To New Levels
Business and Legal Description 2003

BOOK3-791-IFC

29 MARCH 2004

This Reference Document was filed in French with the Autorité des Marchés Financiers on April 1, 2004 pursuant to Règlement No. 98-01 of theCommission des opérations de bourse. It may be used in support of a financial transaction only if it is supplemented by a transaction note approved by the
Autorité des Marchés Financiers.

Warning
The AMF draws the attention of the public to the fact that:
European Aeronautic Defence and Space Company EADS N.V. (“EADS” or the “Company”) is a Dutch company, which is listed in France, Germany andSpain. Given this fact, the applicable regulations with respect to public information and protection of investors, as well as the commitments made by theCompany to securities and market authorities, are described in this Reference Document.

This document contains information which forms an integral part of EADS’ Reference Document filed with the Autorité des Marchés Financierson April 1, 2004. When used as a Reference Document, it must be read in conjunction with the document entitled Financial Statements andCorporate Governance – 2003 (Reference Document Part 1), containing, among other things, the Company’s financial statements and the notes
thereto.

On the cover: wing of Multi-Role Tanker Transport Aircraft (MRTT)BOOK3-791-1
European Aeronautic Defence
and Space Company EADS N.V.
Business andLegal Description — 2003
Reference Document (Part 2)
Financial Year 2003

29 MARCH 2004

Chapter 1 – Information on EADS
3.2.5 Changes in the Issued Share 58
Activities
Capital Since Incorporation
1.1 Presentation of the EADS
2
ofthe Company
Group
1.1.1 Overview
2 3.3 Shareholdings and Voting 58
1.1.2 Airbus
7
Rights
1.1.3 Military Transport Aircraft
16 3.3.1 Shareholding Structure58
1.1.4 Aeronautics
19 3.3.2 Relationships with Principal
60
1.1.5 Defence and Security Systems 24
Shareholders
1.1.6 Space34 3.3.3 Form of Shares
65
1.1.7 Investment
40 3.3.4 Changes in the Shareholding 65
of the Company Since its
1.2 Intellectual Property
41
Incorporation
3.3.5 Persons Exercising Control
66
1.3 Employees
41
over the Company
3.3.6 Simplified Group Structure66
1.4 Research and Development 41
Chart
3.3.7 Purchase by the Company of66
1.5 Risk Factors42
its Own Shares
1.5.1 Market Risks
42
1.5.2 Business-Related Risks
43 3.4 Stock Exchange Information 67
1.5.3 Legal Risks
45
1.5.4 Industrial and Environmental 46 3.5 Dividends
71
Risks
3.5.1 Dividends and Cash71
1.5.5 Insurance
46
Distributions Paid since theIncorporation of the Company
Chapter 2 – Recent Developments 48 3.5.2 Dividend Policy of EADS
71
3.5.3 Unclaimed Dividends
71
Chapter 3 – General Description of 3.5.4 Taxation
71
the Company and its Share Capital
3.1 General Description of the
Chapter 4 – Information Concerning
Company
49 Securities Issued (Not Applicable)
3.1.1 Corporate Name, Seat and49
Registered Office
Chapter 5 – Persons Responsible
3.1.2 Legal Form
49 for the Reference Document and3.1.3 Governing Law – Dutch
49 Persons Responsible for the Audit
Regulationsof the Financial Statements
3.1.4 Date of Incorporation and
52
Duration of the Company
5.1 Persons Responsible for74
3.1.5 Objects of the Company
52
the Reference Document
3.1.6 Commercial and Companies 52
Registry
5.2 Statement of the Persons 74
3.1.7 Inspection of Corporate
52
Responsible for the Reference
Documents
Document
3.1.8 Financial Year52
3.1.9 Allocation and Distribution of 52 5.3 Persons Responsible for
74
Incomethe Audit of the Financial
3.1.10 General Meetings
53
Statements
3.1.11 Disclosure of Holdings
54 5.3.1 Persons Responsible for74
3.1.12 Mandatory Tender Offers
55
the Review of EADS’ Financial
Statements
3.2 General Description of
56 5.3.2 Statement of the Auditors
74
the Share Capital
3.2.1 Modification of Share Capital 56 5.4 Information Policy
76
or Rights Attaching to
theShares
5.5 Undertakings of the76
3.2.2 Issued Share Capital
57
Company Regarding
3.2.3 Authorized Share Capital
57
Information
3.2.4 Securities Granting Access to 57
the Company’s Capital
Reference Document Thematic 77
Index

EADS 2003 Table of contents 1

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Chapter 1
Information on EADS Activities

1.1 Presentation of the EADS Group
1.1.1 Overview
Except where stipulated otherwise, all the data provided below
were prepared on the basis of information from the Company.
With consolidated revenues of € 30.1 billion in 2003, 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 manufacturersof commercial aircraft, civil helicopters, commercial spacelaunch vehicles and missiles, and a leading supplier of military
aircraft, satellites and defence electronics. In 2003, it generated
approximately 76% of its total revenues in the civil sector and
24% in the military sector.
2003 Highlights
In 2003, EADS continued to pursue its strategic lines ofdevelopment and the rebalancing of its business activities in favourof defence. The rebalancing is aimed at reducing the impact on
EADS of business cycles in the civil aircraft market, as well as at
reinforcing the successful dynamics of EADS’ young portfolio of
well-targeted products through sustained R&D efforts. The record
order book of € 179.3 billion at the end of the year constitutes aconsiderable asset for EADS. 2003 was a year of across the board
growth and included the signature of the € 19.7 billion A400M
contract and the Paradigm/Skynet-5 contracts. In addition, 2003
was the first year since Airbus’ creation that it surpassed Boeing interms of both deliveries and order book. In 2003 the Airbus A380
programme, a source of long-term growth for sales andprofitability, moved into the component and major subassembly
production phase. 34 new orders for the A380 in 2003, bringing
the total order backlog to 129 aircraft, highlight the continued
attractiveness of this product.
The economic climate in 2003 continued to be a difficult one,with concerns over the SARS virus contributing to disruptions in
the travel market and exacerbating the terrorism-related impact
on demand for air travel. Operational measures implemented byairlines in response to decreasing passenger numbers andcontinuing market uncertainties created downward pressure onorders and deliveries in 2003. Notwithstanding thesechallenges, EADS met and exceeded its planned 2003 delivery
goal of 300 aircraft at Airbus. In 2003, EADS implemented a€ 1.5 billion cost-reduction plan at Airbus to address
uncertainties over the evolution of the Euro-U.S. dollar
exchange rate and its impact on future profitability.
Restructuring activities within EADS Space continued and were
reinforced in 2003, aimed at breaking even in 2004.
Owing to active cash management policies, an ongoing focus on
managing sales financing exposure and the weakening U.S.
dollar’s impact on the cost of its U.S. dollar-denominated debt,
EADS ended the year with positive net cash of € 3.1 billion.
Strategy
In order to maximise value for its shareholders and to balance its
portfolio, the management of EADS (the “Management”)
2 EADS 2003 Chapter 1 Information on EADS Activities

intends to position EADS as a leading company in major global
aerospace and defence markets. The following elements
constitute the four stepping stones of the EADS strategy:• Continue to strengthen EADS’ competitive position
EADS intends to further position itself as a global company
with a highly visible domestic presence in all major
aerospace and defence markets. While EADS already has a
global presence in such markets as commercial aircraft
through Airbus, helicopters through Eurocopter, missiles
through MBDA and LFK and commercial space launchers
through EADS Space Transportation, it is seeking tostrengthen or to capitalise on its existing line of platforms
and systems to meet the global demand for defence-related
products such as military helicopters, combat and transport
aircraft, defence electronics systems and securecommunications.
Supported by programmes such as the A400M militarytransport aircraft, Eurofighter, Tiger helicopter, the Meteor
and Aster missile programmes and Skynet 5/Paradigm
secure communications network, and based on its year-end
2003 defence backlog of approximately € 45.7 billion, EADS
is targeting € 10 billion in defence-related sales by 2005 inan effort to gain ground against its key competitors in the
defence and space sectors.
• Enlarge EADS’ global reach
EADS is a leading actor in its four home countries: France,
Germany, Spain and the U.K. Here, and throughout Europe,
EADS’ main challenge is to make the most efficient use of its
customers’ defence budgets. The Company aims toharmonise procurement efforts and to participate in researchand technology efforts to narrow the capability gap between
the U.S. and Europe.
EADS will vigorously pursue opportunities to establish local
industrial footholds and technological co-operations in key
export markets. The Company intends to make use of its
established reputation as a technology leader and its
growing credibility as a systems integrator to support its
regional commercial endeavours.
In the U.K., EADS has approximately 12,000 employees, and
it is exploring opportunities to increase its local presence
through acquisitions and strategic partnerships in the
defence sector. EADS intends to strengthen its position as adefence prime contractor in the U.K. whose defence
procurement budget is the fastest growing in Europe. To thisend, EADS is leading key projects such as Paradigm/Skynet 5,
the future strategic tanker aircraft (“FSTA”) and groundbased air defence (“GBAD”).
In the U.S., EADS seeks to become a valued corporate
citizen, with a view towards gaining a foothold in the U.S.
defence procurement process. EADS continues to expand

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its overall footprint in the U.S., with the opening of an Airbus
design centre in Kansas in 2002 and a Eurocopter facility in
Mississippi in 2003. EADS’ strengths in technology andmarket reach have also enabled the Company to develop
strategic partnerships with the principal actors in the U.S.
aerospace and defence market. Opportunities in ballistic
missile defence, mission aircraft and intelligence, surveillance
and reconnaissance (“ISR”) systems, approached jointly withsuch partners as Boeing, Lockheed Martin, Northrop
Grumman and Raytheon, provide attractive avenues for
growth in the U.S.
Management sees Asia, and in particular China, as a richmarket for future growth and, in 2003, took its first step into
the Chinese market through its stake in AviChina, localising
Eurocopter manufacturing in Beijing. In Japan, EADS now
has 15 Japanese partners on the A380 programme, with
Bridgestone Corporation and Mitsubishi Rayon Co. recently
joining the programme.
In Russia, EADS intends to participate actively in ongoing
industrial restructuring through cooperation with local
partners and through the consolidation of its existing
operations in a new EADS Russia company under the aegis
of EADS International.
• Exploit cross-business synergies by leveraging EADS’
broad group portfolio of products and services
By combining a wide range of products and expertise intohigh value-added, integrated systems, EADS will seek toenter new markets, maximise margins and offer strongly
differentiated solutions that are tailored to increasingly
complex customer needs in both the civil and defence
sectors. The ongoing FSTA tanker programme and A400M
military transport aircraft programme illustrate EADS’ ability
to combine know-how and products in the development of
incremental businesses. Furthermore, a broad portfolio of
products and services covering both the private andgovernmental sectors enables EADS to mitigate the effects
of its cyclical commercial aviation business through growth ingovernmental business.
The breadth of EADS’ activities and technologies alsoenables it to benefit from group-wide efforts in R&D andsourcing, which support EADS’ competitiveness and costefficiency against the background of the budgetaryconditions favourable to its U.S. competitors.
• Develop EADS’ role as a systems and solutions provider
The transformation of U.S. and European defence forces
and public safety agencies is driving demand for network
enabled capabilities in areas such as extended air defence,
C4ISR, unmanned aerial vehicles and military space, where
EADS seeks to be a lead system integrator and service
solutions provider. EADS, as the sole European group withcombined control of both space and defence businesses,

possesses a vital combination for technological superiority,and is therefore uniquely positioned to capitalise on thesenew demands by offering innovative systems-of-systems
solution to meet its customers needs.
In the civil sector, EADS seeks to draw on its technologicalbase to offer complex commercial systems such as air
traffic management and obstacle warning systems forhelicopters.
In addition to systems, EADS is committed to extending its
programme leadership through the provision of service
solutions, including outsourcing, to defence forces andpublic safety agencies, such as the secure communication
services of Paradigm and the in-flight refuelling capabilities
under the FSTA program.
Organization of EADS Businesses
EADS businesses fall under five divisions: (1) Airbus, (2) MilitaryTransport Aircraft, (3) Aeronautics, (4) Defence and Security
Systems and (5) Space. The chart at paragraph 3.3.6 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 up to the end of 2003, Airbus has received
4,886 orders for aircraft from 186 customers worldwide. Its
market share of annual deliveries worldwide has grown from
15% in 1990 to 52% in 2003, surpassing its rival Boeing for the
first time. At December 31, 2003, its backlog of orders(1,454 aircraft) stood at 52% of total worldwide backlog. Afteraccounting for cancellations, net order intake for 2003 was 254
aircraft. In 2003, the Airbus division of EADS earned revenuesof € 19 billion, representing 61% of EADS total revenues. See“1.1.2 Airbus”.
Military Transport Aircraft
The Military Transport Aircraft Division (the “MTA Division”)
manufactures and sells light and medium military transport
aircraft and is responsible for the development of the European
heavy military transport A400M project. In addition, the MTA
Division produces and sells mission aircraft, which are derived
from existing platforms and dedicated to specialised militarytasks such as maritime surveillance, antisubmarine warfare andin-flight refuelling capabilities. The MTA Division also designs
and manufactures aerostructure elements. The MTA Division
earned consolidated revenues of € 0.9 million accounting for 3%
of EADS’ total revenues for 2003. The € 19.7 billion contract tomanufacture and deliver the A400M was signed in 2003,
contributing to significant future revenue growth for EADS. See“1.1.3 Military Transport Aircraft”.
Aeronautics
The Aeronautics Division groups together a number of civil andmilitary aviation-related businesses, including helicopters,
EADS 2003 Chapter 1 Information on EADS Activities 3

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29 MARCH 2004

regional and general aviation aircraft and aircraft conversion andmaintenance. The Aeronautics Division is also involved in the
manufacturing of aerostructures for Airbus. Management views
the mix of young and mature civil and military programmes andservices as an effective means of assuring consistent positive
results in markets subject to cyclical or fluctuating demand. For
2003, the Aeronautics Division earned consolidated revenues of€ 3.8 billion representing 12% of EADS’ total revenues. See“1.1.4 Aeronautics”.
Defence and Security Systems
The Defence and Security Systems Division (the “DS Division”)
is active in the field of integrated systems including missile
systems, combat aircraft, defence electronics, militarycommunications and services. Based on 2003 revenues, EADS’
subsidiary MBDA is the largest manufacturer of tactical missile
systems in Europe and the second largest in the world. Its
military aircraft business unit, which was transferred from the
Aeronautics division in 2003, is a leading partner in theEurofighter consortium. EADS is the third largest supplier ofdefence electronics in Europe and plays a significant role in the
secure and encrypted military communications market. On a
consolidated basis, the DS Division earned revenues of € 5.2
billion for 2003, representing 16% of EADS’ total revenues. See“1.1.5 Defence and Security Systems”.

Space
EADS is the third largest space systems manufacturing company inthe world after Boeing and Lockheed Martin and the leading
European supplier of satellites, orbital infrastructures and launchers.
The Space Division designs, develops and manufactures satellites,
orbital infrastructures and launchers largely through its subsidiaries
EADS Astrium and EADS Space Transportation (“EADS ST”), andprovides space services through its EADS Space Services
subsidiary. The Space Division also provides launch services,
through its shareholdings in Arianespace, Starsem and Eurockot, as
well as services related to telecommunications and earth
observation satellites, through dedicated companies, such as
Paradigm. For 2003, the consolidated revenues of the EADS Space
Division amounted to € 2.4 billion, or 8% of EADS’ total
consolidated revenues. See “1.1.6 Space”.
Investment
Among its significant investments, EADS holds a 46.03% stake in
Dassault Aviation, a major participant in the world market for
military jet aircraft and business jets. See “1.1.7 Investments”.
Summary Financial and Operating Data
The following tables provide summary financial and operating
data for EADS for the years ended December 31, 2003 andDecember 31, 2002.

Consolidated Revenues for the Years Ended
December 31, 2003 and 2002 by Division
Year Ended
December 31, 2003

Year Ended
December 31, 2002

Amountin billionsof € Percentage(1)Amountin billionsof € Percentage(1)Airbus

19.0

61

19.5

63

Military Transport Aircraft

0.9

3

0.5

2

Aeronautics

3.8

12

3.8

12

Defence and Security Systems

5.2

16

4.8

16

2.4

8

2.2

7

31.3

100

30.8

100

Space

(2)

Total Divisional Revenues(3)

Headquarters/Eliminations

(1.2)

(0.9)

Total Consolidated Revenues

30.1

29.9

(1)

Percentage of total divisional revenues before headquarters/eliminations.
(2)Astrium consolidated at 100% for 2003; proportionally consolidated at 75% for 2002.
(3)
Includes inter alia intercompany eliminations and headquarters sales.

4 EADS 2003 Chapter 1 Information on EADS Activities

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Consolidated Revenues by Geographical Area for theYears Ended December 31, 2003 and 2002
Year Ended
December 31, 2003

Year Ended
December 31, 2002

Amountin billionsof € Percentage(1)Amountin billionsof € Percentage(1)Europe

14.0

47

14.4

48

North America

8.1

27

10.6

35

Asia/Pacific

4.0

13

2.0

7

Rest of the World

4.0

13

2.9

10

Total

30.1

100

29.9

100

(1)

Percentage of total revenues after eliminations.

Consolidated Orders for the Years Ended
December 31, 2003 and 2002
Year Ended
December 31, 2003

Year Ended
December 31, 2002

Amountin billionsof € Percentage(3)Amountin billionsof € Percentage(3)Orders booked:(1)Airbus(2)

39.9

52

19.7

62

Military Transport Aircraft

20.3

27

0.4

1

Aeronautics

3.7

5

5.1

16

Defence and Security Systems

6.3

8

4.4

14

Space

6.1

8

2.1

7

76.3

100

31.7

100

Total Divisional Orders(2)

Headquarters/Eliminations(15.1)

(0.8)

Total

61.2

30.9

(1)

Without options.
(2)
Based on catalogue prices.
(3)
Before headquarters/eliminations.

EADS 2003 Chapter 1 Information on EADS Activities 5

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29 MARCH 2004

Consolidated Backlog for the Years Ended
December 31, 2003 and 2002(6)Year Ended
December 31, 2003

Year Ended
December 31, 2002

Amountin billionsof € Percentage(5)Amountin billionsof € Percentage(5)Backlog:(1)Airbus(2)

141.8

73

140.9

84

20.0

11

0.6

0

9.8

5

10.1

6

14.3

7

13.5

8

7.9

4

3.9

2

Total Divisional Backlog

193.8

100

169.1

100

Headquarters/Eliminations(14.5)

(0.8)

Total

179.3

168.3

Military Transport Aircraft
Aeronautics(3)

Defence & Security Systems
Space

(3)

(4)

(1)

Without options.
Based on catalogue prices.
(3)
In 2003, the Military Aircraft business unit was transferred from the Aeronautics Division to the DS Division, with a corresponding impact on the backlog of eachdivision of € 3.2 billion. 2002 figures have been restated to be comparable with 2003.
(4)
Astrium consolidated at 100% in 2003; proportionally consolidated at 75% in 2002 and 2001.
(5)
Before headquarters/eliminations.
(6)
For a discussion on the calculation of backlog, see “Part 1/1.1.3 Measurement of Management’s Performance – Order Backlog”.
(2)

Relationship Between EADS N.V. and the EADS GroupEADS N.V. itself does not engage in the core aerospace, defenseor space business of its group (the "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 overallmanagement of the group. In particular, finance activities
pursued by EADS N.V. are in support of the business activities
and strategy of the Group. In connection therewith, EADS N.V.
provides or procures the provision of services to the subsidiariesof the Group. General management service agreements havebeen put in place with the subsidiaries and services are invoiced
on a cost plus basis.

6 EADS 2003 Chapter 1 Information on EADS Activities

For management purposes, EADS N.V. acts through its Board of
Directors, Executive Committee, and Chief Executive Officers inaccordance 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.
To the best knowledge of Management, there are no pledges
over any of the assets of EADS N.V. As a group of companies
with consolidated revenues in 2003 of € 30.1 billion, EADS'
subsidiaries have granted numerous pledges and other suretiesof their assets in connection with their operations.

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1.1.2 Airbus
Introduction and Overview
Airbus is one of the world’s two leading suppliers of commercial
aircraft of more than 100 seats. Its market share of annual
deliveries worldwide has grown from 15% in 1990 to 52% in 2003.
At December 31, 2003, its backlog of orders (1,454 aircraft) stoodat 52% of total worldwide backlog. After accounting forcancellations, net order intake for 2003 was 254 aircraft. In 2003,
the Airbus division of EADS earned revenues of € 19 billion,
representing 61% of EADS total revenues.
Based on deliveries in 2003, Airbus was the largest supplier ofcommercial aircraft in the world, surpassing its rival Boeing forthe first time. Since it was founded in 1970 up to the end of
December 31, 2003, Airbus has received orders for 4,886
aircraft from 186 customers around the world.
Several factors have contributed to the success of Airbus: its
portfolio of modern aircraft, its consistent technologicalinnovation, its stable pool of highly skilled employees and its
concept of aircraft “families” that offer customers cost savings increw training, maintenance and supply for their fleets ofdifferent sized Airbus aircraft. In addition, Management believes
that the international composition of Airbus represents acompetitive advantage in the global marketplace.
The Airbus group is jointly owned by EADS (80%) and BAE
SYSTEMS (20%); the Head of EADS’ Airbus Division acts asAirbus’ President and Chief Executive Officer, echoing EADS’
effective management control over its operations.
Strategy
The paramount strategic goal of Airbus is to deliver first-rate
economic returns in a sustainable manner by continuing todevelop a superior family of products and commanding half of
the world commercial aircraft market over the long term. To
achieve this end, Airbus is actively:• Completing the most comprehensive line of products
targeted to customer needs
This entails (i) a major effort to develop, test, manufacture anddeliver the A380 within budget by early 2006, (ii) the gradualextension of relevant freighter applications across the range of
Airbus aircraft, and (iii) the continuous maintenance of existingmodels’ competitive edge in their respective markets.
• Focusing on key geographic markets
Airbus is seeking to penetrate certain key markets such as
Japan, China and Russia, and to consolidate its position in the
difficult U.S. airline market.
• Expanding its offering of services to customers
Expansion of its offering of customer services will enableAirbus to remain at the forefront of its industry by (i) designing
answers to customers’ evolving needs, and (ii) ensuring
optimal Airbus placement along the industry’s value chain.

• Perfecting its industrial operations
Management is focused on capturing the benefits ofintegration, to enhance its response to changes in volume
and mix, and to carry out A380 related investments with astrong focus on flexibility and efficiency.
MarketCyclicality and Market Drivers
The main factors affecting demand in the aircraft market include
passenger demand for air travel, national and international
regulation (and deregulation), and the rate of replacement andobsolescence of existing fleets. The performance, competitive
posture and strategy of airlines, cargo operators and leasing
companies, wars, political unrest and extraordinary events may
act as a catalyst, precipitate changes in demand and lead toshort term market imbalances.
2003 Airline Market Highlights. The market downturn, whichstarted in 2001, driven by weakening world economies andexacerbated by the terrorist attacks on September 11, 2001,
the war in Iraq and the outbreak of SARS in Asia was thefocus of the industry. Passenger demand in 2003 remained
slack as compared to pre-downturn traffic (the year 2000),with U.S. domestic, trans-Atlantic and trans-Pacific traffic
flows particularly negatively affected. As well as overall
demand decreasing as a result of the factors mentioned
above, the volume of higher yield business passengers
remained low at the same time such passengers remained
price sensitive. The resulting drop in yields combined withhigher costs, primarily higher labour costs over recent years,
to produce the financial difficulties for airlines seen in 2003.
By contrast, no-frills/low-cost carriers have emerged as asignificant sector within the total market. They havedeveloped in the U.S. and Europe by following a businessmodel that leverages the benefits of minimising costs while
stimulating demand by offering low fares to and from shortand medium range, often under-served, destinations. Thisbusiness model, which proved to be particularly successful in
the U.S. following market deregulation, is now being adopted
by a growing number of airlines in Europe, resulting inincreased demand and increasing market share for low-costcarriers. Airbus’ family of modern single aisle aircraft based on
the A320 is well positioned to provide the operating cost baseand flexibility demanded by this segment of the market.
Airbus already has a strong presence in the U.S. no-frills/lowcost market with JetBlue, America West and Frontier.
The impact of the market downturn differs depending upon theairline business model, travel segment, and geography. In 2003,
many aircraft operators continued to adapt and remove excess
capacity from markets by eliminating routes, reducing
schedules and withdrawing older and less efficient aircraft. One
outcome of such activity has been that the number of stored
aircraft, many of which are older, less efficient and more
expensive to maintain and operate than today’s modern
EADS 2003 Chapter 1 Information on EADS Activities 7

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generation of aircraft, totalled approximately 2,200 at the end of
2003. A large percentage of these older-generation aircraft are
not expected to return to revenue-generating service; rather,
they are expected to be replaced by newer types such as thosein the Airbus product line. By constraining excess capacity,
airlines also maximise load factors, which contributes to overall
cost reduction efforts. Such cost reduction by the airlines has
been a core part of their strategies during the current
downturn, especially as additional costs arising from newly
imposed security requirements as well as from higher fuelprices (at the end of 2003), added to the airlines’ financial
burden. The continuing financial hardship for the airlines,
particularly in the U.S. and in those other markets worst
affected by the downturn throughout 2003, resulted in someairline bankruptcies and prompted negotiations with aircraft
manufacturers to cancel or postpone certain contracted
deliveries. While this initially led to a downward revision of
expected deliveries by Airbus and Boeing, Airbus surpassed its
stated 2003 aircraft delivery target of 300 aircraft with recordeddeliveries of 305 aircraft by year end.
Overall Growth. The market for passenger jetliners depends
primarily on the demand for air travel, which is itself primarily
driven by economic or GDP growth, fare levels anddemographic 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 averageannual growth rate of 7.9% for the period. In 2002, Airbus
projected that air travel would grow at 4.7% per annum during
the period 2000-2020, which although slightly lower, isconsistent with similar studies provided by Boeing.
Cyclicality. Although those in the industry feel that long-term
growth in air travel is secure, the market for aircraft has provento be cyclical, due to the volatility of airline profitability andcycles of the world economy. When cyclical downturns haveoccurred in the past, aircraft manufacturers have typicallyexperienced decreases in aircraft orders and lower deliveries
followed by a period of sustained order and delivery activity.
After the last downturn at the time of the Gulf War in 1991, thisperiod of reduced orders and deliveries was followed by six
years of strong activity, including the year 2000, which saw an
industry record for new passenger jet aircraft orders. Despite
the current business cycle, Airbus deliveries have been stable orhave grown since 1994 due to its increasing customer base,market share and expanding product portfolio.
Management believes that it will be able to mitigate the impactof the current downturn by effective management, including
outsourcing decisions. See “–Production – Adaptability to
Changes in Demand”. In previous downturns, despite thedecline in the aggregate market for aircraft, Airbus was able tocapture a larger share of the reduced market, therebycushioning the impact on its operations. Furthermore, adecrease in orders and backlog need not imply a reduction in
immediate deliveries of the same magnitude.
8 EADS 2003 Chapter 1 Information on EADS Activities

Regulation/Deregulation. National and international regulation(and deregulation) of international air services and majordomestic air travel markets affect demand for passenger
jetliners. In 1978, the United States undertook the deregulationof its domestic air transportation system. Other regions havefollowed this model, notably Europe since 1985.
The Federal Aviation Authority (“FAA”) Stage 3 anti-noise
regulations requiring operators to replace many older aircraft by
the end of 1999 also had an impact on demand, resulting in asignificant increase in North American orders in the years
leading up to and following implementation of the regulations.
Airline Network Development: Hubs. As a consequence of
deregulation policies, major airlines are constantly adapting
their fleet, network and commercial strategies. This adaptationis possible because of the availability of new aircraft capable ofmeeting customer requirements in terms of cost andperformance. In response to the price demands of passengers
and competition of new no frills/low cost carriers, major airlines
have organised their operations around strategically located“hub” airports enabling them to link more cities at lower fares.
This affects demand as hubs permit fleet standardisation
around both smaller aircraft types for the short, thin and highfrequency routes feeding the hubs (between hubs and spokes)
and larger aircraft for longer and higher density routes between
hubs (hub-to-hub). As a result, worldwide deregulation has
contributed to the diversification of airline strategies, which initself has resulted in airlines requiring a wider range of aircraft to
implement such strategies.
Fragmentation. The term “fragmentation” describes markets inwhich point-to-point services replace or take a share of
traditional hub and spoke/connection traffic. Fragmentation ofthis type has primarily occurred on short and medium range
domestic U.S. routes, in response to competition and as a means
for airlines to differentiate their services from one another.
The trend towards fragmentation on long and very long haulroutes, driven by the development of new routes between
secondary cities, will be facilitated by the availability of more
modern, efficient aircraft. In the trans-Atlantic market, thedevelopment of new non-stop services between secondary
cities is expected to drive demand for intermediate wide bodyaircraft such as the A330. The concentration of many Asian
country populations into fewer large cities translates into
reduced but still significant demand for new routes connecting
secondary cities in the Pacific market.
Airbus has recognised and responded to this trend towards
fragmentation through the development of the very long range
A340-500/600 aircraft. These aircraft provide increased
operational profitability not only in markets where demand forpoint-to-point service already exists, but also in markets thatwere not previously serviceable by older types of aircraft due torange/cost limitations.

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29 MARCH 2004

Alliances. The development of world airline alliances is reinforcing
these strategies. According to data from Airclaims, a U.K.-based
aviation industry consultancy, half of the world’s jetliner fleet ofover 100 seats was operated by 22 airlines as of December 2002.
In the 1990s, the major airlines began to enter into alliances thatgive each alliance member access to the other alliance members’
hubs and routings, allowing airlines to concentrate their hub
investments while extending their product offering.

the Asia-Pacific region uses a greater proportion of twin aisle
aircraft, as populations tend to be more concentrated in fewer
large urban centres than in the U.S. This distinction iscompounded by the fact that many of the region’s major
airports limit the number of flights either due to environmental
concerns or to infrastructure constraints limiting the ability tofurther increase flight frequency. These constraints necessitate
higher average aircraft seating capacity per flight.

Governmental Funding. A 1992 bilateral agreement between theEuropean Union and the United States provides for ceilings on
reimbursable launch investments (typically used by European
governments) of 33% of the total development costs of newlarge civil aircraft programmes. It also sets a ceiling at 3% ofindustry revenues for indirect support in relation to thedevelopment or production of large civil aircraft (typically the
Department of Defence and NASA mechanisms used in the
United States). This bilateral agreement has provided a levelplaying field for government support and reflects the needs ofboth Europe and the United States.

According to manufacturers’ published figures, a total of 586
new aircraft with more than 100 seats were delivered in 2003.
Of these aircraft, 74% were single aisle, while 26% were twin
aisle aircraft.

Market Structure and Competition
Market Segments. Currently, Airbus competes in each of thethree principal market segments. “Single aisle” aircraft, suchas the A320 Family, have 100-210 seats in two rows divided
by one aisle and are used principally for short-range andmedium-range routes. “Twin aisle” or “wide body” aircraft,such as the A300/A310 and A330/A340 Families, have awider fuselage with more than 210 seats in three rows divided
by two aisles. They are used, in the case of the A300/A310
Family, on short range and medium-range routes, and in thecase of the A330/A340 Family, on long-range routes. “Verylarge aircraft”, such as the A380 Family, are designed to carry
more than 400 passengers non-stop over very long-range
routes and in superior comfort. Freight aircraft, which form afourth, related segment, are often converted ex-passenger
aircraft. See “1.1.4 Aeronautics – Aircraft Conversion andTechnical Services.” In addition, the A300-600F has been a
successful all-new freight aircraft with increasing popularity
among major express courier providers and airlines, such as
Federal Express, UPS and Cathay Pacific. Airbus also
competes in the corporate, VIP business jet market with theA319-related Corporate Jetliner, which has proved popular asa corporate shuttle and in government/VIP roles.

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
manufacturers’ published figures, in 2003 Airbus and Boeing,respectively, accounted for 52% and 48% of total deliveries, 54%
and 46% of total gross orders, and 57% and 43% of the total yearend backlog.

Sales to leasing companies constitute a separate market
sector accounting for approximately 27% of aircraft deliveriesin 2003, since leased aircraft are frequently operated in adifferent region from that of the leasing company’s homejurisdiction.

The 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 the establishedsuppliers in the foreseeable future.
Customers
As of December 31, 2003, Airbus had approximately 186
customers, 3,432 Airbus aircraft had been delivered to operators
worldwide since the creation of Airbus, and 1,454 aircraft wereon order. The table below shows Airbus most significant grossfirm orders, by number of aircraft, for the year 2003.
Customer

Firm
Orders(1)According to a study conducted by Airbus a total of 16,241
aircraft with more than 100 seats were in service during
December 2003.

