT also
resulting from the implementation of EC Directive 2003/71,
the Company is required to provide at least annually a list ofcertain corporate and ﬁnancial documents or other informationthat it has published or made available to the public over thelast 12 months and details of where these documents can beobtained (see “3.5 Annual Securities Disclosure Report”).
French Regulations
Since the Transparency Directive was implemented in France
on 20th January 2007, EADS is no longer obliged to comply
with certain disclosure obligations pursuant to the generalregulations of the Autorité des marchés financiers (the “AMF”).
In line with the requirement set forth in the Transparency
Directive to disseminate Regulated Information throughout theEuropean Community, EADS is required to provide
simultaneously in France the same information as that provided
abroad.

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3.1 | General Description of the Company

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German Regulations
Since the Transparency Directive was implemented in Germany
on 20th January 2007, EADS is no longer obliged to comply withcertain German law disclosure obligations according to theGerman Stock Exchange Act (Börsengesetz) and the German Stock
Exchange Admissions Regulation (Börsenzulassungs-Verordnung).
Due to the listing of the Company’s shares in the regulierter
Markt (speciﬁcally, in the sub-segment of the regulierter Markt,
the Prime Standard) on the Frankfurt Stock Exchange,
the Company is subject to the post-listing obligations described
below. In addition, the Company is included in the selection
index MDAX, the MidCap index of Deutsche Börse AG.
According to sections 47 and 48 of the Exchange Rules(Börsenordnung) of the Frankfurt Stock Exchange, the listing in
the Prime Standard of the regulierter Markt results in the
obligation of the Company to publish consolidated annual
accounts as well as quarterly reports.
In addition, the Company is required as a result of its listing in
the regulierter Markt (Prime Standard) to prepare an update of acorporate action timetable at the beginning of each ﬁscal year.
The Company is also required to hold a meeting of analysts atleast once a year in addition to the press conference regarding
the balance sheet.
Save for certain exceptions, the Company has to apply foradmission of shares issued at a later date to the regulierter Marktof the Frankfurt Stock Exchange, see section 69 of the German
Stock Exchange Admissions Regulation.
Spanish Regulations
Since the entering into force of the law and regulation
implementing the Transparency Directive in Spain in April and
December 2007, respectively, EADS is no longer obliged tocomply with certain disclosure obligations pursuant to the
Spanish Securities Act as developed by Royal Decree 1362/2007
of 19th October 2007.
In this context, the Company will not be under the obligation tosubmit its annual accounts for year 2007 to the CNMV. As far asboth quarterly and half-yearly ﬁnancial information are concerned,
the Company has submitted quarterly and half-yearly information
for the year 2007 to the CNMV, but will no longer be under the
obligation to submit such information for any ﬁscal year as from
1st January 2008.

3.1.3.2 Ongoing Disclosure Obligations
Pursuant to the Transparency Directive, Regulated Information
includes in particular inside information as deﬁned pursuant toarticle 6 of Directive EC/2003/6 on insider dealing and market
manipulation (the “Market Abuse Directive”).
Such information must be disseminated throughout the European
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Disclosure Obligations”).
Inside information shall mean information of a precise nature
which has not been made public, relating, directly or indirectly, toone or more issuers of ﬁnancial instruments or to one or moreﬁnancial instruments and which, if it were made public, would be
likely to have a signiﬁcant effect on the prices of those ﬁnancial
instruments or on the price of related derivative ﬁnancial
instruments.
Inside information must be disclosed to the markets as soon as
possible. However, an issuer may under its own responsibility
delay the public disclosure of inside information so as not toprejudice its legitimate interests provided that such omission
would not be likely to mislead the public and provided that theissuer is able to ensure the conﬁdentiality of that information.
Dutch Regulations
Upon implementation of the Transparency Directive into Dutch
law, EADS will, whenever it discloses inside information
pursuant to applicable mandatory law, disclose and disseminate
throughout the European Community any such information (aspart of the Regulated Information) and also ﬁle that information
with the AFM which will keep all relevant information in a
publicly available register.
French Regulations
Upon implementation of the Transparency Directive into thegeneral regulations of the AMF (the “AMF General
Regulations”) on 20th January 2007, the French requirements topublish inside information in France according to Article 223-1 et
seq of the AMF General Regulations no longer apply to EADS.
However, any inside information as deﬁned above will be
disclosed in France by means of dissemination throughout theEuropean Community, as it will be organised under Dutch law
implementing the Transparency Directive so as to provide
simultaneously in France equivalent information to that provided
abroad.
German Regulations
Upon implementation of the Transparency Directive in German
law on 20th January 2007, the German requirements to publish
inside information according to Section 15 of the Securities
Trading Act (Wertpapierhandelsgesetz) no longer apply to EADS.
However, any inside information as deﬁned above will be
disclosed in Germany by means of dissemination throughout theEuropean Community, as it will be organised under Dutch law
implementing the Transparency Directive so as to provide
simultaneously in Germany equivalent information to thatprovided abroad.

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Spanish Regulations
Pursuant to Article 82 of the Spanish Securities Act, theCompany is required to make public, as soon as possible, any
fact or decision that may substantially affect the quotationof its shares (“a relevant event”). Any relevant event must
be notiﬁed to the CNMV simultaneously with its diffusion
by any other means, as soon as the relevant fact is known,
the relevant decision has been made or, the relevant
agreement has been executed, as the case may be.
The Company may, under its own responsibility, delay
the publication of any relevant event if it considers thatsuch publication damages its legitimate interests, provided
that such lack of publication does not mislead the public
and that the Company is in a position to guarantee
the conﬁdentiality of the relevant information. Nonetheless,
the Company will immediately inform the CNMV should it decideto delay the publication of any relevant event. Furthermore,pursuant to the Spanish Securities Act, the Company must
post details of any relevant event on its website.
The Company must try to ensure that the relevant
information is disclosed simultaneously to all types ofinvestors in the member States of the European Union
where it is listed.

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Pursuant to the Spanish Securities Act and its developing rules
and regulations, the Company is required:(i)

To have rules of the Board of Directors which must be
ﬁled with the CNMV and published on the Company’s
website;(ii) To ﬁle with the CNMV a description of the relevant
Dutch law provisions and provisions in the Articles of
Association governing the conduct of shareholders’meetings and post such description on its website;(iii) To have a website which must contain as a minimum theinformation speciﬁed by Spanish regulations;(iv) To ﬁle a corporate governance report with the CNMV on
an annual basis (the “Annual Corporate Governance
Report”); and(v)

In respect of the provisions of any shareholders’ agreement
which relate to the exercise of voting rights at shareholders’meetings or restrictions or conditions on the freetransferability of shares or convertible bonds, to (a) provided
the Company is a party to the shareholders’ agreement, ﬁlesuch provisions with the CNMV who will then publish theprovisions as a relevant event, (b) post the provisions on the
Company’s website, unless the CNMV exempts theCompany from doing so, and (c) set out details of theprovisions in the Annual Corporate Governance Report.

3.1.4 DATE OF INCORPORATION AND DURATION OF THE COMPANY
The Company was incorporated on 29th December 1998 for an unlimited duration.

3.1.5 OBJECTS OF THE COMPANY
Pursuant to Article 2 of the Articles of Association, the objectsof the Company are to hold, co-ordinate and manage
participations or other interests and to ﬁnance and assume
liabilities, provide for security and/or guarantee debts of legal

entities, partnerships, business associations and undertakingsthat are involved in:(a) The aeronautic, defence, space and / or communicationindustry; or(b) Activities that are complementary, supportive or ancillary
thereto.

3.1.6 COMMERCIAL AND COMPANIES REGISTRY
The Company is registered with the Registry of the Chamber of Commerce of Amsterdam (Handelsregister van de Kamer van
Koophandel en Fabrieken voor Amsterdam) under number 24288945.

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3.1.7 INSPECTION OF CORPORATE DOCUMENTS
The Articles of Association are available for inspection in
Dutch at the Chamber of Commerce of Amsterdam.
Pursuant to articles R.123-115, R.123-116 and R.123-117 of theFrench Commercial code, a certiﬁed copy of a translation in
French of the Articles of Association has been ﬁled with the
Greffe of the Tribunal de commerce of Paris. It is also available
at the head ofﬁce of EADS in France (37, boulevard deMontmorency, 75016 Paris, France, Tel.: + 33 1 42 24 24 24).
In the event of amendments being made to the Articles of
Association, an updated certiﬁed copy of the translation in

French thereof will be ﬁled with the Greffe of the Tribunal decommerce of Paris and made available at the head ofﬁce of
EADS in France.
In Germany, the Articles of Association are available at thehead ofﬁce of EADS in Germany (Willy-Messerschmitt-Str. –Tor 1, 81663 Munich, Germany, Tel.: + 49 89 60 70).
In Spain, the Articles of Association are available at the
CNMV and at the head ofﬁce of EADS in Spain (Avda. Aragón
404, 28022 Madrid, Spain, Tel.: + 34 91 585 70 00).

3.1.8 FINANCIAL YEAR
The ﬁnancial year of the Company starts on 1st January and ends on 31st December of each year.

3.1.9 ALLOCATION AND DISTRIBUTION OF INCOME
3.1.9.1 Dividends
The Board of Directors shall determine which part of the
proﬁts of the Company shall be attributed to reserves.
The remaining distributable proﬁt shall be at the disposalof the shareholders’ meeting.

another date for payment is proposed by the Board of Directors
and approved by the shareholders’ meeting.
Dividends, interim dividends and other distributions on sharesshall be paid by bank transfer to the bank or giro accounts
designated in writing to the Company by, or on behalf of,shareholders at the latest 14 days after their announcement.

The shareholders’ meeting may resolve (if so proposed by the
Board of Directors) that all or part of a dividend shall be paidin shares of the Company as opposed to cash.

3.1.9.2 Liquidation

The declaration of a dividend, an interim dividend or another
distribution to the shareholders shall be made known to themwithin seven days after such declaration. Declared dividends
shall be payable within four weeks of such declaration unlessIn the event of the dissolution and liquidation of the Company,
the assets remaining after payment of all debts and liquidation
expenses shall be distributed amongst the holders of the sharesin proportion to their shareholdings.

3.1.10 GENERAL MEETINGS
3.1.10.1 Calling of Meetings
Shareholders’ meetings are held as often as the Board of
Directors deems necessary or upon the request of shareholders
holding, individually or together, at least 10% of the total issued
share capital of the Company.
The Board of Directors must give notice of general meetings in atleast one of the Netherlands’ national daily newspapers, at least
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one international daily newspaper and at least one daily
newspaper in each of the countries in which the Company’s
shares are listed. Such publication must be made at least 15 days
before the day of the meeting, not counting the day on whichnotice was given, and shall state either the matters to beconsidered at such meeting or that the agenda is open to
inspection by the shareholders at the ofﬁces of the Company andat such other locations as may be speciﬁed in the notice.

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The annual shareholders’ meeting of the Company is held
within six months of the end of the ﬁnancial year.
Shareholders’ meetings are held in Amsterdam, Den Haag,
Rotterdam or Haarlemmermeer (Schiphol Airport). The Boardof Directors may decide that shareholders’ meetings may beattended by means of electronic or video communication
devices from the locations mentioned in the convening notice.
The Board of Directors must announce the date of the annual
shareholders’ meeting at least two months before the meeting.
Requests made by one or more shareholders collectively
representing at least 1% of the issued share capital (or shares
having an aggregate market value of €50 million), to put itemson the agenda for the annual shareholders’ meeting, must be
effected by the Board of Directors, if such requests to theBoard of Directors have been made at least six (6) weeks prior
to the date scheduled for the meeting except if, in the opinionof the Board of Directors, important interests of the Company
prevail over the insertion of such items into the agenda.
A request as referred to in the preceding paragraph may only bemade in writing. The Board of Directors can decide that in“writing” is understood to include a request that is recorded
electronically.

3.1.10.2 Right to attend Meetings
Each holder of one or more shares may attend shareholders’meetings, either in person or by written proxy, to speak and tovote according to the Articles of Association. See “— 3.1.10.4
Conditions of Exercise of Right to Vote”.
A shareholder or person who has the right to attend a meetingcan see to it that he is represented by more than one proxyholder, provided that only one proxy holder can be appointed
for each share.
In relation to holders of registered shares, the Board of
Directors may provide in the convening notice that those
persons are recognised as authorised to exercise the rights toattend, speak and vote at the shareholders’ meetings, who at
the point in time mentioned in the convening notice areauthorised to exercise those rights and as such have beenregistered in the register appointed for the purpose by the
Board of Directors, irrespective of who is authorised to exercise
those rights on the day of the meeting.
Any person who is entitled to exercise the rights set out in theabove paragraph (either in person or by means of a writtenproxy) and is attending the meeting from another location (see“— 3.1.10.1 Calling of Meetings”) in such a manner that theperson acting as chairman of the meeting is convinced that sucha person is properly participating in the meeting, shall bedeemed to be present or represented at the meeting, shall beentitled to vote and shall be counted towards a quorum accordingly.