Jet Blue

67

Emirates

41

Qatar Airways

22

The high proportion of single aisle aircraft 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 and Europe,

CASC

30

Frontier

15

China Airlines

14(1) Options are not included in orders booked or year-end backlog.
Source: Airbus

EADS 2003 Chapter 1 Information on EADS Activities 9

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29 MARCH 2004

Organisation of Airbus
Integration of the Airbus Activities
On July 11, 2001, EADS and BAE SYSTEMS placed their Airbusrelated design, engineering, manufacturing and production
activities located in France, Germany, Spain and the United
Kingdom, and all their membership rights in GIE Airbus
Industrie under the common control of Airbus S.A.S., andunder the day-to-day control of a single management team.
Airbus’ management team is also responsible for marketing andcustomer support. The rationale was that the Airbus business,having outgrown the consortium groupement d’intérêt
économique (“GIE”) structure – which was well adapted topooling skills and resources in order to gain market position –needed a new corporate organisation that would centralisemanagement control over every aspect of the business.
EADS has an 80% interest in Airbus S.A.S., and has effective
management control over its operations, while BAE SYSTEMS,
sharing the remaining 20%, enjoys specific minority rights.
Certain strategic decisions, such as acquisitions and divestitures
valued at more than U.S. $500 million, approval of the threeyear Business Plan (but not the annual budgets or the launch of
new programmes) as well as certain actions which would dilute
the ownership interest of BAE SYSTEMS in Airbus S.A.S.,
require unanimous agreement.
BAE SYSTEMS has been granted an option to sell its Airbus
S.A.S. shares at market value to EADS, either for cash
consideration or in exchange for EADS shares, as determined by
EADS. However, BAE SYSTEMS may elect to receive cash where
the issue of EADS shares would require prior burdensome
regulatory authorisations impacting significantly the allocation of
the EADS shares. During the initial three-year period, this put
option can only be exercised in the event that BAE SYSTEMS
disagrees with certain strategic decisions; thereafter, it isexercisable without cause. EADS benefits from a call option atmarket value on the Airbus S.A.S. shares in case of a change ofcontrol of BAE SYSTEMS in certain circumstances. Likewise,
under certain circumstances, BAE SYSTEMS can require EADS topurchase its Airbus S.A.S. shares at market value in the event ofa change in control of BAE SYSTEMS or EADS.
Beginning with the 2003 financial year, BAE SYSTEMS became
entitled to receive enhanced dividends, subject to deliveries of
A340-500/600 aircraft exceeding an agreed target rate. The
enhanced dividends, which are indexed to Airbus future growth,
could represent a non-indexed value from zero up to a cap of€ 237.5 million (based on current economic conditions) over thefollowing ten years.
Shareholder and strategic matters relating to Airbus S.A.S. aredecided by a Shareholder Committee, to which EADS has
appointed five members and BAE SYSTEMS two members. Mr.
Rainer Hertrich, CEO of EADS, is the chairman of the
Shareholder Committee. Mr. Noël Forgeard, as President andCEO of Airbus S.A.S., is responsible for the operational
10 EADS 2003 Chapter 1 Information on EADS Activities

management of the Airbus business, together with the Executive
Committee, consisting of himself and up to nine other members,
two of which are members proposed by BAE SYSTEMS, all ofthem agreed by the President and CEO of Airbus S.A.S. andappointed by the Shareholder Committee.
As a consequence of its majority interest in Airbus S.A.S. and of
the control provided by the shareholders agreement related to
Airbus S.A.S., EADS consolidates 100% of the integrated groupin its financial statements as from January 1, 2001.
Products and Services
Technological Breakthroughs
Technological innovation has been at the core of Airbus’ strategy
since its creation. Many of the innovations that provided a
distinct competitive advantage have subsequently become
standard in the aircraft industry.
• A300 – The A300 was the world’s first twin-engine twin aisle
commercial aircraft. This feature gave it a distinctive
advantage in terms of fuel burn and maintenance costs overits three-engine and four-engine competitors for the shortand medium range. The A300 B4, a derivative of the original
A300, was the first twin aisle commercial aircraft certified fora two-member flight crew, resulting in lower operationalcosts as compared to three-member crew operated aircraft
which was the industry standard at the time.
• A310 – The A310, brought to the market in 1983, featured
the first digitally imaged cockpit displays, using cathode ray
tubes as opposed to the traditional mechanical display. This
made it possible to provide the pilot with improved flight andnavigation displays and unique centralised, easy accessaircraft monitoring. The implementation of automatedsystems and the integration of Digital Flight Guidance both
helped to further improve safety levels.
New efficient aerodynamic concepts were also introduced,
such as a supercritical airfoil and the high aspect-ratio transonic
wing, which brought a significant improvement in fuel burn.
Carbon fibre reinforced composite materials were introduced
for major structures such as the vertical fin and rudder, withsignificant weight savings as compared to aluminium, resulting
in increased payload capability. The installation of a trim tank in
the horizontal stabiliser increased operators’ savings
significantly by optimising aircraft conditions in flight.
• A320 – Airbus was the first to introduce digital fly-by-wire
controls with the A320 in 1988, introducing pilot commands
through a side stick controller instead of the traditional
control column. Flight-control computers translate thesecommands into electrical signals for the moving surface
actuators and, at the same time, can prevent the aircraft
going beyond the prescribed safe flight envelope. Comparedto the traditional mechanical flight controls, this brought
increased manoeuvrability, simplified operations throughBOOK3-791-11

29 MARCH 2004

digital link-up with the autopilot system and weight
reduction. The fly-by-wire concept is now featured on all
A320 Family aircraft as well as the A330/A340 Family.
Airbus’ U.S. competitors did not introduce fly-by-wire
controls for civil aircraft until later. Composite materials arealso used extensively in the A320, in particular for thehorizontal tail plane.
• A330/A340 – Four models of this twin aisle family featurewing commonality for two and four-engine variants of anotherwise similar airframe – a unique concept that permits
each model to be optimised around different market
requirements. The ultra-long-range A340 -500/-600 feature alarger wing and introduce further breakthroughs in the use ofweight saving composite materials for a large primary structure(the 15m-long keel beam and rear cabin pressure bulkhead).
• A380 – The very large aircraft will bring further development ofadvanced technologies and allow for their broader application.
Approximately 25% of the aircraft structure is to be
manufactured using carbon composites and advanced metallic
hybrid materials, while innovative manufacturing techniquessuch as laser beam welding will eliminate fasteners, reduceweight and provide enhanced fatigue tolerance.
The Family Concept – Commonality across the Fleet
Airbus’ four aircraft families promote fleet commonality. Thisphilosophy takes a central aircraft and tailors it to create
derivatives to meet the needs of specific market segments. Thisapproach means that all new-generation Airbus aircraft (i.e.,
excluding A300/310) share the same cockpit design, fly-bywire controls and handling characteristics. Pilots can transfer

among any aircraft within the Airbus family with minimal
additional training. Cross-crew qualification (“CCQ”) acrossfamilies of aircraft provides airlines with significant operational
flexibility.
This commonality philosophy to reduce development costs andalso permits aircraft operators to realise significant cost savings increw training, spare parts, maintenance and aircraft scheduling.
The extent of cockpit commonality within and across families ofaircraft is a unique feature of Airbus that, in Management’s
opinion, constitutes a sustainable competitive advantage.
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 and A321
derivatives, as well as the A319-based Airbus Corporate Jetliner,a business jet derivative, which Airbus launched in June 1997.
At 3.96 metres, 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 amore capacious underfloor cargo volume than its competitors.
The A320 Family incorporates digital fly-by-wire controls, anergonomic cockpit and a lightweight carbon fibre composite
horizontal stabiliser, derived from the A310-300. The A320
Family’s competitors are the Boeing 737, 757 and 717 aircraft.
The A318. The A318 aircraft is a shortened version of the A319,
designed to satisfy demand for aircraft in the 100 to 120-seat range.

Single Aisle Technical Features
Model

Entry into
service

Passenger
capacity(1)Maximumrange (km)Length(meters)

Wingspan(meters)

A318

2003

107

6,000

31.4

34.1

A319

1996

124

6,800

33.8

34.1

A320

1988

150

5,550

37.6

34.1

A321

1994

185

5,550

44.5

34.1

(1)

Two-class layout.
Source: Airbus 2003

In 2003, Airbus received 155 orders for A318, A319, A320 andA321 aircraft and delivered 233 A319, A320 and A321 aircraft
including the first A318 deliveries to Frontier Airlines and Air
France.

EADS 2003 Chapter 1 Information on EADS Activities 11

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29 MARCH 2004

Short- and medium-range twin aisle aircraft: the A300/A310.
The A300/A310 aircraft were the initial models of the Airbus
product line and are designed for short-and-medium range
routes. The A300, which entered into service in 1974, was theworld’s first twin aisle, twin-engine aircraft. Its current version
A300-600 is also available in freighter and convertible
passenger-freighter configurations, in service with both Federal

Express and UPS.
In 1988, Airbus introduced the extended-range A300-600R,
which incorporated the lightweight carbon fibre composite
horizontal stabiliser developed for the A310. The A310,
which was based on the A300, entered into service in 1983,
and introduced the first electronic cockpit in civil aviation
history.

A300/A310 Technical Features
Model(1)Entry into
service

Passenger
Capacity(2)Maximumrange (km)Length(meters)

Wingspan(meters)

A300

1974

266

7,700

54.1

44.8

A310

1983

220

9,600

46.7

43.9

(1)

All versions of A300/A310 including freighters.
(2)
Two-class layout.
Source: Airbus

In 2003, Airbus received 6 orders for A300 and A310 aircraft anddelivered 8 A300 and A310 aircraft.
Medium to ultra- long-range twin aisle aircraft: the A330/A340
Family. Airbus developed the twin-engine A330 and long-range
four-engine A340 as a joint programme, using the same wing
design for both aircraft and retaining the fuselage cross sectionof the existing A300/A310 to offer comprehensive andeconomic medium to ultra-long-range route coverage.

In 1997, Airbus began development of the ultra-long-range
A340-500 and the high capacity A340-600 derivatives. The
A340-500 is intended to offer more point-to-point routings overextremely long ranges. It is designed to allow non-stop flights
such as Los Angeles – Singapore or Chicago – Auckland. The
A340-600 made its first flight in April 2001 and deliveries began
in July 2002.
The competitors of this family are the Boeing 767, 777 and 747
aircraft.

A330/A340 Technical Features
Entry into
service

Passenger
capacity

Maximumrange (km)Length(meters)

Wingspan(meters)

A330-200

1998

253

12,30059.0

60.3

A330-300

1994

295

10,45063.7

60.3

A340-200

1993

239

14,80059.4

60.3

A340-300

1992

295

13,90063.7

60.3

A340-500

2002

313

16,00067.8

63.6

A340-600

2002

380

14,15075.3

63.6

Model(1)(1)

Three-class layout.
Source: Airbus

In 2003, Airbus received 89 orders for A330 and A340 aircraft
and delivered 64 A330 and A340 aircraft. The first A340-500
was delivered to Qatar, Emirates and Singapore Airlines.

12 EADS 2003 Chapter 1 Information on EADS Activities

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29 MARCH 2004

Very large aircraft: the A380 Family. In 2003, Airbus estimatedworldwide passenger traffic would grow at a sustained averageannual rate of 5% during the 2003-2022 period, leading to two
concurrent trends: rising fragmentation of a portion of themarketplace, characterised by the development of new markets,
higher frequency on thinner routes and hub by-passing; andconsolidation of the rest of the market, resulting in theconcentration of the hub-to-hub traffic and hub-dominatedtraffic, typical of alliance networks. See “–Market”. Following
five years of intensive pre-development with airlines, airports
and regulatory authorities throughout the world, Airbus has
defined a very large aircraft, the A380, to best serve the needsof the consolidated hub-dominated market.

At year-end 2003, Airbus had received a total of 129 firm orders
for the A380 from leading world airlines. The purchaseagreements with Lufthansa, Emirates, Federal Express, Malaysia
Airlines and Korean Air, totalling 47 orders, were signed postSeptember 11, 2001, confirming the strong and robust demand
for this aircraft from both passenger and freight operators.
The cost of developing the A380 programme, which
Management estimates at U.S. $10.7 billion, covers both R&D
expenses and tooling for various versions of the A380. Thisestimate does not include certain infrastructure elements orgeneral and administrative expenses.
Management presently intends to finance the programme by:Major programme milestones in 2003 included groundbreaking
for A380 assembly lines in Toulouse and Hamburg, with asubstantial level of completion of facilities accomplished by yearend. Sub-assembly production has commenced in the U.K.,
Spain, France and Germany. Additionally, Airbus achieved its
headcount requirement of 6,500 employees and identified 95%
of A380 program suppliers.

• Maximising contributions from risk-sharing partners, whohave been found for up to U.S. $3.1 billion of non-recurringcosts, subject to the outcome of negotiations; to date, someten manufacturers have agreed in principle to participate in
the development and production of the A380 as risk-sharing
partners; andThe A380 is planned to be larger than any existing commercial
passenger aircraft, with a wingspan of 79.8 meters and a largediameter fuselage divided into three decks along the entire
aircraft, consisting of two full passenger decks and a cargo deck.
The aircraft’s overall dimensions fit within the expressed airport
guidelines of 80 meter span and 80 meter overall length
limitation, in order to suit planned runways and facilities withminimal infrastructure changes.

• Applying reimbursable launch investments fromgovernments in compliance with the 1992 U.S.-Europe
bilateral agreement and all other applicable regulations,estimated by Management at about U.S. $2.5 billion undercurrent assumptions; France, Great Britain and Spain havealready committed, and Germany has agreed in principle, tosuch investments. See “–Market – Cyclicality and Market
Drivers – Governmental Funding”.

The basic version of the A380 will seat 555 passengers in threeclasses, with greater space per passenger and therefore higher
levels of comfort. It will offer higher efficiency for operations
with a range of 14,825 km (8,000 nm), superior economic
performance, linking major hubs in Europe, North America andAsia, as well as within Asia. Launched simultaneously with thebaseline passenger aircraft is a new large freighter offering 150
tonne payload over a range of 10,410 km. This provides a major
step in payload, volume and range capability relative to the 747
freighter while also offering a reduction in tonne-mile operating
costs of over 20%. The A380 will feature a high degree of
operational commonality with the existing Airbus range, inorder to foster CCQ and reduce operating costs within Airbus
fleets.

When deciding to launch the programme, Management set itself
a 20% pre-tax internal rate of return target, together with aproject break-even point of approximately 250 aircraft. It issatisfied that the terms and conditions presently agreed with its
customers corroborate the business case.

Airbus expects the demand for very large aircraft to beapproximately 1,163 aircraft between 2003 and 2022,
representing U.S. $339 billion or 21% of total commercial aircraft
market value. A portion of these aircraft will be dedicated to thecargo market. Airbus launched the A380 programme in
December 2000, having ensured that the aircraft would betechnically feasible, economically viable and that sufficient
market demand existed in terms of number of customers’commitments, standing of potential customers and geographic
allocation. The A380’s entry into service is planned for 2006.

Final assembly of the A380 takes place in Toulouse, whileinterior furnishing and customisation will be performed in
Hamburg. The fuselage sections are being produced at the samesites in France and Germany as current Airbus aircraft. The
wings are being produced at facilities in the United Kingdom,
while the horizontal stabiliser and other parts are being
produced in Spain.
New Product Development: A400M
A400M. Airbus’ Military Programme Directorate, headed by Mr.
Francisco Fernandez, who is also the executive vice president incharge of the MTA Division, performs research anddevelopment related to the A400M project as an outsource
provider to Airbus Military S.L. The Military Transport Aircraft
A400M is described under “1.1.3 Military Transport Aircraft –Products – Airbus A400M Program – Heavy Military Transport”.

EADS 2003 Chapter 1 Information on EADS Activities 13

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29 MARCH 2004

Asset Management
The Airbus Asset Management division was set up in 1994 to
manage and re-market used aircraft acquired by Airbus,
originally as a result of customer bankruptcies, and subsequently
in the context of certain buy-back commitments. The division
operates with a dedicated staff and manages a fleet comprisedof 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 requirementsof its customers.
Its key roles comprise the commercial and risk management of
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 2003 the Airbus AssetManagement portfolio contained 53 aircraft, a net addition of 12
compared to the end of 2002. The Asset Management divisionalso provides a full range of support services, including
assistance with entry into service, interior reconfiguration andmaintenance checks.
Sales Finance
Airbus favours cash sales, and does not envisage sales financing
as an area of business development; however, it recognises theneed for manufacturers to assist customers in arranging
financing of new aircraft purchases, and in certain cases toparticipate in such financing itself. Extension of credit orassumption of exposure is subject to corporate oversight andmonitoring, and follows stringent standards of discipline andcaution. A dedicated Sales Finance team cumulates decades ofexpertise in aircraft finance. When Airbus finances a customer,
the financed aircraft generally serve as collateral, reducing therisk borne by Airbus. Airbus sales financing transactions aredesigned to facilitate subsequent sell-down of the exposure tothird party lenders or lessors. Management believes, in the lightof experience, that the level of protection from default costs is
adequate and consistent with standards and practice in theaircraft financing industry. See “Part 1/ 1.1.6 Liquidity andCapital Resources – Sales Financing”.
Customer Service
Airbus is dedicated to assisting customers with the operation of
their Airbus fleets as efficiently as possible. With respect toaircraft operation, the Airbus Customer Services directorate
heads an engineering and technical support group, a technicaldocumentation organisation, a network of training centres, spareparts stores and teams based with customer airlines. Throughthis single interface, Airbus aims to satisfy all of its customers’
pre-delivery and in-service support requirements, including (1)engineering and technical support, (2) training and flight
operations support and (3) material support.
Engineering and technical support includes detailed pre-delivery
briefings on maintenance facilities, tools and equipment, as well
as a customised cost reduction programme designed to reduce
14 EADS 2003 Chapter 1 Information on EADS Activities

each customer’s maintenance costs to optimised levels throughdetailed studies of the customer’s activities.
The training and flight operations support service includes apermanent staff of over 200 instructors around the world toprovide accessible and up-to-date training for Airbus flight andground crews. Airbus has three principal training centres, one inToulouse, France, one in Miami, U.S. and one in Beijing, China.
As part of its training services, Airbus offers a pilot CCQ
programme enabling pilots to take advantage of the high degreeof commonality between Airbus aircraft families.
Airbus’ material support division stocks over 130,000 proprietary
part numbers, serving a worldwide distribution network from
Hamburg, Washington, D.C., Singapore and China. The 24-hour
aircraft-on-ground service usually dispatches in-stock items
within two hours of receipt of an order. The division also offers acustomised ongoing spares service package designed to enable
operators to achieve the greatest efficiency in maintenancechecks, ageing aircraft support and emergency orders.
Production
Workshare
Airbus aircraft are produced using an efficient and flexible systemthat has optimised the specialised skills developed during the last
three decades. Each task in the building of the Airbus aircraft(from design, definition and production to product or operational
support) is allocated to industrial sites according to their
specialised expertise. The nurturing and development of centresof excellence, although a legacy of the past, constitutes an
original and competitive feature of Airbus manufacturing.
Engineering
Airbus engineers work on specific and non-specific aircraft
designs to create solutions that ensure the company remains amarket leader. Using an innovative working practice, known as
Airbus Concurrent Engineering (“ACE”), teams are able to work
together effectively in real time, regardless of geographical location.
Engineering innovation at Airbus is driven by five Centres ofCompetence (“CoCs”), which develop general aircraft
technologies and provide functional design leadership for
specific aircraft components. The CoCs operate trans-nationallywith engineers from each CoC present at all Airbus sites.
Drawing on the expertise of the CoCs, Engineering Integration
Centres (“EICs”) provide operational leadership for Airbus
design teams that are based around sections of the aircraft.
Located in France, Germany, Spain and the U.K., the design
teams combine the most appropriate people with the best rangeof skills and expertise to meet the needs of the manufacturing
plants and help deliver specific Airbus programmes.
Airbus engineers have also developed “Colleges of Experts” – teamsof the most experienced specialists in each discipline thatprovide guidance and advice at senior levels. This approach not

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only delivers design solutions to meet the highest standards oftechnical quality and performance, but also ensures that bothindividual and collective knowledge is nurtured throughout the
CoCs.
The engineering teams are supported by system tests andintegration laboratories, structural test centres and the Airbus
flight test centre.
This approach has enabled Airbus to open engineering centres
in Wichita (Kansas), U.S. and in Moscow, Russia, enabling it totap into a large pool of experienced aerospace engineers
available in these two areas. 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.
Manufacturing Facilities
Airbus has established highly specialised centres of excellence
based on the core competencies of each site within its field ofexpertise. These centres are located in Nantes, Meaulte, St.
Nazaire and Toulouse in France; Hamburg, Bremen,
Nordenham, Varel, Laupheim, Stade and Buxtehude inGermany; Getafe, Illescas and Puerto Real in Spain; and Filton
and Broughton in the U.K.
Production Flow
Specialisation at engineering and production levels has ensured
a production flow in which the relevant parts are supplied to theappropriate component and sub-assembly centres of excellence
for the purpose of the systems integration and interiors
installation. Sub-assembly takes place at a variety of sites

located in France, Germany, Spain and the United Kingdom.
The completed sub-assemblies are flown either to Toulouse(A300, A320, and A330/A340 Family) or Hamburg(A318/A319/A321) for final assembly and delivery using a fleet
of five Airbus A300-600 ST “Beluga” Super Transporters
designed specifically for the Airbus production network. Typical
production lead times for single-aisle aircraft are 8-9 months,
and 12-15 months for long-range twin-aisle aircraft.
Adaptability to Changes in Demand
In response to the ongoing downturn, Airbus is reducing deliveriesconsistent with amended commitments. Airbus delivered 305
aircraft in 2003 and is dedicated to delivering approximately 300
aircraft in 2004. Any major market disruption or worsening in theeconomy could lead to revision of these figures.
To meet its 2004 delivery target, Airbus has set various elementsof its adaptable manufacturing process in motion; these include
enhanced integrated intelligence of customer and market
situation to provide early warning, repatriation of an array ofoutsourced tasks and adaptation of make or buy criteria.
Additionally, Airbus is exploiting flexibility features of its labour
structure by applying flexible time and overtime contractual
provisions, and by optimising temporary and time-defined
workforce. This allows Airbus to increase adaptability withoutparing the experienced and trained workforce which
Management considers a most valuable Airbus asset to sustain
long-term growth.
Airbus’ unique manufacturing flexibility is imbedded within theorganisation, implementing lessons learned from previous
downturn.

EADS 2003 Chapter 1 Information on EADS Activities 15

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1.1.3 Military Transport Aircraft
Introduction and Overview
The Military Transport Aircraft Division (the “MTA Division”).
The MTA Division produces and sells military derivatives aircraft,which are derived from existing transport aircraft platforms andare dedicated to specialized military tasks such as maritime
surveillance, antisubmarine warfare and in-flight refuellingcapabilities. In addition, the MTA Division develops,
manufactures and sells light and medium military transport
aircraft and is responsible for the development of the European
heavy military transport A400M project. The MTA Division also
designs and manufactures aerostructure elements.
The MTA Division earned consolidated revenues of € 934
million accounting for 3% of EADS’ total consolidated revenues
for 2003.
Strategy
The MTA Division’s strategic aim is to develop its corebusinesses, to leverage the EADS pool of technologies to gain
share within its markets and to enhance profitability. To achieve
this purpose, the MTA Division has implemented a focused,
two-prong strategy to:• Consolidate its leadership position and address thegrowing demand for modern and dependable tacticalmilitary transport aircraft.
EADS is the global leader in the market segments for lightand medium sized military transport aircraft. Through theaddition of the A400M heavy transport aircraft, EADS
expects to broaden its range of tactical military transport
aircraft and to capture a market with high replacement
potential heretofore dominated by Lockheed Martin.
• Optimise the capabilities of EADS to become a major
supplier of military derivatives.
The MTA Division relies on its own specialised technologies
as well as those of the Defence and Security Systems
Division, on EADS’ wide range of platforms and on theconversion expertise of the Aeronautics Division to promoteaircraft satisfying customers’ mission-specific requirements.
Prior to the formation of EADS, CASA had developed an
outstanding expertise in the utilisation of composite materials foraerostructure manufacturing and advanced automation
processes which is now applied throughout EADS.
MarketMilitary Transport Aircraft
Governments and multinational organisations constitute the
MTA Division’s principal customers in the market for tacticalmilitary transport aircraft. This market consists of threesegments: (1) light transport aircraft, with a payload of one tofour tons, (2) medium transport aircraft with a payload of five tofourteen tons; and (3) heavy transport aircraft with a payload offifteen tons or more. According to a study by the Teal Group, an
16 EADS 2003 Chapter 1 Information on EADS Activities

independent aerospace and defence industry consulting firm,
the market for military transport aircraft will amount to an
estimated approximate U.S. $39 billion over the next ten years.
Light Military Transport. This is a mature market that has
diminished in size as countries develop economically and areable to afford medium military transport aircraft. The CASA C212 has been the historical leader in this market segment, withan average market share of 15% over the last ten years. The C212’s main competitors are manufactured by LET of the Czech
Republic and Raytheon of the U.S.
Medium Military Transport. Management believes this market
will continue to experience moderate growth. EADS models areprominent in this market segment, with the CN-235 and C-295
models having an average market share of 45% over the last ten
years, followed by their competitors, the C-27J produced by
LMATTS, a joint venture of Alenia and Lockheed, and the An-32
produced by Antonov.
Heavy Military Transport. This market segment has historically
been driven by U.S. policy and budget decisions and hence has
been dominated by U.S. manufacturers and in particular,
Lockheed Martin’s C-130 Hercules. While the U.S. is reducing
and upgrading its existing fleet, European transport fleet
replacement and growth needs represent an opportunity for the
new A400M aircraft.
EADS has chosen thus far not to compete in the separate market
segment for super-heavy, strategic airlift aircraft, to which the
Boeing C-17 belongs.
Military Derivatives
According to a study by the Teal Group, the market for mission
aircraft will amount to an estimated approximate U.S. $24 billion
over the next ten years. It is a market of advanced technology
and high added value solutions where customers are
increasingly demanding comprehensive systems tailored to theirrespective operational requirements. Modern defence andwarfare increasingly require independent access to complex
forms of information in various theatres of operations. Thisdevelopment and Europe’s unsatisfied defence needs are
expected to boost demand for European-produced mission
aircraft in the near term. However, this market remains
dominated by U.S. companies.
Products
Tactical Transport Aircraft
C-212 – Light Military Transport. The C-212 was conceived as asimple and reliable unpressurised aircraft able to operate frommakeshift airstrips and carry out both civilian and military tasks.
The first model in the series, the S-100, entered into service in1974. With a payload of 2,950 kg, the new version of the C-212,
the Series 400, entered into service in 1997. It incorporates
improvements such as new avionics and engines for enhanced
performance in hot climates and high altitudes, as well as

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improved short take-off and landing (“STOL”) performance. The
C-212’s rear cargo door provides direct access for vehicles,
cargo and troops. Its configuration can be changed quickly andeasily, reducing turnaround times. The aircraft can perform
airdrops and other aerial delivery missions. As of December 31,
2003, 471 C-212s had been sold to 88 operators in 42 countries.
CN-235 – Medium Military Transport. The first model in the
CN-235 family, the S-10, entered into service in 1987. The latest
model in the CN-235 family, the Series 300, entered into service
in 1998 and is a new-generation, twin turboprop, pressurised
aircraft. The CN-235-300 is capable of transporting a payload ofup to 6,000 kg, representing (1) 48 paratroopers; (2) 21
stretchers plus four medical attendants; (3) four of the mostwidely used type of freight pallet; or (4) oversized loads such as
aircraft engines or helicopter blades. Paratroop operations canbe performed through the two lateral doors in the rear of theaircraft or over the rear ramp. Variants of the CN-235-300 areused for other missions, including maritime patrol, electronic
warfare and photogrammetric (mapping) operations. As of
December 31, 2003, 257 CN-235s had been sold to 34
operators in 23 countries.
C-295 – Medium Military Transport. Certified in 1999, the C295 has the basic configuration of the CN-235, with a stretchedcabin to airlift a 50% heavier payload at greater speed oversimilar distances. The C-295 is equipped with integrated
avionics incorporating digital cockpit displays and flight
management system, enabling tactical navigation, planning andthe integration of signals from several sensors. Both the CN-235
and C-295 have been designed as complements to or
replacements for ageing C-130 Hercules, accomplishing most of
their missions at a lower operating cost; specialising the C-130
for heavier cargo transport only extends its service life. In 2002,
the air forces of Brazil and Jordan both selected the C-295 toperform the medium military transport role. As of December 31,
2003, 19 C-295s had been sold to three operators.
Airbus A400M Programme – Heavy Military Transport. The
A400M is designed to meet the Future Large Aircraft
requirements set out by seven European nations to replace theirageing C-130 Hercules and C-160 Transall fleets. Besides fast
and flexible intercontinental force projection, the new aircraft isintended to respond to changing geopolitical requirements(including increased humanitarian and peacekeeping missions).
The A400M will integrate a number of features from existing
Airbus aircraft, including a two-person cockpit, fly-by-wire
controls and advanced avionics. Additionally, the A400M will
benefit from Airbus’ maintenance procedures and worldwide
customer support network.
Airbus Military is a Spanish sociedad limitada (“S.L.”) dedicatedto the development, manufacture and delivery of the A400M
aircraft. Shares in Airbus Military are currently held 69.44% by
Airbus S.A.S, 20.56% by EADS CASA, 5.56% by Tusas

Aerospace Industries Incorporated of Turkey and 4.44% by
Flabel Corporation NVSA of Belgium. The executive vicepresident in charge of the MTA Division also acts as chief
executive officer of Airbus Military, bringing the MTA Division’s
experience in the management of military transport aircraft
programmes 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, to be 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, mandated by seven nations:
Belgium committed to eight aircraft (including one on behalf of
Luxembourg), France to 50, Germany to 60, Spain to 27, Turkey
to 10, and the U.K. to 25.
Management believes that the A400M programme will allow
EADS to leverage its state-of-the-art commercial aircraft
technology to access a new and attractive market, while
mitigating the impact of civil aircraft market commercial cycles.
Military Derivatives
Military Derivatives are transport aircraft derived from existing
platforms and adapted to particular missions, in general for
military customers. Adaptations to the platform require thoroughknowledge of the basic airframe, which generally only theaircraft manufacturer possesses. The skills necessary for overallsystems integration into such aircraft are extensive and thenumber of participants on the world market is very limited.
Because of the limited size of any single European market andthe significant associated development costs, these programs in
Europe tend to be funded and developed on a multinational
basis with an emphasis on proven technologies. EADS believes
its strong position in Europe will allow it to exploit opportunities
on a worldwide basis.
Strategic Tanker Aircraft. In the medium term, EADS will seek toprovide a competitive alternative to the near-monopoly currently
enjoyed by Boeing products in the market for strategic tanker
aircraft which will help to ensure Europe’s ability to set up
projects independently. Management believes that the market
for strategic tanker aircraft will offer attractive opportunities. The
year saw the roll-out of the German Air Force Tanker MRTT
A310 and a contract win for two tanker kits for the Canadian
Airforce. EADS, Rolls Royce, Cobham and Thales arecooperating through the AirTanker consortium as the single
bidder for the U.K. MoD’s Future Strategic Tanker Aircraft(“FSTA”) programme. Likely to be structured as a Private
Finance Initiative, this program would replace ageing VC10 and
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Tristar tankers, currently operated by the Royal Air Force, with asystem based on the long-range family of Airbus aircraft.
Additionally, Management views the KC-X program for the
replacement of the ageing U.S. fleet of strategic tanker aircraft
as a market opportunity. In an effort to further address theimportant market for strategic tanker aircraft, the MTA Division
is leading a technological programme to develop a new boom air
to air refuelling system based on the A330 platform.
Customised and Converted Platforms. In this category EADS isable to offer logistics transport aircraft such as Airbus cargovariants, aircraft offering protection to government executives
such as the A340 VIP and upgrades of combat aircraft to meet
new mission requirements.
Airborne Ground Surveillance (“AGS”). Within the framework ofNATO, France, Germany, Italy and The Netherlands haveexpressed interest in the development of an AGS System. The
MTA Division could provide candidate solutions based on the
Airbus A321 platform, integrating systems provided by the DS
Division.
Maritime Patrol Aircraft. The MTA Division can provide different
solutions ranging from Maritime Surveillance to Anti-Submarine
Warfare through aircraft based on the C-212, CN-235, C-295,
Atlantic or P-3 Orion platforms, for which EADS has alreadydeveloped a new-generation, open architecture mission systemcalled FITS (Fully Integrated Tactical System). The first flight ofthe modernised version of the Spanish P-3 Orion took place in
2003. Additionally, the Brazilian air force retained the Division in2003 to modernise its fleet of nine P-3 Orion aircraft.
In February 2003, in connection with the Deepwater Program
for the U.S. Coast Guard, EADS signed a contract with
Lockheed Martin for the sale of two CN-235 maritime patrolaircraft, worth U.S.$ 87.4 million. The contract also includes
options for spare parts and integrated logistic support as well as
an option for six additional aircraft. The potential value of thecontract with all the options is approximately U.S.$ 300 million.

18 EADS 2003 Chapter 1 Information on EADS Activities

Airborne Early Warning and Sky Surveillance (“AEW”). EADS iscurrently studying the commercial feasibility of developing an
AEW aircraft with advanced active module radar. This project
would allow EADS to provide a new generation of highperformance AEWs that are more cost-effective to operate thanthe current generation. EADS expects that such AEW systems
could be offered in the future on several different platforms.
Production
The C-212, CN-235 and the C-295 are manufactured in thefactory located within the San Pablo Airport in Seville. The final
assembly of the A400M will take place at the San Pablo Airport
facility, while other Airbus centres of excellence across Europe
will produce sections and subsections in accordance with theircapabilities.