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As a prerequisite to attending the shareholders’ meeting and to
casting votes, the holders of bearer shares and those who derived
the aforementioned rights from these shares shall be obliged todeposit their share certiﬁcate or the documents evidencing theirrights against receipt, at such locations as shall be determined by
the Board of Directors and stated in the convening notice.
Such convening notice shall also state the day that has been ﬁxed
as the ﬁnal day on which the share certiﬁcates and the documents
evidencing the aforementioned rights may be deposited.
That day may not be earlier than ﬁve business days, but in eachcase not earlier than the seventh day, prior to the meeting.
As far as registered shares are concerned, the Board of Directors
should be informed in writing within the timeframe mentioned
in the two preceding sentences of the intention to attend themeeting (the Board must receive such written information
ultimately on the date speciﬁed in the notice by which themeeting is convened).
Holders of shares that are registered in the shareholders’register kept in Amsterdam have the option of holding themthrough Euroclear France S.A. In this case the shares areregistered in the name of Euroclear France S.A.
Shareholders holding their EADS shares through Euroclear
France S.A. who wish to attend general meetings will have torequest from their ﬁnancial intermediary or accountholder anadmission card and be given a proxy to this effect fromEuroclear France S.A. in accordance with the instructions
speciﬁed by the Company in the convening notice. For thispurpose, a shareholder will also be able to request that it beregistered directly (and not through Euroclear France S.A.) in
the register of the Company. However, only shares registered in
the name of Euroclear France S.A. may be traded on stock
exchanges.
In order to exercise their voting rights, the shareholders will
also be able, by contacting their ﬁnancial intermediary or
accountholder, to give their voting instructions to Euroclear
France S.A. or to any other person designated for this purpose,as speciﬁed by the Company in the convening notice.
In accordance with the resolutions proposed to and adopted by
the Annual General Meeting of Shareholders held on
4th May 2007, the Articles of Association of the Company wereamended to the effect that they include the possibility for
EADS to (i) set a “registration date” at which the persons
entitled to attend and vote at the shareholders’ meetings arerecorded for this purpose irrespective of who is shareholder at
the time of the meeting, and (ii) provide for electronic means ofconvocation, attendance and voting at the shareholders’meetings. The introduction of such electronic means will
depend on the availability of the necessary technical means andthe market practice.

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3.1.10.3 Majority and Quorum

3.1.10.4 Conditions of Exercise of Right to Vote

All resolutions are adopted by means of a simple majority ofthe votes cast except when a qualiﬁed majority is prescribed by
the Articles of Association or by Dutch law. No quorum isrequired for any shareholders’ meeting to be held. Dutch law
requires a special majority for the passing of certain resolutions:inter alia, capital reduction, exclusion of pre-emption rights inconnection with share issues, statutory mergers or statutory
demergers; the passing of such resolutions requires a majorityof two-thirds of the votes cast if 50% of the share capital withvoting rights is not present at the meeting (or otherwise a
simple majority). In addition, resolutions to amend the Articles
of Association or to dissolve the Company shall only be capableof being adopted with a majority of at least two-thirds of thevalid votes cast at a shareholders’ meeting, whatever thequorum present at such meeting.

In all shareholders’ meetings, each shareholder has one vote inrespect of each share it holds.

Pledgees of shares and beneﬁciaries of a usufruct, which do nothave voting rights, do not have the right to attend and to speakat shareholders’ meetings. The owners of shares which are
subject to a pledge or a usufruct, which do not have voting
rights, are entitled to attend and to speak at shareholders’meetings.

A shareholder whose shares are subject to a pledge or usufruct
shall have the voting rights attaching to such shares unlessotherwise provided by law or by the Articles of Association orif, in the case of a usufruct, the shareholder has granted voting
rights to the usufructuary. Pursuant to the Articles of
Association and subject to the prior consent of the Board of
Directors, a pledgee of shares in the Company may be granted
the right to vote in respect of such pledged shares.
Article 25 (paragraph 2 and 3) of the Articles of Association
provides that “The right to vote can be granted to an
usufructuary. The right to vote can be granted to a pledgee, but
only with the prior consent of the Board of Directors. No vote
may be cast at the general meeting of shareholders on a sharethat is held by the Company or a subsidiary; nor for a share in
respect of which one of them holds the depository receipts.
Usufructuaries and pledgees of shares that are held by theCompany or its subsidiaries are, however, not excluded fromtheir voting rights, in case the right of usufruct or pledge wasvested before the share was held by the Company or its
subsidiary.”

3.1.11 DISCLOSURE OF HOLDINGS
Pursuant to the WFT, any person who, directly or indirectly,
acquires or disposes of an interest in the capital or voting rightsof the Company must immediately give written notice to the
AFM by means of a standard form, if, as a result of suchacquisition or disposal, the percentage of capital interest or
voting rights held by such person meets, exceeds or falls below
the following thresholds: 5%, 10%, 15%, 20%, 25%, 30%, 40%,
50%, 60%, 75% and 95%. Once in every calendar year, every
holder of an interest in the share capital or voting rights of 5%
or more in the Company must renew its notiﬁcation to reﬂectchanges in the percentage held in the share capital or voting
rights of the Company, including changes as a consequence ofchanges in the total issued share capital. The disclosures are
published by the AFM on its website (www.afm.nl).
In order to comply with these disclosure rules under the WFT,
the Articles of Association of the Company have been
amended in accordance with the resolutions adopted by the
Annual General Meeting of Shareholders held on 4th May 2007
to the effect that they now include the obligation forshareholders to notify both the competent authorities and theCompany when crossing thresholds in the share capital and/or
voting rights of EADS set at: 5%, 10%, 15%, 20%, 25%, 30%,

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40%, 50%, 60%, 75% and 95%. Previously, such thresholds wereset at 5%, 10%, 25%, 33 1/3%, 50%, 66 2/3% and more.
Upon implementation of the Transparency Directive in German
law on 20th January 2007, EADS is no longer required to
publish changes of voting rights pursuant to the German
Securities Trading Act (Wertpapierhandelsgesetz).
Upon implementation of the Transparency Directive into
Spanish law, EADS is no longer required to publish changes ofvoting rights pursuant to the Spanish Securities Act and its
developing regulation.
The Articles of Association also require that any person
acquiring directly or indirectly or with others with whom it isacting in concert more than one tenth of the issued sharecapital or voting rights of the Company must notify theCompany of its intentions (i) to buy or sell shares of theCompany in the following 12 months; (ii) to continue or tostop acquiring shares or voting rights of the Company; (iii) toacquire control of the Company; or (iv) to seek to designate amember of the Board of Directors of the Company. The
Company will provide the AMF with the information received
in this context.

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Failure to comply with the legal obligation to notify a change
in range of thresholds under the WFT is a criminal offence
punishable by criminal and administrative penalties as well ascivil law penalties, including the suspension of voting rights.

Disclosure Requirements for Members of the Boardof Directors and the Executive Committee
Disclosure of holdings
In addition to the requirements under the WFT regarding thedisclosure of holdings in case the speciﬁed thresholds are met or
exceeded or if holdings fall below these thresholds, members of theBoard of Directors must report to the AFM the number of shares
in EADS and attached voting rights(5) held by him or an entity
controlled by him, within two weeks following their appointment
as director, whether or not such shareholdings meet or exceed anyof the speciﬁed thresholds. Subsequently, any member of theBoard of Directors is required to notify the AFM of any changes insuch number of shares in EADS and attached voting rights.
Disclosure of transactions carried out on any securities
issued by the Company
Pursuant to section 5:60 of the WFT, certain persons
discharging managerial responsibilities within the Company(i.e., for EADS, the members of the Board of Directors and of
the Executive Committee) and, where applicable, persons
closely associated with them must in principle notify the AFM
of all transactions conducted for their own account relating toshares of the Company, or to derivatives or other ﬁnancial
instruments linked to them. These persons have to notify the
AFM of the transactions within ﬁve trading days unless theaggregate amount of such transactions does not exceed €5,000
in respect of all transactions in a calendar year.

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According to paragraph 15a of the German Securities Trading
Act, persons with signiﬁcant managerial responsibility withrespect to the Company (i.e., for EADS, the members of theBoard of Directors and the members of the Executive
Committee), or the persons closely associated with them, must
disclose transactions conducted for their own account involving
shares of the Company or ﬁnancial instruments that relate tothose shares, especially derivatives. These persons have to notify
the Company and the German Federal Financial Supervisory
Authority of the transactions within ﬁve trading days unlessthe aggregate amount of such transactions does not exceed€5,000 in respect of all transactions in a calendar year.
Upon implementation of the Transparency Directive into
German law on 20th January 2007, EADS is no longer required
to publish such notiﬁcations on its website or in a German
supra-regional mandatory stock exchange newspaper.
Pursuant to Articles 223-22 to 223-25 of the AMF General
Regulations, directors, persons with signiﬁcant managerial
responsibility with respect to the Company and having access ona regular basis to inside information about the Company(members of the Board of Directors and members of the
Executive Committee), and, where applicable, any person closely
associated with them, must report by e-mail to the AMF, withina period of ﬁve trading days following completion, anytransactions in securities of the Company carried out by these
persons, unless the aggregate amount of such transactions does
not exceed €5,000 in respect of all transactions carried out in acalendar year. The AMF makes such disclosure information
publicly available on its website. In addition, the Company must
establish, update and provide the AMF with a list detailing thepersons with signiﬁcant managerial responsibility with respect
to the Company and having access on a regular basis to inside
information about the Company.

3.1.12 MANDATORY TENDER OFFERS
3.1.12.1 Takeover Directive
The Directive 2004/25/EC on takeover bids (the “Takeover
Directive”) sets forth the principles governing the allocationof laws applicable to EADS. The applicable laws refer to therules of the Netherlands and the rules of the European Union
Member State of the competent authority that must be chosen
by EADS from among the various market authorities
supervising the markets where its shares are listed.
For EADS, matters relating to the consideration offered in thecase of a bid, in particular the price, and matters relating to thebid procedure, in particular the information on the offeror’s
decision to make a bid, the contents of the offer document andthe disclosure of the bid, shall be determined by the laws of
the European Union Member State having the competentauthority, which will be selected by EADS at a future date.
For EADS, matters relating to the information to be provided
to the employees of EADS and matters relating to company
law, in particular the percentage of voting rights which confers
control and any derogation from the obligation to launch a bid,
the conditions under which the Board of Directors of EADS
may undertake any action which might result in the frustrationof the bid, and the applicable rules and the competentauthority shall be dealt with in accordance with Dutch law(see sections 3.1.12.2 and 3.1.12.3).

(5) In this context, the term “shares” also includes for example depositary receipts for shares and rights resulting from an agreement to acquire shares or depositary receipts for shares, speciﬁcally call options,warrants, and convertible bonds. Equally, the term “voting rights” also includes actual or contingent rights to voting rights (e.g., embedded in call options, warrants or convertible bonds).

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3.1.12.2 Dutch Law
The bill implementing the Takeover Directive (the “TakeoverAct”) in Dutch Law entered into force on 28th October 2007. In
accordance with the Takeover Act, shareholders are required tomake a public offer for all issued and outstanding shares in
EADS’ share capital if they — individually or acting in concert(as such terms are deﬁned below), directly or indirectly — have
30% or more of the voting rights (signiﬁcant control) in EADS.
In addition to the other available exemptions listed below, therequirement to make a public offer does not apply to persons,
who at the time the Takeover Act came into force, already held —individually or acting in concert — 30% or more of the voting
rights in EADS.
Under the Takeover Act, natural persons, legal entities orcompanies are “acting in concert” if they cooperate on the basis ofan agreement with the objective to acquire signiﬁcant control (asdeﬁned above) in the target company, or if they cooperate with its
Board of Directors with the objective to prevent the success of analready announced public offer for the shares in such company.
The following categories of natural persons, legal entities orcompanies are deemed to be “acting in concert” under the
Takeover Act: (i) legal entities or companies that form a group ofcompanies as deﬁned in section 2:24b of the Dutch Civil Code,(ii) legal entities or companies and their subsidiaries, and(iii) natural persons and their subsidiary companies.
In addition to the exemption stated above, the obligation to makea public offer does not apply to the natural person, legal entity orcompany that, amongst others:●

Acquires signiﬁcant control as a result of declaring
unconditional (gestand doen) a public offer made for all shares(or depositary receipts) in the target company;●

Is a legal entity, independent from the target company, that
acquires signiﬁcant control after a public offer has beenannounced by a third party, provided that such entity (i) holds
the shares in the target company for a maximum period of two
years and for purposes of protection of the target company and(ii) the corporate objects of such entity are to preserve theinterests of the target company;●

Is a legal entity, independent from the target company, which
has issued depositary receipts for the shares in the target
company;●

Acquires signiﬁcant control as a result of: (i) an intra-grouptransfer of the shares representing signiﬁcant control; or (ii) atransfer between a parent company and its subsidiary;●

Acquires signiﬁcant control acting in concert with one or moreother natural persons, legal entities or companies, in whichcase the obligation to make a public offer lies with the natural
person, legal entity or company that can exercise most of thevoting rights in the general meeting of shareholders of theCompany;

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Acts as a custodian (if and to the extent it cannot exercise any
voting rights in its sole discretion).

The obligation to make a public offer does also not apply if:●

The natural person, legal entity or company, after acquiring
signiﬁcant control, loses such control within a thirty day grace
period, unless (i) loss of control is due to a transfer to a natural
person, legal entity or company to which one of the
exemptions set out above applies, or (ii) the acquirer of thesigniﬁcant control has exercised its voting rights during thisthirty day period; or●

95% of the general meeting of shareholders of the Company
agrees up front with the acquisition of signiﬁcant control by athird party (a reversed takeover).

The Takeover Act also introduces the right for a minority
shareholder to make a request for his shares to be purchased by anofferor who holds at least 95%. of the issued share capital and thevoting rights. This claim should be brought before the Enterprise
Chamber of the Court of Appeals in Amsterdam within thethree-month period after the closing of the acceptance period of
the public offer.

3.1.12.3 Articles of Association
Pursuant to Article 15 of the Articles of Association, in the eventthat a direct or indirect acquisition of shares in the Company
results in a person acting alone or in concert (as set out in Section
5:45 of theWFT) holding shares or voting rights where thecontrol over the number of shares or votes reaches or exceeds
33 1/3% of the issued share capital of the Company then such
person(s) is (are) required to make an unconditional public offer
to all shareholders to acquire all of their shares or to procure thatsuch an offer is made. Such offer must comply with all of theapplicable regulatory or other legal requirements in eachjurisdiction in which the Company’s shares are listed.
Pursuant to Article 16 of the Articles of Association, in the eventof a failure to launch such an offer (or if the offer does not satisfy
the relevant legal or regulatory requirements in each of thejurisdictions where the Company’s shares are listed) within
two months after notiﬁcation to the Company of shareholdings
reaching or exceeding 33 1/3% or failing such notiﬁcation, withina period of 15 days of receipt of notice from the Board of
Directors conﬁrming the obligation to make the public offer, thenany person(s) who is (are) required to make the offer shall within
the period speciﬁed by the notice sent by the Board of Directors
exchange for depository receipts to be issued by the
Stichting Administratiekantoor EADS (the “Foundation”), such
percentage of shares they hold over and above the 33 1/3% of theshares issued by the Company (the “Excess Percentage”). From thedate speciﬁed in the notice sent by the Board of Directors, theright to attend meetings, to vote and to receive dividends shall besuspended in respect of the Excess Percentage. If, within a periodof 14 days from a further notice from the Board of Directors,

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3.2 | General Description of the Share Capital1

the person required to exchange his shares representing his Excess
Percentage for depository receipts still has not done so, then the
Company is irrevocably authorised to exchange such shares fordepository receipts issued by the Foundation. The constitutive
documents of the Foundation provide that the Foundation shallnot have the right to attend shareholders’ meetings of theCompany as a shareholder, to speak at such meetings and to
exercise the voting rights attached to the shares it holds, except if,
in the view of the Board of Directors of the Foundation, suchaction is required for the performance of the mandatory offer
provisions in the Articles of Association.
The obligation to make a public offer does not apply inthe following situations(6):(i)

To a transfer of shares to the Company itself or to theFoundation;(ii) To a securities custody, clearing or settlement institution
acting in that capacity, provided that the provisions ofArticle 16 of the Articles of Association described above
shall be applicable where shares are held for persons acting
in breach of the provisions of Articles 15 and 16 of the
Articles of Association described above;

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Back to Contents(iii) To a transfer of shares by the Company or to an issue ofshares by the Company on a merger or on an acquisitionby the Company of another company or business;(iv) To a transfer of shares from one party to another party who
is a party to an agreement as envisaged in the WMZ todeﬁne “concert parties” where the agreement is entered into
before 31st December 2000 (as amended, supplemented or
replaced by a new agreement by the admission of one ormore new parties or the exclusion of one or more parties)
except that this exemption will not apply to a new party that
individually or with its subsidiaries and/or group companies
holds at least 33 1/3% of the control over shares or votes in
the Company; this exemption is intended to exclude
the parties to the Participation Agreement (See “3.3.2
Relationships with Principal Shareholders”) as amended,
supplemented or replaced by a new agreement by theadmission of one or more new parties or the exclusion of
one or more parties from the obligation to make themandatory offer in the event of a transfer of shares between
themselves; or(v)

To a transfer by a shareholder to a subsidiary in which it
holds more than 50% or by a shareholder to a company
which holds more than 50% in such transferring shareholder.

3.2 General Description of the Share Capital
3.2.1 MODIFICATION OF SHARE CAPITAL OR RIGHTS ATTACHED TO THE SHARES
Unless such right is limited or eliminated by the shareholders’meeting as described below, holders of shares have a preemptive right to subscribe for any newly issued shares pro rata
to the aggregate nominal value of shares held by them, except
for shares issued for consideration other than cash and sharesissued to employees of the Company or of a Group company.
For the contractual position as to pre-emption rights,
see “3.3.2 Relationships with Principal Shareholders”.
The shareholders’ meeting has the power to issue shares.
The shareholders’ meeting may also authorize the Board of
Directors for a period of no more than ﬁve years, to issue sharesand to determine the terms and conditions of share issuances.
The shareholders’ meeting also has the power to limit or to
exclude pre-emption rights in connection with new issues ofshares, and may authorize the Board of Directors for a periodof no more than ﬁve years, to limit or to exclude preemption
rights. All resolutions in this context must be approved by a
two-thirds majority of the votes cast during the shareholders’meeting in the case where less than half of the capital issued ispresent or represented at said meeting.
In accordance with the ninth resolution passed by the annual
shareholders’ meeting of EADS held on 4th May 2007, theBoard of Directors was granted the powers (i) to issue sharesand to grant rights to subscribe for shares which are part of
EADS’s authorised share capital provided that such powers
shall be limited to 1% of the Company’s authorised sharecapital from time to time and (ii) to limit or exclude preferential
subscription rights, in both cases for a period expiring at theannual shareholders’ meeting to be held in 2009.
The shareholders’ meeting may reduce the issued share capitalby cancellation of shares or by reducing the nominal value ofthe shares by means of an amendment to the Articles of
Association, the latter requiring the approval of at least two-thirdsof the votes cast at the general meeting. At the annual general
meeting of shareholders to be held on 26th May 2008, it will be
proposed to cancel up to a maximum of 1,291,381 shares.

(6) Article 17 of the Articles of Association.

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3.2.2 ISSUED SHARE CAPITAL
As at 31st December 2007, the Company’s issued share capital is €814,014,473 comprising 814,014,473 fully paid shares of a nominal
value of €1.0 each.

3.2.3 AUTHORISED SHARE CAPITAL
As at 31st December 2007 the authorised share capital of the Company is €3 billion comprising 3,000,000,000 shares of €1.0 each.

3.2.4 SECURITIES GRANTING ACCESS TO THE COMPANY’S CAPITAL
Except for stock options granted for the subscription of EADS shares (See “Part 1 – 2.3.3 Long Term Incentive Plans”), there are no
securities that give access, immediately or over time, to the share capital of EADS.
The table below shows the total potential dilution that would occur if all the stock options issued as at 31st December 2007 were
exercised:
Number of shares

Dilution percentage
in capital

Number of
voting rights

Dilution percentage
in voting rights*

Total number of EADS shares issued as of 31st December 2007

814,014,473

96.59%

809,807,471

96.57%

Total number of EADS shares which may be issued following
exercise of stock options

28,749,782

3.41%

28,749,782

3.43%

842,764,255

100%

838,557,253

100%

EADS’ potential share capital

Total potential EADS share capital(*)

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The potential dilutive effect on capital and voting rights of the exercise of these stock options may be limited as a result of the Company’s share purchase programmes and in the case of subsequent cancellation of
repurchased shares. See “3.3.7.1 Dutch Law and information on share buyback programmes”.

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3.2.5 CHANGES IN THE ISSUED SHARE CAPITAL SINCE INCORPORATION OF THE COMPANY

Nature of Transaction

Nominalvalue
per share

29 December 1998

Incorporation

NLG 1,000

100

-

100

NLG 100,000

3rd April 2000

Conversion into €€1

50,000-50,000€50,000€1

715,003,828€1,511,477,044

715,053,828€715,053,828€1

80,334,580€1,365,687,860

795,388,408€795,388,408€1

11,769,259€168,300,403

807,157,667€807,157,667€1

2,017,894€19,573,571.80

809,175,561€809,175,561€1

2,022,939€14,470,149.33

811,198,500€811,198,500€11,686,682€19,363,109.36

812,885,182€812,885,182€1

5,686,682-

807,198,500€807,198,500€12,017,822€34,302,974

809,216,322€809,216,322€1

362,747€6,133,436

809,579,069€809,579,069€1

1,336,358-

808,242,711€808,242,711€1

1,938,309€34,618,198.74

810,181,020€810,181,020€17,562,110€144,176,031.61

817,743,130€817,743,130€1

6,656,970-

811,086,160€811,086,160€1

4,845,364€89,624,589

815,931,524€815,931,524€14,568,405-

811,363,119€811,363,119€1

2,037,835€33,482,173

813,400,954€813,400,954€1

613,519€9,438,683

814,014,473€814,014,473

Date
th

8th July 2000
13th July 2000
21st September 2000

5th December 2001

4th December 2002

5th December 2003

20th July 2004

3rd December 2004

In 2004
25th July 2005

29th July 2005
In 2005
20th July 2006
In 2006
In 2007
In 2007
In 2007

Issue of shares in exchange for contributions
by Aerospatiale Matra, Dasa AG and SEPI
Issue of shares for the purpose of the initialpublic offering and listing of the Company
Issue of shares for the purpose of the employee
offering carried out in the context of the initialpublic offering and listing of the Company
Issue of shares for the purpose of an employee
offering (note d’opération approved by
the COB** on 13th October 2001 under
number 01-1209)
Issue of shares for the purpose of an employee
offering (note d’opération approved by
the COB on 11th October 2002 under
number 02-1081)
Issue of shares for the purpose of an employee
offering (note d’opération approved by
the COB on 25th September 2003
under number 03-836)
Cancellation of shares upon authorisation
granted by the annual shareholders’ meeting
held on 6th May 2004
Issue of shares for the purpose of an employee
offering (note d’opération approved by
the AMF on 10th September 2004 under
number 04-755)
Issue of shares following exercise of options
granted to employees***
Cancellation of shares upon authorisation
granted by the annual shareholders’ meeting
held on 11th May 2005
Issue of shares for the purpose of an employee
offering (note d’opération approved by the AMF
on 4th May 2005 under number 05-353)
Issue of shares following exercise of options
granted to employees***
Cancellation of shares upon authorisation
granted by the annual shareholders’ meeting
held on 4th May 2006
Issue of shares following exercise of options
granted to employees***
Cancellation of shares upon authorisation
granted by the annual shareholders’ meeting
held on 4th May 2007
Issue of shares for the purpose of an employee
offering
Issue of shares following exercise of options
granted to employees***Number of sharesissued/cancelled

Premium*

Total number
of issued shares
after transaction

Total
issued capital
after transaction(*)
The costs (net of taxes) related to the initial public offering of the shares of the Company in July 2000 have been offset against share premium for an amount of €55,849,772.
(**) Former name of the Autorité des marchés ﬁnanciers (the “AMF”).
(***) For information on stock option plans under which these options were granted to EADS employees, see “Part 1 – 2.3.3 Long Term Incentive Plans”.