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1.1.4 Aeronautics
Introduction and Overview
The Aeronautics Division groups together a number of civil andmilitary aviation-related businesses, including helicopters,
regional and general aviation aircraft and aircraft conversion andmaintenance. The Aeronautics Division is also involved in the
manufacturing of aerostructures for Airbus. Management views
the mix of young and mature civil and military programmes andservices as an effective means of assuring consistent positive
results in markets subject to cyclical or fluctuating demand. For
2003, the Aeronautics Division earned consolidated revenues of€ 3.8 billion representing 12% of EADS’ total revenues.
Through Eurocopter, EADS is one of the world’s leading
producers of helicopters and the leader in the European civil andmilitary helicopter market. Management expects Eurocopter
sales in the military market to increase substantially due to thecommencement of delivery of the Tiger attack helicopter, thestrong backlog of the NH90 military transport helicopter with anumber of European governments and the increasing demand in
military and para-military export markets.
In addition to Eurocopter, the Aeronautics Division has
significant businesses in the areas of regional aircraft (ATR), lightaircraft (EADS Socata), aircraft conversion and technical services(EFW and EADS Sogerma Services) and aerostructures.
In 2003, the Military Aircraft business was transferred to the DS
Division. See “1.1.5 Defence and Security Systems – Overview”.
Strategy
The strategy of the Aeronautics Division is to develop thosebusinesses which Management views as having potential forcontinued and future growth:• Maintain leadership in the market for civil helicopters.
The Aeronautics Division has renewed its comprehensive
product line of modern civil helicopters and will improve its
civil helicopter operations, in particular through the
exploitation of synergies with its military helicopter activities.
Because customer services are an important source ofrevenues and a key component of value for clients, theAeronautics Division will continue to strengthen its networkof marketing, distribution and support systems, which
services approximately 9,000 Eurocopter aircraft with 2,180
operators worldwide.
• Leverage EADS’ role as an original equipment
manufacturer (“OEM”) to benefit from the steadily
growing conversion and customer service markets.
Exploiting EADS’ exceptional knowledge of Airbus aircraft andrelationships with Airbus customers, the Aeronautics Divisioncontinues to expand its Airbus conversion and maintenancebusiness. EFW offers the only OEM solution for converting
existing Airbus passenger aircraft to freighter aircraft. In
addition, the Aeronautics Division capitalises on its strong

position in industrial maintenance for Air Forces and diversifies
its services to include training and expand along the logistics
support value chain for its governmental customers.
Eurocopter
Overview
Eurocopter is one of the world’s largest manufacturers ofhelicopters with a very wide range of civil and militaryhelicopters. In 2003, Eurocopter captured 53% of the worldwide
market for civil helicopters and 20 % of the export market for
military helicopters. Through its helicopter manufacturing andservicing operations as well as its contribution to theaerostructure business, Eurocopter generated 68% of total
revenues of the Aeronautics Division in 2003.
MarketIn 2002, the value of helicopters delivered worldwide wasestimated at over € 7 billion; a figure Management expects willgrow to € 10 billion by 2010. According to a study carried out by
the Teal Group in 2002, 4,570 civil and 4,667 military helicopters
are expected to be built globally from 2002 to 2011. This forecast,particularly with respect to the military segment, depends to alarge extent on the future of large U.S. development programmessuch as the V-22 Osprey and the RAH-66 Comanche helicopters.
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 technology systems and the ongoing
introduction of combat helicopters into many national armed
forces will contribute to increased military helicopter procurement
over the next several years. This trend was confirmed by the
recent large-scale military programmes such as those conductedby Australia, Brazil, Indonesia, Spain, and the Nordics Standard
Helicopter Project. Demand from the military segment hashistorically been subject to large year-to-year variations, due to
evolving strategic considerations.
Military helicopters, which are usually larger and their systems
generally more sophisticated than commercial helicopters,
accounted for 49% of the total value of deliveries in 2003. In
2002, 70% of military helicopters ordered belonged to the highvalue attack and heavy segments of the market.
The military segment is highly competitive and is characterised bycompetitive restrictions on foreign manufacturers’ access to thedomestic defence bidding process, sometimes to the virtual
exclusion of imports. As a result, Eurocopter’s past share of the
global market for military helicopters has been relatively small,whereas the introduction of the Tiger and NH90 is likely toincrease this share in the future.
In the military segment, Eurocopter’s principal competitors are
the four major helicopter manufacturers operating worldwide,
including one in Europe (Agusta-Westland) and three in the
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United States (Bell Helicopter, Boeing and Sikorsky).
Additionally, a number of domestic manufacturers compete intheir respective national markets.

helicopter segment is relatively concentrated, with Eurocopter
and Bell Helicopter together accounting for approximately 80%
of total civil helicopter sales in 2003.

The helicopters sold in the civil sector provide transport forcorporate executives, offshore oil drillers, diverse commercial
applications and state agencies, including coast guard, police,
medical and fire-fighting services. Management believes that thevalue of global civil deliveries will grow at an average rate of 3% in
the next ten years. Market data indicates that in 2002, worldwide
deliveries of civil helicopters stood at 495 units.

Products and Services
Existing Products. Management believes that Eurocopter
currently offers the most complete and modern helicopter
product range, covering more than 85% of the overall civil andmilitary market spectrum. The Eurocopter product range
comprises light single-engine, light twin-engine, medium andmedium-heavy helicopters. Eurocopter’s product line is basedon a series of new-generation platforms that are designed to beadaptable to both military and civil applications. The table below
illustrates Eurocopter’s existing product line:

Eurocopter’s principal civil competitor globally is Bell Helicopter,a division of Textron Inc. of the United States. The civil
Helicopter Type

Typical Uses

Entry into Service

Light Single Engine
Corporate/Private

1998

AS350

Utility, Law Enforcement, Corporate/Private

1975

EC130

Shuttle, Tourism, Offshore, Corporate/Private

2001

Parapublic (*), Utility, Corporate/Private

1988

EC120
Single Engine

Light Twin Engine
AS355N
EC135
EC145

(*)

1996

(*)

Emergency Medical, Parapublic , Shuttle

2002

Offshore, Parapublic (*)

1977

Emergency Medical, Parapublic

MediumDauphin(*)

Corporate/Private, Offshore, Parapublic , Shuttle

1999

Super Puma/Cougar

Offshore, Shuttle

1980

MK II

Offshore, Shuttle

1993

EC155
Medium Heavy(*)

Parapublic includes law enforcement, fire fighting, border patrol, coast guard and public agency emergency medical services.

– The Tiger. In 1987, the French and German governments
launched the Tiger combat attack helicopter program.
Development is nearing completion, with two variants
based on the same airframe, an antitank variant and a
support and protection variant. Initially, the antitank
variants are to be built for both the French and German
armies, while the French army alone has expressed
requirements for the support and protection variant. Total
requirements of 215 aircraft for France and 182 forGermany were confirmed. In 2002, a contract for 22 Tiger
attack helicopters with the Australian MoD was signed andin 2003 Spain signed a memorandum of understanding forthe purchase of 24 aircraft.

above 50%. Eurocopter has successfully introduced into theinternational markets such newly developed products as thelight, single-engine EC120 and the light, twin-engine EC135, andsuch major product upgrades as the EC155, the latest evolutionof the medium class Dauphin, and the EC145 light helicopter, aderivative of the BK117. Deliveries of the EC130, the latest single
engine member of the Ecureuil family started in 2001.

In recent years Eurocopter has invested in the renewal of its civil
product line, enhancing its competitive position in the civil
segment so that its share of the world market currently stands– The NH90. The NH90 was developed as a multi-role
helicopter for both tactical transport and naval applications.
The project, principally financed by the governments of

20 EADS 2003 Chapter 1 Information on EADS Activities

Products in Development. Current product development projects inthe military segment include (1) the NH90, a military transport
helicopter with different versions for tactical, naval and combatsearch and rescue applications, (2) the Tiger attack helicopter and(3) the EC725, the latest member of the Cougar family.

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France, Germany, Italy and the Netherlands, was jointly
developed by Eurocopter, Agusta of Italy and Fokker Servicesof the Netherlands 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%. Confirmed requirements for the NH90 are for
325 helicopters plus 85 options. Production of the first lot of
243 helicopters plus 55 optional helicopters destined to thefour partner countries started in 2000, with first deliveries
expected at the end of 2004. In 2001, Portugal booked ten
NH90 helicopters; Finland, Sweden and Norway also jointly
chose the NH90, with 52 firm units plus 17 options. Of thesefirm orders, 38 were booked in 2001, while 14 were booked
in 2002. Greece ordered 20 aircraft in 2003, plus 14 options.
These initial successes confirm the NH90 platform’s
significant export potential as a military platform that may also
have civil applications in the future.
Development activities represent 16% of Eurocopter’s total
revenues for 2003. These sales derive principally fromexternally funded development of the Tiger and NH90
programmes.
Customer Support. As of December 31, 2003, Eurocopter
products constituted the world’s second largest manufacturer
fleet, with approximately 9,000 helicopters in service
worldwide. Consequently, customer support activities
represented 34 of Eurocopter’s revenues for 2003.
Eurocopter’s customer support activities consist principally of
training, maintenance, repairs and spare part supply. In orderto provide efficient worldwide service, Eurocopter has
established an international service network of subsidiaries,
authorised distributors and service centres. To extend therange of services offered to customers, Eurocopter and Thales
have together established HELISIM, a helicopter training
centre, which opened in 2002.
Customers and Marketing
Eurocopter’s principal military clients have been thegovernments of European countries, followed by clients in Asiaand the Middle East. Eurocopter’s penetration of the civil andparapublic market is globally well distributed, and its penetrationof the civil and parapublic market in Europe, the U.S. andCanada places it first among manufacturers in these markets.
Eurocopter’s global strategy is reflected in its development of alarge international network, currently comprising 15 foreignsubsidiaries, complemented by a network of authorised
distributors and service centres geared to the largest number ofpotential clients.
In addition, Eurocopter has developed expertise in production
licensing, joint production and subcontracting agreements andhas been developing links with industrial partners and suppliersin more than 35 different countries.

Approximately 2,180 operators worldwide currently operate
Eurocopter helicopters, forming a broad established base forEurocopter’s customer support activities. 90% of Eurocopter’scustomers have fleets of between one and five helicopters.
The versatility and reliability of Eurocopter products have madethem the preferred choice of the most prominent customers.
The U.S. Coast Guard operates 95 Dolphin (Dauphin)helicopters and the world’s largest offshore operators(Norwegian Helicopter Services and PHI) use Eurocopter
helicopters for passenger transport and offshore oil industry
support. In the Emergency Medical Service market segment,
Eurocopter helicopters dominate the fleets of large operatorssuch as Rocky Mountain Helicopter in the U.S. and ADAC in
Germany. Agencies with high serviceability requirements,
including police and armed forces, rely on Eurocopter products.
Production
Eurocopter’s manufacturing development activities are carriedout primarily in four locations, two in France and two in
Germany. The French sites are located at Marignane, in southern
France, and La Courneuve, near Paris. The German sites arelocated at Donauwörth and Ottobrunn, near Munich.
The opening of an AS350 final assembly line plant in Mississippi(targeting the parapublic sector in the U.S.) and a Tiger final
assembly plant in Australia (relating to specific Australian version
development under the AIR 87 program) reflect Eurocopter’scommercial strategy to increase its presence in these strategic
countries.
Regional Aircraft – ATR
Overview
ATR is a world leader in the market for regional turboprop
aircraft of 40 to 70 seats. In 2001, EADS and Alenia decided totransition from the original consortium structure of ATR into a
new company, ATR Integrated. After contribution of their sharesand certain industrial assets dedicated to ATR consortium
structure in 2001, EADS and Alenia each have a 50% stake in
ATR Integrated. The new organisation is intended to facilitate
response to market demands, resource allocation, and ultimately
to reduce production and operating costs. EADS’ 50% stake in
ATR Integrated contributed 7% of Aeronautics Division total
revenues in 2003.
Market
The regional aircraft industry has experienced concentration inrecent years. During the 1990s, a number of 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 December 31, 2003, theworldwide market for turboprop aircraft of 40-70 seats in
production was dominated by two manufacturers: ATR with 50%of the cumulative orders and Bombardier of Canada with 50%.
In 2003, ATR registered orders for 1 new and 6 used aircraft,and it delivered 9 new aircraft.
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Products and Services
ATR 42 and ATR 72 Series Aircraft. Commencing with the ATR
42, which entered service in 1985, ATR has developed a familyof high-wing, twin turboprop aircraft in the 40-70 passenger
market that are designed for optimal efficiency, operational
flexibility and comfort. In 1996, in order to respond to operators’
increasing demands for comfort and performance, ATR
launched a new generation of aircraft designated the ATR
72-500 and ATR 42-500. Like Airbus, the ATR range is based on
the family concept, which provides for savings in training,
maintenance operations, spare parts supply and CCQ.
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. Implementation of the cooperation agreement
concluded in 2001 with EMBRAER for the creation of
AEROCHAIN, an e-marketplace designed to enhance support
services across all areas of airline operations (training, spares,
technical publications and maintenance planning) commenced
in 2002.
ATR Asset Management. In line with industry practice, asignificant portion of orders received by ATR is conditional on
its assistance in financing the purchase either through leasing orloan guarantee arrangements. The ATR Asset Management
Division manages the resulting risk and responds to thegrowing market for second-hand aircraft. By assisting in theplacement and financing of used and end-of-lease aircraft, ATR
Asset Management has helped broaden ATR’s customer base,notably in emerging markets, by providing quality
reconditioned aircraft at attractive prices and has helped
maintain residual values of used aircraft. In the past, clients forsuch used aircraft have subsequently purchased new aircraft asthey have gained experience in the operation of ATR
turboprops. Returned aircraft generally remain out of service
for approximately five months awaiting reconditioning andresale or leasing, subject to market conditions. ATR has beensuccessful in implementing its strategy of consistent reductionof sales financing exposure.
Production
The ATR facilities are located near Naples, Italy and at SaintNazaire and Saint-Martin near the Toulouse airport in France.
Final assembly, flight-testing, certification and deliveries takeplace at the Toulouse site. ATR outsources certain areas of
responsibility to the Airbus Division, including wing design andmanufacture, flight-testing and information technology.
General Aviation
EADS Socata
EADS Socata manufactures a range of light aircraft for theprivate civil aircraft market and also engages in aerostructuressubcontracting, producing materials and subassemblies for
EADS’ other aircraft operations, including Airbus. In the
22 EADS 2003 Chapter 1 Information on EADS Activities

general aviation field, EADS Socata has developed over the
past 20 years a range of piston engine aircraft, the TB family,
and the monoturboprop pressurised TBM 700. These newgeneration aircraft compete with products based on models
that date back to the 1950s. Many aircraft in the generalaviation market are nearing the end of their service life. To
improve its penetration of the U.S. market, which represents
60% of its general aviation sales, EADS Socata is developing a
U.S. distributor network.
Since launching its aerostructures activity in the early 1960s,
EADS Socata has positioned itself as a first-line subcontractor forcomplete assemblies. EADS Socata is experienced in the use ofcomposite materials for aircraft structural elements; in particular
for the Airbus A330/A340, as well as metal-composite
combination technology and forming of large-dimension metal
panels. In addition, EADS Socata carries out design work for anumber of European aviation programmes, including Airbus,
Eurocopter, Mirage and Falcon aircraft.
Aircraft Conversion and Technical Services
Overview
EADS is a major provider of aircraft conversion and technicalservices for airlines.
In the fields of aircraft conversion and technical services, EADS
combines the operations of EADS Sogerma Services and Elbe
Flugzeugwerke GmbH (“EFW”). Management believes that theconcentration of expertise in a stable pool of highly skilledworkers enables EADS’ aircraft conversion and technicalservices group to perform services on a wide range of aircraft,including all of the aircraft produced by EADS. In addition, theexchange of skilled workers in response to cyclical variations in
the market occurs increasingly within the aircraft conversion
and technical services group, generating synergies. Moreover,
EADS can use knowledge gained through maintaining Airbus
aircraft to improve initial product quality and reduce
maintenance costs.
In the field of commercial aircraft technical services, knowledge
exchange within EADS will benefit maintenance of earlygeneration Airbus aircraft and facilitate maintenance activities fornewer aircraft such as the A320 or A330/A340. Management
believes that integrated packages, designed to meet customers’
full range of service requirements, will be particularly attractive
to small and medium-sized airlines.
Management believes that joint marketing of maintenance andconversion work has been beneficial, since EADS has beenretained to perform maintenance for a large number ofconverted aircraft.
Commercial Aircraft Conversion – EFW
Conversion of passenger aircraft into freighter aircraft (“P to F”),
which generally requires 30,000 to 40,000 working hours andrequires highly-skilled workers to modify the aircraft structure as

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well as passenger related systems, such as air conditioning,heating and lighting, is the modification most proposed tocommercial aircraft owners. Conversion kits comprise original
parts, known as Original Equipment Manufacturer or “OEM”
parts from the corresponding Airbus serial freighter versions,and result in a converted aircraft that is very similar to a freighter
from the series production.
Market. The market for civil aircraft freighter conversion
encompasses freight service airlines such as UPS or Federal
Express, airlines with small aircraft fleets and finance groups.
Two considerations drive the aircraft operators’ decision toconvert existing passenger aircraft to freighters: first,
conversion is the most efficient way to obtain a relatively
modern freighter; second, it maintains residual values of theaircraft at relatively high levels by extending revenue-generating
service life.
According to Airbus estimates, airfreight is expected to growfaster than passenger traffic in the next 20 years. Given theretirement of older aircraft, an estimated 1,900 dedicated cargo
aircraft should meet this demand, of which roughly 75% would
come from the conversion of passenger aircraft.
EADS’ main competitor in the freighter conversion business is
Boeing, which now offers P to F conversions for its complete
range of aircraft except B777 and ex-MD aircraft. With thediscontinuation by BAE Services of its A300 B4 and A300-600
conversion programmes, there is currently no near-termcompetitor for Airbus P to F conversions.
Products. In the field of P to F conversions, EADS specialises in
the conversion of Airbus A300 and A310 passenger aircraft tocargo usage. EADS is building on this specialisation by adding
versions such as, in 2001, the A310-300, and in 2002 the A300600, to position itself for future upcoming conversion
programmes. In addition to Airbus freighter conversions, EFW isalso the single source supplier of Airbus passenger cabin floor
panels for all Airbus models.

(3) aerostructure manufacturing, primarily for Airbus. Revenues
from EADS Sogerma Services in 2003 totalled 17% of total
revenues of the Aeronautics Division.
MRO. Maintenance activities provided by Sogerma include
periodic airframe maintenance services, system modifications
and cabin interior upgrades, and structural repairs as required
for large commercial aircraft. These services are carried out infacilities in Bordeaux, France; Lake Charles, United States; andMonastir, Tunisia. Sogerma also provides services for military
fighter and transport aircraft, including C-130 checks for Africanand Latin American clients at Maroc Aviation in Casablanca.
Cabin Interiors and Completion. Sogerma is an approved outfitter
for Airbus corporate jets, with services currently performed inToulouse, France and planned in Lake Charles, United States in2005. It has dedicated hangar bays for large aircraft VIP completionin Bordeaux. Sogerma designs and manufactures top-of-the-line
cabin interior components and first and business class passenger
seats.
Sogerma also is a specialist in small engines (SECA in Le
Bourget, France), landing gear, APU (Revima in Rouen, France)
and avionics MRO (Bordeaux, France) and has additional
facilities in the United States (Barfield, Miami) and the Far East
(Sogerma Asia in Hong Kong).
Aerostructures. In the aerostructures field, Sogerma is involvedin the design and manufacture of fuselage panels and sections
for Airbus aircraft as well as in composite components foraeronautical and general industrial applications. Metal work is
conducted in Rochefort, France, while composites activities are
conducted at Composites Aquitaine in France and Composites
Atlantic in Canada.

Commercial Technical Services – EADS Sogerma Services
EADS Sogerma Services focuses primarily on three businesslines: (1) aircraft and equipment maintenance, repair andoverhaul (“MRO”), (2) cabin interiors and completion and

EADS 2003 Chapter 1 Information on EADS Activities 23

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1.1.5 Defence and Security Systems
Introduction and Overview
The Defence and Security Systems Division (the “DS Division”)
is active in the field of integrated systems including missile
systems, combat aircraft, defence electronics, militarycommunications and services. Based on 2003 revenues, EADS’
subsidiary MBDA is the largest manufacturer of tactical missile
systems in Europe and the second largest in the world. Its
Military Aircraft business unit, which was transferred from the
Aeronautics Division in 2003, is a leading partner in theEurofighter consortium. EADS is the third largest supplier ofdefence electronics in Europe and plays a significant role in the
secure and encrypted military communications market. On a
consolidated basis, the DS Division earned revenues of € 5.2
billion for 2003, representing 16% of EADS’ total revenues.
In 2003, the Military Aircraft business unit was transferred fromthe Aeronautics Division to the DS Division. By gathering its
Missile Systems (MBDA and EADS/LFK), Defence andCommunications Systems (“DCS”), Defence Electronics (“DE”),
Military Aircraft (“MA”) and Services activities within a single
division, EADS aims to strengthen its defence business to better
meet the needs of customers requiring integrated defence andsecurity technology.
Since the formation of EADS, the DS Division has been
consolidating its capabilities in the key segments of the German,
French and Spanish markets and has also been improving its
access to the U.K. market.
In 2003, the DS Division continued the integration andrestructuring activities commenced in earlier years, including
workforce adaptation and site optimisation. These efforts
contributed to the Division’s profitability in 2003.
Existing programmes under contract and new programmes
confirmed under governmental long-term funding plans are themain drivers of the DS Division’s near term growth. These
programmes include:• the maintenance and upgrade of Tornado aircraft,• the production of Eurofighter aircraft,• MBDA and EADS/LFK missile systems (e.g. Meteor, Taurus,
Aster/PAAMS, Scalp EG/Storm Shadow),• Command/Control/Communication/Intelligence (C3I)
Systems such as SIR for France, Faust for Germany,• Air and Naval Defence Systems such as Samoc for Germany
and the GBAD study for the U.K.,• Public safety telecommunication systems, such as Acropol inFrance,• Communication and Information Systems for commercial anddefence applications,• Defence Electronics sub-systems such as naval and groundradars,• airborne systems for Eurofighter, Tiger, NH90 and other
EADS platforms, and24 EADS 2003 Chapter 1 Information on EADS Activities• outsourced defence services such as flight operation
services provided by subsidiaries in France (AVDEF) andGermany (GFD).
In France, the current Loi de Programmation Militaire (multiyear defence funding plan) provides opportunities for the DS
Division in the fields of new and upgraded missiles (Exocet,
Scalp Naval) and unmanned aerial vehicles (UAVs). Recent
comments from the German government suggest a
prioritisation of capabilities to which the DS Division cancontribute, such as global reconnaissance, interoperable
command systems and missile defence. The German Ministerof Defence also confirmed key projects involving EADS:
German participation in NATO AGS and in the trans-atlantic
project MEADS, orders of Trigat Long Range armaments for
Tiger helicopter, and procurement of 180 Eurofighter aircraft. In
the U.K., the DS Division is involved in key bids for
programmes such as the Future Strategic Tanker Aircraft(FSTA), Ground Based Air Defence (GBAD) and Combined
Aerial Target Services (CATS).
In addition, various Franco-German and NATO defence
initiatives are expected to open new opportunities for EADS’
defence-related systems and services.
Strategy
Through continued organic growth of existing businesses andthe development of new markets for systems and products, theDS Division aims to contribute significantly to the further
development of EADS’ overall defence activities. The strategic
priorities of the DS Division are as follows:• Growth by improving access to fast expanding markets
Beyond focusing on increasing sales of existing products to
its traditional export markets, EADS seeks to expand its local
presence in the U.K. defence market (one of its four “homemarkets”) and to further participate in the U.S. defence
market.
Among European nations, the U.K. has the largest andfastest-growing defence procurement budget. To capitaliseon the opportunities provided by the U.K. market, the DS
Division aims to move from a provider of subsystems to aprime contractor for projects such as the GBAD program. To
further improve access to this important market, EADS will
unify, coordinate and leverage its strong industrial presencein the U.K. and partnerships with defence contractors that
also have a local presence in the U.K.
Penetration of the U.S. defence market remains a key
objective for the DS Division, which is seeking to expand its
current U.S. industrial presence in missiles, defence
electronics, telecommunications and tests and services.
Expansion into the U.S. involves several paths, including (i) the
pursuit of niche market segments where the Division can offer
superior products and technologies, such as the Hellas

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obstacle avoidance system for helicopters and the TRS-3D
radar for the U.S. Coastguard; (ii) building on its strong transatlantic industrial partnerships with U.S. prime contractors,
including Northrop Grumman (NATO AGS and Global Hawk),
Lockheed Martin (MEADS, Deepwater) and Boeing (JDAM)
to explore new opportunities driven by MilitaryTransformation; and (iii) seeking acquisitions and new
partnerships that would enhance the DS Division’s capabilities
and solutions offerings.
• Growth in new market segments – leverage existing
capabilities to become a leading provider of integrated
defence and security systems.
The DS Division is ideally positioned to meet European
government demand for new military and security
capabilities such as integrated, network-enabled defenceand homeland security systems. The change in the EADS
structure, including the transfer of the Military Aircraftbusiness unit to the DS Division from the Aeronautics
Division in 2003, is to position the DS Division to be able
to meet its customers’ new requirements. As theintegrated division for defence and security in EADS, theDS Division uses cross-business unit synergies to capturesystems business opportunities, strengthen both system
integration capabilities (focused in the Defence andCommunications Systems business unit) and DefenceElectronics sub-systems, and to act as a Network CentricEnterprise to support the transformation process of ourmilitary customers. The DS Division’s unique capabilities intelecommunications, C3I and ISR put it at the centre ofefforts to develop a European approach to network centricwarfare. Investments in new systems such as UAVs forstrategic and theatre intelligence, C3I for battle
management, and secure telecommunications networks
are aimed at improving the effectiveness of combat andhomeland security forces. Within EADS, the DS Division
will be the prime contractor for integrated defence
systems.
The DS Division was recently awarded a key contract for the
EuroMALE UAV and has successfully tested, together with
Northrop Grumman, the Global Hawk, a high-altitude longendurance UAV fitted with European mission systems
designed by EADS. The DS Division also is participating in
the early phases of the NATO AGS bidding process with thetrans-atlantic TIPS initiative (along with Northrop Grumman,
Finmeccanica, Thales and Indra). In conjunction with otherbusiness divisions within EADS, the DS Division is also
involved in the European development of future ballistic
missile defence concepts for NATO.
Military Aircraft
Overview
The Military Aircraft business within the DS Division focuses on
the development and manufacturing of the Eurofighter combat

aircraft, MRO (maintenance, repair & overhaul), logistic support
and conversion of existing combat aircrafts, as well as theprovision of training services and the construction of Airbus
aerostructures. In addition, the development and construction ofa light combat and training aircraft and an unmanned combat
aircraft (UCAV) is conducted through Military Aircraft. In 2003,
32% of the total revenues of the DS Division came from theMilitary Aircraft business.
Eurofighter
The Eurofighter (known as “Typhoon” for export outside
Europe) is a high-performance multi-role combat aircraft
optimised for air superiority in complex air combat scenarios. It
is fully compatible with state-of-the-art NATO weapon systems.
The Eurofighter is designed to enhance fleet efficiency througha single platform tasked with supersonic beyond visual range
combat, subsonic close combat, air interdiction, close air
support, air defence suppression and maritime attack roles. The
tactical requirements of the aircraft include all-weather
capability, short take-off and landing capability and high survival
capability and operational rates.
The Eurofighter programme is organized as follows:– The NATO Eurofighter and TORNADO Management Agency(NETMA) is the management company for the participating
nations. NETMA contracts with Eurofighter Jagdflugzeug
GmbH (Eurofighter GmbH), the program managementcompany for the Eurofighter program.
– The Eurofighter GmbH shareholders and subcontractors are
EADS (46% share), BAeS (33% share) and Alenia Aerospazio,
a division of Finmeccanica (21%).
In January 1998, the NATO Eurofighter and Tornado
Management Agency (NETMA) signed the umbrella
Eurofighter contract for 620 aircraft: United Kingdom 232(with 65 options); Germany 180; Italy 121 (with 9 options;
Spain 87 (with 16 options). The umbrella contract, while
fixing a maximum price for the overall program, also
stipulates that production agreements are to be awarded inthree tranches, each with progressively lower fixed prices
than the one preceding it. The programme includes thedevelopment, the production investment and the series
production of the aircraft. Austria signed a contract for 18
Eurofighters in 2003.
Eurofighter’s first tranche of 148 aircraft is slated for delivery
between 2003 and 2005. Production is expected to continue until
2015, with volumes of 52 aircraft per year from 2004 onwards. The
first seven Eurofighters were delivered to Germany and Spain in
2003.
The Eurofighter was conceived to be suitable for long-term
improvement as avionics and weapons systems evolve,
providing for an extended service life potential.

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Market and Customers for Combat Aircraft. Two major U.S.
suppliers (Lockheed Martin, Boeing), along with several smaller
European and Russian competitors, serve the global market forfighters.

and/or strike capability) as well as by political and spending
constraints, especially in the post-Cold War era.
The combat aircraft platforms presently in contention for fighter
procurement by the majority of the world’s MoDs are as follows:

Ministry of Defence (MoD) fighter procurement considerations
are governed by strategic requirements (need for air defence
Manufacturer

Date of First
DeliveryAircraft TypeU.S.
Boeing (McDonnell Douglas)

F-15 (Eagle)

1973

Lockheed Martin

F-16

1976

Boeing (McDonnell Douglas)

F/A-18C/D (Hornet)

1980

BoeingF/A-18E/F (Super Hornet)

1997

Mitsubishi/Lockheed Martin

F-2

2000

Boeing/Lockheed Martin

F-22 (Raptor)

2003

Lockheed Martin

F-35 (Joint Strike Fighter)

2009

Dassault Aviation

Mirage 2000

1983

Saab

Gripen1993

Dassault Aviation

Rafale2000

Eurofighter Consortium

Eurofighter (Typhoon)

2003

VPK/MAPO

MiG-291983

Sukhoi

Su-27 Series

1986

EuropeRussiaAccording to the Teal Group, “fly away” prices for fighters,
depending on model and specification, range from U.S. $30 to
U.S. $100 million, of which each of the major constituent partsof a fighter platform – the airframe, the engine and the aircraft
systems/equipment – typically represents approximately onethird of the total per unit cost. The Teal Group estimates theworldwide fighter market at U.S. $142 billion between 2003 and2012, and assigns a 17% share to the Eurofighter.
The Eurofighter consortium is seeking to target up to 50% of thetotal export market estimated at 800 aircraft over the next 30
years and worth in excess of € 50 billion. Eurofighter has
already been sold to Austria (18 aircraft), been selected in
Greece and further export opportunities are believed to exist in
Europe, the Middle East and the Far East.
Eurofighter Production. With regard to series production, therespective production workshares of the participating partners
within the Eurofighter consortium stand at 43% for EADS,
37.5% for BAE SYSTEMS and 19.5% for Alenia, reflecting therelative number of aircraft ordered. EADS is responsible for thecentre fuselage, the flight control systems, the manufacturingof the right wing and leading edge slats, as well as final
assembly for the 180 aircraft destined for the German military
26 EADS 2003 Chapter 1 Information on EADS Activities

and the 87 aircraft ordered by the Spanish armed forces.
Eurofighter is a single source program, without redundancies indesign or production responsibilities, leading to an efficient
program cost structure. The final assembly of the Eurofighter
takes place in the respective contracting country: in Germany
at Manching, in Spain at Getafe, in the U.K. at Warton and in
Italy at Torino.
Future Development of European Unmanned Combat
Aircraft (UCAV)Management believes that the success of the next generation
European combat air system program requires that it will bejointly developed with EADS’ European competitors. Throughthe six-nation European Technology Acquisition Program(ETAP), the principal European defence contractors are working
on multi-use technologies, with the aim of developing the fifthgeneration Combat Air System (probably unmanned), withentry into service forecast to be between 2018 and 2020.
Training and Light Combat AircraftManagement believes there is a high potential market fortraining and light combat aircraft. The competition in this sector
is intense, with offerings from BAE SYSTEMS (Hawk),
KAI/Lockheed Martin (T-50), Aermacchi (AM-346) and others.

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Through the Advanced European Jet Pilot Training industrial
team, EADS is well positioned to provide jet pilot training for thetwelve participating air forces. The high energy advanced jet
trainer MAKO, currently in the definition phase at EADS, isdesigned as an optimal solution for this type of training.
Military Aircraft Conversion and Technical Services
Management believes that the modernisation of military aircraft
provides an important business opportunity for sustained
growth and profitability. As well as providing a profitable aftermarket service to existing customers, aircraft modernisation
operations provide access to new export markets for future
sales of all types of aircraft, both military and commercial. The
upgrading of military airframes is particularly attractive forcountries with limited national defence budgets, such as thosein the former “Eastern Bloc”, Latin America, North Africa andsome Asian regions. For these nations, the purchase of new
multi-role aircraft is either politically or economically impractical,
making upgrading the most cost-effective alternative.
EADS has established expertise in the field of military aircraft
conversion and upgrades through programmes for such aircraft
as Tornado, F-4 Phantom, F-18, F-5, MiG-29, Mirage F-1, C101
Aviojet, Harrier AV-8B, E-3A AWACS, P-3A Orion, C-160
Transall and Breguet Atlantic 1. These capabilities will be ofparticular value in capturing new markets, such as further
upgrades of central European air force aircraft and future
support contracts for Eurofighter.
The complementary skills and experience of EADS in many
military aircraft programmes, including the manufacturing ofmajor aerostructure components for the entire Airbus family,
allows it to offer a broad spectrum of products to multinationalcustomers and to expand its customer base and export
possibilities.

Missile Systems
Introduction and Overview
The Missile Systems group within the DS Division (comprised of
MBDA and EADS/LFK) offers solutions for air dominance, land
control and sea power missions through its innovative range oftactical missile systems. MBDA currently has a total of 45 missile,
missile system and countermeasure programmes in production
or in operational service and a further 30 in development oradvanced studies. MBDA/LFK competencies encompass all
critical subsystems such as warheads, seekers, propulsion (rocket
motors and ramjet), proximity fuses and guidance systems.
MBDA, as the pole of EADS’ missile activities, provides theindustrial basis for the much needed standardisation of weaponsof the main European countries. It enjoys a geographicallydiverse customer portfolio. Through a multinational network of
subsidiaries, it has direct access to the major European domestic
markets for missile systems in France, Germany, Italy, Spain andthe U.K. The Missile Systems group also has a stable foothold inexport markets including close links to trans-Atlantic business via
co-operations on MEADS, Patriot, PAC3 and RAM.

Revenues from the Missile Systems group in 2003 represented
31% of total revenues of the DS Division.
Markets
Market data in the missile systems sector is limited due to theclassified nature of this information and the sensitivity of buyers
and sellers of missile systems to the general dissemination ofsuch information. The figures mentioned in this section are
therefore based solely on estimates by EADS and not on official,publicly available information.
The current worldwide market for missile systems is estimatedto exceed € 10 billion. It is expected to increase due to (i) the
development of new products (such as tactical ballistic antimissile systems and stand-off guided weapons), (ii) new
missile-carrying platforms entering into production phase(Mirage 2000-5/9, Rafale, Eurofighter, Gripen, Tiger helicopter,new frigate and aircraft carriers) and (iii) requirements
stemming from new operational doctrines, changes in thegeopolitical environment and lessons learned from the mostrecent conflicts.
The conflicts in Kosovo, Afghanistan and Iraq have highlighted
the importance of standoff precision-guided weapons, which
are fired from a distance. The increasing importance of airspacedominance and the recent focus on homeland security is
expected to lead to a greater emphasis in European defence
budgets on next generation surface-to-air (Ground & Naval) andair-to-air missiles (as confirmed by the recent ASTER Phase 3
contract). EADS is particularly well positioned in thesesegments with its renewed range of products.
At present, European firms cannot easily penetrate the U.S.
market, which is dominated by companies such as Raytheon,
Lockheed Martin and Boeing. Other countries, such as Russia andChina, are also inaccessible for political reasons. However, certaintrans-atlantic programmes related to NATO’s Defence Capability
Initiative may present an initial basis for closer future cooperation.
Four principal defence contractors are active in the worldwide
market for tactical missiles and missile systems. As measured byrevenues, MBDA ranks second behind Raytheon (U.S.), and istied with Lockheed Martin (U.S.) and ahead of Boeing (U.S.). In
addition to political considerations and budgeting, key buying
factors for the customer include price, performance of individual
products, adherence to specifications, launch platforms andsystem support.
Products
Fitting the primary strategic purposes of air dominance, land
control and sea power, missile systems can be divided into
seven principal categories according to the launch platforms andtargets involved: (1) air to air, (2) air to surface, (3) ground to
air/ATBM (Anti-Tactical Ballistic Missile), (4) surface to air/naval,(5) anti-ship, (6) anti-tank, (7) surface to surface, deep attack.
EADS is active in all of these categories.
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The table below lists the programmes in which EADS
participates as prime or major contractor either directly or
through joint ventures.
Type of Missile

Purposes

Air to Air

Short range

Air to Surface

Key Products or Projects

ASRAAM

Medium range

MICA

Long range

MeteorShort range

Diamond Back – Bang

Stand-off with sub-munitions
Stand-off unitary warhead
Prestrategic stand-off
Anti-radar
Ground to Air/ATBM

Very short range
Short range
Medium range

Surface to Air/Naval

Very short range
Short range

ApacheScalp EG/Storm Shadow – Taurus
ASMP – ASMP A/VESTA
ALARM
Mistral – Stinger (under license)
VL Mica – Roland – Rapier – Spada
Aster SAMP/T – MEADS – Patriot/PAC 3
MistralVL Mica – VL Seawolf
Albatros – RAM

Anti-ship

Anti-tankMedium range

Aster/PAAMS – Aster/SAAM – ESSM

Light

Sea Skua – AS 15 TT – NSM – Marte

Heavy

Exocet family - TESEO

Anti-submarine

Milas

Short range

Eryx

Medium range

MilanLong range
Surface to surface, deep attack

Ground-to-groundSea-to-land

The most significant programmes under development andproduction are currently the Mica, the Aster, the Scalp
EG/Storm Shadow, the Taurus and the Meteor with the bulk ofdeliveries scheduled between 2003 and 2007.
The signature of the FSAF (Future Surface to Air Family) Phase 3
contract was the key success for MBDA in 2003. The contract
was signed by the OCCAR (on behalf of the French, Italian andBritish MoDs) and MBDA on November 12 and is worth € 3billion (of which the MBDA share amounts to € 2.3 billion). It
covers series production of 18 ASTER-SAMP/T batteries forFrance and Italy and up to 1,400 ASTER missiles plus logistic
support and training and full-scale development and evaluationof the ASTER Block 1 Anti-Tactical Ballistic Missile configuration
for France, Italy and the U.K.
The ASTER-SAMP/T system, the first European air defence
system with an anti-ballistic missile capability for deployment inEurope, will provide area defence for forces deployed in “out of
28 EADS 2003 Chapter 1 Information on EADS Activities

HOT – LR Trigat - Brimstone
G-MLRS
Scalp Navalarea” theatres of operation, as well as defence against bothmanoeuvring and high-speed targets such as aircraft, UCAVs,
cruise missiles and tactical ballistic missiles in severeElectromagnetic Counter Measure (ECM) environments. The
French and Italian armies expect to field the SAMP/T Block 1
system from 2007 onwards. Trading of the contract will start thisyear, ending in 2015.
During 2003, successful milestones were passed for a number ofmissile programmes – on ASRAAM, the Certificate of Design was
accepted by the U.K. customer, first deliveries of Storm Shadow
SCALP were accepted by the French customer, all Meteor
development milestones were met on time and initial integration
contracts were received in respect of Rafale and Gripen.
In December 2003, the U.K. MoD announced that the
EADS/MBDA team had signed a contract to begin theassessment of a new integrated air defence command andcontrol system (GBAD) for the U.K. armed forces. The

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contract is worth approximately £ 40 million. Under the prime
contract, the team made up of EADS Defence andCommunications Systems and MBDA will develop a new Air
Defence Command and Control System integrated with the
MBDA Rapier Field Standard C air defence missile system andthe Starstreak High Velocity Missile (HVM) which are bothcurrently in service with the U.K. armed forces. The total
GBAD Phase 1 budget is £ 1 billion.
Taurus KEPD 350, the precision stand-off-weapon system for
TORNADO and Eurofighter, is under series contract for theGerman Air Force. In September 2003, EADS/LFK submitted its
best and final offer for Taurus KEPD 350 procurement andintegration on Spanish EF-18 to GECOIN (the Spanish
procurement agency). In addition an industrial co-operationagreement between TAURUS Systems and Sener (Spain) has
been agreed. The Swedish Air Force has also confirmed its
interest in Taurus KEPD 350.
MEADS is the future ground-based air defence system for theGerman airforce and will replace Patriot in the U.S. and NIKE in
Italy. The successful tri-lateral (U.S., Germany, Italy) risk-reduction
phase is expected to be finalized in 2004. The proposal for thedesign and development phase, planned from 2004 up to 2010,
was handed over by MEADS International to the NATO agency
NAMEADSMA on June 30, 2003 and a tri-lateral Memorandumof Understanding for the design and development phase is
expected in April 2004. MEADS is the most important transatlantic co-operation programme within NATO.
In April and May 2003 the capabilities of the LR TRIGAT multipurpose guided missile system were demonstrated with asuccessful firing campaign. Germany has announced that it
intends to procure LR TRIGAT missiles for its 80 TIGER
helicopters. The start of the series preparation and series
production phase is expected for 2005/06.
The Spanish Minister Council announced on September 5, 2003
its decision to procure 24 TIGER helicopters, including the LR
TRIGAT weapon system.
In addition to its key activities in missiles and missile systems,
EADS also designs and manufactures, both itself and throughparticipations, critical missile sub-systems such as warheads,
propulsion devices, proximity fuses and guidance systems.
These sub-systems account for more than half of a missile’scost. More than three-quarters of the sub-systems produced by
EADS are for its own missile business. EADS is also active inother missile sub-systems such as launch structures, missileplatform mechanical and electronic interfaces and missile
thermal batteries. In February 2003, EADS, MBDA,
Finmeccanica, BAE SYSTEMS and SNPE combined their Rocket
Motors business through the formation of the ROXEL joint
venture (in which the shares are held equally by MBDA and
SNPE). This joint venture reflects an ongoing consolidation of
the European major missile sub-systems industry.

MBDA is also a significant provider of airborne self-protection
counter-measure systems for combat aircraft, transport aircraft
and helicopters.
Customers and Marketing
Orders for missile systems originate from MoDs. Budgetary
constraints have led European MoDs to focus on standardised
products and to the harmonisation of European government
purchases. Management believes this trend could benefit EADS
as well as its customers; allowing interoperability, better
allocation of research and development budgets, larger
production rates and standardisation of the product line.

Defence And Communications Systems
Introduction and Overview
EADS Defence and Communication Systems (“DCS”),
regrouping several defence activities with thetelecommunications activities of EADS, was created to better
respond to the evolution of the defence markets towards
global solutions and integrated systems. Its field ofcompetence encompasses manned and unmanned systems
such as tactical and strategic UAVs, manned mission aircraft,
C3I, Air and Naval Defence, Public Safety (includingHomeland Security) and Communication and Information
Networks. DCS, as a EADS System House, implements
advanced defence concepts, simulation and experimentation
tools such as Network Centric Operations and Simulations(NETCOS).
In 2003, DCS contributed 23 % of the DS Division’s total
revenues.
MarketEADS believes that the need for transformation of the armed
forces and for homeland security will grow in the medium tolong term, even if European defence budgets overall should
decline. Most recent conflicts have shown an increasing needfor interoperable reconnaissance and communication systems
for the armed forces. The DS Division has the mission ofcreating value for EADS by addressing the new market segmentof Lead System Integration (LSI) and to provide cross-business
unit solutions.
In this market, the DS Division faces competition from large U.S.
and European companies such as Raytheon, Lockheed Martin,
Thales, BAE SYSTEMS, Motorola and SAIC.
Products
Command, Control, Communication and Information(C3I) Systems C3I systems form an essential part of current andfuture battlefield management. They improve the overall
battlefield awareness and support the command and control
process over all command levels, from a tactical, battlefield-level
through to a higher, strategic command level. They can also be
used both in simulation and training modes.

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The main objectives of C3I systems are timely information
display and reliable and rapid data exchange among forces,
including within coalitions. In response to the increasing
demand for interoperability and improved informationexchange, EADS is integrating standardised protocols andelectronic documents. EADS is a major designer and supplier ofC3I systems to the armed forces in France and Germany, andthe Joint Staffs in Germany, France and NATO.
Intelligence, Surveillance and Reconnaissance Systems (ISR).
EADS has considerable systems capabilities with respect tostrategic and tactical airborne and satellite-based
reconnaissance and surveillance systems. EADS’ activities
include the design and production of systems and sensors,
payload integration with platforms, ground stations, image
exploitation and data processing.
Following the first generation of reconnaissance drones (CL289)
delivered by EADS to the French and German armies, whichwere used in operations in the former Yugoslavia, EADS iscurrently developing a novel Medium Altitude Long Endurance(MALE) UAV system covering the full spectrum of intelligence,
surveillance and reconnaissance missions. An initial evaluation of
the MALE UAV is being carried out under a contract with the
French MoD, with a successful test flight performed in 2002.
The MALE UAV is being marketed globally, with a particularfocus on European customers.
At the initiative of the U.S. and German MoDs, Northrop
Grumman and EADS have together performed the first
European global demonstration flight of a EuroHawk unmanned
aerial vehicle, a combination of an existing U.S. system(GlobalHawk) with European electronics and sensors. EADS is
responsible for the concept, the sensor system, and integrationof the sensors on the EuroHawk platform. Cooperation between
EADS and Northrop Grumman on this High Altitude Long
Endurance (HALE) UAV system will help to meet urgent
European airborne ISR needs. The successful demonstrationflights in Germany at the end of 2003 have shown thecapabilities for system integration in the UAV field.
EADS is a European leader in satellite image processing andground stations and has been selected by the U.S. Air Force as
the contractor for the Eagle Vision multi-satellite ground data
terminal. EADS has a significant share in the ground segment
for the German SAR-Lupe radar satellite program and is also a
principal contractor for the image processing stations in France
for the Helios military observation satellites and the SPOT civil
observation satellites.
EADS, as a participant in the Trans-Atlantic Industrial
Proposed Solution program (TIPS), will play a key role in future
joint ISR systems involving airborne manned vehicles, UAVs
and space-based resources, including the NATO Airborne
Ground Surveillance program (AGS). EADS is the leadcompany in the five-nation development of a synthetic30 EADS 2003 Chapter 1 Information on EADS Activities

aperture radar for NATO’s airborne ground reconnaissanceand its demonstrator SOSTAR-X, as well as for its common
ground station. Within joint ISR systems, EADS is alreadyunder contract for a ground system that will integrate current
and future reconnaissance and surveillance systems based oninternet technology.
Air and Naval Defence (AND). AND incorporates all capabilities
of a turn-key systems supplier for Air Defence, Air Operations,
Naval Combat, Electronic Warfare and Coastal Surveillance.
Based on advanced Command and Control capabilities, ANDprovides integrated networks from sensor to effect.
EADS is continuously increasing its capabilities in the area oflarge system development and integration. Combined
Engagement Capability (CEC) is one area for future
opportunities. Continuous progress in the development of costeffective, competitive system solutions based on common
technologies and architectures are key success factors in the fast
growing global market of advanced defence networks. AND
develops, tests and evaluates complex system solutions within
comprehensive, virtual defence scenarios including simulated
data and hardware-in-the-loop. The GBAD program for U.K. is a
key example of the DCS’s success in this area.
Public Safety. EADS provides police, fire brigades, healthservice and civil protection organisations with secure mobile
network systems. These systems offer wireless communications
with features such as encryption and integration withapplications such as GPS positioning, databases and portals,
group communications, individual communication with different
levels of priorities and walkie-talkie mode. EADS also provides
integrated communication systems to airports, transportcompanies (for fleet management) and sensitive industry sites(e.g. nuclear power facilities). EADS turnkey solutions aremainly based on radio communications systems as well as on
PABXs (Private Area Branch Exchange).
The TETRAPOL has proved its reliability and efficiency as a radio
communications solution capable of being deployed on a large
scale. There are currently 80 networks already deployed orunder construction in 34 countries using technology based on
the TETRAPOL standard, tested by the International
Telecommunications Union (ITU) and the Police Cooperation
Group (formerly Schengen Group). Many of these networks
cover entire countries: RUBIS (French National Gendarmerie),
ACROPOL (French National Police), SIRDEE in Spain,
POLYCOM in Switzerland, SITNO in Slovakia, PHOENIX in
Rumania and IRIS in Mexico.
Currently, the total area covered by TETRAPOL networks
exceeds 1.4 million square kilometres and provides a service to420,000 users. Once the deployment currently underway iscompleted TETRAPOL will provide services to a million users
and cover an area of 4 million square kilometres.

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Communication and Information Networks (CIN). CIN is aprovider and integrator of secure communication infrastructuresand information systems based on civil technologies. These
solutions, which address the needs of civil and government
customers, are based on key technologies such as telephonyover IP, security, secure messaging, system management,
directories and Web communication portals.
EADS provides enterprises with communication networks basedon its Private Branch Exchange Internet Protocol (PBX IP) rangeof products. The communication networks of large corporationsorganise and transmit data and voice over their internal
computer and telephone systems. Enterprise solution networks
consist of switching systems and trunk lines that handle thecentralised flow of voice and data traffic between the local
networks and user terminals of private business networks.
Current market trends focus on the integration of voice and data
networks through increasingly relying on Internet protocols.
In the civil market, EADS offers a range of leading products,
including NeXspan ToIP solutions, call centres and security
solutions, which allows CIN to provide significant differentiation
for its customers both in France (MTGT, the new land forces
garrison transmissions network and MUSE, the DGA’s (Directeur
Général Administration) secure messaging system) and in the
United Kingdom (Hourglass, Skynet 5 and NATO Messaging).
CIN’s current projects and prospects are the HERKULES and DII
projects (outsourcing of communication infrastructures for theGerman and British armies) and NMS (NATO secure
messaging). In the medium term, the BOA (Bulle Opérationnelle
Aéroterrestre) cooperative fighting system in collaboration with
C3I is a prospective project.
Customers and Marketing
The MoDs, the Ministries of the Interior, fire brigades, healthservices and civil protection organisations primarily in France,
Germany and the U.K. are key customers for the DCS defence
business. Through various joint ventures and co-operations,
EADS has access to NATO customers and European countries.
Export markets also offer growth opportunities.
EADS provides businesses in the commercial field with data andvoice-oriented communication solutions.

Defence Electronics
Introduction and Overview
The markets in defence and security are increasingly
characterized by integrated battlespace, Net Centric Operations
and interoperable platforms and systems. The importance ofabsolute situational awareness and effective mission
management is growing constantly in the changing militaryenvironment.
Battlefield superiority and homeland security increasingly
require robust solutions for collection, management anddistribution of information, and seamless integration fromsensor to effect in a net-centric environment, whether airborne,
land or sea-based. The Defence Electronics business unit
represents the Sensors and Avionics House in EADS byproviding critical elements for data gathering, data distribution
and self-defence.
In 2003, 10% of the total revenues of the DS Division came from
Defence Electronics.
Markets
The Defence Electronics business unit addresses the market for
military avionics including ground support, surveillance, landand naval radars and battlefield management. The dominantbusiness is based on sensors and subsystems as a second- tiersupplier.
EADS’ main competitors in defence electronics are large andmedium sized U.S. or European companies (i.e. Raytheon,
Northrop-Grumman, Thales, BAE SYSTEMS, Galileo Avionica,
Indra, Saab) as well as competitors from Israel.
Products
Sensors. Defence Electronics is a principal partner for airborne
multi-mode radars such as the Captor radar in the Eurofighter
program, and has also significant activities in systems logistics,
maintenance and upgrades. Fighter aircraft and helicopters are
typically upgraded several times during their life cycle and EADSDefence Electronics can take advantage of this. Recent examples
of programmes include the improvement of the German andGreek F-4 fighter radars and the Tornado Nose Radar program.
EADS is heavily involved in the technology development andapplication of next generation phased array radars for air, naval
and ground applications, such as Eurofighter and MEADS. In thearea of Air Defence, EADS produces mid-range radars on ships(TRS-3D) and on land (TRML-3D). As subcontractor for theconstruction of K-130 corvettes for the German Navy and for the
Finnish Squadron-2000 program, EADS is responsible for major
shipboard sensor subsystems, including the multimode radar.
Defence Electronics is taking a lead role in developing andmanufacturing Synthetic Aperture Radars (SAR), which are consideredessential for future reconnaissance and surveillance operations.
EADS holds a 50% stake in United Monolithic Semiconductors(UMS), a joint venture with Thales. UMS provides EADS withthe success-critical access to gallium arsenide technology forthese above mentioned next generation radars.
Electronic Warfare and Self Defence. EADS supplies
passive electronic warfare units, such as Laser Warning, Missile
Warning, and active electronic countermeasure units, such as
self-protection jammer and towed decoy. EADS provides a
dedicated electronic warfare suite to several customers for Tiger
and NH90 helicopters. EADS also integrates the “EuroDASS”
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Defensive Aids subsystem on Germany’s 180 Eurofighters andsupplies subsystem components to the wider Eurofighter
program.
For military mission aircraft and commercial airliners, EADS isdeveloping solutions to counter terrorist threats from manpacked missiles.
For ships, armoured vehicles and artillery, EADS offers selfdefence suites and fire control subsystems for land and maritime
applications.
Mission Systems. The EADS portfolio also comprises avionics
equipment, such as digital map units and obstacle warning
systems for helicopters. In addition, having developed theIdentification Friend Foe-Subsystem (IFF) for the Eurofighter,
EADS, through a 50/50 joint venture with Thales
Communications, has been awarded a next generation IFF
production contract by the German Air Force.
EADS is also developing multi-sensor integration and data
fusion technology, which is a key future technology in this area.
For example, EADS is in charge of sensor data fusion on theNATO AWACS E3A programme including delivery of COTS
mission computing equipment and multi sensor tracking andidentification software.
Additional products offered by EADS in the field ofcommunication and identification include wide-band modular
data links and MIDS (multi-function information distribution
system).
The French DGA has awarded EADS an important contract for
integrated airborne communication. These are essential
elements for mastering interoperable net-centric battlefieldenvironments.
As a major work share partner in the field of military mission
avionics for the A400M, EADS assumes the sub-system
responsibility for mission management and for the defensive
aids sub-system.
For the successful execution of “out of area” ground missions incrisis and conflict regions, EADS Defence Electronics supports
the international armed forces with mobile bridges and mobile
hospitals to ensure the same quality of medical care as instationary facilities.
For the infantry, Defence Electronics works on soldier systemmodernisation programmes for dismounted infantry sections.
This includes both provision of electronic devices and training.
Customers and Marketing
Key customers for defence electronics are MoDs, Ministries of
the Interior, military services, security forces, our in-house EADS
systems supplier and other lead systems integrators worldwide.
32 EADS 2003 Chapter 1 Information on EADS Activities

Through various joint ventures, participations and cooperations, EADS has access to MoDs of all NATO countries, inparticular in Germany, France, U.K., Spain and Italy. Export
markets, especially in the Middle-East and the Asia-Pacificregion, also offer growth opportunities.

EADS Services
Introduction and Overview
Until the end of 2003, EADS organised its defence and civil
systems services activities around four main areas: (1)outsourced services, (2) test and related services, (3) systemengineering services and (4) engineering solutions services.
The growing complexity of modern systems and engineering
tools and the requirement for cost-effectiveness has led
customers to demand turnkey solutions instead of stand-alone
equipment. Because of its technical and organisational
capabilities, EADS can pool the technical resources andproducts of its various subsidiaries and external suppliers tooffer such turnkey solutions.
For military forces, outsourcing is an effective solution to the
problems of tight public budgets and to the reduction of military
personnel. In order to maintain its position as prime contractor
with military customers and to generate profitable growth instable defence markets, EADS aims to play a key role in suchoutsourcing of defence activities.
The EADS Services business unit contributed 4 % of the DS
Division’s total 2003 revenues.
Products
Outsourced Services. EADS Services forms part of aconsortium (ISIC 21) with CSC Ploenzke and Mobilcom ranked
by the German MoD as “preferred bidder” for Germany’s€ 6.7 billion Herkules project (outsourcing of thecommunication and IT services of the German MoD for 10
years). The EADS share in this project, if awarded, is expected
to amount to € 2 billion over the next ten years. The projectaward is expected in 2004.
EADS Services, together with other EADS business units as wellas partners in the U.K., is a participant in the Air Tanker
consortium. The FSTA project represents the largest private
financing initiative project in Europe. EADS also participates invarious outsourcing projects for French, German, Spanish andU.K. military customers in the field of logistics, training,telecommunications and flight operations.
In 2002, to further strengthen its portfolio in outsourced military
services, EADS acquired the Gesellschaft für Flugzieldarstellung(GFD), complementing its acquisition in 2001 of a majority stakein Aviation Defense Services (AVDEF). GFD (in Germany) and
AVDEF (in France) provide training services to the German andFrench navies and air forces for air defence, in addition to otherservices in Europe. GFD was selected by the German MoD for a

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5-year flight operations contract from 2004 until 2008 (target
towing, ELOKA training).
In a 50/50 consortium with Serco, EADS Services was also
short-listed by the U.K. MoD to participate in the tender for
CATS (Combined Aerial Target Service), a U.K. MoD triService (Army, Navy, Air Force) project to provide an aerial
target service at a variety of military ranges tender. This
contract is expected to amount to € 1.2 billion over the next
10 years.
Test Solutions and Related Services. The increasingly complex
electronics used both in civil and military aircraft and weapon
systems require continuous equipment maintenance testing.
EADS Services, through the Test & Services operating
unit, confirmed in 2003 its leading position world-wide interms of market share for multi-purpose civil aviation test
systems and related services and its leading position in
Europe as supplier of multi-purpose defence test equipment.
In 2003, despite a decreasing civil aircraft business, Test &Services received a high level of new orders from airlines
worldwide.
Test & Services strengthened its co-operation with major OEM’s
which are looking for solutions coming from Test & Services inorder to replace their own in-house test solutions.
In the area of Test Engineering, Test & Services confirmed its
strong growth in France and in the U.S. through ARC. In 2003
Test & Services received important orders for the standard F2 of
RAFALE program through Dassault and Thalès and D2G test
benches for the French MoD.
System Engineering Services. EADS, through APSYS, provides
technical studies and expertise relating to security and safety ofcomplex systems. Major markets in 2003 were aeronautics,
defence, chemical and oil industry.
Engineering Solutions Services. EADS Services, through
MULTICOMS, offers international voice services for traffic
headed to difficult to reach destinations and for cellular
networks.

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1.1.6 Space
Introduction and Overview
EADS is the third largest space systems manufacturing company
in the world after Boeing and Lockheed Martin and the leading
European supplier of satellites, orbital infrastructures andlaunchers. For 2003, the consolidated revenues of Space
Division amounted to € 2.4 billion, or 8% of EADS’ total
revenues.
The Space Division designs, develops and manufacturessatellites, orbital infrastructures and launchers and provides
space services. The Division is composed of three main
companies: EADS Astrium, EADS Space Transportation(“EADS-ST”) and EADS Space Services.
The Space Division also provides launch services, through its
shareholdings in Arianespace (Ariane 5 launcher), Starsem(Soyuz launcher) and Eurockot (Rockot launcher), as well as
services related to telecommunications and earth observation
satellites, through dedicated companies such as Paradigm,
Infoterra and Spot Image. The Division’s roles in space
programmes are complemented by its specialist subsidiaries:
EADS CASA Espacio for (subsystems for launchers, satellites
and orbital infrastructure); EADS Sodern for optronics andspace equipment and CILAS for laser technologies and highprecision optics.
EADS Astrium is the leading European company in the design
and manufacture of satellites, spanning all major segments ofthe markets for satellites (platforms, payloads, equipment). It
supplies (1) telecommunications satellites to leading
telecommunications service providers, (2) Earth observation,navigation and science satellites to major national andinternational agencies and (3) military applications satellites toEuropean MoDs. EADS Astrium also designs and manufactures
payload equipments and subsystems available to the global
space industry market. On January 31, 2003, EADS completed
the acquisition of BAE SYSTEMS’ 25% stake in Astrium(subsequently renamed EADS Astrium) effective as of January
1, 2003. Following this acquisition EADS now controls 100% of
the voting rights of EADS Astrium.
EADS-ST is a specialist in European space transportation andspace infrastructure. It designs, develops and produces Ariane
launchers, the Columbus laboratory and the ATV cargo carrier
for the International Space Station, the atmospheric re-entry
vehicles, missiles for France’s nuclear deterrent force,
propulsion systems and space equipment. As sole prime
contractor for the Ariane 5 system it is responsible for thedelivery to Arianespace of a complete and fully tested vehicle.
The company also supplies all the Ariane 5 stages, theequipment bay, the flight software, as well as numerous subassemblies.
EADS Space Services is a dedicated division of EADS Space forthe development and promotion of satellite services with a
34 EADS 2003 Chapter 1 Information on EADS Activities

current focus on the fields of telecommunications andnavigation. EADS Space Services includes wholly owned
subsidiaries Paradigm Secure Communications (“Paradigm”)
and Paradigm Services, the first commercial provider of secure
military communications services under the Skynet 5
programme for the U.K. MoD. Paradigm currently operates theSkynet 4 system for the U.K. MoD, which will be replaced by
the Skynet 5 system in 2007. EADS Space Services also
manages holdings in companies providing telecommunication
satellite services and operations and provides satellite navigation
services through its participation in the Galileo project.
In 2003, the Space Division intensified its restructuring actions
leading to headcount reductions at EADS-ST and EADS Astrium
and took further actions to increase efficiency and boost
profitability despite a challenging competitive environment:
These revolve around increased focus on customer satisfaction,
more aggressive cost reduction through integration, andstreamlining management and functions. The Space Divisioncommenced a drastic improvement plan for satellite activities in2002 which was continued and enhanced in 2003. The
restructuring activities are expected to result in a return toprofitability in 2004.

StrategyManagement views the Space Division as an important enabler
of EADS’ future growth in the provision of comprehensive
military and civil large systems. In the military sector,
competencies in the Space Division complement efforts
throughout EADS in the development of network centricwarfare capabilities, ballistic missile defence systems andsecured telecommunications networks. In the civil sector, theSpace Division is positioned to provide new growth
opportunities in areas such as air traffic management andnavigation.
EADS considers a thriving commercial space industry as
necessary to provide the critical mass for the sustenance of an
overall space business – including the military programmes
important for EADS’ overall strategy. EADS views consolidation
and re-engineering of the European space industry as theinevitable response to the currently contracted commercial
space market. Through the Space Division, EADS intends to beat the forefront of this consolidation in order to insure its futurerole in the space industry. To this end, the Space Division willseek to:• Re-engineer the satellite and launch vehicle businesses.
In order to return the space business to profitability in amarket characterised by shrinking demand and excess
capacity, EADS is undertaking efforts to reengineer theSpace Division. The acquisition of BAE SYSTEMS’ 25% stakein Astrium permitted the Space Division to reorganise its
satellite and launch vehicle businesses by creating corecentres of competency in both businesses. This
reorganisation is expected to generate cost efficiencies by

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developing synergies between EADS Astrium and EADS-ST
activities and to better position the Space Division forparticipation in further European space industry
consolidation.
In addition to the implementation of previously announced
headcount reductions (1,600 positions), the Space Division
will reduce headcount by an additional 1,700 positions.
Through the Space Ambitious Recovery Actions programs(“SARA 1 and SARA 2”), the Space Division intends togenerate further cost savings by implementing the
integrated cross-national centres of competence concept,
and by adapting to market demand, reorganising its sourcing
activities with the view to significantly reducing procurement
costs, and integrating its various program engineering,system design/integration and testing resources.
• Maintain Ariane’s market position in the commercial
launch services market.
As the main industrial shareholder and prime supplier ofArianespace, EADS intends to lead, with the backing ofEuropean governments, the restructuring of the European
space transportation industry in response to an increased
competition in the launch vehicle field and a weak commercial
telecommunications satellite launch market. To assure longterm competitiveness of the Ariane programme, the Space
Division has positioned itself as the prime contractor for
Ariane development and production, paving the way to an
overhaul of the current manufacturing and marketingorganisation, with a goal of reduced costs and increased
launcher performance and reliability.
• Extend EADS’ leadership in European military space
programmes.
Management views national and European space
programmes, such as the Paradigm Skynet 5 programme, as
an important future growth segment for the Company.
Taking full control of Paradigm (as a result of the acquisitionof BAE SYSTEMS’ 25% stake in Astrium) allows EADS to
expand its services offerings via military telecommunications
satellites, highlightedly by the ongoing offer to the NATO
organisation for their secure satellite communications
requirements. EADS is also well positioned in militaryreconnaissance systems, such as Helios II, Pleiades or Essaim,in the wake of successful commercial and military earth
observation satellite systems (e.g. Spot, Helios, ERS).
Management believes that European governments realise theincreasing importance of space systems following the Iraq,
Afghan and Kosovo military campaigns and should commit
greater resources to independent use of space based
systems – a key strategic enabler in the context of rising
asymmetric threats.