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3.3 Shareholdings and Voting Rights
3.3.1 SHAREHOLDING STRUCTURE
EADS combined the activities of Aerospatiale Matra(“Aerospatiale Matra” or “ASM”), Daimler Aerospace AG(“Dasa AG”) (with the exception of certain assets andliabilities) (“Dasa”) and Construcciones Aeronauticas SA(“CASA”) pursuant to a series of transactions completed inJuly 2000.
In this document, the term “Completion” relates to
the July 2000 completion of the contributions made by
Aerospatiale Matra, Dasa AG and SEPI to EADS to combine
such activities into EADS.
The term “Indirect EADS Shares” relates to EADS shares heldby Daimler AG (“Daimler”), SEPI and Société de Gestion del’Aéronautique, de la Défense et de l’Espace (“Sogeade”),
for which EADS Participations B.V. exercises all the attachedvoting rights as well as Lagardère SCA (“Lagardère”) and
Société de Gestion de Participations Aéronautiques (“Sogepa”), or
the companies of their group, the number of EADS shares held
indirectly via Sogeade, reﬂecting by transparency, theirrespective interest in Sogeade.
Unless the context requires otherwise, the shareholdings of
Dasa AG in EADS are referred to in this document asshareholdings of Daimler, and the rights and obligations of
Dasa AG pursuant to the agreements described herein arereferred to as rights and obligations of Daimler.
As at 31st December 2007, 22.52% of the EADS shares were
held by Dasa AG, which is a subsidiary of Daimler Luft- undRaumfahrt Holding AG (“DLRH”), a 93.85% subsidiaryof Daimler. Sogeade, a French partnership limited by shares(société en commandite par actions) whose share capital, as at
31st December 2007, is held 54.55% by Sogepa (a French stateholding company) and 45.45% by Désirade (a French société paractions simplifiée wholly owned by Lagardère), held 27.53% of
the EADS shares. Thus, 50.05% of the share capital of EADS
was held by Daimler and Sogeade who jointly control EADS
through a Dutch law contractual partnership (the “ContractualPartnership”). SEPI (a Spanish state holding company), being aparty to the Contractual Partnership, held 5.49% of the share

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capital of EADS. The public (including EADS employees) andthe Company held, respectively, 43.88% and 0.52% of the sharecapital of EADS. The République française (the “French State”)
held directly 0.06% of such share capital, such shareholding
being subject to certain speciﬁc provisions.
On 8th July 2004, Daimler announced that it had placed on themarket (in the context of a hedging transaction) all of its EADS
shares (22,227,478 EADS shares), representing 2.73% of
the capital and 2.78% of the EADS voting rights at that date,
except for its Indirect EADS Shares. Thus, Daimler does nothold directly any EADS shares at the date of this document.
On 11th November 2005, Dasa AG transferred its entire interest
in EADS to its wholly owned subsidiary DaimlerChrysler Luftund Raumfahrt Beteiligungs GmbH & Co. KG (“DC KG”).
However, in November 2006, DC KG then transferred its
entire interest in EADS back to Dasa AG.
In April 2006, Daimler reduced by 7.5% its stake in EADS andLagardère issued bonds redeemable into EADS shares, as aresult of which it is committed to reduce its stake in EADS
by 2.5% in June 2007, 2.5% in June 2008 and 2.5% in June 2009,
i.e a total of 7.5%.
On 8th September 2006, the Company was notiﬁed that JSC
Vneshtorgbank (formerly Bank of Foreign Trade) acquired
41,055,530 shares of EADS, representing 5.04% of the sharecapital of EADS at that time.
On 9th February 2007, Daimler reached an agreement with aconsortium of private and public-sector investors by which it
reduced its economic rights in EADS by 7.5% while keeping
the voting rights. For more information on this transaction,
see “3.3.4 Changes in the Shareholding of the Company Since
its Incorporation”.
On 26th December 2007, JSC Vneshtorgbank has sold andtransferred its shares in EADS to the Bank for Development
and Foreign Economic Affairs (Vnesheconombank). EADS was
notiﬁed of such transaction thereafter.

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The diagram below shows the ownership structure of EADS as at 31st December 2007 (% of capital (voting rights) before exercise ofoutstanding stock options granted for the subscription of EADS shares. See “Part 1 – 2.3.3 Long Terms Incentive Plans”.
OWNERSHIP STRUCTURE OF EADS AS AT 31 ST DECEMBER 2007

(*)
(**)

EADS Participations B.V. exercises the voting rights attached to these EADS shares pledged by Sogeade, Daimler and SEPI who retain title to their respective shares.
The French State exercises the voting rights attached to these EADS shares (such shares being placed with the Caisse des dépôts et consignations) in the same way that EADS Participations B.V. exercises thevoting rights pooled in the Contractual Partnership.
(***) Shares held by the French State following the distribution without payment of consideration to certain former shareholders of Aerospatiale Matra as a result of its privatisation in June 1999. All the shares currently
held by the French State will have to be sold on the market.
(****) DLRH is 99,90% held by Daimler; almost all the balance is held by individual minority shareholders.
(*****) As at 31st December 2007, the Company holds, directly or indirectly through another company in which the Company holds directly or indirectly more than 50% of the share capital, 4,207,002 of its own shares. The
EADS shares owned by the Company itself do not carry voting rights.

For the number of shares and voting rights held by members of
the Board of Directors and Executive Committee, “see Part 1– 2.2.1 Compensation Granted to Directors and Principal
Executive Ofﬁcers”.

Approximately 1.89% of the capital and 1.90% of the voting
rights are held by EADS employees.

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3.3.2 RELATIONSHIPS WITH PRINCIPAL SHAREHOLDERS
The principal agreements governing the relationships between
the founders of EADS are an agreement (the “Participation
Agreement”) entered into on Completion between Daimler,
Dasa AG, Lagardère, Sogepa, Sogeade and SEPI, and a Dutch
law Contractual Partnership agreement entered into on
Completion between Sogeade, Dasa AG, SEPI and EADSParticipations B.V. (the “Contractual Partnership
Agreement”), which repeats certain terms of the Participation
Agreement and a certain number of other agreements (notably,a shareholder agreement (the “Sogeade Shareholders’
Agreement”) entered into on Completion between Sogepa andLagardère and an agreement between the French State, Daimler
and DCLRH). EADS Participations B.V. is a Dutch privatecompany with limited liability (besloten vennootschap met
beperkte aansprakelijkheid) and is the managing partner of theContractual Partnership. The Indirect EADS Shares held byDaimler, Sogeade and SEPI have been pledged to EADSParticipations B.V., which has been granted the exclusive power
to exercise the voting rights attached to the pledged shares(including the right to attend and speak at shareholders’meetings) in accordance with the Contractual Partnership
Agreement.

Organisation of EADS Participations B.V.
The Board of Directors of EADS Participations B.V. has anequal number of directors nominated by Daimler andby Sogeade, respectively (taking into account proposals madeby Lagardère in respect of the Sogeade-nominated directors).
Daimler and Sogeade each nominate two directors, unlessotherwise agreed, and the Daimler-Directors and the SogeadeDirectors jointly have the right to nominate and to remove the
Chairman and the Chief Executive Ofﬁcer. In addition, SEPI
has the right to nominate a director, as long as the shareholdingof SEPI in EADS is 5% or more but in any case until
the Annual General Meeting of Shareholders to be heldin 2012. The Chairman shall either have French or German
nationality and the Chief Executive Ofﬁcer shall have the othernationality.

The agreements above contain, among other things, provisions
relating to the following matters:

Transfer of EADS Shares●

The composition of the Boards of Directors of EADS, EADSParticipations B.V. and Sogeade Gérance (gérant commanditéof Sogeade);●

Restrictions on the transfer of EADS shares and Sogeade
shares;●Pre-emptive and tag-along rights of Daimler, Sogeade,
Sogepa and Lagardère;●

Defences against hostile third parties;●

Consequences of a change of control of Daimler, Sogeade,
Lagardère, Sogepa or SEPI;●

A put option granted by Sogeade to Daimler over its EADS
shares in certain circumstances;●

Speciﬁc rights of the French State in relation to certain
strategic decisions, regarding among other issues, EADS’ballistic missiles activity; and●Certain limitations on the extent of the French State’sownership of EADS.

Further details on the agreements among the principal
shareholders of EADS are set out below.

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EADS BU S I NES S , LEG A L AN D CO R P O R AT E R E S P O N S I B I L I T YThis structure gives Daimler and Sogeade equal nominatingrights in respect of the majority of the directors of thedecision-making body of EADS Participations B.V.
All decisions of EADS Participations B.V.’s Board of Directors
shall require the vote in favour of at least four directors.

During the period commencing at Completion and ending on
1st July 2003 (the “Standstill Period”), there were restrictions
on Daimler’s, Sogeade’s, SEPI’s, Lagardère’s, Sogepa’s and theFrench State’s ability to transfer EADS shares.
Following the expiration of the Standstill Period, as of
1st July 2003, Daimler, Sogeade, SEPI, Lagardère and Sogepa
will each have the right to sell its EADS shares on the market,
subject to the following conditions:●

If a party wishes to sell any EADS shares, it shall ﬁrst sell
its shares other than its Indirect EADS Shares before
exercising its right to sell its Indirect EADS Shares inaccordance with the provisions set out below;●

On the sale of Indirect EADS Shares, Daimler (in the caseof a sale by Sogeade), Sogeade (in the case of a sale byDaimler) or Sogeade and Daimler (in the case of a sale by
SEPI) may either exercise a pre-emption right or sell its
Indirect EADS Shares on the market in the same proportions
as the respective Indirect EADS Shares of the relevant
parties bear to each other;●

Any transfer of Indirect EADS Shares by either Sogepa
or Lagardère is subject to a pre-emption right in favour of
Lagardère or Sogepa, as the case may be. In the event thatsuch pre-emption right is not exercised, the Indirect EADS
Shares may be sold (a) to an identiﬁed third party subject toLagardère’s or Sogepa’s consent (as the case may be) and also

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to Daimler’s consent and (b) if such consent is not obtained,
the Indirect EADS Shares may be sold on the market,
subject to Daimler’s pre-emption right referred to above;●

Lagardère and Sogepa shall each have a proportional right totag-along on a sale of its Indirect EADS Shares; and●The pre-emption and tag-along rights of Lagardère andSogepa referred to above do not apply to a transfer of EADS
shares directly held by one of them.

(i)Control of EADS

Following the expiration of the Standstill Period, as of
1st July 2003, the parties to the Participation Agreement may
accept an offer (whether by way of tender offer or otherwise)
by a Hostile Third Party which is not acceptable to either
Daimler or Sogeade (a “Hostile Offer”), subject to provisions
requiring, inter alia, the party wishing to accept, to ﬁrst offer
its EADS shares to Daimler and/or Sogeade, in which caseDaimler and/or Sogeade may exercise their pre-emption rights
in respect of all or some only of the EADS shares held by the
party wishing to accept the Hostile Offer.
Any sale of EADS shares, other than the EADS Indirect
Shares, by Daimler, Sogeade or Lagardère, at a time when a
Hostile Third Party is a shareholder and purchaser of EADS
shares on the market, is subject to the pre-emption right ofSogeade, Daimler and Sogepa respectively. In the case of a saleby Lagardère, if Sogepa does not exercise its right ofpre-emption, Daimler has in turn a pre-emption right.

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Dissolution of Contractual Partnership and EADSParticipations B.V.
The Contractual Partnership and EADS Participations B.V. will
be dissolved and wound up upon the occurrence of certain
events (each, a “Termination Event”) including:

Any sale on the market of EADS shares in accordance with theParticipation Agreement shall be conducted in an orderly
manner so as to ensure the least possible disruption to themarket of EADS shares. To this effect, the parties shall consult
with each other before any such sale.

In the event that a third party to which Daimler or Sogeade
objects (a “Hostile Third Party”) has a direct or indirectinterest in EADS shares equal to 12.5% or more of the numberof such EADS shares the voting rights of which are pooled
through the Contractual Partnership (a “Qualifying
Interest”), then, unless a Hostile Offer (as deﬁned below) has
been made by the Hostile Third Party or until such time as
Daimler and Sogeade agree that the Hostile Third Party should
no longer be considered a Hostile Third Party or the Hostile
Third Party no longer holds a Qualifying Interest, the parties
to the Participation Agreement shall exercise all means ofcontrol and inﬂuence in relation to EADS to avoid such Hostile
Third Party increasing its rights or powers in relation to EADS.

2

If the proportion which the Indirect EADS Shares of
either Daimler or Sogeade bears to the total number of
EADS shares is less than 10%, unless the difference
between the holdings of Daimler and Sogeade (calculated
as a percentage by reference to the number of Indirect
EADS Shares held by each of them as against the total
number of EADS shares) is 5% or less, in which case thedissolution and winding up shall only occur if the
proportion which the Indirect EADS Shares of Daimler orSogeade bears to the total number of EADS shares is 5%
or less; or(ii) If, on a change of control of either Lagardère, Sogepa,
Sogeade or Daimler, no notice of an offer by a third party
to purchase the Sogeade shares or the Indirect EADS
Shares held by the party undergoing the change of control(the “Changed Party”) (which offer the Changed Party
wishes to accept) has been served in accordance with theParticipation Agreement (see below “— Change ofControl”) within 12 months of the date of the change ofcontrol occurring (the absence of notice of an offer by athird party to purchase the Indirect EADS Shares held by
SEPI upon a change of control of SEPI does not trigger adissolution of the Contractual Partnership or EADSParticipations B.V. but shall cause SEPI to lose its mainrights or liabilities under the Participation Agreement or
the Contractual Partnership Agreement).
On the occurrence of a Termination Event, EADSParticipations B.V. is prohibited from conducting further
business except as is necessary to its liquidation or theliquidation of the Contractual Partnership.