Satellites
Overview
Satellite systems can be grouped into four categories:
telecommunications (civil and military), observation (civil andmilitary), science, and navigation. Telecommunications
satellites have multiple applications, such as long distance andmobile telephone links, television and radio broadcasting,data transmission, multimedia and Internet. They may be
used for civil or military applications. Observation satellites
allow the gathering of information for various fields such as
cartography, weather forecasting, climate monitoring,
agricultural and forestry management, mineral, energy andwater resource management and military surveillance
applications. Scientific satellites are tailor-made products
adapted to the specific requirements of the mission assigned
to them. They have applications such as astronomical
observation of the universe’s sources of radiation, planetary
exploration and earth sciences. Navigation satellite systems
deliver signals that enable users to determine theirgeographic position with high accuracy, and is of increasing
importance significant in many commercial sectors, including
airlines, land transport operators, sea and air emergency
services, agriculture and fisheries, tourism andtelecommunications networks.
MarketEADS is one of the largest European satellite manufacturers
and benefits from its long-term, close relationships withinstitutional customers in France, Germany, Spain and the U.K.
with access to the respective national budgets. The
commercial telecommunications satellite manufacturing market
is highly competitive, with customer decisions based
principally on price, technical expertise and track record.
EADS’ main competitors worldwide are Boeing, Loral andLockheed Martin of the United States and Alcatel Space ofFrance.
Management expects the telecommunications satellite segment,
presently depressed due to the global economic recession andsatellite operator woes, could recover due to such factors as: (1)increased telecommunications demand, including Internet,
multimedia and military needs, and (2) a greater demand to
replace existing satellites. EADS intends to position itself as asignificant player in this field in order to participate in thepotential recovery of the market.
In Europe, the market for observation, scientific and navigation
satellites is organised either on a national or on a multilateralbasis and in accordance with the fair return policy under which
contracts are awarded to domestic suppliers in proportion to therespective contributions of the suppliers’ countries.
For observation, scientific and navigation satellites,
Management estimates that EADS’ share of the accessible
market is about one half. On top of the European institutional
market, EADS believes that there is emerging export demandfor earth observation systems.
Furthermore, civil state agencies, including the European Space
Agency (“ESA”), are likely to display increased needs for earth
observation satellites in the framework of European
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environmental programmes. This was identified as a key focusof the EU/ESA framework agreement on a European Space
Policy in 2003 and such focus was highlighted by thestrengthening of the GMES initiative.
EADS expects the market for scientific satellites to remain stable
over the medium term.
The agreements in 2003 at the EU level and among ESA member
states clear the way for the development and implementation of
Galileo, the new European global satellite navigation system. This
creates an invigorated situation for the satellite navigation market(system development/implementation and navigation-related
services sector) and the program will increase demand for user
and customer-oriented solutions.
In the institutional market for observation, scientific andnavigation satellites, EADS competes against several players,
many of which may intervene as prime contractor. Space
agencies and other scientific institutional customers may alsochoose to retain the control of mission design by acting as soleor joint prime contractor for certain programmes.
In the market for military satellites, EADS expects increased
demand for telecommunications and observation satellites. In
recent conflicts, the shortcomings of European militarycapabilities in that field have become increasingly visible,
while the need for preparedness in the face of elusive threats
have promoted such means to a higher level of priority. A
notable feature of these military markets is their predictability
in terms of volume over a long-term period. The growth in
the military telecommunications satellites market ishighlighted by Paradigm’s participation in the Skynet 5
program.
Products
EADS Astrium manufactures satellite platforms, payloads andmajor sub-systems and a wide range of equipment and isthereby able to offer turnkey satellite systems to its customers.
Telecommunications Satellites. EADS Astrium 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, the latest version of which is EUROSTAR 3000
(35 such satellites have been ordered to date).
In 2003, EADS Astrium won a contract from Telesat, a Canadiancompany to build the Anik F1R satellite, a contract from
Eutelstat to build the Hotbird 8 satellite and the Arabsat 4A and
4B contract for the development of two satellites and theupgrade of the ground control centres for Arabsat.
The Hellas-Sat EUROSTAR 2000+ satellite which will provide
telecommunications for the 2004 Olympic Games in Greece was
successfully launched in May 2003.
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In the field of military telecommunications satellites, in 2003
the Skynet 5 contract was awarded to Paradigm by the U.K.
MoD. EADS Astrium, under contract to Paradigm, is systemprime, responsible for the design and build of two Skynet 5
spacecraft as well as implementing the upgrade of the groundsegment and provision of additional satellite communications
terminals.
Observation Satellites. EADS is the leading European
supplier of earth observation satellite systems, for both civil andmilitary applications. In this field, EADS derives significant
benefits from the common elements of its civil and military
programmes.
EADS is the prime contractor for the following ESA civil earth
observation programmes: Envisat, a European environmental
monitoring satellite launched in March 2002; Metop, a next
generation polar orbiting meteorological satellite system to be
operational in 2005; and Spot 5, a high resolution satellite
system with extended coverage capability launched in May
2002.
In 2003, EADS Astrium won several important contracts forobservation programs including (1) a € 314 million contractfrom the French national space agency (“CNES”) as prime
contractor for two small and highly agile earth observation
satellites, Pleïades, for civil and military applications to belaunched in 2008 and 2009 and (2) a contract with ESA for thedevelopment of the Aeolus satellite including the platform andthe Aladin wind - studying instrument.
EADS Astrium is prime contractor for Helios, the sole European
optical military observation satellite system to date. EADS
Astrium is currently manufacturing the second-generation
Helios 2 satellites and ground segment systems. EADS Astrium
is also the prime contractor of the Essaim microsatellites
demonstrator, launch and ground segment for militaryobservation of electromagnetic activity.
Science Satellites. EADS Astrium is prime contractor for the
spacecraft in ESA’s major scientific programmes including the
Soho solar observatory, the four Cluster II spacecraft, the X-Ray
Multi-Mirror Newton space telescope and the Mars Express,
Rosetta and Venus Express interplanetary probes. In 2003 Mars
Express successfully landed on Mars and following on from thisEADS Astrium has been awarded the next Mars mission
contract.
Navigation Satellites. EADS Astrium, together with Alcatel Space,
Alenia Spazio and GSS has established a dedicated company tobuild and implement the European navigation system Galileo. As
the principal shareholder in Galileo Industries S.A. (“Galileo
Industries”), EADS Astrium plays a crucial role in the developmentof Galileo, which is scheduled to be operational by 2008. In July
2003 Galileo Industries was awarded a contract for the first of two
test satellites with a launch date scheduled for the end of 2005.

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29 MARCH 2004

EADS Astrium Germany will supply the avionics system and partsof the Galileo’s test satellite’s solar arrays while EADS Astrium U.K.
is responsible for payload development and ground segment lead.
Also in July 2003 the Thales Group signed a memorandum of
understanding pursuant to which Thales will take a 12% equity
stake in Galileo Industries.

launchers to place them into orbit; the launcher is consumed
during the launch process. EADS-ST is active in two distinct
businesses: (i) manufacturing launchers for both civil andmilitary purposes; and (ii) providing launch services through its
interests in Arianespace, Starsem and Eurockot.

Orbital Infrastructure
Overview
The orbital infrastructure segment comprises manned andunmanned space systems. The International Space Station (“ISS”),
together with related vehicle and equipment development
programmes and services, constitutes the predominant field ofactivity in this segment. The Columbia shuttle accident in 2002 has
led to the postponement of the launch of the European Columbus
module for two years, which is now planned for 2006.

Market
The development of the launcher market depends on the
demand for satellites, orbital infrastructures and space
exploration vehicles. The average open market for launchservices is estimated by Management to remain low, atapproximately 20 payloads per year, mostly made up ofgeostationary telecommunications satellites. However, this figure
can vary to reflect the impact of economic cycles. This market
does not include institutional launch services for the American,
Russian and Chinese military and governmental agencies.

Market
The demand for orbital infrastructure systems originates solely
from publicly funded space agencies, in particular ESA, NASA,
RKA (Russia) and NASDA (Japan). Such systems are usuallybuilt in cooperation among international partners. The core
European contribution to the ISS includes (1) the Columbus
Orbital Facility, a laboratory module permanently attached to theISS, and (2) the ATV (Automated Transfer Vehicle) for freightdeliveries and provision of other services for the ISS.

The advent of an increasingly large, profit-driven private
customer base for satellites has encouraged the development oflaunch services companies willing to compete on price andquality of service. Among them, certain ventures have beenorganised, combining access to low-cost, reliable military
rockets from former Soviet Union companies with the marketing
expertise and access to the satellite open market of western
manufacturers. This situation creates a strong competition on
the commercial launches market.

Once the ISS is fully operational, a range of orbital infrastructure
products will be open to general competition, such as additional
equipment for scientific experiments, along with a market for theutilisation and servicing of the space station. EADS ST is currently
competing for a twelve-year contract to provide services to the ISS.

In defence, France follows an independent policy to have its
own deterrent force which is currently based on submarinelaunched ballistic missile systems. In 1998, the French Statedecided to develop a new generation of ballistic missiles. In
addition to new sales and state-financed development work, theballistic missile segment entails substantial maintenance work toensure system readiness over the life span of the equipment,
which may stretch over several decades. EADS Space’s ballistic
missile segment activities are conducted through EADS-ST,
which is the exclusive supplier of ballistic missiles to the French
State, its sole customer in this area.

Products
Manned Laboratories or Habitats. EADS-ST is the prime
contractor for the development and integration of theColumbus Orbital Facility and is responsible for the
Columbus on-board Data Management System. It also
participates in the construction of the ISS robotic system
European Robotic Arm.
Vehicles. EADS-ST is prime contractor for the development andmanufacture of the ATV (Automated Transfer Vehicle),designed to carry fuel and supplies to the ISS and to provide
reboost capability and a waste disposal solution. The first ATV
will be launched by Ariane 5 in 2005 and there will be a total of
approximately 8 ATV missions planned through to 2013.
Experiment Facilities. Under contract with the ESA and DLR,EADS-ST supplies experiment facilities to be used for researchin microgravity conditions.

Launchers and Launch Services
Overview
Space systems (satellites, orbital infrastructure elements,
interplanetary probes) depend on rocket propelled multi-stage

Products and Services
Launch Services. EADS-ST is active in the field of launchservices through its shareholdings in Arianespace for heavy-liftlaunchers, Starsem for medium-lift launchers and Eurockot forsmall-lift launchers.

Arianespace. With a participation of 27.13% in Arianespace(direct and indirect), EADS-ST is the second largest
shareholder after CNES and the largest industrial shareholder.
Arianespace is the world’s largest commercial launch service
provider in terms of total sales in 2003 with over 147
commercial satellite launches since 1984. It markets and sells
European launchers on the world market and carries out
launches from the Kourou space centre in French Guyana. Its
market share of the accessible market exceeds 50%. In 2003,
one Ariane 4 launch (for a civil customer) and three Ariane 5
launches with 7 payloads (4 for civil customers and 3 for
EADS 2003 Chapter 1 Information on EADS Activities 37

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institutional customers) were carried out. The currently usedversion of Ariane 5 has the capacity to launch one or more
payloads with a total mass of up to 6,9 tonnes into
geostationary transfer orbit. The first Ariane 5 commercial
launch occurred in 1999, four Ariane 5 were successfullylaunched in 2000, one in 2001 and three in 2002.
Following a letter of order signed in June 2003 for € 3 billion,
negotiations are in process between Arianespace and EADSST for the delivery of 30 increased lift versions of Ariane 5,
capable of carrying up to a ten-tonne payload.

Starsem. EADS-ST has a direct participation of 35% inStarsem, a French corporation, along with Arianespace(15%), the Russian space agency (25%) and the Russianstate-owned Central Specialised Design Bureau “Progress”(25%). Starsem markets launch services by Soyuz launchers
for medium-weight spacecrafts into low or sun-synchronous
orbits as well as for interplanetary missions. The ESA
Ministerial Conference in May 2003 approved the offering of
Soyuz launches from Kourou. Such launches should be
effective in 2007 and will be operated by Arianespace. In
2003 Soyuz successfully launched the ESA’s Mars Express
mission and the Israeli Amos 2 satellite.
Eurockot. EADS-ST (51%) and Khrunichev (49%) have a joint
participation in Eurockot Launch Services, which procures
low cost launch services for small, low earth orbit satellites
with Rockot launchers derived from the SS-19 ballistic
missiles. In 2003, Eurockot successfully carried out two
launches (the Multiple Orbit Mission MOM and Japanesesatellite Servis-1). Eurockot’s backlog includes the launch
CryoSat for ESA (2004), Korea’s Kompsat-2 mission and
ESA’s GOCE spacecraft (2005).
Commercial Launchers. EADS-ST manufactures launchersand performs research and development for the Ariane
programmes. ESA funds the development cost for Ariane
launchers and associated technology. Once ESA certifies thelauncher, Arianespace markets and sells launch services
worldwide. The ESA ministerial conference in May 2003
confirmed EADS-ST as the single prime contractor for the
Ariane 5 system, meaning EADS ST will manage all of thecontracts covering launch vehicle production.
EADS ST is presently focusing on the production of the Ariane 5
and the return to flight status of the increased lift 10 tonnes
version Ariane 5. In addition to its prime contractor role, EADS
supplies all Ariane 5 stages, the vehicle equipment bay, the flight
software and several sub-assemblies. These activities in the
Ariane program underscore the key position of EADS in theEuropean launcher industry. Furthermore, EADS also supplies
launcher equipment to non-European customers, particularly in
the United States.

38 EADS 2003 Chapter 1 Information on EADS Activities

Management remains committed to driving down production
costs, and to restructuring EADS launcher activities into a single
company to take responsibility for prime contracting of Ariane
development and production.
ESA Ministerial Conference in May 2003 has also taken a strong
commitment towards the “European Guaranteed Access to Space”(EGAS) program, with the decision to fund the Ariane 5 ECA
qualification and to support Arianespace recovery plan over a 5
years period.
Ballistic Missiles. EADS-ST is the only company in Europe todesign, manufacture, test and maintain ballistic missiles. Under
its contract with the French State, EADS-ST has produced the
sub-marine launched MSBS family (M1, M2, M20, M4, M45 as
well as launch facilities at the Brest naval base. The M45 is
deployed onboard France’s new-generation nuclear-poweredballistic missile submarine. The company is tasked with theoperational maintenance of the M45 missile system until theend of its operational service. EADS-ST is under contract todevelop the M51, a new submarine-based strategic missile
system with increased technical and operational capabilities.
The initial development phase is scheduled for completion in2008. EADS-ST has also made proposals to the French MoD
for the M51 production phase and test range facilities.
Management believes that the development and production of
the M51 will provide EADS with technologically sophisticatedwork over the long term, related to subsequent production anddevelopment work.
In addition to being relatively predictable, current orders for thedevelopment of ballistic missiles coincide with the entry of
Ariane 5 into the production phase thereby facilitating the
optimal utilisation of development capacity.
As part of the efforts by the U.S. to develop defences against
missile attack, EADS Astrium and EADS-ST have been selectedby NATO as members of a trans-atlantic consortium to carry out
a Theatre Missile Defence feasibility study. In July 2002, EADS
entered into a memorandum of understanding with Boeing on
the Missile Defence System project, highlighting EADS’ pivotal
role in the European development and deployment of a ballistic
missile defence system. In addition, EADS-ST has made several
proposals to French MoD for future work in the field of missile
defence capabilities.

Space Services
EADS has identified military telecommunications satellite services
as a significant area of future growth. In July 2002, EADS and BAE
SYSTEMS jointly formed Paradigm to address service provision
requirements of the U.K. MoD’s Skynet 5 programme; the U.K.’s
future military telecommunications satellite system. In October2003 Paradigm was awarded a £ 2.5 billion contract by the U.K.
MoD to deliver new generation space-based defence

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communication services using Skynet 5 satellites, ground systems
and terminals.
In December 2003 EADS Space Services, with a team of partners
which includes Inmarsat and Thales, submitted its bid to become
the concessionaire-holder for the deployment phase andsubsequent operations phase of Galileo. The nominatedconcessionaire will be expected to take the lead in arranging private
financing for the deployment and operational phases of Galileo,
and should ultimately become the Galileo Operating Company.
EADS is involved, at a proposal stage, in satellite secure military
telecommunication programs for the NATO and the German MOD.
EADS also holds stakes in companies providing commercial
earth observation services (e.g. Spotimage/Infoterra).

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

EADS 2003 Chapter 1 Information on EADS Activities 39

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1.1.7 Investment
Dassault Aviation
EADS holds a 46.03% stake in Dassault Aviation – listed on thePremier Marché of Euronext Paris – along with Groupe Industriel
Marcel Dassault (“GIMD”) (50.02%) and free float (4.04%).

(1) The Mirage 2000-5, its latest version, is a multi-role combat
aircraft designed for air to air multiple-target combat, as wellas air to ground missions. The Mirage 2000-5 can be armed
with the MBD MICA air to air interception and combat
missile; andDassault Aviation is a major participant in the world market for
military jet aircraft and business jets. Founded in 1945, Dassault
Aviation has delivered more than 7,500 military and civil aircraftto purchasers in more than 73 countries.

(2) The Mirage 2000-D, an all-weather penetration aircraft usedby the French Air Force is being adapted to fire the new
MBD SCALP EG stand-off air to ground missile. The lastaircraft ordered by the French Air Force in 1996 weredelivered in 2001.

On the basis of its experience as designer and industrial architectof complex systems, Dassault Aviation designs, develops andproduces a range of military aircraft and business jets.
In order to avoid any potential conflict between the military
products of Dassault Aviation and EADS (Rafale and Eurofighter)and to facilitate a “Chinese wall” approach, EADS’ Dassault
Aviation shareholding is managed by Strategy Coordination,
whereas the Eurofighter program is managed by EADS’
Aeronautics Division.
Military Aircraft
Dassault Aviation offers two multi-role combat aircraft, theRafale and the Mirage 2000 family.
• Rafale. The Rafale program includes three versions of a twinengine, multi-role combat aircraft designed for both Air
Force and Navy applications. According to government
budgetary documents, France is considering the acquisitionof 294 Rafale, 234 for the Air Force and 60 for the Navy, for a
total program cost of € 32.3 billion, including € 9.5 billion
for development. 61 aircraft have already been ordered; ofthese, 36 are destined to the Air Force, and 25 to the Navy.
In 2001, the first operational group of Navy Rafale wascommissioned on the Charles De Gaulle aircraft carrier.
Twelve Rafale were delivered by the end of 2002.
• Mirage 2000. The Mirage 2000 family is offered in two
versions:

40 EADS 2003 Chapter 1 Information on EADS Activities

More than 600 Mirage 2000 aircraft have already been ordered,nearly half of them by foreign countries.
Business Aircraft
Dassault Aviation offers a wide range of products at the top
end of the business jet sector. Over 1,400 Falcon business jets
have been delivered since the first Falcon 20 delivery in 1965.
In-service Falcons currently operate in over 60 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, launchedin October 2000. The turn of the century saw Dassault Falcon
Jet clearly emerge as the industry leader in its category. 72 netorders were closed in 2002, compared with the 73 net orders
in 2001. Despite a lower level of corporate orders reflecting thegeneral economic downturn, 66 Falcons were delivered in
2002. In 2001, the latest project in the Falcon family, the tri-jet
long range Falcon 7X was unveiled to the public at Dassault’sTeterboro, New Jersey, plant. It is presently in development.
Dasa-Dornier Luftfahrt
DADC, which is 75% held by EADS, holds a 93.6% stake in
Dornier GmbH, which in turn holds a 1.58% stake in the capitalof Fairchild Dornier Luftfahrt Beteiligungs GmbH, which is thesole shareholder of Dornier Luftfahrt GmbH. Through thisminority interest, EADS is not involved in any business decision
regarding Dornier Luftfahrt.

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1.2 Intellectual Property
Intellectual property (“IP”), such as patents, trademarks andknow-how, plays an important role in the production andprotection of EADS technologies and products. The use of
intellectual property rights enables EADS to remain competitivein the market and to manufacture and sell its products freely.

EADS centralises and coordinates the Group’s IP portfolio,
participates with the subsidiaries in its management andpromotes licensing of common IP between the subsidiaries.
EADS also ensures that procedures are in place to protect theconfidentiality of the Group’s IP and to ensure that third party
rights are protected (in the case of joint ventures).

Each of the subsidiary companies of the Group owns theintellectual property which is specific to its particular business. IP
used throughout the Group may be owned either directly by thesubsidiary which generated it or under license from EADS
where such IP is of common interest to the Group. EADS also
owns IP directly or under licence agreements with its
subsidiaries.

1.3 Employees
At December 31, 2003, the EADS workforce amounted to109,135 employees. The tables below set forth the number of
EADS employees by business sector and by geographic region.
Employees of companies accounted for by the proportionate
method (such as ATR and MBDA) are included in the tables on
the same proportionate basis.

EADS Employees by Business Sector
December31, 2003

December31, 2002

December31, 2001

Airbus49,52046,40945,543

Military Transport Aircraft

3,428

3,593

3,573

18,031(*)

25,547

24,23024,844(*)

16,782

17,65011,991(**)

10,366

10,414

Headquarters and Research Centre

1,321

(***)

1,270

1,557

Total EADS

109,135 103,967 102,967

Aeronautics
Defence and Security Systems
Space

(*)

Military Aircraft business unit was moved from Aeronautics to Defence and Security Systems in September 2003.
In 2003, the consolidation quota for Astrium changed from 75% to 100% resulting in 2,279 additional employees.
(***)
Including employees from EADS North America since December 2003.
(**)

EADS Employees by Geographic Region
December 31, 2003

December 31, 2002

December 31, 2001

AmountPercentage

AmountPercentage

AmountPercentage

France42,85839.3

41,74440.2

41,55040.4

Germany

41,10337.7

38,73337.3

38,445

37.3

Spain

8,063

7.4

7,759

7.5

7,893

7.7

U.K

13,125

12.0

11,893

11.4

11,754

11.4

Italy

682

0.6

765

0.7

767

0.7

USA

2,554

2.3

2,653

2.5

2,175

2.1

Rest of World

750

0.7

420

0.4

383

0.4

Total EADS

109,135

100.0

103,967

100.0 102,967

100.0

1.4 Research and Development
Research and development activities are conducted in line withthe following principles:– granting each business unit full product development
responsibility in order to conform to specific markets andcustomers’ needs, and allowing a large degree of autonomy
in the establishment of research programs;– co-ordinating research and technology activities among thedifferent business units through a research and technology
network (“EADS R&T Network”), which facilitates thecirculation of information and research results within the EADS
group and allows the setting up of a common R&T programproviding long term innovation potential; and– sharing resources, competencies and research means
through a common research centre (“Corporate Research
EADS 2003 Chapter 1 Information on EADS Activities 41

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Centre” or “CRC”) with operating sites in Hamburg,
Suresnes, Toulouse, Ottobrunn and a Technology Office in
Moscow.
Transverse projects have been implemented around thefollowing two axes:– Operation of the EADS R&T Network and extension to allgroup entities by spreading best existing practices andrelying on the CRC and joint working teams from business
units to optimise the use of potentialities in such fields asmaterials, composites, electronics, propulsion, energy,
aerodynamics, flight control, image processing andinformation technology.
– Optimization and integration of competencies and activities
of CRC laboratories.
See also “Part 1/1.1 Management’s Discussion and Analysis ofFinancial Condition and Results of Operations “.
1.5 Risk Factors
EADS is subject to many risks and uncertainties that may affectits financial performance. The business, financial condition or
results of operations of EADS could be materially adversely
affected by the risks described below. These risks are not the
only ones facing EADS. Additional risks not presently known to
EADS or that it currently deems immaterial may also impair its
business operations.
1.5.1 Market Risks
Exposure to Foreign Currencies
EADS’ revenues are mainly denominated in U.S. dollars, while
the major portion of its costs is incurred in Euro and Pounds
Sterling. Consequently, to the extent EADS were not to use
financial instruments to cover its exposure resulting from thisforeign currency mismatch, its profits would be affected bychanges in the Euro-U.S. dollar and Pound Sterling-U.S. dollar
exchange rates. EADS has, therefore, implemented an exchange
rate strategy in order to manage and minimize such exposure. In
order to secure the rates at which U.S. dollar revenues (arising
primarily at Airbus) are converted into Euro or Pounds Sterling,
EADS manages a long term hedging portfolio. There arecomplexities inherent in determining whether and when foreignexchange rate exposure of EADS will materialize, in particulargiven the possibility of unpredictable revenue variations arisingfrom order cancellations and postponements. Furthermore, as asignificant portion of EADS’ foreign currency exposure ishedged through contractual arrangements with third parties,
EADS is exposed to the risk of non-performance by its hedging
counterparties. See “Part 1/1.1.7 Management of Market Risks –Credit Risk”. No assurances may be given that EADS’ exchange
rate hedging strategy will protect it fully from significant changes
in the exchange rate of the U.S. dollar to the Euro and thePound Sterling and that such changes will not affect its results ofoperation and financial condition.
42 EADS 2003 Chapter 1 Information on EADS Activities

EADS’ consolidated revenues, costs, assets and liabilities
denominated in currencies other than the Euro are translated
into the Euro for the purposes of compiling its financial
statements. As EADS’ exchange rate hedging strategy aims tocover EBIT*, changes in the value of these currencies relative tothe Euro will have an effect on the Euro value of EADS’ reported
revenues, costs, assets and liabilities.
Currency exchange rate fluctuations in those currencies otherthan the U.S. dollar in which EADS incurs its principal
manufacturing expenses (mainly the Euro) may have the effect of
distorting competition between EADS and competitors whose
costs are incurred in other currencies. This is particularly true withrespect to fluctuations relative to the U.S. dollar, as many of EADS’
products and those of its competitors are priced in U.S. dollars.
EADS’ ability to compete with competitors may be eroded to theextent that any of EADS’ principal currencies appreciates in value
against the principal currencies of such competitors.
See “Part 1/1.1.3 Measurement of Management’s Performance– EBIT* Performance by Division – Hedging Impact on EBIT*”
and “Part 1/1.1.7 Management of Market Risks – Exchange Rate
Risk” for quantitative information about EADS’ exchange raterisk and a discussion of its foreign currency hedging policy. See“Part 1/1.1.2 Critical Accounting Considerations, Policies andEstimates – Accounting for Hedged Transactions in the Financial
Statements” for a summary of EADS’ accounting treatment offoreign currency hedging transactions.
Other Fluctuations in Financial Markets Risk
EADS is exposed not only to currency exchange rate risk, butalso to interest rate, credit, liquidity and other financial market
risks. For a discussion of these risks and the management ofthem by EADS, see “Part 1/1.1.7 Management of Market Risks”.
Exposure to Sales Financing Risk
In support of sales, EADS (primarily through Airbus and ATR)
may agree to participate in the financing of customers. As aresult, EADS has a significant portfolio of leases and otherfinancing arrangements with airlines. The risks arising from
EADS’ sales financing activities may be classified into two
categories: (i) credit risk, which concerns the customer’s ability
to perform its obligations under a financing arrangement and (ii)aircraft value risk, which primarily relates to unexpected
decreases in the future value of aircraft. Measures taken by
EADS to mitigate these risks include optimised financing andlegal structures, diversification over a number of aircraft andcustomers, credit analysis of financing counterparties,
provisioning for the credit and asset value exposure, andtransfers of exposure to third parties. No assurances may be
given that these measures will protect EADS fully from defaults
by its customers or significant decreases in the value of thefinanced aircraft in the resale market.
EADS’ sales financing arrangements expose it to aircraft valuerisk, because it retains collateral interests in aircraft for the

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purpose of securing customers’ performance of their financial
obligations to EADS, and because it guarantees part of themarket value of certain aircraft during limited periods after theirdelivery to customers. Under adverse market conditions, themarket for used aircraft could become illiquid and the market
value of used aircraft could significantly decrease below
projected amounts. In the event of a financing customer default
at a time when the market value for a used aircraft has
unexpectedly decreased, EADS would be exposed to thedifference between the outstanding loan amount and the market
value of the aircraft. Similarly, if an unexpected decrease in themarket value of a given aircraft coincided with the exercise
window of an asset value guarantee (“AVG”) with respect to thataircraft, EADS would be exposed to losing as much as thedifference between the market value of such aircraft and the
AVG amount. No assurances may be given that the provisions
taken by EADS will be sufficient to cover these potential
shortfalls. See “Part 1/1.1.6 Liquidity and Capital Resources –Sales Financing”.
Through the Airbus asset management division or as a result of
past financing transactions, EADS is the owner of used aircraft,
exposing it directly to fluctuations in the market value of theseused aircraft.
1.5.2 Business-Related Risks
Aircraft Market Cyclicality
In 2003, the combined revenues generated from Airbus and ATR
represented approximately two thirds of EADS’ consolidated
revenues. Historically, the commercial passenger aircraft market
has shown cyclical trends due in part to the sensitivity ofpassenger demand in the air travel market to growth in grossdomestic product (“GDP”). The growth in EADS’ commercial
aircraft activities has consequently been correlated to growth inGDP. Other factors, however, play an important role, such as (i)the average age and technical obsolescence of the fleet relative
to new aircraft, (ii) the number and characteristics of aircraft
taken out of service and parked pending potential return into
service, (iii) passenger load factors, (iv) airline pricing policies,(v) airline financial health and (vi) deregulation.
EADS and the Airbus division have implemented a flexible
manufacturing organization that is intended to help them adapt
to cyclical market changes in demand. See “1.1.2 Airbus –Market”. Nevertheless, EADS expects that the market forpassenger aircraft will continue to be cyclical and downturns in
broad economic trends, such as those currently being
experienced, may have a negative effect on its future results ofoperation and financial condition.
Impact of Terrorism, Epidemics and Catastrophic Events
On Aircraft Market
As the terrorist attacks in New York and Madrid, and the spreadof the SARS virus have demonstrated, terrorism and epidemics
may negatively affect public perception of air travel safety andcomfort and the demand for air travel and commercial aircraft.
Furthermore, major airplane crashes may have a negative effecton the public’s or regulators’ perceptions of the safety of a givenclass of aircraft, form of design, or airline. As a consequence ofterrorism, epidemics and other catastrophic events, an airline
may be confronted with sudden reduced demand for air traveland be compelled to take costly security and safety measures. In
response to such events, and the resulting negative impact on
the airline industry or particular airlines, EADS may suffer from adecline in demand for all or certain types of its aircraft and
EADS’ customers may postpone delivery of new aircraft orcancel orders.
Dependence on Defence Spending
In 2003, approximately 20% of EADS’ consolidated revenues wasderived from defence spending. In any single market, defence
spending depends on a complex mix of geopoliticalconsiderations, budgetary constraints and the ability of the armed
forces to meet specific threats and perform certain missions.
Defence spending may be subject to significant fluctuations fromyear to year and country to country. Adverse economic andpolitical conditions, as well as downturns in broad economic trends
in EADS’ defence markets, may have a negative effect on EADS’
future results of operations and financial condition.
In the case where several countries undertake to enter together
into defence procurement contracts, economic, political and/or
budgetary constraints in any one of these countries may have anegative effect on the ability of EADS to enter into or perform
such contracts.
Emergence of Public-Private Partnerships and Private
Finance Initiatives
Defence customers, particularly in the U.K., increasingly request
proposals and grant contracts under schemes known as publicprivate partnerships (“PPPs”) or private finance initiatives(“PFIs”). PPPs and PFIs differ substantially from traditional
defence equipment sales, as they often incorporate elements
such as:– the provision of extensive operational services over the life of
the equipment,– continued ownership and financing of the equipment by aparty other than the customer, such as the equipment
provider,– mandatory compliance with specific customer requirements
pertaining to public accounting or government procurement
regulations; and– provisions allowing for the service provider to seek out
additional customers for unused capacity.
EADS is party to PPP and PFI contracts, for example throughParadigm with Skynet 5 and related telecommunications
services, and involved in additional PFI proposals, such as theAirtanker (FSTA) project.

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Given that participation in PPPs and PFIs is new for EADS,
there can be no assurances of the extent to which EADS will
efficiently and effectively (i) compete for future PFI or PPP
programmes, (ii) administer the services contemplated under
the contracts, (iii) finance the acquisition of the equipment andthe ongoing provision of services related thereto, or (iv) accessthe markets for the commercialisation of excess capacity. Nor
can EADS be certain that it will not encounter unexpected
political, budgetary, regulatory or competitive risks over the long
duration of PPP and PFI programs.
Competition and Market Access
Most of EADS’ businesses are subject to significant competition,in particular in the commercial aircraft market, where, in thepast, Airbus has been affected by downward price pressure
resulting from such competition. EADS believes that some of theunderlying causes of such price competition have been
mitigated by restructuring in the aerospace and defence
industry. However, the recent weakening of demand has led togreater leverage for certain customers to encourage competition
in respect of a variety of issues, including price and payment
terms. No assurance can be given that competition may notintensify, particularly in the context of a prolonged downturn.
In addition, the contracts for many aerospace and defence
products are awarded, implicitly or explicitly, on the basis ofhome country preference. Although EADS constitutes amultinational combination broadening a domestic market
constituency, it may remain at a competitive disadvantage incertain countries, especially outside of Europe, relative to local
contractors for certain products. The strategic importance andpolitical sensitivity attached to the aerospace and defence
industries means that political considerations will persist for
many products for the foreseeable future.
Availability of Government Financing
In prior years, EADS and its principal competitors have benefited
from government financing of product research anddevelopment and EADS has recently received financing fromcertain governments in relation to the A380 commercial aircraft
program. No assurances can be given that financing willcontinue to be made available for future projects. Since 1992,
the European Union and the United States are bound by anagreement that sets the terms and conditions of financial
support that governments may provide to civil aircraft
manufacturers. No assurance can be given that such terms andconditions may not be varied in the future.
Technologically Advanced Products and Services
EADS develops and manufactures products that are, for the mostpart, technologically advanced and, sometimes, novel. Most of
EADS’ products must function under demanding operating
conditions. Even though EADS believes it employs sophisticateddesign, manufacturing and testing practices, there can be noassurance that EADS’ products will be successfully developed or
operated or that they will be developed or will perform as intended.
44 EADS 2003 Chapter 1 Information on EADS Activities

Certain of EADS’ contracts require it to forfeit part of its
expected profit, to receive reduced payments, to provide a
replacement launch or other product or service, or to reduce theprice of subsequent sales to the same customer if its products
fail to be delivered on time or to perform adequately. EADS hascommitments under telecommunication satellite manufacturingcontracts that were signed during a period when tight delivery
schedules were provided in these contracts, but market practiceallowed extension of schedules to meet ever more complex
technological requirements. No assurances can be given that
performance penalties or contract cancellations will not be
imposed should EADS fail to meet delivery schedules or othermeasures of contract performance.
EADS, like other organizations, has experienced occasional
product failures and other problems, including with respect tocertain of its launch vehicles and satellites. There can be noassurances that such problems will not occur in the future. In
addition to any costs resulting from product warranties, contract
performance or required remedial action, such failures may
result in increased costs or loss of revenues and may also have asignificant adverse effect on the competitive reputation of
EADS’ products. See “– Legal Risks – Product Liability andWarranty Claims”.
Major Research and Development Programs
The business environment in many of EADS’ principal operating
business segments is characterized by extensive research anddevelopment costs requiring significant up-front investment.
Business plans underlying such investment contemplate a long
payback period before this investment is recouped. There canbe no assurances that the commercial, technical and market
assumptions underlying such business plans will be met, andconsequently, the payback period or returns contemplated
therein achieved.
U.K. Pension Commitments
EADS has several common investments with BAE SYSTEMS, ofwhich the most significant in terms of employees are Airbus andMBDA. In respect of each investment, for so long as BAE
SYSTEMS remains a shareholder, U.K. employees may stay in
the BAE SYSTEMS pensions schemes, which currently qualify as
defined benefit plans. BAE SYSTEMS has announced a shortfallof £2,099 million in post retirement pension assets whencompared with the respective liabilities. This amount would havebeen recognised in BAE SYSTEMS’ books had the new U.K.
accounting standard FRS 17 already been implemented. As
participants in the BAE SYSTEMS schemes, EADS investments
are potentially affected by the shortfall. However, the agreements
between EADS and BAE SYSTEMS have the effect of capping
the contributions that the investment has to make to the pension
scheme for a certain period of time (e.g., until 2011 for Airbus).
Any additional contribution would be paid by BAE SYSTEMS.
EADS is therefore not exposed to increased contribution
payments resulting from the pension underfunding during theperiod of the contribution caps. At present, EADS has only

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limited information about how the underfunding could impact
the investments after the period of contribution caps has expired.
On November 1, 2003 EADS established a new pension
scheme for Astrium UK. The defined benefit obligation of the
new plan, calculated under the assumption that all employees
choose to transfer their benefits, amounts to £ 117 million.
Plan assets are recorded at £ 65 million, resulting in a net
liability of £ 52 million which covers the maximum risk
associated with the creation of the new plan. See “Part
1/Notes to the Consolidated Financial Statements – Note19(b): Provisions for Retirement Plans”.
1.5.3 Legal Risks
Dependence On Joint Ventures and Minority Holdings
EADS generates a substantial proportion of its revenues throughvarious consortia, joint ventures and equity holdings andbelieves that its alliances and partnerships are a source ofcompetitive advantage. These arrangements include primarily:– the Eurofighter consortium in which EADS has a 46% interest;– two principal joint ventures: MBDA in which EADS holds anaggregate 37.5% interest and ATR in which EADS has a 50%
interest;– majority interests: (a) Airbus in which EADS holds a 80%
interest, (b) Dornier GmbH: DADC, which is 75% held by
EADS, has a 93.6% interest in Dornier GmbH; and (c) LFK in
which EADS has a 81.3% interest; and– investment in associates: Dassault Aviation in which EADS
holds a 46.03% interest.
The formation of partnerships and alliances with other market
players is an integral strategy of EADS and the proportion ofsales generated from consortia, joint ventures and equity
holdings may rise in future years. This strategy may from time totime lead to changes in the organizational structure, or
realignment in the control, of EADS’ existing joint ventures.
EADS exercises varying and evolving degrees of control in the
consortia, joint ventures and equity holdings in which it
participates. While EADS seeks to participate only in venturesin which its interests are aligned with those of its partners, therisk of disagreement or deadlock is inherent in a jointly
controlled entity, particularly in those entities that require theunanimous consent of all members with regard to majordecisions and specify limited exit rights. The other parties inthese entities may also be competitors of EADS, and thus may
have interests which differ from those of EADS.
In addition, in those holdings in which EADS is a minority
partner or shareholder, EADS’ access to the entity’s books andrecords, and as a consequence, EADS’ knowledge of the entity’s
operations and results, is generally limited as compared toentities in which EADS is a majority holder or is involved in the
day-to-day management.