Change of Control
The Participation Agreement provides, inter alia, that if (a)Lagardère or Sogepa undergoes a change of control and Daimler
so elects (b) Sogeade undergoes a change of control and Daimler
so elects (c) Daimler undergoes a change of control and Sogeadeso elects (d) SEPI undergoes a change of control and Sogeade orDaimler so elects then:(i)

The party undergoing the change of control shall use its
reasonable efforts to procure the sale of its Sogeadeinterest (if the party undergoing the change of control is
Lagardère or Sogepa) or of its Indirect EADS Shares(if the party undergoing the change of control is Daimler,
Sogeade or SEPI) to a third party purchaser on bona ﬁdearm’s length terms. When the party subject to the changeof control is Lagardère or Sogepa, the third party
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1purchaser shall be nominated with Daimler’s consent, notto be unreasonably withheld; and(ii) In the event that a third party offers to purchase the
Sogeade interest held by Lagardère or Sogepa or the
Indirect EADS Shares held by Daimler, Sogeade or SEPI
as the case may be, is received and the party undergoingthe change of control wishes to accept that offer, suchoffer shall immediately be notiﬁed to (a) Daimler in thecase of a change of control occurring to Lagardère or
Sogepa, (b) Sogeade in the case of the change of control
occurring to Daimler, (c) Daimler in the case of the changeof control occurring to Sogeade, or (d) Daimler or Sogeadein the case of the change of control occurring to SEPI (theparty notiﬁed under (a), (b), (c) or (d) being the “NonChanged Party”). The Non-Changed Party shall have aﬁrst right to purchase the Sogeade interest or the Indirect
EADS shares being offered for sale at the price being
offered by the third party. In relation to (d), if Daimler
and Sogeade have both elected that SEPI procure a third
party purchaser, then they shall each have the right toacquire SEPI’s Indirect EADS Shares in the respective
proportions which the number of their EADS shares bear
to one another at that time. In the event that the NonChanged Party does not give notice of its intention topurchase the Sogeade interest or the Indirect EADS Shareswithin 30 days of the offer being made, then the Changed
Party is obliged to sell such Sogeade interest or Indirect
EADS Shares to the third party on the terms of the third
party’s original offer.
The third party purchaser may not be a competitor of EADS,
Sogeade or Daimler (as the case may be) nor a member of theGroup which has taken control of the Changed Party.

Events of Default Other Than Change of Control
The Participation Agreement provides for certain actions
following events of default (other than a change of control) (i.
e., insolvency-related or a material breach of the Participation
Agreement). In particular, if such an event of default occurs in
relation to Daimler, Sogeade or SEPI, the non-defaulting party(respectively Sogeade, Daimler and Sogeade and Daimler acting
together) has a call option over the defaulting party’s EADS
shares and interest in EADS Participations B.V. If such an
event of default occurs in relation to Lagardère or Sogepa, suchparty is obliged to use its best efforts to sell its interest in thecapital of Sogeade on bona ﬁde arm’s length terms to a third
party purchaser (who must not be a competitor of EADS or
Daimler). In the case of a sale by Lagardère, the third party
purchaser must be nominated by Sogepa with Daimler’s
consent (which may not be unreasonably withheld). In the caseof such a sale by Sogepa, Daimler must consent to the sale(again, such consent may not be unreasonably withheld).

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Specific Rights and Undertakings of the French StateThe French State, not being a party to the Participation
Agreement, entered into a separate agreement, governed by
French law, with Daimler and DCLRH on 14th October 1999
(as amended) pursuant to which:●

The French State undertakes to hold an interest of no morethan 15% of the entire issued share capital of EADS throughSogepa, Sogeade and EADS Participations B.V.;●

The French State undertakes that neither it nor any of its
undertakings will hold any EADS shares directly;●

In each case disregarding (i) those EADS shares held by the
French State following the distribution without payment ofconsideration to certain former shareholders of
Aerospatiale Matra as a result of its privatisationin June 1999 and which will have to be sold on the market;(ii) those shares held by Sogepa or the French State which
may be sold or acquired pursuant to the Participation
Agreement or the Sogeade Shareholders’ Agreement (seebelow); and (iii) those shares held for exclusively investment
purposes.

Moreover, pursuant to an agreement entered into between
EADS and the French State (the “Ballistic Missiles
Agreement”), EADS has granted to the French State (a) a vetoright and subsequently a call option on the ballistic missiles
activity exercisable in the event that (i) a third party which is
not afﬁliated to the Daimler and/or Lagardère Groups acquires,directly or indirectly, either alone or in concert, more than 10%
or any multiple thereof of the share capital or voting rights of
EADS or (ii) the sale of the ballistic missiles assets or of theshares of such companies carrying out such activity is
considered after the termination of the Sogeade Shareholders’
Agreement and (b) a right to oppose the transfer of any such
assets or shares during the duration of the Sogeade
Shareholders’ Agreement.

SogeadeSogeade is a French partnership limited by shares (société encommandite par actions) the share capital of which is split
between Sogepa (54.55%) and Désirade, a French société paractions simplifiée (45.45%). The share capital of Désirade isitself wholly owned by Lagardère. Lagardère hence owns
indirectly 45.45% of Sogeade.
The general partner (associé commandité) of Sogeade, Sogeade
Gérance, is a French société par actions simplifiée which is the
manager of Sogeade and the share capital of which is split
equally between Sogepa and Lagardère SCA.
Sogeade Gérance’s Board of Directors consists of eight
directors, four of them nominated by Lagardère (among whom
one shall be designated as the Chairman of the Board) and fourby Sogepa. Decisions of Sogeade Gérance’s board shall beGENERAL DESCRIPTION OF THE COMPANY AND ITS SHARE CAPITAL

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approved by a simple majority of directors except for thefollowing matters which require the approval of a qualiﬁed
majority of six of the eight directors: (a) acquisitions ordivestments of shares or assets the individual value of which
exceeds €500 million; (b) agreements establishing strategic
alliances, or industrial or ﬁnancial co-operation; (c) a capitalincrease of EADS of more than €500 million to which no
preferential right to subscribe for the shares is attached; (d) any
decision to divest or create a security interest over the assets
relating to prime contractor status, design, development andintegration of ballistic missiles or the majority shareholdings in
the companies Cilas, Sodern, Nuclétudes and the GIE Cosyde(each a “Sogeade Reserved Matter”). The decisions
contemplated under (d) above are also governed by the Ballistic
Missiles Agreement (see above “— Speciﬁc Rights andUndertakings of the French State”).
When a vote of Sogeade Gérance’s board on such matters does
not reach the qualiﬁed majority of six directors by reason of anyof the Sogepa-nominated directors casting a negative vote, theSogeade-nominated directors on the board of EADSParticipations B.V. are obliged to vote against the proposal.
This means that the French State as the owner of Sogepa canveto any decisions on these matters within EADSParticipations B.V. and in turn within EADS as long as
the Sogeade Shareholders’ Agreement remains in existence.
In addition, in the case where the Board of Directors of EADSParticipations BV and/or the Board of Directors of EADS
would be called to address the following matters:(a) Appointment/removal of the Chairman and the Chief
Executive Ofﬁcer of EADS and appointment/removalof the Chief Executive Ofﬁcer of Airbus;(b) Investments, projects, launch of new products ordivestments within the Group with an individual value/amount exceeding €500 million;(c) Strategic and cooperation agreements;(d) Modiﬁcations of the authorised share capital of EADS andincrease in the issued capital of EADS, with the exceptionof capital increases for the purposes of ESOP or othersecurities issuances in favour of employees for an amount,
per year or per plan, less than 2% of the issued capital;(e) Modiﬁcations of (1) the Articles of Association of EADS,(2) the internal rules for the Board of Directors and(3) the internal rules for the Executive Committee;(f) Change of name, place of incorporation and nationality
of EADS, and(g) Signiﬁcant decisions in connection with the ballistic
missiles activities of EADS.
Sogeade Gérance’s board shall previously meet to come to adecision on the appropriateness of any of the above-mentionned

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matters. In this respect, the decision of Sogeade Gérance’s
board shall be in writing and require the approval of a qualiﬁed
majority of six of the eight directors; it being understood that
the Sogeade-nominated directors on the board of EADSParticipations B.V. shall in no event be bound by such decision.
Such procedure shall not apply in the case where the relevant
matter will have been examined as a Sogeade Reserved Matterin accordance with the above.
The shareholding structure of Sogeade shall reﬂect at all times theindirect interests of all the shareholders of Sogeade in EADS.
In certain circumstances, in particular in the event of a changeof control of Lagardère, Lagardère shall grant a call option overits Sogeade shares to any non-public third party designated by
Sogepa and approved by Daimler. This option may be exercised
during the term of the Sogeade Shareholders’ Agreement on
the basis of the market price for the EADS shares.
The Sogeade Shareholders’ Agreement shall terminate if
Lagardère or Sogepa ceases to hold at least 20% of the capital of
Sogeade, except that: (a) the provisions relating to the call
option granted by Lagardère described above shall remain inforce as long as the Participation Agreement is in force, (b) as
long as Sogepa holds at least one Sogeade share, it will remain
entitled to nominate a Sogeade Gérance Director whose
approval will be required with respect to any decision to divest
or create a security interest over the assets relating to prime
contractor status, design, development and integration ofballistic missiles activity or the majority shareholdings in thecompanies Cilas, Sodern, Nuclétudes and the GIE Cosyde; and(c) the Sogeade Shareholders’ Agreement will be terminated in
the event of a dissolution of EADS Participations B.V. caused
by Daimler. In the latter case, the parties have undertaken tonegotiate a new shareholders’ agreement in the spirit of theshareholders’ agreement between them dated 14th April 1999
relating to Aerospatiale Matra and with regard to theirrespective shareholdings in Sogeade at the time of the
dissolution of EADS Participations B.V.
Put Option
Under the Participation Agreement, Sogeade grants a put
option to Daimler over its EADS shares which shall be
exercisable by Daimler, (i) in the event of a deadlock arisingfrom the exercise by Sogepa of its rights relating to certain
strategic decisions (listed above under the description of
Sogeade) other than those relating to the ballistic missiles
activity or (ii) during certain periods provided that in bothcases the French State still holds any direct or indirect interest
in EADS shares. The put option may only be exercised in
respect of all and not some only of Daimler’s EADS shares.
The exercise price of the option will be calculated on the basisof an average market price for EADS shares.

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In the event that Daimler exercises the put option granted to it
by Sogeade, Sogeade will acquire the EADS shares from
Daimler. However, Lagardère has the right to require Sogepa to
substitute itself for Sogeade in relation to the acquisition ofDaimler’s EADS shares following the exercise by Daimler ofthe put option. Such substitution right has been accepted byDaimler. In the event that Lagardère does not exercise such
substitution right, Lagardère would have to provide its pro rata
part of the ﬁnancing necessary for such acquisition. Sogepa
undertakes to provide its pro rata part of the ﬁnancing
corresponding to its rights in Sogeade. Should Lagardère decide
not to take part in the ﬁnancing, (a) Sogepa undertakes tosubstitute itself for Sogeade to buy the shares sold by Daimler
as a result of the exercise of its put option and Sogepa or
Lagardère may request the liquidation of Sogeade and EADSParticipations B.V. and the termination of the Sogeade
Shareholders’ Agreement (notwithstanding the termination
provisions of the Sogeade Shareholders’ Agreement describedunder the paragraph “Sogeade” above). In that case, Lagardère
could freely sell its EADS shares on the market or in a blocksale to a third party.
Pledge over EADS’ Shares Granted to EADSParticipations B.V.
Upon Completion and in order to secure their undertakings
under the Contractual Partnership Agreement and theParticipation Agreement, Sogeade, Daimler and SEPI granted apledge over their respective Indirect EADS Shares to EADSParticipations B.V. for the beneﬁt of EADS Participations B.V.
and the other parties to the Contractual Partnership
Agreement.
Contributions to EADS — Specific Undertakings of EADSEADS has agreed not to dispose of the shares contributed by
Aerospatiale Matra, Dasa AG and SEPI for a period of sevenyears. The contribution agreements entered into between
EADS on the one hand and Aerospatiale Matra, Dasa AG and
SEPI on the other hand, provide that EADS may, if it
determines that this is desirable, dispose of such sharesprovided that EADS shall, on demand, indemnify Lagardère
and Sogepa (in the case of a sale of shares contributed by
Aerospatiale Matra), Dasa AG or SEPI, as the case may be, forall tax disadvantages (tax actually paid or borne by them as wellas any consumption of loss-carry-forward potential) they suffer
as a result of the loss of the tax beneﬁt triggered by thedisposal of the shares by EADS. Such obligation to indemnify
shall cease after seven years from the date of contribution.
In the event that the indemniﬁcation would be made to all
three of Lagardère, Sogepa and Dasa AG, the Board of Directors
would decide on the amount of the indemnity on the basis ofa report made and presented by the two independent Directorsof EADS. The amount and the conditions of thisindemniﬁcation will be reported to the shareholders’ meeting.