Product Liability and Warranty Claims
EADS designs, develops and produces a number of high profile
products of large individual value, particularly civil and military
aircraft and space equipment. EADS is subject to the risk of
product liability and warranty claims in the event that any of its
products fail to perform as designed. While EADS believes thatits insurance programs are adequate to protect it from suchliabilities and that no material claims have been made against it,
no assurances can be given that claims will not arise in the futureor that such insurance cover will be adequate.
Export Controls and Other Regulations
The export market is a significant market for EADS. In addition,
many of the products EADS designs and manufactures formilitary use are considered to be of national strategic interest.
Consequently, the export of such products outside of EADS’
domestic markets may be restricted or subject to licensing andexport controls, notably by the United Kingdom, France,
Germany and Spain, where EADS carries out its principal
military activities. There can be no assurance (i) that the export
controls to which EADS is subject will not become more
restrictive, (ii) that new generations of EADS products will notalso be subject to similar or more stringent controls or (iii) thatgeopolitical factors will not make it impossible to obtain export
licenses for one or more clients. Reduced access to military
export markets may have a material adverse effect on EADS’
business, financial condition and results of operations.
EADS is also subject to a variety of other governmental
regulations that may adversely affect its business and financial
condition, including among others, regulations relating to theprotection of the environment, the use of its products, labour
practices and dealings with foreign officials. In addition, EADS’ability to market new products and enter new markets may be
dependent on obtaining government certifications andapprovals in a timely manner.
Exceptional Items and Litigation
In its defence against an arbitration proceeding initiated byThales, EADS (more specifically Euromissile GIE) was awarded at
the end of 2002 damages on the basis of its counterclaim, theprincipal amount of which totals € 107.6 million. Thales failed
through summary proceedings to stop the immediate
enforceability of the arbitration award and damages were paid toEuromissile on February 17, 2003. Thales has filed an appeal forannulment of the arbitration decision. Briefs are being
exchanged between the parties and a decision of the Paris
Court of Appeal is expected by the end of the year 2004.
EADS 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.
EADS (more specifically, DADC and Dornier GmbH) is and wasa party to several disputes and arbitration proceedings with the
EADS 2003 Chapter 1 Information on EADS Activities 45

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29 MARCH 2004

Dornier family shareholders, minority shareholders of DornierGmbH. These disputes concerned the validity of various
resolutions of shareholders’ meetings of Dornier GmbH primarily
relating to contributions of Dornier activities and assets. These
contributions were the subject of two arbitration proceedings,
which were decided in favour of EADS/Dornier GmbH. Also,
the validity of some of these contributions was confirmed by
the regional court of appeals in Stuttgart. However, otherproceedings, in particular regarding the contribution of shares in
Dornier Luftfahrt GmbH by Dornier to Fairchild Dornier
Luftfahrt Beteiligungs GmbH, are still pending. EADS andDornier GmbH expect that the remaining proceedings will bedecided in their favour, as was the case with the recent
decisions.
At the end of 2002, a request for arbitration was filed against a
subsidiary of EADS involved in the supply of equipment under acommercial contract that was completed several years ago.
EADS believes it has strong defences, both procedural and of
substance, to oppose the claim. At this early stage of theprocedure the financial risk cannot be assessed. In June 2003,
EADS was notified that the arbitration procedure wassuspended at the request of the claimant.
EADS is not aware of any other exceptional items or pending or
threatened legal or arbitration proceedings that may have, or
may have had in a recent period, a material adverse effect on thefinancial position, the activities or the results of its group taken asa whole, except as stated above.
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 to settle
such obligation and (iii) a reliable estimate of the amount of suchobligation can be made. The amount for litigation and claims
provision as of December 31, 2003 is € 220 million. See “Part
1/Notes to the Consolidated Financial Statements – Note 19(d):Provisions”.
1.5.4 Industrial and Environmental Risks
EADS has a corporate environmental policy that seeks to ensureeach of its business units complies with the laws and regulationsof each country in which it operates. EADS has implemented
Environmental Management Systems based on ISO 14001
standards or EMAS in all business units. This aims to ensure thatconsistent measures for the improvement of EADS’s
environmental performance are systematically adopted in all
sectors of its activity.
EADS has also undertaken an effort to implement standardized
reporting and compliance levels at all of its sites and is investingin research and development projects devoted to environmental
improvements and processes. In this regard, Airbus is currently
46 EADS 2003 Chapter 1 Information on EADS Activities

implementing research programs on the reduction of noise
emissions of future aircraft, which are co-financed by theEuropean Commission. In addition, several tasks have been
identified in all business units to reduce emissions and water
waste, to eliminate asbestos or to favour the use of natural gas or
renewable energy sources. In 2003, the Military Aircraftbusiness unit was awarded the “Environment Certificate”
demonstrating compliance with environmental protection.
EADS informs its employees and the public about environmental
protection issues. For example, Airbus, one of the mostimportant EADS business units, has published an extensive anddetailed environmental report (available on the Airbus website(www.airbus.com)). EADS also actively supports theparticipation of employees in pursuing new products andtechnologies that promote resource conservation, facilitate
recycling and preserve the natural environment as much as
possible.
Together with other companies in the principal industries inwhich it operates, EADS is subject to numerous European
Union, national, regional and local environmental laws andregulations concerning emissions into the environment,
discharges to surface and subsurface water and the disposal andtreatment of waste materials. EADS believes that its current
operations are in substantial compliance with all applicable
environmental regulations. EADS believes that it is currently
capable of satisfying the stricter environmental standards for the
future contemplated by current laws or regulations, including
increasingly stringent environmental product quality standards
that will be implemented over the next few years, without
incurring significant capital expenditure. However, there can be
no assurance that increased capital expenditure and operating
costs resulting from future environmental regulations will notadversely affect the results of EADS’ operations and its financial
condition.
1.5.5 Insurance
EADS Insurance Risk Management (“IRM”), centralized at EADS
headquarters, is responsible for all corporate insurance activities
and related protection for the Group. It includes identification,
evaluation, prevention and protection of insurable risks.
Insurance techniques are used to protect the assets and liabilities
of EADS against financial consequences due to unexpected
events. Harmonized insurance policies and standards are inplace for all insurance risks underwritten by the Group.
A comprehensive information and reporting system is in place tosecure that IRM, in close conjunction with insurance managers
named by the EADS business divisions and business units, areable to respond to all insurance related risks of the Group.
A vigorous insurance risk management strategy reinforces EADS
insurance coverage. This includes strict operating procedures aswell as policies regarding procurement and sales agreements. A
systematic review and monitoring procedure of protections
systems applicable for all EADS sites is in place, fostering

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29 MARCH 2004

comprehensive and timely identification of risks and related
adjustments of insurance coverage.
EADS’ insurance programs 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– Space Third Party Liabilities including Product Liabilities– Commercial General Liabilities including non-aviation andnon-space Product Liabilities and risks related toenvironmental accidents– 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 productliability claims. Certain sub limits are applicable for Core
Insurance Policies as outlined above.
Non Core Insurance Policies cover risks such as:––––

Personal Accidents
Company Automobiles
Personal and property exposures during business trips
Life insurance

Insurance amounts for Non Core Insurance Lines are covered up
to respective sums and replacement values.
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. The standards of insurance protection aremandatory for all insurance policies.
However, to become more independent from volatilities of theinsurance markets, EADS will use the capabilities of acorporate-owned reinsurance captive in the future.
The insurance industry, partly in response to events of
September 11, 2001, has been 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 underwriting industrial
risks is shrinking. No assurance can be given that EADS will beable to maintain its current levels of coverage on similar financial
terms in the future.

EADS 2003 Chapter 1 Information on EADS Activities 47

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Chapter 2
Recent Developments

2.1 Recent Developments
Successful Launch of Rosetta Cometary Probe
March 2, 2004 marked the successful launch of a European
Ariane 5 carrying the Rosetta cometary probe, built under theoverall management of EADS Astrium. The Rosetta probe is aten-year, five billion kilometre journey to the comet Churymov
Gerasimenko. To escape the gravitational forces of Earth, theRosetta probe was accelerated to a velocity of 40,000 kilometres
per hour by the Ariane 5 upper stage, which was modified andre-qualified by EADS Space Transportation for this demanding
mission. EADS Astrium was the industrial prime contractor forthis European Space Agency project, which mobilised EADS
teams and expertise across Europe.
EADS CASA Signs Contract to Supply Maritime Patrol
Aircraft to U.S. Coastguard
On February 18, 2004 EADS and Lockheed Martin signed a
U.S.$ 87.4 million contract formalising EADS’ participation in
the U.S. Coastguard’s Integrated Deepwater Systems(“Deepwater”) program. The initial contract is for the
procurement of two CN-235 medium-range surveillance
maritime patrol aircraft, and includes options for spare parts,
servicing and six additional aircraft. The potential value of thecontract, with all options exercised, is approximately U.S.$ 300
million.
The choice of the CN-235 by the U.S. Coastguard is viewed as avalidation of the capability, flexibility and value of the aircraft as asurveillance platform, and as an example of the benefits of transAtlantic cooperation, whereby EADS brings its global capabilities
together to provide valued products to U.S. government
customers.
EADS Selected to Propose Air Refueling Service to the
U.K. MoD
On January 26th, AirTanker was selected to negotiate exclusively
the Future Strategic Tanker Aircraft (FSTA) programme,
supplying A330-200 MRTT (Multi Role Tanker Transport
Aircraft) to the U.K. Royal Air Force. AirTanker is set to become
the industrial partner for the £13 billion U.K. MoD air-to-air
refueling programme, covering a 27 year service period. With a
40 percent share, EADS is the largest partner in AirTanker andresponsible for the full integration of the aircraft.

48 EADS 2003 Chapter 2 Recent Developments

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Chapter 3
General Description of the Company and its Share Capital

3.1 General Description of the Company
3.1.1 Corporate Name, Seat and Registered Office
European Aeronautic Defence and Space Company EADS N.V.
Le Carré, Beechavenue 130-132, 1119 PR, Schiphol-Rijk, The
Netherlands

turnover of the Company and (iii) all persons holding more than
25% of the share capital of the Company and, if such persons
are legal entities, the members of such legal entities’ board ofmanaging directors and board of supervisory directors. In
addition, spouses, first degree family members and persons
with whom individual “Insiders” share a common household are
subject to this notification requirement.

Seat (statutaire zetel): Amsterdam
3.1.2 Legal Form
The Company is a public limited liability company (naamloze
vennootschap) organized under the laws of The Netherlands.
3.1.3 Governing Law – Dutch Regulations
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 theCompany are not listed in The Netherlands.
The Company is subject to various legal provisions of the Dutch
Securities Market Supervision Act 1995 (Wet toezicht
effectenverkeer 1995) (the “WTE”). These are summarized
below.
Above all, the Company is subject to various disclosure
requirements in The Netherlands pursuant to section 5 of the
WTE. These requirements comprise, in particular:(i) Filing of the annual accounts and the statutory auditors’
statement with the Registry of the Chamber of Commerceof Amsterdam with a copy to the Authority for the Financial
Markets (Autoriteit Financiële Markten) (the “AFM”);(ii) Filing of the semi-annual financial statements in the samemanner;(iii) Publication of all new facts regarding the Company’sbusiness which have not been made public in The
Netherlands and which, if made public, would be likely tohave a significant influence on the price of the shares. Suchpublication shall be made by way of a press releasesubmitted to the AFM.
Further, pursuant to section 46b of the WTE, the Company andall “Insiders” (as defined below) must, unless an exemption ordispensation applies, notify the AFM of all transactions carriedout in respect of securities of the Company listed for trading ona regulated market (or any financial instrument or securities thevalue of which depends on such securities) if, and only if, thesetransactions are carried out in or from The Netherlands.
“Insiders” include, in particular, (i) the Board of Directors of theCompany, (ii) members of the board of managing directors andboard of supervisory directors of its subsidiaries andparticipations (deelnemingen) whose consolidated turnover
individually represents more than 10% of the consolidated

Failure to comply with the requirements of the WTE is a criminal
offence punishable by criminal and administrative penalties in
The Netherlands.
Finally, pursuant to section 46b of the WTE, the Company must,
unless exemptions apply, notify the AFM of all transactions towhich the Company is a party in (i) listed securities of theCompany or (ii) securities the price of which depends on theprice of these listed securities.
Pursuant to Dutch law, EADS has adopted specific internal
insider trading rules (the “Insider Trading Rules”) in order toensure the confidentiality of sensitive company information, thetransparency 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 The Netherlands, German, Spanish and Frenchdisclosure requirements applicable to members of the Board of
Directors, see “–Disclosure Requirements for Members of theBoard of Directors of EADS”). Pursuant to the Insider Trading
Rules (i) all employees and directors are prohibited fromconducting transactions in EADS shares or stock options if they
have insider information, (ii) certain persons are only allowed to
trade in EADS shares or stock options within very limited
periods and have specific information obligations to thecompliance officer of the Company and the competent
financial market authorities with respect to certain transactions.
These persons include amongst others (i) Insiders (as defined
above) and (ii) certain employees specified by the complianceofficer. On December 5, 2003, the EADS Board of Directors
resolved to amend the Insider Trading Rules effective January
1, 2004 in order to keep these rules in line with applicable rulesin The Netherlands, France, Germany and Spain. The amended
Insider Trading Rules will be posted on the Company’s
website.
EADS’ Chief Financial Officer, Hans Peter Ring, was appointed
Compliance Officer by EADS’ Board of Directors. The
Compliance Officer is essentially responsible for the
implementation of the Insider Trading Rules and for thereporting to the AFM.
In addition, given the fact that its shares are listed on a regulated
market in France, Germany and Spain, the Company is subject
to laws and regulations in these three jurisdictions. A summaryof the main regulations applicable to the Company in relation to
information to be made public in these three jurisdictions is set
out below.
EADS 2003 Chapter 3 General Description of the Company and its Share Capital 49

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3.1.3.1 Ongoing Disclosure Obligations
French Regulations
The loi de sécurité financière (the “LSF Act”) dated August
1, 2003 merged the Commission des opérations de bourse (the“COB”) and the Conseil des Marchés Financiers (the “CMF”)
into a single market authority called the Autorité des Marchés
Financiers (the “AMF”).
The general regulations of the AMF shall incorporate both theregulations of the COB (mostly Règlements) and the generalregulations of the CMF. Pending implementation of the generalregulations of the AMF, the regulations of the COB and thegeneral regulations of the CMF are still effective and applicable
to EADS, where relevant.
Therefore, if and where appropriate, certain references to the
COB and the CMF in this document should also be deemed to
be a reference to the AMF.
A foreign issuer must take all necessary measures to enable
shareholders to manage their investments, and to exercise theirrights. Pursuant to Règlements No. 98-01 and 98-07 of the COB:(i) the Company is required to inform its shareholders of (i) all
forthcoming shareholders’ meetings and of the various ways
for them to exercise their rights; (ii) payments of dividends;and (iii) issues of new shares or subscriptions, allocations,
renunciations, or conversions of shares;(ii) the Company is also required to (i) inform the public of any
modifications in its shareholder structure compared to thelatest published data; (ii) publish any relevant information
concerning its activities and results for the first half of its
financial year within four months of the end of the first halfof the financial year, (iii) publish its annual accounts, andconsolidated accounts and the management report, which
report (or the most significant extracts thereof) must betranslated into French, within six months of the end of thefinancial year; and (iv) inform the public of all modificationsof the rights attached to each category of shares;(iii) the Company is required to inform the AMF in due time ofany contemplated amendments of its Articles of Association;(iv) furthermore, the Company is required to provide
simultaneously in France the same information as that given
abroad.
Like French issuers, the Company may prepare a reference
document, the purpose of which is to provide legal and financial
information on the issuer (shareholding, activities, management,
recent events, possible evolution and other financial
information), but no information concerning a particular
securities issue. In practice, the annual report of the Company
may be used as a reference document since it contains therequired information.
50 EADS 2003 Chapter 3 General Description of the Company and its Share Capital

The reference document must be filed with the AMF and, once
filed, is made available to the public.
German Regulations
Due to the listing of the Company’s shares in the amtlicher
Markt (specifically, in the sub-segment of the amtlicher Markt,
Prime Standard) on the Frankfurt Stock Exchange, the Company
is subject to the post-listing obligations described below. In
addition to the listing in amtlicher Markt (Prime Standard), theCompany is included in the selection index MDAX, the MidCap
index of Deutsche Börse AG.
Pursuant to § 65 of the German Stock Exchange Admissions
Regulation (Börsenzulassungs-Verordnung), the Company isrequired to promptly make available its statement of annual
accounts and its management report as soon as these have been
produced, insofar as these are not published nationally. If theCompany produces its own statement of annual accounts inaddition to a consolidated one, both types must be made available.
According to § 62 of the Exchange Rules (Börsenordnung) of theFrankfurt Stock Exchange, the listing in the Prime Standard of theamtlicher Markt results in the further obligation of the Company tocompile and publish consolidated annual accounts in accordancewith the International Financial Reporting Standards (IFRS) or the
U.S.-Generally Accepted Accounting Principles (U.S.-GAAP) in theGerman and English language.
In addition, the Company is required to publish an interim reportpursuant to § 40 of the German Stock Exchange Act(Börsengesetz). The interim report must be published within aperiod of two months after the end of the first six-month periodof the Company’s current fiscal year, in at least one German
supra-regional mandatory stock exchange newspaper(überregionales Börsenpflichblatt), the Federal Gazette(Bundesanzeiger) or as a printed newsletter that is available tothe public free of charge upon request. The report must also begiven to the stock exchange admissions authorities of thoseexchanges where the shares are officially listed.
Pursuant to § 63 of the Exchange Rules of the Frankfurt Stock
Exchange, the Company, being part of the amtlicher Markt(Prime Standard), is required to publish quarterly reports in theGerman and English language according to the sameinternational accounting principles as the annual accounts.
Pursuant to § 63 et seq. of the German Stock Exchange
Admissions Regulation, the Company is required to inform thepublic and the stock exchange admissions authorities of certain
developments or changes that affect the Company or its shares.
The Company is also obliged to inform the stock exchange
admissions authorities about all material events arising from oraffecting its legal situation. For that reason, all announcements
concerning events that may be of interest to shareholders, suchas the assembly of the general shareholders’ meeting,announcements concerning determinations and payments of

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dividends, the issuance of new shares and the exercise of
conversion, warrant and subscription rights, must be publishedin an official stock exchange newsletter. The Company is,furthermore, required to publish without delay all changes
concerning rights that are connected with securities.
If the Company provides information to the stock exchanges inFrance and Spain and if such information could be relevant for
the assessment of securities of the Company, then the Company
has to publish at least equivalent information at the Frankfurt
Stock Exchange in at least one German supra-regional
mandatory stock exchange newspaper.
In addition, the Company is required as a result of its listing in
the amtlicher Markt (Prime Standard), to prepare a continuous
update of a corporate action timetable at the beginning of eachfiscal year, for at least the respective fiscal year, in the German
and English language. This timetable must include details about
the most important events of the Company. The Company isalso required to hold a meeting of analysts at least once a year
on top of the press conference regarding the balance sheet.
Save for certain exemptions, the Company has to apply foradmission of shares issued at a later date to the amtlicher Marktof the Frankfurt Stock Exchange, see § 69 of the German Stock
Exchange Admissions Regulation.
Spanish Regulations
Pursuant to the Ministerial Order of January 18, 1991, theCompany is required to file with the Comisión Nacional del
Mercado de Valores (the “CNMV”) and with the relevant
Spanish stock exchange authorities (who will disclose it to themarket), relevant information regarding its financial situation foreach half year and which is communicated, for each June 30
and December 31, no later than the following September 1 andMarch 1 respectively. If after this communication the annual
accounts are produced by the Board of Directors and they do
not conform with the half-yearly information, the Board must
disclose this inconsistency in the following ten trading days. An
exemption from the obligation to publish quarterly informationof a financial or economic nature has been obtained from the
CNMV.
According to the financial law 44/2002, of 25 November, on
Measures Reforming the Financial System (Ley 44/2002, de 25
de noviembre, sobre Medidas de Reforma del Sistema
Financiero) (the “Financial Law”), together with the half-yearly
information referred to in the above paragraph, the Company
must provide quantified information as to every transaction
carried out with any related party.
3.1.3.2 Disclosure of Specific Information
French Regulations
Pursuant to Règlement No. 98-07 of the COB, any informationthat could have a significant effect on the market value of theCompany’s shares is to be disclosed to the public.

The AMF may request that the Company or any third party
disclose any information relevant in respect of the investors’
protection and of the functioning of the market. If such requests
are not satisfied, the AMF may itself disclose such information.
The party responsible for the disclosure of relevant
information may decide not to reveal it if (i) it is able toensure confidentiality of such information; and (ii) it
considers that confidentiality is necessary (a) should theparty be the Company, on the grounds that confidentiality isnecessary to preserve its legitimate interests; or (b) should
the party be a third party, on the grounds that confidentiality
is temporarily necessary to achieve completion of atransaction.
German Regulations
Pursuant to § 15 of the German Securities Trading Act(Wertpapierhandelsgesetz), the Company is required to
publish, without undue delay, such information that has become
available to it and that has not become known to the generalpublic, if such information is, due to its effect on the Company’s
holdings, finances or general business, likely to have a material
impact on its share price.
The Company needs, prior to publication, to disclose suchinformation to the German Federal Financial Supervisory
Authority (Bundesanstalt für Finanzdienstleistungsaufsicht) as
well as the board of directors of the stock exchanges on which
the Company’s shares are admitted to trading.
Due to the listing in amtlicher Markt (Prime Standard), theCompany is required to also publish this information in the
English language (§ 66 of the Exchange Rules (Börsenordnung)of the Frankfurt Stock Exchange).
Spanish Regulations
Pursuant to Article 82 of the Spanish Securities Act 24/1998 ofJuly 28, 1988, (Ley 24/1998, de 28 de julio, del Mercado deValores, as amended by Ley 37/1998, de 16 noviembre), as
amended by the Financial Law, the Company is required to makepublic, as soon as possible, any fact or decision that may
substantially affect the quotation of its shares. Pursuant to the
Financial Law, any such relevant event must be notified to the
CNMV as quickly and as efficiently as possible, always prior to its
communication to third parties or other means of publication and,in any event, 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. Wherever possible, the relevant
event should be notified to the CNMV after the close of themarkets on the day of notification so as to avoid impacting on thequotation of the Company’s shares in the corresponding trading
session. Furthermore, pursuant to the Financial Law, the Company
must post details of any relevant event on its web site. Undercertain circumstances, the CNMV may authorize the issuer not tomake public relevant information, which may affect its legitimate
interests.
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Pursuant to Spanish Law 26/2003 of July 17, 2003, ontransparency of listed companies (Ley 26/2003 de 17 de Juliode refuerzo de la transparencia de las sociedades anónimas
cotizadas, “Spanish Transparency Law”) which amends,
amongst others, the Spanish Securities Act and order3722/2003 of December 26, 2003 of the Ministry of Economy(“Ministerial Order”) which develops the provisions of the
Spanish Transparency Law, the Company is required:(i) To have rules of the board of directors which must be filedwith 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 postsuch description on its website;(iii) To have a website which must constain as a mininum theinformation specified in the Ministerial Order (The CNMV is
still to enact regulations clarifying the specific details of thewebsite and its content);(iv) To file a corporate governance report annually (the “Annual
Corporate Governance Report”) with the CNMV whichmust contain the information specified in the Ministerial
Order;(v) In respect of the provisions of the Participation Agreement
which relate to the exercise of voting rights at shareholder
meetings or restrictions or conditions on the freetransferability of shares, to (i) file by July 2006 (or earlier inthe case of a takeover bid or if a new agreement is enteredinto) such provisions with the CNMV who will then publish
the provisions as a relevant event, (ii) post the provisions on
the Company’s website, unless the CNMV exempts theCompany from doing so, and (iii) set out details of theprovisions in the Annual Corporate Governance Report.
3.1.4 Date of Incorporation and Duration of theCompany
The Company was incorporated on December 29, 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 in 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.
52 EADS 2003 Chapter 3 General Description of the Company and its Share Capital

3.1.6 Commercial and Companies Registry
The Company is registered with the Registry of the Chamber ofCommerce of Amsterdam (Handelsregister van de Kamer van
Koophandel en Fabrieken voor Amsterdam) under number
24288945.
3.1.7 Inspection of Corporate Documents
The Articles of Association are available for inspection in Dutchat the Chamber of Commerce of Amsterdam.
Pursuant to Article 57 of the French Decree n° 84-406 of 30
May 1984, 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 de Montmorency,
75016 Paris, France, Tel: 00.33.1.42.24.24.24). 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 de Commerce of Parisand made available at the head office of EADS in France.
In Germany, the Articles of Association are available at the head
office of EADS in Germany (81663 Munich, Germany, Tel:
00.49.89.60.70).
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: 00.34.91.585.70.00).
3.1.8 Financial YearThe financial year of the Company starts on January 1 and ends
on December 31 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 disposal of the general
meeting of shareholders.
The shareholders meeting may resolve (if so proposed by the
Board of Directors) that all or part of a dividend shall be paid inshares of the Company as opposed to cash.
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 unless
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 fourteen days after theirannouncement.

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3.1.9.2 Liquidation
In 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
General meetings of shareholders are held as often as the Boardof Directors deems necessary or upon the request ofshareholders 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
at least one Netherlands national daily newspaper, at least one
international daily newspaper and at least one daily newspaperin each of the countries in which the Company’s shares arelisted. Such publication must be made at least fifteen days
before the day of the meeting and shall state either the mattersto be considered at such meeting or that the agenda is open to
inspection by the shareholders at the offices of the Company
and at such other locations as may be specified in the notice.
The annual general meeting of the Company is held within six
months of the end of the financial year.
General meetings are held in Amsterdam, Den Haag, Rotterdam
or Haarlemmermeer (Schiphol Airport). The Board of Directors
may decide that general meetings of shareholders 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
general meeting of shareholders at least two months before
the meeting. Requests made by one or more shareholders
collectively representing at least three percent (3%) of theissued share capital, to put items on the agenda for theannual general meeting of shareholders, must be effected by
the Board of Directors, if such request to the Board of
Directors has been made at least six (6) weeks prior to thedate scheduled for the meeting except if, in the opinion of
the Board of Directors, important interests of the Company
prevail over the insertion of such items into the agenda.
3.1.10.2 Right to Attend Meetings
Each holder of one or more shares may attend general meetingsof shareholders, either in person or by written proxy, to speak
and to vote according to the Articles of Association. See“–Conditions of Exercise of Right to Vote”.
A shareholder or person who has the right to attend a meeting can
see to it that he is represented by more than one proxy holder,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 arerecognized as authorized to exercise the rights to attend, speak
and vote at the general meetings, who at the point in time
mentioned in the convening notice are authorized to exercise thoserights and as such have been registered in the register appointed
for the purpose by the Board of Directors, irrespective of who isauthorized 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 written proxy)
and is attending the meeting from another location (See “–Callingof Meetings”) in such manner that the person(s) acting aschairman/chairmen of the meeting is/are convinced that such
person is properly participating in the meeting, shall be deemed
to be present or represented at the meeting, shall be entitled tovote and shall be counted towards a quorum accordingly.
As a prerequisite to attending the general meeting ofshareholders and to casting votes, the holders of bearer sharesand those who derived the aforementioned rights from theseshares shall be obliged to deposit their share certificate or the
documents evidencing their rights against receipt, at suchlocations as shall be determined by the Board of Directors andstated in the convening notice.
Such convening notice shall also state the day which has been
fixed as the final day on which the share certificates and the
documents evidencing the aforementioned rights may bedeposited. That day may not be earlier than five business days, but
in each case 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 toattend the meeting.
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 from Euroclear
France S.A. in accordance with the instructions specified by theCompany in the convening notice. For this purpose, ashareholder will also be able to request that it be registereddirectly (and not through Euroclear France S.A.) in the register of
the Company. However, only shares registered in the name ofEuroclear France S.A. may be traded on the 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.
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3.1.10.3 Majority and Quorum
All resolutions are adopted by means of a simple majority of thevotes cast except when a qualified majority is prescribed by the
Articles of Association or by Dutch law. No quorum is required forany shareholders’ meeting to be held. Dutch law requires a special
majority for the passing of certain resolutions: inter alia, capital
reduction, exclusion of preemption rights in connection with shareissues, statutory mergers or statutory demergers; the passing ofsuch resolutions requires a majority of two-thirds of the votes castif 50% of the share capital with voting rights is not present at themeeting (or otherwise a simple majority). In addition, resolutions
to amend the Articles of Association or to dissolve the company
shall only be capable of being adopted with a majority of at least
two-thirds of the valid votes cast at a general meeting ofshareholders, whatever the quorum present at such meeting.
Pledgees of shares and beneficiaries of a usufruct, which do nothave voting rights, do not have the right to attend and to speakat general meetings. The owners of shares which are subject toa pledge or a usufruct, which do not have voting rights, areentitled to attend and to speak at general meetings.
3.1.10.4 Conditions of Exercise of Right to Vote
In all general meetings, each shareholder has one vote inrespect of each share it holds.
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 or if,
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.
3.1.11 Disclosure of Holdings
Any person, acting alone or in concert (as defined in the
Netherlands Act on reporting of shareholdings, Wet melding
zeggenschap in ter beurze genoteerde vennootschappen 1996
(the “WMZ”)), acquiring or disposing of, directly or indirectly,
an interest in the share capital or voting rights of the Company
resulting in such person, after such acquisition or disposal,
being in a different range of thresholds in terms of capital or
voting rights than that in which he was prior to such acquisition
or disposal is required by the WMZ to promptly notify theCompany and the AFM of such interests. The same notification
requirements apply in relation to acquiring or disposing of actual
or contingent rights to obtain shares or voting rights. The
applicable ranges of relevant interests pursuant to the WMZ are
as follows: 0% to 5%; 5% to 10%; 10% to 25%; 25% to 50%; 50%
to 66 2/3%; 66 2/3% and over. The AFM publishes all
disclosures made to it in newspapers with a nationwide(1)

circulation in each of the Member States of the European
Economic Area where the shares are admitted for listing on aregulated stock exchange. In addition, the Articles of
Association require notification to the Company in the event ofan acquisition or disposal of an interest resulting, for any person
acting alone or in concert, in a change of range from or to theranges 25% to 33 1/3% and 33 1/3% to 50%.
Furthermore, pursuant to the WTE, an additional disclosure
requirement applies for certain categories of persons. This
disclosure requirement applies to, among others, shareholders
with a direct or indirect interest of 25% or more in the sharecapital of a listed company and their spouses, ascendants anddescendants in direct line and other persons with whom theshareholders share a common household. These shareholders
are required to notify the AFM of all transactions in securities
pertaining to the company in which they hold an interest of 25%
or more. If the shareholder with an interest of 25% or more is acompany, this obligation extends to its directors.
According to § 26 of the German Securities Trading Act(Wertpapierhandelsgesetz), the Company has to publish in a
German supra-regional mandatory stock exchange newspaper,
if the percentage of voting rights held by a shareholder of theCompany reaches, exceeds or falls short of 5%, 10%, 25%, 50%
or 75% of the voting rights.
Disclosure Requirements for Members of the Board of
Directors
The members of the Board of Directors must report to the AFM
their shareholdings in EADS, whether or not such shareholdings
reach specified thresholds. Each member of the Board of
Directors must report the number of shares and voting rights
held by him or an entity controlled by him and not only thepercentage of shares and voting rights. (1)
EADS must report any resignation or termination of
appointment of members of its Board of Directors to the AFM
immediately. All reports are incorporated by the AFM into apublic register that is accessible on the AFM web site and canbe consulted by any interested person.
The Company has to inform the AMF, the CNMV and the
Spanish Stock Exchanges of any disclosure of holdings
exceeding the above-mentioned thresholds that it receives.
The Articles of Association also require that any person
acquiring directly or indirectly or with others with whom it isacting in concert (as defined in the WMZ) more than one
tenth of the issued share capital or voting rights of theCompany must notify the Company of its intentions (i) to buy

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.January 2003 on insider dealing and market manipulation (market abuse)) is
implemented in German law, which must be done by October 12, 2004 at the latest.

54 EADS 2003 Chapter 3 General Description of the Company and its Share Capital

BOOK3-791-55

29 MARCH 2004or sell shares of the Company in the following 12 months; (ii)to continue or to stop acquiring shares or voting rights of theCompany; (iii) to acquire control of the Company; or (iv) toseek to designate a member of the Board of Directors of theCompany. The Company will provide the AMF with theinformation received in this context.
The AMF has indicated that it will publish a notice concerning
any communication so transmitted. The CNMV will publish all
such notifications received.
Failure to comply with the legal obligation to notify a change inrange of thresholds under the WMZ is a criminal offence
punishable by criminal and administrative penalties as well ascivil law penalties, including the suspension of voting rights.
According to § 15a of the German Securities Trading Act,
transactions in securities of the Company carried out bymembers of the Board of Directors of the Company (or a parent
company of the Company) or their spouses, registered partners
and relations in the first degree must be published. These
persons have to notify the Company and the German Federal
Financial Supervisory Authority of the transactions without
undue delay unless within a 30-day period the aggregate
amount of such transactions does not exceed € 25,000 (2). The
Company is required to publish the notification without undue
delay on the Company’s website or in a German supra-regional
mandatory stock exchange newspaper. This also applies inconnection with employee profit sharing and incentive plansand other kinds of stock option plans granted by the Company.
Pursuant to the Spanish Transparency Law, the Directors of theCompany must not carry out transactions or suggest thattransactions be carried out involving the shares of theCompany or related companies on which they possess, due totheir position, privileged or confidential information, if thisinformation has not been made public. In addition, when adirector, either by himself or through an intermediary, acquires
or transfers shares or share options in the Company, he must
inform the Company, the markets on which its shares aretraded and the CNMV.
Pursuant to the LSF Act and applying the Insider Trading Rules,
the Company must report to the AMF any transactions insecurities of the Company carried out by members of the Boardof Directors, members of the Executive Committee and any
person connected with such persons. The Company must also
disclose the information to the public.
The disclosure requirements detailed above are included in the
Insider Trading Rules, the main characteristics of which aredescribed in “–Governing Law – Dutch Regulations”.

(2)

3.1.12 Mandatory Tender Offers
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 defined in the
WMZ) holding shares or voting rights where the control overthe 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 allshareholders to acquire all of their shares or to procure that suchan 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 twomonths after notification to the Company of shareholdings
reaching or exceeding 33 1/3% or failing such notification, withina period of fifteen 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
the shares issued by the Company (the “Excess Percentage”).
From the date specified in the notice sent by the Board of
Directors, the right to attend meetings, to vote and to receive
dividends shall be suspended in respect of the Excess
Percentage. If, within a period of fourteen days from a further
notice from the Board of Directors, the person required to
exchange his shares representing his Excess Percentage fordepository receipts still has not done so, then the Company isirrevocably authorized to exchange such shares for depository
receipts issued by the Foundation. The constitutive documentsof the Foundation provide that the Foundation shall not have theright to attend meetings of shareholders of the Company as ashareholder, to speak at such meetings and to exercise the voting
rights attached to the shares it holds, except if, in the view of theBoard of Directors of the Foundation (comprising the two
independent Directors and one of the two Chief Executive
Officers of EADS), such action is required for the performance ofthe mandatory offer provisions in the Articles of Association.
The obligation to make a public offer does not apply in thefollowing situations:(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 of Article

This threshold shall become obsolete once the European Market Abuse Directive (Directive 2003/6/EC of the European Parliament and of the Council of
28 January 2003 on insider dealing and market manipulation (market abuse)) is implemented in German law, which must be done by October 12, 2004 at the latest.
EADS 2003 Chapter 3 General Description of the Company and its Share Capital 55

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16 of the Articles of Association described above shall beapplicable where shares are held for persons acting inbreach of the provisions of Articles 15 and 16 of the Articles
of Association described above;(iii) to a transfer of shares by the Company or to an issue ofshares by the Company on a merger or on an acquisition by
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
to define “concert parties” where the agreement isentered into before December 31, 2000 (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) 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 theParticipation Agreement (See “3.3.2 Relationships with
Principal Shareholders”) (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)
from the obligation to make the mandatory offer in theevent of a transfer of shares between themselves;(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 transferringshareholder.
Spanish securities legislation sets forth specific provisions
which are applicable in the event an investor acquires, directly
or indirectly, certain percentages of the share capital of acompany listed on a Spanish Stock Exchange, because they
are deemed to be significant. These provisions, set forth inarticle 1 of the Royal Decree 1197/1991, of July 26, regarding
Takeover Bids, recently amended by Royal Decree 432/2003,
of 11 April, provide that said investor will have to offer toacquire the following percentages: if the investor acquires 25%of the shares, or other securities (such as subscription rights,
convertible debentures, warrants, or any other similar
securities that may directly or indirectly entitle such investor to
subscribe or acquire shares) or a threshold that, without
reaching such percentage, enables the appointment of anumber of directors who, together with those alreadyappointed, if any, represent more than 1/3 and less than 1/2
plus one of the total directors of the target company, or, if theinvestor already holds between 25% and 50%, and intends topurchase an additional 6% within the following 12 months, theoffer must be for at least 10%; and (ii) for 100% in the eventthat the investor reaches or exceeds the threshold of 50% or a
threshold that, without reaching such percentage, enables theappointment of a number of directors who, together withthose already appointed, if any, represent more than 1/2 of thetotal directors of the target company. Given the different
56 EADS 2003 Chapter 3 General Description of the Company and its Share Capitalthresholds set forth in article 1 of the Royal Decree 1197/1991
and in Article 15 of the Articles of Association of EADS (whichin short requires, in principle, that a tender offer for 100% of
the share capital be launched in the event a shareholder
controls (alone, or in concert with other shareholders) directly
or indirectly a number of shares or voting rights exceeding 33
1/3% of the share capital of EADS, as described above),
Sociedad Estatal de Participaciones Industriales (“SEPI”), a
minority shareholder of EADS, taking the stand that the Royal
Decree 1197/1991 is not applicable to EADS, as a Dutch
company listed in three different countries (Spain, France andGermany) and the Articles of Association of which duly
provide that a tender offer must be launched whenevercontrol of 33 1/3% of the share capital is taken, has, on behalfof EADS, consulted on this issue with the CNMV, which has
confirmed in writing that “the event posed does not fall withinthose contemplated in the aforementioned Royal Decree
1197/1991” and, therefore, said Royal Decree 1197/1991 is notapplicable to EADS.
In addition, the CNMV, responding to a request from certain
shareholders of EADS, stated in a letter dated June 19, 2000
that the Royal Decree 1197/91 dated July 26, 1991 relating totakeover bids does not apply to transfers of shares between
parties in the EADS shareholders agreements, provided suchtransfers are made within the framework of the shareholders
agreements and that such agreements remain in force.
3.2 General Description of the Share Capital
3.2.1 Modification of Share Capital or Rights Attaching
to the Shares
Unless such right is limited or eliminated by the general
meeting of shareholders as described below, holders ofshares have a pre-emptive right to subscribe for any newly
issued shares pro rata to the aggregate nominal value ofshares held by them, except for shares issued forconsideration other than cash and shares issued to employeesof 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 general meeting of shareholders has the power to issue
shares. The general meeting of shareholders may also authorize
the Board of Directors for a period of no more than five years, toissue shares and to determine the terms and conditions of shareissuances.
The general meeting of shareholders also has the power tolimit or to exclude pre-emption rights in connection with newissues of shares, and may authorize the Board of Directors fora period of 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 thegeneral meeting of shareholders in the case where less thanhalf of the capital issued is present or represented at said
meeting.

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The shareholders of EADS, at the general meeting ofshareholders held on May 6, 2003 authorized the Board of
Directors to issue shares representing up to 1% of theCompany’s authorized capital from time to time and to grantrights to subscribe for shares for a period up to and including
the date of the annual general meeting of shareholders to beheld in 2005, and also in the case where the subscription
rights may be exercised thereafter, and to determine theterms and conditions of the share issuances. The general
meeting of shareholders held on May 6, 2003 also authorized
the Board of Directors to limit or exclude the preferential
subscription rights for the period up to and including the dateof the annual general meeting of shareholders in 2005 and to
approve stock option plans and employee share ownershipplans which may include the granting of rights to subscribe
for shares, which can be exercised at such time as may be
specified in such plans.
The general meeting of shareholders may reduce theissued share capital by cancellation of shares or by reducing
the nominal value of the shares by means of an amendment
to the Articles of Association, the latter requiring theapproval of at least two-thirds of the votes cast at the general
meeting.
3.2.2 Issued Share CapitalAt the date of this document the Company’s issued share capitalis € 812,885,182 comprising 812,885,182 shares of a nominal
value of € 1.0 each.
3.2.3 Authorized Share CapitalAt the date of this document the authorized share capital of theCompany 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 for EADS
shares (See “Part 1/2.3.3 Options Granted to Employees”),
there are no securities that give access, immediately or overtime, to the share capital of EADS.
The table below shows the total potential dilution which would
occur if all the stock options issued as at December 31, 2003
were exercised:

Numberof shares

Dilution
percentage
in capital

Numberof voting rights

Dilution
percentage
in voting rights

Total number of EADS shares issued asof the date of this document:

812,885,182

96.7%

800,957,248

96.6%

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

27,889,080

3.3%

27,889,080 (*)

3.4%

840,774,262

100%

EADS’ potential share capital

Total potential EADS share capital(*)

828,846,328

100%

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 purchaseprogrammes and in the case of subsequent cancellation of repurchased shares. See “3.3.7.1 Purchase by the Company of its Own Shares – Dutch Law”.

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3.2.5 Changes in the Issued Share Capital Since Incorporation of the Company
Nominalvalue
per share

Numberof shares
issuedPremium (*)

Totalnumberof issued
shares after
transaction

Total
issuedcapitalafter
transaction

NLG 1,000

100

–

100

NLG 100,000

50,000–50,000€ 50,000

Date

Nature of Transaction

December 29, 1998

Incorporation

April 3, 2000

Conversion into euros€1

July 8, 2000

Issue of shares inexchange forcontributions by
Aerospatiale Matra,
Dasa AG and SEPI
Issue of shares for the
purpose of the initialpublic offering andlisting of the Company€1715,003,828 € 1,511,477,044

715,053,828€ 715,053,828€1

80,334,580 € 1,365,687,860

795,388,408€ 795,388,408

September 21, 2000

Issue of shares for the
purpose of the employee
offering carried out in thecontext of the initialpublic offering and listingof the Company€1

11,769,259€ 168,300,403

807,157,667€ 807,157,667

December 5, 2001

Issue of shares for the
purpose of an employee
offering (note d’opération
approved by the COB on
October 13, 2001 under
number 01-1209)€1

2,017,894 € 19,573,571.80

809,175,561€ 809,175,561

December 4, 2002

Issue of shares for the
purpose of an employee
offering (note d’opération
approved by the COB on
October 11, 2002 under
number 02-1081)€1

2,022,939 € 14,470,149.33

811,198,500€ 811,198,500

December 5, 2003

Issue of shares for the
purpose of an employee
offering (note d’opération
approved by the COB on
September 25, 2003
under number 03-836)€1

1,686,682 € 19,363,109.36

812,885,182€ 812,885,182

July 13, 2000(*)

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.

3.3 Shareholdings and Voting Rights
3.3.1 Shareholding Structure
EADS combined the activities of Aerospatiale Matra(“Aerospatiale Matra” or “ASM”), DaimlerChrysler Aerospace
AG (“Dasa AG”) (with the exception of certain assets andliabilities) (“Dasa”) and Construcciones Aeronauticas SA(“CASA”) pursuant to a series of transactions completed in July
2000.

58 EADS 2003 Chapter 3 General Description of the Company and its Share CapitalIn 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 held byDaimlerChrysler AG (“DaimlerChrysler”), SEPI and Société deGestion de l’Aéronautique, de la Défense et de l’Espace

BOOK3-791-59

29 MARCH 2004(“SOGEADE”), for which EADS Participations B.V. exercises all
the attached voting rights, as well as, for Istroise deParticipations, Lagardère SCA (“Lagardère”) and Société deGestion de Participations Aéronautiques (“SOGEPA”), or thecompanies 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 DaimlerChrysler, and the rights and obligationsof Dasa AG pursuant to the agreements described herein arereferred to as rights and obligations of DaimlerChrysler.
As of the date of this document, 30.07% of the EADS shares areheld by Dasa AG, which is a wholly owned subsidiary ofDaimlerChrysler Luft- und Raumfahrt Holding AG (“DCLRH”), a
93.85% subsidiary of DaimlerChrysler. SOGEADE, a French
partnership limited by shares (société en commandite paractions) whose share capital is held 50% by SOGEPA (a Frenchstate holding company) and 50% by Désirade (a French société

French StateSOGEPA

Lagardère

par actions simplifiée whose share capital is held 99% (3) by
Lagardère and 1% by Istroise de Participations, which is acompany wholly owned by Lagardère), owns 30.07% of the
EADS shares. Thus, 60.14% of the share capital of EADS is heldin equal proportions by DaimlerChrysler and SOGEADE who
jointly control EADS through a Dutch law contractual
partnership (the “Contractual Partnership”). SEPI (a Spanish
state holding company), being a party to the ContractualPartnership, holds 5.50% of the share capital of EADS. The
public (including EADS employees) and the Company hold,respectively, 30.10% and 1.47% of the share capital of EADS.
DaimlerChrysler and the République Française (the “French
State”) hold directly respectively 2.73% and 0.06% of such sharecapital, such shareholdings being subject to certain specificprovisions.
The diagram below shows the current ownership structure of
EADS (% of capital/voting rights) before exercise of any stock
options granted for the subscription of EADS shares. See “Part
1/2.3.3 Options Granted to Employees”.

Spanish State

Daimler Chrysler

100%
99%

(****)
93.85%

Istroise de Participations
1%

100%

DCLRH

Désirade
50%
50%

100%
SEPI

SOGEADE(managed by SOGEADE Gérance)

30.07%/

30.52%

5.50%/

Dasa

5.58%

30.07%/

30.52%

Contractual Partnership(managed by EADS participations B.V.)

65.64%/ 66.62%(*)

0.06%/
(**)

0.06%
(***)

EADS N.V.

2.73%/ 2.78%(**)

30.10 %/

30.54%

Public

1.47%(*)

EADS Participations B.V. exercises the voting rights attaching to these EADS shares pledged by SOGEADE, DaimlerChrysler and SEPI who retain title to theirrespective shares.
(**)
The French State and DaimlerChrysler exercise the voting rights attaching to these EADS shares (in the case of the French State such shares being placed with the
Caisse des dépôts et consignations) in the same way that EADS Participations B.V. exercises the voting 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
privatization in June 1999. All the shares currently held by the French State will have to be sold on the market.
(****)DCLHRH is 93.85% held by DaimlerChrysler; almost all the balance is held by the City of Hamburg.

(3)

In July 2003, the Indirect EADS Shares held by BNP Paribas and AXA (the "French Financial Institutions"), acting through a jointly organized company, Istroise deParticipations, were transferred to Lagardère as initially agreed on Completion.

EADS 2003 Chapter 3 General Description of the Company and its Share Capital 59

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29 MARCH 2004

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”.
As of the date of this document, the Company holds, directly
or indirectly through another company in which the Company
holds directly or indirectly more than 50% of the share capital,
11,927,934 of its own shares. The EADS shares owned by theCompany itself do not carry voting rights.
Approximately 3.55% of the capital and 3.60% of the voting
rights are held by EADS employees.
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
DaimlerChrysler, Dasa AG, Lagardère, SOGEPA, SOGEADE
and SEPI, and a Dutch law Contractual Partnership agreement
entered into on Completion between SOGEADE, Dasa AG,
SEPI and EADS Participations B.V. (the “ContractualPartnership Agreement”), which repeats certain terms of theParticipation Agreement and a certain number of otheragreements (notably, a shareholder agreement (the“SOGEADE Shareholders’ Agreement”) entered into on
Completion between SOGEPA and Lagardère and an
agreement between the French State, DaimlerChrysler and
DCLRH). EADS Participations B.V. is a Dutch private company
with limited liability (besloten vennootschap met beperkte
aansprakelijkheid) and is the managing partner of theContractual Partnership. The Indirect EADS Shares held byDaimlerChrysler, SOGEADE and SEPI have been pledged to
EADS Participations B.V., which has been granted the exclusive
power to exercise the voting rights attaching to the pledged
shares (including the right to attend and speak at shareholders’meetings) in accordance with the Contractual Partnership
Agreement.
The agreements above contain, among other things, provisions
relating to the following matters:– the composition of the Boards of Directors of EADS, EADSParticipations B.V. and SOGEADE Gérance (gérant
commandité of SOGEADE);– restrictions on the transfer of EADS shares and SOGEADE
shares;– pre-emptive and tag-along rights of DaimlerChrysler,
SOGEADE, SOGEPA and Lagardère;– defences against hostile third parties;– consequences of a change of control of DaimlerChrysler,
SOGEADE, Lagardère, SOGEPA or SEPI;60 EADS 2003 Chapter 3 General Description of the Company and its Share Capital– a put option granted by SOGEADE to DaimlerChrysler overits 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.
Organization of EADS Participations B.V.
The Board of EADS Participations B.V. has an equal number of
directors nominated by DaimlerChrysler and by SOGEADE,
respectively (taking into account proposals made by Lagardère
in respect of the SOGEADE-nominated directors).
DaimlerChrysler and SOGEADE each nominate four directors,
unless otherwise agreed, and each nominate from among its
nominated directors a chairman and a chief executive officer.
From July 8, 2003, SEPI no longer has an automatic right tonominate a director. However, at the shareholders general
meeting of EADS Participations B.V. held on July 8, 2003,
SOGEADE, DaimlerChrysler and SEPI unanimously approved
the appointment of an additional director, nominated by SEPI, tothe Board of EADS Participations B.V., bringing the total
number of directors to nine.
This structure gives DaimlerChrysler and SOGEADE equal
nominating rights in respect of the majority of the directors ofthe decision-making body of EADS Participations B.V. Alldecisions of EADS Participations B.V.’s board of directors shallrequire the vote in favour of at least six directors, except for
certain specified matters which require the prior unanimous
approval of DaimlerChrysler and SOGEADE. As of July 8, 2003,
the SEPI-nominated director no longer has the ability to block
any decisions of the board of EADS Participations B.V. relating
to any major change to the CASA Industrial Plan and/or its
implementation (the “CASA Matters”).
Transfer of EADS Shares
During the period commencing at Completion and ending on
July 1, 2003 (the “Standstill Period”), there were restrictions on
DaimlerChrysler’s, SOGEADE’s, SEPI’s, Lagardère’s, SOGEPA’s
and the French State’s ability to transfer EADS shares.
Following the expiration of the Standstill Period, as ofJuly 1, 2003, each of DaimlerChrysler, SOGEADE, SEPI,Lagardère and SOGEPA has the right to sell their EADS shareson 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 in accordance withthe provisions set out below;

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29 MARCH 2004

– on the sale of Indirect EADS Shares, DaimlerChrysler (inthe case of a sale by SOGEADE), SOGEADE (in the case ofa sale by DaimlerChrysler) or SOGEADE andDaimlerChrysler (in the case of a sale by SEPI) may either
exercise a pre-emption right or sell their Indirect EADS
Shares on the market in the same proportions as therespective 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) andalso to DaimlerChrysler’s consent and (b) if such consent is
not obtained, the Indirect EADS Shares may be sold on themarket, subject to DaimlerChrysler’s pre-emption rightreferred to above;– each of Lagardère and SOGEPA shall have a proportionalright to tag-along on a sale of their Indirect EADS Shares;– the pre-emption and tag-along rights of Lagardère and
SOGEPA referred to above do not apply to a transfer of
EADS shares directly held by one of them.
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.
Control of EADSIn the event that a third party to which DaimlerChrysler or
SOGEADE objects (a “Hostile Third Party”) has a direct orindirect interest in EADS shares equal to 12.5% or more of thenumber of such EADS shares the voting rights of which arepooled 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
DaimlerChrysler 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, theparties 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.
Following the expiration of the Standstill Period, as ofJuly 1, 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
DaimlerChrysler or SOGEADE (a “Hostile Offer”), subject toprovisions requiring, inter alia, the party wishing to accept, tofirst offer its EADS shares to DaimlerChrysler and/or
SOGEADE, in which case DaimlerChrysler and/or SOGEADE

may exercise their pre-emption rights in respect of all or someonly 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 DaimlerChrysler, 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 of
SOGEADE, DaimlerChrysler and SOGEPA respectively. In thecase of a sale by Lagardère, if SOGEPA does not exercise its
right of pre-emption, DaimlerChrysler has in turn a pre-emption
right.
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:(i) if the proportion which the Indirect EADS Shares of either
DaimlerChrysler or SOGEADE bears to the total number of
EADS shares is less than 10%, unless the difference between
the holdings of DaimlerChrysler and SOGEADE (calculated
as a percentage by reference to the number of Indirect EADS
Shares held by of each of them as against the total number ofthe EADS shares) is 5% or less in which case the dissolution
and winding up shall only occur if the proportion which theIndirect EADS Shares of DaimlerChrysler or SOGEADE 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 DaimlerChrysler, 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 the Participation
Agreement (see below “Change of Control “) within 12 monthsof the date of the change of control occurring (the absence ofnotice of an offer by a third party to purchase the Indirect EADS
Shares held by SEPI upon a change of control of SEPI does not
trigger a dissolution of the Contractual Partnership or EADSParticipations B.V. but shall cause SEPI to lose its main rights or
liabilities under the Participation Agreement or the ContractualPartnership Agreement).
On the occurrence of a Termination Event, EADS Participations
B.V. is prohibited from conducting further business except as isnecessary to its liquidation or the liquidation of the ContractualPartnership.
Change of Control
The Participation Agreement provides, inter alia, that if (a)Lagardère or SOGEPA undergoes a change of control andDaimlerChrysler so elects or (b) SOGEADE undergoes a changeof control and DaimlerChrysler so elects or (c) DaimlerChrysler
undergoes a change of control and SOGEADE so elects or (d)EADS 2003 Chapter 3 General Description of the Company and its Share Capital 61

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29 MARCH 2004SEPI undergoes a change of control and SOGEADE or
DaimlerChrysler so elect then:(i) the party undergoing the change of control shall use its
reasonable efforts to procure the sale of its SOGEADE
interest (if the party undergoing the change of control is
Lagardère or SOGEPA) or of its Indirect EADS Shares (ifthe party undergoing the change of control is
DaimlerChrysler, SOGEADE or SEPI) to a third party
purchaser on bona fide arm’s length terms. When theparty subject to the change of control is Lagardère or
SOGEPA, the third party purchaser shall be nominatedwith DaimlerChrysler’s consent, not to 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 DaimlerChrysler, SOGEADE
or SEPI as the case may be, is received and the party
undergoing the change of control wishes to accept thatoffer, such offer shall immediately be notified to (a)DaimlerChrysler in the case of a change of control occurringto Lagardère or SOGEPA, (b) SOGEADE in the case of thechange of control occurring to DaimlerChrysler, (c)DaimlerChrysler in the case of the change of control
occurring to SOGEADE, or (d) DaimlerChrysler or
SOGEADE in the case of the change of control occurring to
SEPI (the party notified under (a), (b), (c) or (d) being the“Non-Changed Party”). The Non-Changed Party shall havea first right to purchase the SOGEADE interest or the
Indirect EADS shares being offered for sale at the pricebeing offered by the third party. In relation to (d), if
DaimlerChrysler and SOGEADE have both elected that SEPI
procure a third party purchaser, then they shall each havethe right to acquire SEPI’s Indirect EADS Shares in therespective proportions which the number of their EADS
shares bear to one another at that time. In the event that the
Non-Changed Party does not give notice of its intention topurchase the SOGEADE interest or the Indirect EADS
Shares within 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 thethird party’s original offer.
The third party purchaser may not be a competitor of EADS,SOGEADE or DaimlerChrysler (as the case may be) nor a memberof the group 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 DaimlerChrysler, SOGEADE or SEPI, the nondefaulting party (respectively SOGEADE, DaimlerChrysler and
SOGEADE and DaimlerChrysler acting together) has a call
62 EADS 2003 Chapter 3 General Description of the Company and its Share Capital

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, such party is obliged to use its
best efforts to sell its interest in the capital of SOGEADE on
bona fide arm’s length terms to a third party purchaser (whomust not be a competitor of EADS or DaimlerChrysler). In thecase of a sale by Lagardère, the third party purchaser must be
nominated by SOGEPA with DaimlerChrysler’s consent (which
may not be unreasonably withheld). In the case of such a saleby SOGEPA, DaimlerChrysler must consent to the sale (again,such consent may not be unreasonably withheld).
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 DaimlerChrysler and DCLRH on October 14,
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 through
SOGEPA, 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 privatisation in 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 (see below); 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 notaffiliated to the DaimlerChrysler and/or Lagardère groups
acquires, directly or indirectly, either alone or in concert, morethan 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
the shares 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 (50%) and Désirade, a French société paractions simplifiée (50%). The share capital of Désirade is itself
held by Lagardère (99%) and by Istroise de Participations (1%),

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which is a company wholly owned by Lagardère. Lagardère
hence owns indirectly 50% of SOGEADE.
The general partner (associé commandité) of SOGEADE,SOGEADE Gérance, is a French société par actions simplifiée
which is the manager of SOGEADE.
SOGEADE Gérance’s board of directors consists of eight
directors, four of them nominated by Lagardère and four by
SOGEPA. Decisions of the SOGEADE Gérance Board shall beapproved 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.
The decisions contemplated under (d) above are also governedby the Ballistic Missiles Agreement (see above “–Specific Rights
and Undertakings of the French State”).
When a vote of the SOGEADE Gérance board on such matters
does not reach the qualified majority of six directors by reasonof any of the SOGEPA-nominated directors casting a negative
vote, the SOGEADE-nominated directors on the board of EADSParticipations B.V. are obliged to vote against the proposal. Thismeans that the French State as the owner of SOGEPA can vetoany decisions on these matters within EADS Participations B.V.
and in turn within EADS as long as the SOGEADE Shareholders’
Agreement remains in existence.
The shareholding structure of SOGEADE shall reflect at all times
the indirect interests of all the shareholders of SOGEADE in EADS.
In certain circumstances, in particular in the event of a change ofcontrol of Lagardère, Lagardère shall grant a call option over its
SOGEADE shares to any non-public third party designated by
SOGEPA and approved by DaimlerChrysler. 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 capitalof 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 willremain entitled to nominate a SOGEADE Gérance Director
whose approval will be required in respect of any decision todivest or create a security interest over the assets relating toprime 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 terminatedin the event of a dissolution of EADS Participations B.V. caused
by DaimlerChrysler. In the latter case, the parties haveundertaken to negotiate a new shareholders’ agreement in thespirit of the shareholders’ agreement between them dated April
14, 1999 relating to Aerospatiale Matra and having regard totheir respective 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 DaimlerChrysler over its EADS shares which shall be
exercisable by DaimlerChrysler, (i) in the event of a deadlock
arising from the exercise by SOGEPA of its rights relating tocertain 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 both cases
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 DaimlerChrysler’s EADS shares.
The exercise price of the option will be calculated on the basisof an average market price for EADS shares.
In the event that DaimlerChrysler exercises the put option
granted to it by SOGEADE, SOGEADE will acquire the EADS
shares from DaimlerChrysler. However, Lagardère has the rightto require SOGEPA to substitute itself for SOGEADE in relation to
the acquisition of DaimlerChrysler’s EADS shares following theexercise by DaimlerChrysler of the put option. Such substitution
right has been accepted by DaimlerChrysler. 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 to substitute itself for SOGEADE to buy theshares sold by DaimlerChrysler as a result of the exercise of its
put option and SOGEPA or Lagardère may request theliquidation of SOGEADE and EADS Participations B.V. and thetermination of the SOGEADE Shareholders’ Agreement(notwithstanding the termination provisions of the SOGEADE
Shareholders’ Agreement described under the paragraph“SOGEADE” above). In that case, Lagardère could freely sell its
EADS shares on the market or in a block sale 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 the Participation
Agreement, SOGEADE, DaimlerChrysler and SEPI granted apledge over their respective Indirect EADS Shares to EADSParticipations B.V. for the benefit of EADS Participations B.V. andthe other parties to the Contractual Partnership Agreement.
EADS 2003 Chapter 3 General Description of the Company and its Share Capital 63

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Contributions to EADS – Specific Undertakings of EADSEADS has agreed not to dispose of the shares contributed to it by
Aerospatiale Matra, Dasa AG and SEPI for a period of 7 years. 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 shares provided that EADS shall, on demand,
indemnify Lagardère and SOGEPA (in the case of a sale of sharescontributed by Aerospatiale Matra), Dasa AG or SEPI, as the casemay be, for all tax disadvantages (tax actually paid or borne bythem as well as 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 shallcease after 7 years from the date of contribution. In the event thatthe 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 of a report made andpresented by the two independent Directors of EADS. The
amount and the conditions of this indemnification will be reported
to the general meeting of shareholders.
Lagardère Group Services
At the time of the combination of Aerospatiale and Matra
Hautes Technologies, it was agreed that the administrative
services rendered by Lagardère Ressources (formerly Matra
Hachette General), a wholly owned subsidiary of Lagardère, tothe direct and indirect subsidiaries of Matra Hautes
Technologies that were contributed to Aerospatiale, would
remain unchanged until December 31, 2003.
Since December 31, 2003, all the administrative services renderedby Lagardère Ressources have been terminated as of that date.
DADC
EADS Deutschland GmbH 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 isheld as to 93.58% by DADC and as to 6.42% by the Dornierfamily. In shareholders’ meetings DADC is entitled to more than
89.9% and the Dornier family to less than 10.1% 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 of holdings inother enterprises or the transfer of whole areas of enterprise
activities with the exception of transfers of assets in return forshares or as a contribution in kind or to a company associatedwith DaimlerChrysler, which is assumed to be the case if
DaimlerChrysler controls at least 20% of its share capital. The
same requirement applies with regard to all transfers of shares of
64 EADS 2003 Chapter 3 General Description of the Company and its Share Capital

Dornier GmbH held by the DaimlerChrysler group (including
associated enterprises) subject to certain exceptions including thetransfer to other DaimlerChrysler group companies (including
associated enterprises). Furthermore, the Dornier family receives
a guaranteed dividend from Dornier GmbH of (depending on thenature of the shares) 8.7% or 15% of the nominal amount of theirshares plus any corporation tax credits. The guaranteed dividend
is indexed. DaimlerChrysler has guaranteed the payment of theminimum dividend to the Dornier family shareholders. In the caseof the profit and loss transfer agreement, which presently exists
between DADC and Dornier GmbH, the Dornier family
shareholders are entitled to receive payments corresponding atleast to the amount which they would be entitled to in theabsence of such profit and loss transfer agreement. Internally
DADC has assumed this obligation.
On November 30, 1988 DaimlerChrysler and the Dornier family
entered into a separate agreement to strengthen the rights ofDaimlerChrysler and, simultaneously, to protect the economic
interests of the minority shareholders. The latter can, inparticular, demand that their shares in Dornier GmbH bebought (i) for cash consideration or (ii) in exchange forDaimlerChrysler shares or (iii) in exchange for shares in acompany in which, or under which, DaimlerChrysler
concentrates its aerospace activities by DaimlerChrysler oranother company associated with DaimlerChrysler andnominated by DaimlerChrysler. On March 29, 2000
DaimlerChrysler, DCLRH, DADC, EADS Deutschland GmbHand Dasa AG entered into an agreement according to which
DaimlerChrysler has the right to demand from DADC to buy theshares so offered by the Dornier family shareholders.
DaimlerChrysler shall reimburse DADC for any amount to be
paid being above the fair market value of the shares. Moreover,
DADC will assume certain other rights and obligations relating
to the protection of the interests of the Dornier family.
Under the terms of the business combination agreements
entered into in the context of the creation of EADS, DCLRH hasundertaken to indemnify Lagardère (for itself and on behalf ofeach member of the Lagardère group) and SEPI and shall keepthem indemnified, against (save in respect of any consequential
loss not foreseeable by DCLRH (or any member of theDaimlerChrysler 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 toobtain any rights or remedies against Lagardère (or any memberof the Lagardère group), SEPI, the Contractual Partnership,
EADS Participation B.V., Dasa AG, EADS or any entity
contributed by or on behalf of DaimlerChrysler which is tobecome a member of the EADS group or any member of theDasa AG group. This indemnity shall also extend to EADS to theextent such protection is not provided for in the transfer of theDasa business to EADS.

BOOK3-791-65

29 MARCH 2004

Matra as a result of its privatisation in June 1999. The last
distribution took place in July 2002.