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DADC
EADS holds 75% of the shares in DADC Luft- und Raumfahrt
Beteiligungs AG (“DADC”) (the other 25% being held by
DCLRH). The share capital of Dornier GmbH is held as to97.1% by DADC and as to 2.9% by the Dornier family.
In shareholders’ meetings, DADC is entitled to more than
95.2% and the Dornier family to less than 4.8% of the voting
rights in Dornier GmbH. DADC and Dornier GmbH haveentered into a control and proﬁt and loss transfer agreement.
A considerable number of shareholders’ resolutions in DornierGmbH require a majority of 100% of the votes cast in theshareholders’ meeting notably resolutions to dissolve theCompany, alterations of the Articles of Association if theyterminate, limit or have an impact on the rights of the minority
shareholders, reduction of share capital, mergers (unlessDornier GmbH is the surviving entity), the transfer ofholdings in other enterprises or the transfer of whole areas ofenterprise activities with the exception of transfers of assets inreturn for shares or as a contribution in kind or to a company
associated with Daimler, which is assumed to be the case if
Daimler controls at least 20% of its share capital. The samerequirement applies with regard to all transfers of shares of
Dornier GmbH held by the Daimler Group (including
associated enterprises) subject to certain exceptions including
the transfer to other Daimler Group companies (including
associated enterprises). Furthermore, the Dornier family
receives a guaranteed dividend from Dornier GmbH (dependingon the nature of the shares) of 8.7% or 15% of the nominal
amount of their shares plus any corporation tax credits.
The guaranteed dividend is indexed. Daimler has guaranteed
the payment of the minimum dividend to the Dornier family
shareholders. In the case of the proﬁt and loss transfer
agreement, which presently exists between DADC and DornierGmbH, the Dornier family shareholders are entitled to receive
payments corresponding at least to the amount which theywould be entitled to in the absence of such proﬁt and losstransfer agreement. Internally DADC has assumed thisobligation.
On 30th November 1988 Daimler and the Dornier family
entered into a separate agreement to strengthen the rights ofDaimler and, simultaneously, to protect the economic interestsof the minority shareholders. The latter can, in particular,
demand that their shares in Dornier GmbH be bought (i) for
cash consideration or (ii) in exchange for Daimler shares or(iii) in exchange for shares in a company in which, or underwhich, Daimler concentrates its aerospace activities by Daimler
or another company associated with Daimler and nominated byDaimler. On 29th March 2000 Daimler, DCLRH, DADC,EADS Deutschland GmbH and Dasa AG entered into anagreement according to which Daimler has the right to demand
from DADC to buy the shares so offered by the Dornierfamily shareholders. Daimler shall reimburse DADC for any
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shares. Moreover, DADC will assume certain other rights andobligations relating to the protection of the interests of theDornier family.
On 29th December 2004, Silvius Dornier and Daimler enteredinto an agreement to transfer all of the remaining shares ofSilvius Dornier in Dornier GmbH (3.58%) to Daimler oranother company of the Daimler Group nominated by Daimler
and to settle all of the rights and potential claims of Silvius
Dornier resulting from or in connection with his shareholding
in Dornier GmbH. None of the other family shareholders
exercised their three month right of ﬁrst refusal to acquire
these shares so that the legal transfer became effective on
17th April 2005. According to the above mentioned agreement
between Daimler, DCLRH, DADC, EADS DeutschlandGmbH and Dasa AG (“Handhabungsvereinbarung”), DADC had
irrevocably offered to Daimler to buy these shares at market
value upon effectiveness of their sale to Daimler, which offer
was accepted by Daimler and the deal being brought to closure
on 3rd May 2005.
Under the terms of the business combination agreements
entered into in the context of the creation of EADS, DCLRH
has undertaken to indemnify Lagardère (for itself and on behalf

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Back to Contentsof each member of the Lagardère Group) and SEPI and shallkeep them indemniﬁed, against (save in respect of any
consequential loss not foreseeable by DCLRH (or any memberof the Daimler Group)) all or any costs, claims, demands,
expenses, losses or liabilities that they (or any of them) may
suffer or incur from the date of the business combinationagreements entered into in the context of the creation of EADS
as a result of all or any of the shareholders of Dornier GmbHother than a member of the Dasa Group obtaining or seeking
to obtain any rights or remedies against Lagardère (or any
member of the Lagardère Group), SEPI, the ContractualPartnership, EADS Participation B.V., Dasa AG, EADS or any
entity contributed by or on behalf of Daimler which is tobecome a member of the Group or any member of the Dasa AG
Group. This indemnity shall also extend to EADS to the extent
that such protection is not provided for in the transfer of theDasa business to EADS.
Other than the relationships between the Company and its
principal shareholders described above in this Section 3.3.2,
there are no potential conﬂicts of interest between the duties to
the Company of the Directors and their respective privateinterests or other duties.

3.3.3 FORM OF SHARESThe shares of EADS are in registered form. The Board of
Directors may decide with respect to all or certain shares, onshares in bearer form.
Shares shall be registered in the shareholders’ register without
the issue of a share certiﬁcate or, should the Board of Directors

so decide, with respect to all or certain shares, with the issue ofa certiﬁcate. Share certiﬁcates shall be issued in such form as
the Board of Directors may determine. Registered shares shallbe numbered in the manner to be determined by the Board of
Directors.

3.3.4 CHANGES IN THE SHAREHOLDING OF THE COMPANY SINCE ITS INCORPORATIONThe Company was founded with an authorised share capital of
500,000 Netherlands Guilders (“NLG”) divided into 500 shareseach having a nominal value of 1,000 NLG, of which 100 were
issued to Aerospatiale Matra on 29th December 1998. Theseshares were transferred to Dasa AG by way of notarised
transfer certiﬁcate on 28th December 1999.
The changes in the shareholding of the Company since its
initial public offering and listing are set forth below (for a
description of the changes in the issued share capital of theCompany since its incorporation, see “3.2.5 Changes in theIssued Share Capital Since Incorporation of the Company”).

Since July 2000, 4,293,746 EADS shares have been distributed
without payment of consideration by the French State tocertain former shareholders of Aerospatiale Matra as a result of
its privatisation in June 1999. The last distribution took placein July 2002.
In addition, in January 2001, the French State and Lagardère
sold on the market all of their EADS shares (respectively
7,500,000 and 16,709,333 EADS shares) other than their
Indirect EADS Shares (and, in the case of the French State,other than the EADS shares to be distributed to former
shareholders of Aerospatiale Matra, see “— 3.3.2 Relationships
with Principal Shareholders — Speciﬁc Rights andEA DS B USINESS, LEG A L A ND CORP ORAT E RESP ONSIBILIT Y

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Undertakings of the French State”) that they held as a result of
the non-exercise of the over-allotment option granted to theunderwriters in the context of the initial public offering
carried out by the Company for the purpose of its listingin July 2000 (including, in the case of Lagardère, those shares
other than its Indirect EADS Shares purchased from the French
Financial Institutions at the end of the exercise period of theover-allotment option).

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4effectively reduced its shareholding in EADS from 22.5% to15%. Pursuant to this agreement, on 13th March 2007, Daimler
has placed its entire 22.5% equity interest in EADS into a newcompany, in which the consortium of investors acquired a one-thirdinterest through a special-purpose entity. This gives theconsortium of investors an economic interest over a 7.5% stakein EADS while the associated voting rights are still exercisedby Daimler. Daimler will continue to control the voting rightsof the entire 22.5% package of EADS shares. Daimler has theoption of dissolving the new structure on 1st July 2010 at theearliest. If the structure is dissolved, Daimler has the righteither to provide the investors with EADS shares or to pay cash
compensation. If EADS shares are provided, the German State,
and the French State and Lagardère through Sogeade, will beentitled to pre-empt such EADS shares to retain the balance
between the German and the French side. This transaction
constitutes a speciﬁc exception to the agreements described in
section 3.3.2 Relationships with Principal Shareholders.

On 8th July 2004, Daimler announced that it had placed on themarket (in the context of a hedging transaction) all of its EADS
shares (22,227,478 EADS shares), representing 2.73% of thecapital and 2.78% of the EADS voting rights at that date,
except for its Indirect EADS Shares.
On 4th April 2006, Daimler and Lagardère announced the entry
into simultaneous transactions aimed at reducing by 7.5% each
their respective shareholdings in EADS. Daimler entered into aforward sale agreement of approximately 61 million EADS
shares with a group of investment banks. Daimler indicatedthat it lent these shares to the banks in anticipation of thesettlement of the forward sale. Lagardère issued mandatoryexchangeable bonds. The EADS shares deliverable at thematurity of the bonds will represent a maximum of 7.5% of theshare capital of EADS, or approximately 61 million EADS
shares and will be delivered in three equal instalments
representing 2.5% of the share capital of EADS in June 2007,
June 2008 and June 2009.

On 26th December 2007, JSC Vneshtorgbankhas sold andtransferred 41,055,530 EADS shares to the Bank forDevelopment and Foreign Economic Affairs(Vnesheconombank). EADS was notiﬁed of such transaction
thereafter.
The breakdown of the issued shares and voting rights of theCompany before exercise of outstanding stock options granted
for the subscription of EADS shares (see”Part 1 – 2.3.3 Long
Terms Incentive Plans”) in respect of the past three years isindicated in the table below:

On 9th February 2007, Daimler reached an agreement with aconsortium of private and public-sector investors by which it
Position as at 31st Dec. 2007

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Position as at 31st Dec. 2006

Position as at 31st Dec. 2005

Shareholders% ofcapital% ofvoting rights

Numberof shares% ofcapital% ofvoting rights

Numberof shares% ofcapital% ofvoting rights

Numberof shares

Dasa AG22.52%

22.64%

183,337,704

22.47%

22.71%

183,337,704

29.89%

30.29%

244,447,704

Sogeade27.53%

27.67%

224,077,704

29.96%

30.27%

244,447,704

29.89%

30.29%

244,447,704

SEPI

5.49%

5.52%

44,690,871

5.48%

5.54%

44,690,871

5.47%

5.53%

44,690,871

Sub-total ContractualPartnership

55.54%

55.83%

452,106,279

57.91%

58.52%

472,476,279

65.25%

66.11%

533,586,279

French State

0.06%

0.06%

502,746

0.06%

0.06%

502,746

0.06%

0.06%

502,746*

Public43.88%

44.11%

357,198,446

40.99%

41.42%

334,448,355

33.39%

33.83%

273,061,396**

Own share buy-back***

0.52%

-

4,207,002

1.04%

-

8,504,144

1.30%

-

10,592,709

Total

100%

100%

814,014,473

100.00%100.00%815,931,524

100.00%100.00%817,743,130(*)

Shares held by the French State following the distribution without payment of consideration of 4,293,746 shares to certain former shareholders of Aerospatiale Matra as a result of its privatisation in June 1999. All
the shares currently held by the French State will have to be sold on the market.
(**) Including EADS employees. As at 31st December 2007, EADS employees hold approximately 1.89% of the share capital and 1.90% of the voting rights.
(***) The EADS shares owned by the Company itself do not carry voting rights.

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To the knowledge of the Company, except as disclosed
previously in “3.3.2 Relationships with Principal
Shareholders”, there are no pledges over the shares of theCompany.
The Company requested a disclosure of the identity of the
beneﬁcial holders of its shares held by identiﬁable holders(“Titres au porteur identifiables”) holding more than
2,000 shares each. The study, which was completed on

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31st December 2007, resulted in the identiﬁcation of 1,786
shareholders holding a total of 319,553,855 EADS shares(including 12,669,088 shares held by Iberclear on behalf of the
Spanish markets and 39,176,722 shares held by Clearstream on
behalf of the German market).
The shareholding structure of the Company is as shown in the
diagram in “3.3.1 Shareholding Structure”.

3.3.5 PERSONS EXERCISING CONTROL OVER THE COMPANY
See “3.3.1 Shareholding Structure” and “3.3.2 Relationships with Principal Shareholders”.

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3.3.6 SIMPLIFIED GROUP STRUCTURE CHART
The following chart illustrates the simpliﬁed organisational
structure of EADS, comprising ﬁve Divisions and the main
business units. For ease of presentation, intermediate holding
companies have been omitted. The shaded boxes represent
Divisions (with respect to the MTA Division) or business units(with respect to Military Air Systems) that are part of the legal
entities referred to in parentheses. The coloured boxes denote
entities forming part of one of EADS’ ﬁve Divisions.

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The non- coloured boxes denote entities that are holding
companies or participations not within one of EADS’ ﬁve
Divisions and do not directly form part of the management
responsibility of a speciﬁed director. Socata, EADS ATR, ATR
GIE, EFW and Sogerma are ‘Other Businesses’ and do not form
part of EADS’ ﬁve Divisions. See “1.1.1 Overview –Organisation of EADS Businesses”.

1(*)
EADS holds its interest in Dassault Aviation through EADS France.
(**) EADS’ interest in Euroﬁghter is jointly held by EADS Deutschland and EADS Casa.
(***) EFW, Sogerma ATR and Socata are allocated to “Other Businesses”.

EADS GROUP MAIN SHAREHOLDINGSGENERAL DESCRIPTION OF THE COMPANY AND ITS SHARE CAPITAL
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3.3.7 PURCHASE BY THE COMPANY OF ITS OWN SHARES
3.3.7.1 Dutch Law and Information on Share
Buy-Back Programmes
Pursuant to Commission Regulation (EC) No. 2273/2003,
the Company is subject to conditions for share buy-backprogrammes and disclosure relating thereto, as described below.
Under Dutch Civil law, the Company may acquire its own
shares, subject to certain provisions of the law of theNetherlands and the Articles of Association, if (i) the
shareholders’ equity less the payment required to make theacquisition does not fall below the sum of paid-up and called
portion of the share capital and any reserves required by thelaw of the Netherlands and (ii) the Company and its
subsidiaries would not thereafter hold or hold in pledge shareswith an aggregate nominal value exceeding one-tenth of theCompany’s issued share capital. Share acquisitions may beeffected by the Board of Directors only if the shareholders ingeneral meeting have authorised the Board of Directors toeffect such repurchases. Such authorisation may apply for a
maximum period of 18 months.
Shares held by the Company do not carry voting rights.
Usufructuaries and pledgees of shares that are held by theCompany are, however, not excluded from their voting rights
in such cases where the right of usufruct or pledge was vested
before the share was held by the Company.
The annual shareholders’ meeting of EADS held on
4th May 2007 authorised the Board of Directors, in a
resolution that renewed the previous authorisation given by
the annual shareholders’ meeting of EADS held on 4th May
2006, for a period of 18 months from the date of suchmeeting, to repurchase shares of the Company, by any means,including derivative products, on any stock exchange orotherwise, as long as, upon such repurchase, the Company
shall not hold more than 10% of the Company’s issued sharecapital and at a price not less than the nominal value and not
more than the higher of the price of the last independent
trade and the highest current independent bid on the trading
venues where the purchase is carried out.
As of July 2007, the Company had purchased in aggregate
8,719,103 of its own shares, 4,568,405 of which werecancelled on July 2007.
As of the date of this document, the Company has purchasedin aggregate 4,434,889 of its own shares.

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A resolution will be submitted to the annual shareholders’meeting of EADS called for 26th May 2008 in order tosupersede and replace the authorisation given by the annual
shareholders’ meeting held on 4th May 2007 and authorise theBoard of Directors, for a new period of 18 months as from thedate of such meeting, to repurchase shares of the Company, by
any means, including derivative products, on any stock
exchange or otherwise, as long as, upon such repurchase, theCompany shall not hold more than 10% of the Company’s
issued share capital and at a price not less than the nominal
value and not more than the higher of the price of the last
independent trade and the highest current independent bid on
the trading venues where the purchase is carried out.

3.3.7.2 French Regulations
As a result of its listing for trading on a regulated market inFrance, the Company is subject to the regulations summarised
below.
Pursuant to Articles 241-1 to 241-6 of the AMF General
Regulations, the purchase by a company of its own shares,
in principle, requires the publication of the description of
the share-buy programme. Such description must be publishedprior to the implementation of the share buy-back programme.
Under Articles 631-1 to 631-4 of the AMF General
Regulations, a company may not trade in its own shares for the
purpose of manipulating the market. Articles 631-5 and 631-6
of the AMF General Regulations also deﬁne the conditions for
a company’s trading in its own shares to be valid.
After purchasing its own shares, the Company is required todisclose on its website speciﬁed information regarding such
purchases within at least seven trading days.
Additionally, the Company must notably report to the AMF,
on at least a monthly basis, all the speciﬁed information
regarding such purchases previously published on its website
and information concerning the cancellation of such
repurchased shares.

3.3.7.3 German Regulations
As a foreign issuer, the Company is not subject to German
rules on repurchasing its own shares, which only apply toGerman issuers.

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GENERAL DESCRIPTION OF THE COMPANY AND ITS SHARE CAPITAL
3.3 | Shareholdings and Voting Rights

1

As a foreign issuer, the Company does not have to comply with
the Spanish rules on trading in its own shares, which only
apply to Spanish issuers.
However, according to the Conduct Rules under the Spanish
Securities Act 24/1988 of 28th July 1988, the Company may
not trade in its own shares for the purpose of manipulating themarket.

−(i)

Date of the general shareholders’ meeting to authorise
the share buy-back programme to be held: 26th May
2008;

●

Number of EADS shares and corresponding percentageof share capital held directly and indirectly by theCompany: 4,434,889 shares representing 0.54% of theshare capital as at the date of this document;●

Intended use of the EADS shares held by theCompany as at the date of this document: the reductionof share capital by cancellation of all or part of the
repurchased shares, in particular to avoid the dilution effectrelated to certain share capital increases for cash (i) reservedor to be reserved for employees of the EADS Group and/or(ii) carried out or to be carried out in the context of theexercise of stock options granted or to be granted to certain
EADS Group employees: 4,434,889 shares.

Purposes of the share buy-back programme to be
implemented by the Company (by order of decreasingpriority, without any effect on the actual order of useof the buy-back authorisation, which shall be
determined according to needs and possibilities):−

The reduction of share capital by cancellation of all orpart of the repurchased shares, in particular to avoid the

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The owning of shares for the performance of obligations
related to:
Debt ﬁnancial instruments convertible into EADS’ shares,●−

The purchase of shares for retention and subsequent use
for exchange or payment in the framework of potential
external growth transactions, and−The liquidity or dynamism of the secondary market of
the EADS shares carried out pursuant to a liquidity
agreement to be entered into with an independent
investment services provider in compliance with thedecision of the AMF dated 22nd March 2005 (as amended)
related to approval of liquidity agreements recognised as
market practices by the AMF.

Procedure:−

Maximum portion of the issued share capital to be
repurchased by the Company: 10%,−

Maximum number of shares to be repurchased by theCompany upon authorisation by the general shareholders’meeting: the portion of 10% would represent
81,402,867 shares of the Company issued share capital
representing 814,028,673 shares as of the date of thisdocument. This maximum portion of 10% would
represent 84,243,099 shares based on the842,430,992 shares which would make up the entire
fully-diluted share capital of the Company after the issueof 28,402,319 shares as a result of the exercise of stock
options, which can still be exercised as of the date of thisdocument, which the Board of Directors decided to grant
to certain EADS Group employees in 2000, 2001, 2002,
2003, 2004, 2005 and 2006,−

Furthermore, the amounts to be paid in consideration forthe purchase of the treasury shares must not, in
accordance with applicable Dutch law, exceed the equity
components which are, per se, repayable or distributable
to the shareholders. “Equity components repayable or
distributable to the shareholders” means the contribution
premiums (in relation to contributions in kind), the issuepremiums (in relation to cash contributions) and the other

For information on shares held by EADS at the date of theentry into force of EC Regulation No. 2273/2003 of
22nd December 2003 on 13th October 2004 and still held by
EADS at the date of this document, see below:●

4(ii) Employee share option programmes or other allocationsof shares to EADS Group employees,

Pursuant to Articles 241-2-I and 241-3-III of the AMF General
Regulations, below is a description of the share buy-backprogramme (“descriptif du programme”) to be implemented by
the Company:●

3

dilution effect related to certain share capital increases forcash (i) reserved or to be reserved for employees of the
EADS Group and/or (ii) carried out or to be carried out inthe context of the exercise of stock options granted or to
be granted to certain EADS Group employees, it being
understood that the repurchased shares shall not carryany voting or dividend rights,

3.3.7.4 Spanish Regulations

3.3.7.5 Description of the Share Buy-Back
Programme to be Authorised by the Annual
General Shareholders’ Meeting to be heldon 26th May 2008

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3.3 | Shareholdings and Voting Rights

1

reserves as set out in the ﬁnancial statements of EADS,
from which the repurchase price for the treasury sharesmust be deducted.

Finally, EADS undertakes to maintain at any time a
sufﬁcient number of shares in public hands to meet thethresholds of Euronext Paris S.A.
−

Shares may be bought or sold at any time (including during
a public offering) to the extent authorised by the stock
exchange regulations and by any means, including, without
limitation, by means of block trades and including the useof options, combinations of derivative ﬁnancial instrumentsor the issue of securities giving rights in any way to EADS
shares within the limits set out in this document.
Moreover, EADS will use call options and swaps that havebeen acquired pursuant to the agreements it had entered into
during the previous share repurchase programme (see below)
and does not exclude the possibility of using a structure oftransaction similar to the one that had been used in theprevious share repurchase programme in order to repurchaseits own shares.
The portion of shares repurchased by means of the use ofblock trades may amount to all the shares to be repurchasedin the context of this programme.
In addition, in the event that derivative ﬁnancial instruments
are used, EADS shall ensure that it does not use mechanisms
which would signiﬁcantly increase the volatility of the sharesin particular in the context of call options,−characteristics of the shares to be repurchased by theCompany upon authorisation by the general shareholders’meeting: shares of EADS, a company listed on Euronext
Paris, on the regulierter Markt of the Frankfurt Stock
Exchange and on the Madrid, Bilbao, Barcelona and Valencia
Stock Exchanges,−

Daimler, Dasa AG, the French State, Lagardère, SEPI,
Sogeade and Sogepa will retain all of their rights, dependingon the circumstances, to sell their available EADS shares to
EADS as part of this share buy-back programme,−

maximum purchase price per share: €70.

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Term of the share buy-back programme: this share
repurchase programme shall be valid until 26th November
2009 inclusive, i.e., the date of expiry of the authorisation
requested from the Annual General Shareholders’ Meetingof 26th May 2008. One of the main aims of this EADS share
repurchase programme is linked to the possible exercise by
EADS Group employees of stock options granted to them in
2000, 2001 and 2002, it is currently intended (i) that such a
programme be continued and renewed so that it expires on
9th August 2012 (8th August 2012 being the latest date uponwhich an employee of the EADS Group may exercise all orpart of his/her stock options granted in 2002) and (ii) that
the EADS annual general meeting be asked to renew theauthorisations until such date.

●

Declaration by the Company of transactions carriedout in relation to its own shares from 4th May 2007 to
the date of this document:

As at 31st December 2007, the respective values of each ofthese EADS’ equity components which are by nature
repayable or distributable to the shareholders were:€7,968,000,000 (contribution premiums), €(1,343,000,000)(other reserves) and € (206,000,000) (treasury shares), i.e.,
an aggregate amount of €6,419,000,000.
EADS reserves the right to implement the share purchaseprogramme to its full extent and undertakes not to exceed,
directly or indirectly, the threshold of 10% of the issued
share capital as well as the amount of €6,419,000,000
throughout the term of the programme.

2

Percentage of share capital held directly and indirectly

0.54%

Number of shares cancelled during the last 24 months

11,225,375

Number of shares held in portfolio

4,434,889

Book value of portfolio€64.30 M

Market value of portfolio€65.95 M

The 1,843,814 EADS shares held by EADS at the date of theentry into force of EC Regulation No. 2273/2003 of
22nd December 2003 on 13th October 2004 and still held by
EADS at the date of this document shall be, in order ofdecreasing priority, either (i) cancelled pursuant to a decision to
be made, according to Dutch law, by an EADS annual general
meeting, to avoid the dilution effect related to certain sharecapital increases for cash carried out, during the ﬁscal year
preceding such annual general meeting, in the context of an
EADS employee share ownership programme and/or upon theexercise of stock options granted to certain EADS Group
employees, or (ii) retained in order to allow the performance of
certain obligations described within the aims of the share
repurchase programme referred to in this document,or (iii) used for exchange or payment in the framework of apotential external growth transaction, or (iv) sold in the context
of a liquidity agreement in compliance with the provisions ofInstruction AMF No. 2005-07.
In addition, it is envisaged that the EADS Annual General
Meeting to be held on 26th May 2008 be requested to decideupon the cancellation of 1,291,381 repurchased shares to avoid
the dilution effect related to the share capital increases for cash
carried out (i) in the context of the EADS employee shareownership plan (ESOP) 2007 (in an amount of 50% of theshares issued in such context) and (ii) upon the exercise in 2007of stock options granted to certain EADS Group employees in
2000, 2001, 2002 and 2003 (in an amount of 100% of theshares issued in such context).

GENERAL DESCRIPTION OF THE COMPANY AND ITS SHARE CAPITAL

3

3.3 | Shareholdings and Voting Rights

1

As of the date of this document, EADS has not entered into
any liquidity agreement with an independent investment
services provider in the context of this share repurchaseprogramme.

2

Number of Shares

Purchases

138,741-

Average Maximum Maturity Date*
Average Price of the Transaction*-

Average Exercise Price*

-

Total
(*)

€2,447,249

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4

In the context of this share repurchase programme, EADS usedderivative ﬁnancial instruments (see below). These derivative
ﬁnancial instruments (call options) have the characteristics set
out in the table below.

Gross cumulative flows
Sales/Transfers(Exercise of Option)

3

Opening positions as of the date of this document
Opening Position on the Purchase

Opening Position on the Sale

Call purchased
8,686,633

Forward sale

Call purchased

Sale

9th August 2012

-

-

-

-

-

-

-

-

See “Part 1 – 2.3.3 Long Term Incentive Plans”.

A share repurchase programme has been implemented since 2004
in order to avoid the dilution effect related to the share capitalincreases in cash which would result from the exercise of thestock options granted to certain employees of the EADS Group in
2000, 2001 and 2002. This share repurchase programme isimplemented according to the neutral delta method as a means ofrepurchase in order to compensate for the dilution effect of suchstock option plans as approved by the Board of Directors on
5th December 2002 and 10th October 2003.
In relation to this repurchase programme, EADS entered into thefollowing agreements: (i) call options agreements allowing EADS toacquire from a top ranking French bank a number of EADS’ shares
equal to the number of shares to be created as a result of theexercise of stock options granted to certain employees of the EADSGroup in 2000, 2001 and 2002, and (ii) swap agreements for theperiodical adjustment of an amount in cash equal to the premiums
paid by EADS to a top ranking French bank pursuant to the call
options agreements, in accordance with the neutral delta method.
Pursuant to these agreements, the call options which EADS
acquired from a top ranking French bank, have the same terms (asto exercise prices, exercise dates, quantities and expiry dates) as
the stock options granted pursuant to the 2000, 2001 and 2002
stock option plans. If the EADS share price increases, the top
ranking French bank must buy the number of EADS shares
which then derived from the increase in price according to thedelta neutral method formula. The total amount paid for theseshares by the top ranking French bank corresponds to the ﬁnancial
charge borne by EADS, as determined from the variable amounts
in the swap agreement. On the other hand, in the case of areduction in the EADS share price, the top ranking French bankmust sell a number of EADS shares which derived from thereduction in the share price according to the neutral delta method
formula. The total amount received by the top ranking Frenchbank for the sale of these shares corresponds to the ﬁnancial
revenues received by EADS as determined from the variable
amounts in the swap contract. Under these conditions, the ﬁnal

amount due as a result of the purchases of the call options is only
known at the time of the payment as determined from the lastvariable amount of the swap contract.
The structure of the transaction aims at covering off the dilution
effect and the price risk for EADS linked to the exercise of stock
options granted to certain EADS Group employees in 2000, 2001
and 2002.
Within this context, EADS uses the internal control procedures
put in place by the Company in order to ensure the reliability ofthe management of the risks linked to these call options andswap. The procedures and tools for reporting have been set up,
the responsibility and powers have been delegated to the Financeand Treasury department of EADS which has responsibility for
all operational decisions and all activities within its competence.
The relevant competent bodies within the organisation must be
made aware of all substantial transactions, activities and risks.
From an accounting standpoint, the call options qualify as equity
instruments, provided that they are physically settled in EADS’
own stock (IAS 32.16). The initial accounting led to a reduction in
cash balances for the premiums paid and in stockholder’s equity
for the same corresponding amount. With each variable payment
made in application of the delta neutral method formula, there isa corresponding impact on cash and on equity to reﬂect the
cumulative premiums paid on the call options. Upon exercise of
the call options, EADS decreases cash by the amount paid (strikeprice times number of options) and deducts treasury shares fromshareholder’s equity. Variations in the market value of the call
options are not recognised in the ﬁnancial statements. All suchtransactions are therefore neutral on the income statement.
The top ranking French bank has contractually undertaken tocomply with the regulations in force in relation to repurchaseprocedures applicable to EADS and in particular the provisions ofArticles 241-1 to 241-6 and 631-1 et seq. of the General
Regulations of the AMF.

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GENERAL DESCRIPTION OF THE COMPANY AND ITS SHARE CAPITAL
3.4 | Dividends

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3.4 Dividends
3.4.1 DIVIDENDS AND CASH DISTRIBUTIONS PAID SINCE THE INCORPORATION
OF THE COMPANY
Cash distributions, paid to the shareholders since the incorporation of the Company, are summarized in the table below:
Financial Year

Date of the cash distribution payment

Gross amount per share

th

2000

27 June 2001

€0.50

2001

28th June 2002

€0.50

2002

12th June 2003

€0.30

th

2003

4 June 2004

€0.40

2004

8th June 2005

€0.50

2005

1st June 2006

€0.65

th

16 May 2007

2006

€0.12

3.4.2 DIVIDEND POLICY OF EADSThe Board of Directors will propose to the EADS Annual
General Meeting to be held on 26th May 2008 a dividend of€0.12 per share in respect of the 2007 ﬁnancial year (dividend
per share for 2006: €0.12). The Group’s sales successes, its
ﬁnancial strengths and its encouraging operational performancein legacy programmes, are reﬂected in the dividend. The
dividend proposal is a gesture of appreciation for shareholders’loyalty and an expression of conﬁdence in the outlook for theyears ahead, despite remaining challenges.

3.4.3 UNCLAIMED DIVIDENDS
Pursuant to Article 31 of the Articles of Association, the claim
for payment of a dividend or other distribution approved by
the general meeting shall lapse ﬁve years after the day on whichsuch claim becomes due and payable. The claim for payment ofinterim dividends shall lapse ﬁve years after the day on which
the claim for payment of the dividend against which theinterim dividend could be distributed becomes due andpayable.

3.4.4 TAXATIONThe statements below represent a broad analysis of the present
Netherlands tax laws. The description is limited to the material
tax implications for a holder of the Company’s shares (the“Shares”) who is not, or is not treated as, a resident of theNetherlands for Netherlands tax purposes (a “Non-Resident
Holder”). Certain categories of holders of the Company’s
shares may be subject to special rules which are not addressed
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EADS BU S I NES S , LEG A L AN D CO R P O R AT E R E S P O N S I B I L I T Y

their tax position in the Netherlands and in their state ofresidence should consult their professional advisors.

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

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GENERAL DESCRIPTION OF THE COMPANY AND ITS SHARE CAPITAL
3.4 | Dividends

1for Netherlands dividend withholding tax purposes, andliquidation proceeds in excess of the average paid-in capital
recognised as capital for Netherlands dividend withholding tax
purposes. Stock dividends paid out of the Company’s paid-inshare premium, recognised as capital for Netherlands dividend
withholding tax purposes, will not be subject to thiswithholding tax.
A Non-Resident Holder of Shares can be eligible for a partial
or complete exemption or refund of all or a portion of theabove withholding tax under a tax convention that is in effectbetween the Netherlands and the Non-Resident Holder’scountry of residence. The Netherlands has concluded such
conventions with the U.S., Canada, Switzerland, Japan, almost
all European Union member states and other countries.

2

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Back to Contentspart of the assets of an enterprise, or (ii) such income or gain
qualiﬁes as income from miscellaneous activities (“belastbaar
resultaat uit overige werkzaamheden”) in the Netherlands as
deﬁned in the Dutch Income Tax Act 2001 (“Wetinkomstenbelasting 2001”).
Generally, a Non-Resident Holder of Shares will not have asubstantial interest in the Company’s share capital, unless the
Non-Resident Holder, alone or together with certain related
persons holds, jointly or severally and directly or indirectly,
Shares in the Company, or a right to acquire Shares in the
Company representing 5% or more of the Company’s total
issued and outstanding share capital or any class thereof. A
deemed substantial interest exists if all or part of a substantial
interest has been or is deemed to have been disposed of withapplication of a roll-over relief.

Withholding Tax on Sale or Other Dispositionsof Shares

Gift or Inheritance Taxes

Payments on the sale or other dispositions of Shares will not be
subject to Netherlands withholding tax, unless the sale orother disposition is, or is deemed to be, made to the Company
or a direct or indirect subsidiary of the Company. A redemption
or sale to the Company or a direct or indirect subsidiary of theCompany will be treated as a dividend and will in principle besubject to the rules set forth in “Withholding Tax on
Dividends” above.

●

The transfer is made by or on behalf of a person who, at thetime of the gift or death, is or is deemed to be resident in
the Netherlands; or●

The Shares are attributable to an enterprise or part thereof
that is either effectively managed in the Netherlands or
carried on through a permanent establishment or apermanent representative in the Netherlands.

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

Such income or gain is attributable to an enterprise or part
thereof which is either effectively managed in the
Netherlands or carried on through a permanentestablishment (“vaste inrichting”) or permanent
representative (“vaste vertegenwoordiger”) in the Netherlands;or●

The Non-Resident Holder is not an individual and the NonResident Holder has, directly or indirectly, a substantial
interest (“aanmerkelijk belang”) or a deemed substantial
interest in the Company and such interest does not form
part of the assets of an enterprise, or●

The Non-Resident Holder is an individual and (i) the NonResident Holder has, directly or indirectly, a substantial
interest (“aanmerkelijk belang”) or a deemed substantial
interest in the Company and such interest does not form

Netherlands gift or inheritance taxes will not be levied on thetransfer of Shares by way of gift, or upon the death of a NonResident Holder, unless:Value-Added Tax
No Netherlands value-added tax is imposed on dividends on
the Shares or on the transfer of the Shares.

Other Taxes and Duties
There is no Dutch registration tax, transfer tax, capital tax,
stamp duty or any other similar tax or duty other than court
fees payable in the Netherlands in respect of or in connection
with the execution, delivery and/or enforcement by legal
proceedings (including any foreign judgment in the courts of
the Netherlands) with respect to the dividends relating to the
Shares or on the transfer of the Shares.

Residence
A Non-Resident Holder will not become resident, or bedeemed to be resident, in the Netherlands solely as a result ofholding a Share or of the execution, performance, delivery and/or enforcement of rights in respect of the Shares.

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GENERAL DESCRIPTION OF THE COMPANY AND ITS SHARE CAPITAL
3.5 | Annual Securities Disclosure Report

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3.5 Annual Securities Disclosure Report
The list of the following announcements comprises the regulatory disclosures relating to price sensitive information which can beaccessed through the Company’s website at www.eads.com:
10th May 2007

Press release – First Quarter 2007 Results

26th July 2007

Press release – First Half 2007 Results
Press release – Third Quarter 2007 Results
Press release – 2007 Annual Resultsth

8 November 2007
11th March 2008

In addition, EADS publishes announcements made in the ordinary course of business which are also available through its website atwww.eads.com.
This section constitutes the annual securities disclosure report in application Article 10 of EC Directive 2003/71.

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Entity Responsible
for the Registration
Document
4.1

4Entity Responsible
for the Registration Document

118

Statement of the Entity Responsible
for the Registration Document

118

4.3

Information Policy

118

4.4

Undertakings of the Company
regarding Information

119

Signiﬁcant Changes

119

4.2

4.5

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ENTITY RESPONSIBLE FOR THE REGISTRATION DOCUMENT
4.3 | Information Policy

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4.1 Entity Responsible for the Registration Document
EADS

4.2 Statement of the Entity Responsible for the Registration
Document
The Company declares that, having taken all reasonable care to ensure that such is the case, the information contained in theRegistration Document is, to the best of the Company’s knowledge, in accordance with the facts and contains no omission likely toaffect its import.
EADS represented by:Louis Gallois
Chief Executive Officer

4.3 Information Policy
Contact details for information:
Ms. Nathalie Errard
Head of Investor Relations and Financial Communication
EADS
37 bd Montmorency
75781 Paris Cedex 16 France
Telephone: +33 1 42 24 28 00
Fax: +33 1 42 24 28 40
E-mail: ir@eads.com
A website, www.eads.com, provides a wide range of
information on the Company, including the Board of Directors
Report. Additionally, for the life of this Registration
Document, copies of EADS’ Articles of Association, theRegistration Document ﬁled in English with, and approved by,
the AFM on 26th April 2006, the Registration Document ﬁled

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in English with, and approved by, the AFM on 25th April 2007,
the Consolidated Financial Statements (IFRS) and the Company
ﬁnancial statements of EADS for the year ended
31st December 2005, the Consolidated Financial Statements(IFRS) and the Company ﬁnancial statements of EADS for theyear ended 31st December 2006, the Consolidated Financial
Statements (IFRS) and the Company ﬁnancial statements of
EADS for the year ended 31st December 2007 together with
reports of the auditors for the years ended 31st December 2005,
31st December 2006 and 31st December 2007 may be inspected
at EADS’ registered ofﬁce at: European Aeronautic Defence andSpace Company EADS N.V., Le Carré, Beechavenue
130-132,1119 PR, Schiphol-Rijk, the Netherlands, Seat
(statutaire zetel): Amsterdam, Tel: +31 20 655 48 00.
Special toll-free hotlines are available to shareholders in France(0 800 01 2001), Germany (00 800 00 02 2002) and Spain(00 800 00 02 2002). An e-mail box is dedicated toshareholders’ messages: ir@eads.com.

ENTITY RESPONSIBLE FOR THE REGISTRATION DOCUMENT

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4.5 | Significant Changes

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4.4 Undertakings of the Company regarding Information
Given the fact that the shares of the Company are listed onEuronext Paris (the “Paris Stock Exchange”), in regulierter
Markt (in the sub-segment Prime Standard) on the Frankfurter
Wertpapierbörse (the “Frankfurt Stock Exchange”) and on
the Madrid, Bilbao, Barcelona and Valencia Stock Exchanges(the “Spanish Stock Exchanges”), the Company is subject tocertain laws and regulations applicable in France, Germany andSpain in relation to information, the main ones of which aresummarised in “3.1.3 Governing Laws”.

4.5 Signiﬁcant Changes
As of the date of this registration document, there has been no signiﬁcant change in EADS’ ﬁnancial or trading position since
31st December 2007.

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Designed & Produced by:

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Back to Contentswww.eads.com
European Aeronautic Defence
and Space Company EADS N.V.
Le Carré, Beechavenue 130 -1321119 PR Schiphol-Rijk
The Netherlands

This document is also available
at the following addresses:
European Aeronautic
Defence and Space Company
EADS N.V.
In France
37, boulevard de Montmorency
75781 Paris cedex 16 – France
In Germany
81663 Munich – Germany
In Spain
Avenida de Aragón 404
28022 Madrid – Spain