3.3.3 Form of Shares
The shares of EADS are in registered form. The Board of
Directors may decide in respect of 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, in respect of all or certain shares, with the issue of acertificate. Share certificates shall be issued in such form as theBoard of Directors may determine. Registered shares shall benumbered in the manner to be determined by the Board of
Directors.
3.3.4 Changes in the Shareholding of the Company since
its Incorporation
The Company was founded with an authorized share capital of
NLG 500,000 divided into 500 shares each having a nominal valueof NLG 1,000, of which 100 were issued to Aerospatiale Matra on
December 29, 1998. These shares were transferred to Dasa AG
by way of notarised transfer certificate on December 28, 1999.
The changes in the shareholding of the Company since its initialpublic offering and listing are as follows (for a description of thechanges in the issued share capital of the Company since its
incorporation, see “3.2.5 Changes in the Issued Share Capital
Since Incorporation of the Company”):
Since July 2000, 4,293,746 EADS shares (representing 0.53% of
the share capital of EADS as of the date of this document) havebeen distributed without payment of consideration by the
French State to certain former shareholders of Aerospatiale
Position as at April 1, 2004

In addition, in January 2001, the French State and Lagardère soldon the market all of their EADS shares (respectively 7,500,000
and 16,709,333 EADS shares representing 0.92% and 2.06% of
the share capital of EADS as of the date of this document) otherthan 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 “–Relationships with
Principal Shareholders – Specific Rights and Undertakings of theFrench State”) that they held as a result of the non-exercise of
the over-allotment option granted to the underwriters in thecontext of the initial public offering carried out by the Company
for the purpose of its listing in July 2000 (including, in the case of
Lagardère, those shares other than its Indirect EADS Sharespurchased from the French Financial Institutions at the end of theexercise period of the over-allotment option).
Since the date of filing with the COB of the Document deRéférence of the Company for the financial year 2002 (April 2,
2003), the Company has not received any threshold notification.
To the knowledge of the Company, none of the shareholders of
the Company, other than as disclosed in the chart below, holdmore than 5% of the share capital or voting rights of the Company.
The division of the issued shares and voting rights of theCompany before exercise of any stock options granted for thesubscription of EADS shares (see “ Part 1/2.3.3 Options
Granted to Employees”) in respect of the past three years isindicated in the table below:
Position as at April 2, 2003

Position as at April 18, 2002

Numberof shares% ofcapital% ofvotingrightsNumberof shares% ofcapital% ofvotingrightsNumberof shares% ofcapital% ofvotingrightsDasa AG244,447,704

30.07%

30.52%

244,447,704

30.13%

30.52%

244,447,704

30.21%

30.25%SOGEADE

244,447,704

30.07%

30.52%

244,447,704

30.13%

30.52%

244,447,704

30.21%

30.25%

SEPI

44,690,871

5.50%

5.58%

44,690,871

5.51%

5.58%

44,690,871

5.52%

5.53%

533,586,279

65.64%

66.62%

533,586,279

65.77%

66.62%

533,586,279

65.94%

66.03%

22,227,478

2.73%

2.78%

22,227,478

2.74%

2.77%

22,227,478

2.75%

2.75%

502,746

(*)

0.06%

0.06%

502,746

0.06%

0.06%

2,748,681

0.34%

0.34%

244,640,745(**)

30.10%

30.54%

244,640,745

30.16%

30.55%

249,585,180

30.84%

30.88%

Own sharebuy-back (***)

11,927,934

1.47%

–

10,241,252

1.27%

–

1,027,943

0.13%

–

Total

812,885,182 100.00% 100.00%

Shareholders

Sub-total
ContractualPartnershipDasa AGFrench State
Public811,198,500 100.00% 100.00%

809,175,561 100.00% 100.00%(*)

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 of the date of this document, EADS employees hold approximately 3.55% of the share capital and 3.60% of the voting rights.
(***)
The EADS shares owned by the Company itself do not carry voting rights.

EADS 2003 Chapter 3 General Description of the Company and its Share Capital 65

BOOK3-791-66

29 MARCH 2004

To the knowledge of the Company, except as disclosed
previously in “Relationships with Principal Shareholders”, there
are no pledges over the shares of the Company.
The Company requested a disclosure of the identity of thebeneficial holders of its shares held by identifiable holders(“Titres au porteur identifiables” (TPI)) holding more than ten
thousand shares each. The study, which was completed on
March 31, 2003, resulted in the identification of 1,038
shareholders holding a total of 181,221,387 EADS shares(including 4,852,490 shares held by Iberclear on behalf of the
Spanish markets and 20,562,887 shares held by Clearstream on
behalf of the German market).
The current shareholding structure of the Company is as shownin the diagram in “– Shareholding Structure”.
3.3.5 Persons Exercising Control over the Company
See “– Shareholding Structure” and “– Relationships with
Principal Shareholders”.
3.3.6 Simplified Group Structure Chart
The following chart shows the main business units of EADS.
SIMPLIFIED GROUP ORGANIZATION CHARTEUROPEAN AERONAUTIC DEFENCE AND SPACE COMPANY (EADS)

AirbusMilitary Transport
AircraftAeronautics

Defence andSecurity System

Space

AirbusMilitary Transport
AircraftEurocopter

EADS Military
Aircraft

EADS Astrium

ATR

EADS Defence &Communication
Systems

EADS SpaceTransportation

EADS EFWEADS Services

EADS Space
Services

EADS Sogerma
Services

MBDA

EADS Socata

EADS LFKEADS DefenceElectronics

66 EADS 2003 Chapter 3 General Description of the Company and its Share Capital

3.3.7 Purchase by the Company of its Own Shares
3.3.7.1 Dutch Law
The Company may acquire its own shares, subject to certain
provisions of the law of The Netherlands and the Articles of
Association, if (i) the shareholders’ equity less the payment
required to make the acquisition does not fall below the sum ofpaid-up and called portion of the share capital and any reserves
required by the law of The Netherlands and (ii) the Company
and its subsidiaries would not thereafter hold or hold in pledge
shares with an aggregate nominal value exceeding one-tenth of
the Company’s issued share capital. Share acquisitions may beeffected by the Board of Directors only if the shareholders ingeneral meeting have authorized the Board of Directors toeffect such repurchases. Such authorization 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 insuch cases where the right of usufruct or pledge was vested
before the share was held by the Company.
The Shareholders’ General Meeting of EADS held on May 6,
2003 authorized the Board of Directors, in a resolution thatsuperseded and replaced the previous authorization given by
the Shareholders’ General Meeting of EADS held on May 17,
2002, for a period of 18 months from the date of such meeting,to repurchase shares of the Company within the limit of 5% of
the Company’s issued share capital, on the stock exchange orotherwise in return for payment, at a price between the nominal
value of the shares (€ 1.0) and an amount equal to 110% of theprice at which the relevant shares were quoted on any stock
exchange at close of business on the trading day before the dayof the purchase by the Company.
The Board of Directors resolved on October 10, 2003 andrequested the Chief Executive Officers to implement, in the context
of the employee share ownership plan for 2003 (see “Part 1/2.3.2
Employee Share Offering”), a share purchase programme for theCompany to repurchase up to a maximum of 2,027,996 of its own
shares (depending on the number of shares actually subscribed forby the relevant employees), which at that date, represented 0.25 %of the issued share capital of the Company. The objectives andcharacteristics of this share purchase programme are set out in thenote d’information approved by the COB on October 27, 2003
under number 03-927. The implementation of this share purchaseprogramme has resulted in the acquisition by the Company of
1,686,682 of its own shares.

BOOK3-791-67

29 MARCH 2004

As of the date of this document, the Company had purchased inaggregate 11,927,934 of its own shares.
A resolution will be submitted to the shareholders’ general
meeting of EADS called for May 6, 2004 in order tosupersede and replace the above authorization and authorize
the Board of Directors, for a new period of 18 months as fromthe date of such meeting, to repurchase shares of theCompany, by any means, including derivative products, on
any stock exchange or otherwise in return for payment, aslong as, upon such repurchase, the Company shall not holdmore than 5% of the Company’s issued share capital and at a
price between the nominal value of the shares (€ 1.0) and an
amount equal to 110% of the price at which the relevant
shares were quoted on any stock exchange at close ofbusiness on the most recent day on which such stock
exchange was open for trading before the day of thepurchase by the Company.
After making purchases of its own shares, the Company isrequired to immediately file a report with the AFM that contains
specified information about such purchases, unless an
exemption applies. The AFM makes this information publicly
available.
3.3.7.2 French Regulations
As a result of its listing for trading on a regulated market in France,
the Company is subject to the regulations summarized below.
Pursuant to Règlement No. 98-02 (as amended by Règlements
No. 2000-06, No. 2003-02 and No. 2003-06) of the COB, thepurchase by a company of its own shares will, in principle,
require the filing of a note d’information that has received theapproval (or “visa”) of the AMF.

(4)

Under Règlement No. 90-04 (as amended by Règlements No.
92-03, No. 98-03, No. 2000-06 and No. 2002-02) of the COB,
a company may not trade in its own shares for the purpose ofmanipulating the market. Règlement No. 90-04 also defines theconditions for a company’s trading in its own shares to be valid.
After making purchases of its own shares, the Company isrequired to file monthly reports with the AMF that containspecified information about such purchases. The AMF makes
this information publicly available (4).
3.3.7.3 German Regulations
As a foreign issuer, the Company is not subject to German rules
on trading in its own shares, which only apply to German issuers.
3.3.7.4 Spanish Regulations
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 July 28, 1988, the Company may nottrade in its own shares for the purpose of manipulating the market.
3.4 Stock Exchange Information
The Company’s issued share capital is divided into 812,885,182
shares currently listed under the symbol “EAD” on the Paris
Stock Exchange, the Frankfurt Stock Exchange and the Spanish
Stock Exchanges and included in the CAC 40 index as well as
the MDAX index.
The following tables set forth, for the periods indicated, the average
daily trading volumes and the high and low prices of EADS shareson the Paris, Frankfurt and Spanish Stock Exchanges.

EADS also files these reports with the CNMV, the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht) and the AFM
EADS 2003 Chapter 3 General Description of the Company and its Share Capital 67

BOOK3-791-68

29 MARCH 2004

Paris Stock Exchange
Share
trade
volume2000
July (from the 10th)
AugustSeptember
OctoberNovember
December
2001
January
February
March
April
May
June
July
AugustSeptember
OctoberNovember
December
2002
January
February
March
April
May
June
July
AugustSeptember
OctoberNovember
December
2003
January
February
March
April
May
June
July
AugustSeptember
OctoberNovember
December
2004
January
February

Trade
value
(€)

Averagedaily tradevalue (€)

Month’sHigh

Month’sLow

28,006,987
25,823,476
30,460,407
54,407,858
33,635,272
27,572,339

1,867,132
507,785,107
1,122,760 384,575,157
1,450,496 571,089,464
2,473,084 1,184,877,998
1,528,876 810,699,388
1,451,176 628,842,769

33,852,340
16,720,659
27,194,736
53,858,091
36,849,972
31,442,138

19.19
18.05
20.10
24.10
25.20
24.29

17.40
16.05
17.06
18.88
22.47
20.12

39,914,713
28,371,942
40,195,234
23,042,758
30,810,517
36,622,362
23,998,212
29,135,094
55,227,242
49,407,887
40,347,151
19,755,943

1,814,305
1,418,597
1,827,056
1,212,777
1,400,478
1,831,118
1,090,828
1,266,743
2,761,362
2,148,169
1,833,961
1,097,552

922,430,115
671,386,276
808,266,895
466,130,786
680,973,860
847,614,750
531,019,150
602,364,447
724,387,025
592,687,519
550,247,341
271,754,537

41,928,642
33,569,314
36,739,404
24,533,199
30,953,357
42,380,738
24,137,234
26,189,759
36,219,351
25,769,023
25,011,243
15,097,474

24.03
23.59
23.56
21.50
24.00
25.07
23.50
23.60
19.94
13.65
14.57
15.24

21.90
21.10
18.20
19.22
19.50
20.67
21.02
18.64
9.14
9.90
12.00
13.05

26,525,882
21,298,834
31,975,439
35,889,677
45,646,138
31,749,880
46,935,443
23,084,592
39,530,265
55,312,620
34,660,783
34,109,924

1,205,722
1,120,991
1,682,918
1,794,484
1,901,922
1,671,046
2,040,671
1,282,477
1,882,394
2,404,897
1,650,513
1,705,496

363,824,632
287,799,414
517,520,338
580,351,224
779,829,454
504,393,890
737,366,977
341,095,955
476,338,740
599,820,170
409,210,849
382,128,122

16,537,483
15,147,338
27,237,913
29,017,561
32,492,894
26,547,047
32,059,434
18,949,775
22,682,797
26,079,138
19,486,231
19,106,406

14.90
14.80
17.45
17.08
18.45
17.60
17.71
16.68
13.65
13.55
13.39
13.39

12.52
12.71
14.53
15.18
15.93
14.03
13.28
13.46
10.41
8.67
10.35
9.65

41,084,015
31,503,649
46,872,323
51,698,858
45,882,586
62,648,698
55,248,723
30,590,530
47,237,941
60,098,669
70,012,235
46,490,041

1,867,455 420,579,852
1,575,182 271,850,579
2,232,015 355,854,789
2,349,948 406,330,625
2,085,572
390,153,125
2,983,271 659,656,740
2,402,118 696,341,886
1,456,692 436,033,159
2,147,179 698,671,170
2,612,986 938,858,930
3,500,612 1,257,952,390
2,213,811 891,365,537

19,117,266
13,592,529
16,945,466
18,469,574
17,734,233
31,412,226
30,275,734
20,763,484
31,757,780
40,819,953
62,897,620
42,445,978

11.70
9.93
9.10
8.65
9.80
11.48
14.45
14.74
16.47
18.04
19.18
20.20

8.89
7.25
6.33
6.87
7.75
9.22
10.41
13.56
12.80
12.99
16.60
18.00

49,595,902
35,148,871

2,361,710
1,757,444

43,281,131
31,016,159

19.39
18.81

17.26
16.95

Source: Bloomberg Database

68 EADS 2003 Chapter 3 General Description of the Company and its Share Capital

Averagedaily tradevolumes

908,903,760
620,323,172

BOOK3-791-69

29 MARCH 2004

Frankfurt Stock Exchange

2000
July (from the 10th)
AugustSeptember
OctoberNovember
December
2001
January
February
March
April
May
June
July
AugustSeptember
OctoberNovember
December
2002
January
February
March
April
May
June
July
AugustSeptember
OctoberNovember
December
2003
January
February
March
April
May
June
July
AugustSeptember
OctoberNovember
December
2004
January
February

Share
trade
volumeAveragedaily tradevolumes

Trade
value
(€)

Averagedaily tradevalue (€)

Month’sHigh

Month’sLow

10,021,156
2,296,984
2,667,145
2,116,370
1,100,523
646,677

626,32299,869127,007
96,19950,02434,036

126,313,029
39,539,352
47,534,427
40,178,886
25,983,694
15,011,258

7,894,564
1,719,102
2,263,544
1,913,280
1,181,077
750,563

19.00
18.30
20.02
24.05
25.90
24.30

17.20
16.00
17.05
19.00
22.50
20.06

623,484
519,634
558,229
262,503491,162
817,372
958,870
753,104
2,039,979
1,217,290
861,507626,51228,34025,98225,374
13,81622,32638,922
46,66439,034
102,970
52,92639,15936,854

13,824,417
11,758,970
12,349,913
5,292,404
10,860,045
18,911,714
21,167,451
15,668,232
25,656,940
14,786,737
11,688,046
8,653,911

628,383
587,948561,360
278,548
493,638
900,558
1,029,124
822,343
1,301,782
642,902531,275
509,054

23.90
23.52
23.50
21.70
23.97
25.20
23.45
23.50
19.97
13.80
14.70
15.10

21.80
21.21
18.50
19.20
19.70
20.61
20.57
18.60
9.20
10.00
10.90
13.00

687,609484,884
852,539910,722551,598
409,279
501,338
223,696486,634
718,288
510,315561,626

31,25524,244
42,62745,53622,983
21,541
21,797
12,42823,173
31,23024,301
28,081

9,416,004
6,523,078
13,770,868
14,479,100
9,466,389
6,464,362
7,710,529
3,294,759
5,788,128
7,759,130
6,035,121
6,268,283

428,000
326,154
688,543
723,955
394,433
340,230
335,240
183,042
275,625
337,353
287,387
313,414

14.81
14.30
17.48
17.50
18.45
17.46
17.62
16.60
13.80
13.37
13.28
13.31

12.50
12.70
13.90
15.15
16.00
14.10
13.50
13.30
10.50
8.80
10.41
9.78

629,888543,124
1,746,387
1,365,736
1,058,476
1,667,506
1,734,296
863,962
1,702,772
1,674,219
1,616,328
1,738,852

28,631
27,156
83,161
62,07948,11379,40575,404
41,141
77,39972,79280,81682,8026,440,735
4,680,095
14,362,272
10,669,097
8,970,172
17,802,437
21,359,965
12,316,746
25,378,004
26,604,092
29,053,089
33,370,991

292,761
234,005
683,918
484,959
407,735
847,735
928,694
586,512
1,153,546
1,156,700
1,452,654
1,589,095

11.80
9.98
9.38
8.65
9.75
11.50
14.40
14.94
17.85
17.99
19.10
20.27

8.80
7.27
6.30
6.90
7.70
9.25
10.35
13.57
12.90
13.00
16.60
17.86

2,132,747
1,170,392

101,559
58,52039,223,881
20,711,768

1,867,804
1,035,588

19.40
18.80

17.25
16.90

Source: Bloomberg Database

EADS 2003 Chapter 3 General Description of the Company and its Share Capital 69

BOOK3-791-70

29 MARCH 2004

Spanish Stock Exchanges

2000
July (from the 10th)
AugustSeptember
OctoberNovember
December
2001
January
February
March
April
May
June
July
AugustSeptember
OctoberNovember
December
2002
January
February
March
April
May
June
July
AugustSeptember
OctoberNovember
December
2003
January
February
March
April
May
June
July
AugustSeptember
OctoberNovember
December
2004
January
February

Share
trade
volumeAveragedaily tradevolumes

Trade
value
(€)

Averagedaily tradevalue (€)

Month’sHigh

Month’sLow

18,203,064
1,733,497
4,016,475
4,868,795
1,293,184
655,922

1,137,692
75,369191,261
221,30958,781
34,522

330,862,873
30,022,590
75,331,737
99,463,587
29,653,441
13,991,513

20,678,930
1,305,330
3,587,226
4,736,361
1,347,884
777,306

19.10
18.39
20.07
24.00
25.10
24.50

17.00
16.01
17.02
18.50
22.10
20.20

447,403415,608
446,407
182,638
243,750
302,249
132,517342,359
791,965
694,478
554,396368,870

20,337
20,78020,291
9,613
11,08014,393
6,024
16,124
39,59830,19525,20021,6989,939,805
9,173,076
9,742,541
3,543,739
5,423,419
6,988,672
2,927,541
7,060,800
10,074,145
8,212,669
7,547,151
5,067,135

451,809458,654442,843
186,513
246,519332,794
133,070
320,945
503,707357,073
343,052
298,067

23.99
23.52
23.50
21.90
23.90
24.98
23.32
23.50
20.00
13.60
14.53
14.45

21.77
21.14
18.01
19.13
19.70
20.80
21.10
18.90
9.20
10.00
12.11
13.11

560,834
326,840
598,644
353,915
517,966
341,322
277,767
173,359
249,687
613,348
781,926
486,758

25,492
17,20231,508
17,696
21,582
17,964
12,077
9,631
11,89026,667
37,23524,338

7,608,542
4,429,110
9,678,288
5,733,831
8,935,214
5,467,806
4,400,045
2,532,757
3,053,515
6,672,879
9,124,295
5,430,877

345,843
233,111509,384
286,692
372,301
287,779
191,306
140,709
145,405
290,125
434,490
271,544

14.85
14.76
17.40
17.05
18.25
17.63
17.66
16.55
13.98
13.45
13.36
13.33

12.57
12.77
14.30
15.18
16.05
14.20
13.53
13.50
10.55
8.82
10.45
9.75

904,400
623,576
1,175,515
2,867,930
2,576,034
2,671,875
2,224,848
776,963
1,754,879
1,735,945
1,308,781
1,863,354

41,10931,17955,977130,360
117,092
127,232
96,73336,99879,76775,47665,43988,731

9,267,742
5,271,716
9,026,197
22,731,695
22,034,774
28,002,606
27,389,359
11,054,279
26,109,086
27,239,068
23,407,929
35,231,343

421,261
263,586
429,819
1,033,259
1,001,581
1,333,457
1,190,842
526,394
1,186,777
1,184,307
1,170,396
1,677,683

11.62
9.90
9.02
8.65
9.77
11.48
14.38
14.71
16.48
17.99
19.10
20.10

8.90
7.28
6.41
6.91
7.75
9.26
10.42
13.59
12.89
13.00
16.61
18.01

1,698,734
1,276,509

80,892
63,825

31,138,245
22,531,318

1,482,774
1,126,566

19.40
18.79

17.29
16.98

Source: Bloomberg Database

70 EADS 2003 Chapter 3 General Description of the Company and its Share Capital

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29 MARCH 2004

3.5 Dividends
3.5.1 Dividends and Cash Distributions Paid since theIncorporation of the Company
A cash distribution was paid in respect of the years 2000 and2001 for a gross amount of € 0.50 per share respectively on
June 27, 2001 and June 28, 2002 and, in respect of the year 2002,
for a gross amount of € 0.30 per share on June 12, 2003.
A resolution will be submitted to the shareholders’ general
meeting of EADS called for May 6, 2004 in order to approve thepayment of a cash distribution in respect of the year 2003 for agross amount of € 0.40 per share to be paid on June 4, 2004.
3.5.2 Dividend Policy of EADSThe Board of Directors will recommend to the shareholders’general meeting of EADS called for May 6, 2004 the payment ofa cash distribution for a gross amount of € 0.40 per share withrespect to the year 2003.
The amount of the proposed cash distribution results from theCompany’s performance during the year 2003 and from theexamination of payout ratios based on net income before
goodwill amortization for a collection of relevant European
companies.
This distribution level, at the current civil market juncture,reflects Management’s confidence in the Company’s future
earnings as the impact of the cyclical upturn, the growth ofdefence activities and the introduction of the A380 in airline
service depict a vision of sustained growth.
In the future, EADS’ dividends and attributions to reserves will be
proposed to the shareholders by the Board of Directors dependingon factors such as EADS’ distribution capacity arising fromperformance, its priorities for cash utilization and confidence infuture prospects (payment levels will also take external factors into
account, such as the dividend policies of relevant European andInternational companies) (see also “3.1.9 Allocation andDistribution of Income”). No assurance may be given that
dividends will be proposed for the years 2004 onwards.
3.5.3 Unclaimed Dividends
Pursuant to article 31 of the Articles of Association, the claim forpayment of a dividend or other distribution approved by thegeneral 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 thedividend could be distributed becomes due and payable.
3.5.4 Taxation
The 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 The
Netherlands for Netherlands tax purposes (a “Non-Resident

Holder”). The statements below do not address special rulesthat may apply to certain categories of holders of Shares and are
not exhaustive. Certain categories of holders of the Company’s
shares may be subject to special rules which are not addressed
below and which may be substantially different from the generalrules described below. Investors who are in doubt as to their tax
position in The Netherlands and in their state of residence
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 25%. Dividends include
dividends in cash or in kind, deemed and constructive dividends,
repayment of paid-in capital not recognized as capital for
Netherlands dividend withholding tax purposes, and liquidation
proceeds in excess of the average paid-in capital recognized ascapital for Netherlands dividend withholding tax purposes. Stock
dividends paid out of the Company’s paid-in-share premium,recognized as capital for Netherlands dividend withholding tax
purposes, will not be subject to this withholding tax.
A Non-Resident Holder of Shares can be eligible for a partial orcomplete exemption or refund of all or a portion of the above
withholding tax under a tax convention that is in effect between
The Netherlands and the Non-Resident Holder’s country ofresidence. The Netherlands has concluded such conventions
with the United States, Canada, Switzerland, Japan, all European
Union member states and other countries.
French, German, and Spanish Tax Treaties
Under the Convention between the Republic of France and theKingdom of The Netherlands for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with Respect toTaxes on Income and Capital, concluded March 16, 1973, theConvention between the Federal Republic of Germany and theKingdom of The Netherlands for the Avoidance of Double
Taxation with respect to Income and Capital and Various Other
Taxes and for the Regulation of Other Questions relating toTaxation, concluded June 16, 1959 or the Convention between
the Government of the State of Spain and the Government of
the Kingdom of The Netherlands for the Avoidance of Double
Taxation with respect to Taxes on Income and Capital, concluded
June 16, 1971, dividends paid by the Company to a NonResident Holder that is a resident of France, Germany or Spain as
defined in the respective Convention are generally eligible for a
reduction of the 25% Netherlands withholding tax to 15%,
provided that the dividends are not attributable to an enterpriseor part thereof which is carried on through a permanentestablishment or permanent representative in The Netherlands.
Withholding Tax on Sale or Other Dispositions of Shares
Payments on the sale or other dispositions of Shares will not be
subject to Netherlands withholding tax, unless the sale or otherdisposition is, or is deemed to be, made to the Company or adirect or indirect subsidiary of the Company. A redemption or
EADS 2003 Chapter 3 General Description of the Company and its Share Capital 71

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29 MARCH 2004

sale to a direct or indirect subsidiary of the Company will betreated as a dividend and will in principle be subject to the rules
set forth in “Withholding Tax on Dividends” above.

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.

Taxes on Income and Capital Gains
A Non-Resident Holder who receives dividends distributed by
the Company on Shares or who realizes a gain from the sale ordisposition of Shares, will not be subject to Netherlands taxation
on income or capital gains unless:Gift or Inheritance Taxes
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:(i) 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(ii) 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(iii) the Non-Resident Holder is an individual and the NonResident Holder has, directly or indirectly, a substantial
interest (aanmerkelijk belang) in the Company or suchincome or gain otherwise qualifies as income frommiscellaneous activities (belastbaar resultaat uit overigewerkzaamheden) in The Netherlands as defined in the Dutch
Income Tax Act 2001 (Wet inkomstenbelasting 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

72 EADS 2003 Chapter 3 General Description of the Company and its Share Capital(i) 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(ii) the Shares are attributable to an enterprise or part thereof
that is carried on through a permanent establishment or apermanent representative in The Netherlands.
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 withthe 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 be deemed
to be resident, in The Netherlands solely as a result of holding a
Share or of the execution, performance, delivery and/or
enforcement of rights in respect of the Shares.

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29 MARCH 2004

Chapter 4
Information Concerning Securities Issued

NOT APPLICABLE

EADS 2003 Chapter 4 Information Concerning Securities Issued 73

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29 MARCH 2004

Chapter 5
Persons Responsible for the Reference Document and Persons Responsible
for the Audit of the Financial Statements

5.1 Persons Responsible for the Reference Document
Mr. Philippe Camus and Mr. Rainer Hertrich, Chief Executive
Officers of EADS
5.2 Statement of the Persons Responsible for theReference Document“To our knowledge, the information set out in this Reference
Document relating to EADS is true and correct; it includes all
the information required by investors to base their opinion on
EADS’ assets and liabilities, business, financial position, results
and prospects of the issuer; there are no omissions that could
affect the significance of such information.”

Philippe Camus
Chief Executive Officer

Rainer Hertrich
Chief Executive Officer

5.3 Persons Responsible for the Audit of the Financial
Statements
5.3.1 Persons Responsible for the Review of EADS’
Financial Statements

KPMG Accountants N.V

Date of First
Appointment

Term ofCurrent Office

May 10, 2000

May 6, 2004(5)Churchillplein 62517 JW The Hague
The Netherlands
Represented by
Mr. E. Paul Medema
Ernst & Young Accountants

Our procedures conducted in accordance with International
Standards on Auditing, comprised an assessment of the fairnessof the information presented relating to the financial position andthe financial statements and its consistency with the financial
statements on which we have issued an audit report.
Our procedures also comprised the reading of the consolidated
financial information for 2003 and 2002 included in the section“Management Discussion and Analysis of Financial Condition and
Results of Operation” included in the Reference Document, inorder to identify material inconsistencies with the information
relating to the financial statements and to report any apparent
misstatement of facts that we may have uncovered in reading theother information based on our general knowledge of thecompany obtained during the course of our engagement.
The financial statements as of December 31, 2003, 2002 and2001, that have been approved by the EADS Board of Directors,
have been audited by us, in accordance with auditing standards
generally accepted in the Netherlands and International Standards
on Auditing.
In our audit report dated March 5, 2004, we expressed an
unqualified opinion on the financial statements for the year ended
December 31, 2003.

July 24, 2002

May 6, 2004(5)Drentestraat 20 1083
HK Amsterdam
The Netherlands
Represented by
Mr. Ferdi G.M. Beuting

5.3.2 Statement of the Auditors
In our capacity as auditors of EADS (KPMG Accountants N.V.
and Ernst & Young Accountants for the year ended December
31, 2003, KPMG Accountants N.V. and Ernst & Young
Accountants as successors to Arthur Andersen for the year
ended December 31, 2002, KPMG Accountants N.V. and Arthur
Andersen for the year ended December 31, 2001), we haveverified the financial information relating to the statutory financial
statements (“the financial statements”) of EADS for the years
ended December 31, 2003, 2002 and 2001 (including theconsolidated financial statements), contained in the present
Reference Document.
This Reference Document has been prepared under the
responsibility of EADS Chief Executive Officers, Philippe Camus(5)

and Rainer Hertrich. Our responsibility is to report on thefairness of the financial information included in this documentwith respect to the financial position and the financial
statements of EADS.

The opinion expressed in the audit report dated March 7, 2003,
on the financial statements for the year ended December 31,
2002, contained in respect of the opinion that, because theauditors had not been able to perform the audit procedures
they normally would have performed in relation with the EADS
investment with Dassault Aviation which was accounted forunder the equity method (level of net income from equity
investment in 2002 of Euros 111 millions and equity investment
in Dassault Aviation of Euros 1,333 millions as of December 31,2002), they have issued a qualification in respect of the effectsof such adjustments, if any, as might have been determined tobe necessary had they been able to perform the audit
procedures they normally would have performed in relation to
the Dassault Aviation investment. In all other respects, on the
one hand according to KPMG Accountants N.V. and Ernst &Young Accountants, except for the effect of the departure fromIFRS for development costs that have been expensed as
incurred, whereas IFRS require that development costs becapitalized as intangible assets when certain criteria for asset
recognition are met; and, on the other hand according to KPMG
Accountants N.V., except for the effect of the departure fromIFRS relating to the proportionate consolidation of MBDA, as

A resolution will be submitted to the shareholders' general meeting of EADS called for May 6, 2004, in order to resolve that the Company's auditors for theaccounting period being the financial year 2004 shall be Ernst & Young Accountants and KPMG Accountants N.V.

74 EADS 2003 Chapter 5 Persons Responsible for the Reference Document and Persons Responsible for the Audit of the Financial Statements

BOOK3-791-75

29 MARCH 2004

EADS is accounting for its interest in MBDA joint venture with aproportionate consolidation of 50% for the financial statementsof MBDA and accounts for minority interests of 12.5%, whereas
the above standards require a venturer to report its effective net
proportionate interest in a jointly controlled entity, being 37.5%
for MBDA, the financial statements gave a true and fair view ofthe financial position of the Company as of December 31, 2002,
and of the result for year then ended, in accordance with IFRS
and in accordance with the financial accounting principles
generally accepted in the Netherlands.
The opinion expressed in the audit report dated March 15, 2002,
on the financial statements for the year ended December 31,
2001, contained in respect of the opinion that, because theauditors had not been able to perform the audit procedures theynormally would have performed in relation with the EADS
investment with Dassault Aviation, which was accounted forunder the equity method (level of net income from equity
investment in 2001 of Euros 111 million and equity investment of
EADS in Dassault Aviation of Euros 1,252 million as of December
31, 2001), they have issued a qualification in respect of the effectsof such adjustments, if any, as might have been determined to benecessary had they been able to perform the audit procedures
they normally would have performed in relation to the Dassault
Aviation investment. In all other respects, on the one handaccording to KPMG Accountants N.V. and Arthur Andersen,
except for the effect of the departure from IFRS for development
costs that have been expensed as incurred, whereas IFRS requirethat development costs be capitalized as intangible assets whencertain criteria for asset recognition are met; and, on the other
hand according to KPMG Accountants N.V., except for the effectof the departure from IFRS relating to the proportionate
consolidation of MBDA, as EADS has been accounting for its
interest in MBDA joint venture with a proportionate consolidationof 50% for the balance sheet of MBDA and accounted forminority interests of 12.5%, whereas the above standards requirea venturer to report its effective net proportionate interest in ajointly controlled entity, being 37.5% for MBDA, the financial
statements gave a true and fair view of the financial position of
the Company as of December 31, 2001, and of the result for year
then ended, in accordance with IFRS and in accordance with thefinancial accounting principles generally accepted in the
Netherlands.
Based on the procedures described above, except for the effectsof such adjustments, if any, as might have been determined to benecessary had we been able to perform the audit procedures wenormally would have performed in relation to the Dassault
Aviation investment in 2002 and 2001, except for the effect of thedeparture from IFRS and accounting principles generally acceptedin the Netherlands relating to the accounting for development
costs in 2002, 2001, and according to KPMG Accountants N.V.,
except for the effect of the departure from IFRS and accounting

principles generally accepted in the Netherlands for the
proportionate consolidation of MBDA in 2002 and 2001, we haveno other matters to report regarding the fairness of the financial
information relating to the financial statements of EADS N.V for
the years ended December 31, 2003 and 2002 and as audited by
KPMG Accountants NV and Arthur Andersen for the year ended
December 31, 2001 and any other information mentioned here
above.
This statement has been prepared following a specificrequirement of the Autorité des Marchés Financiers so as to be
included in the 2003 EADS Reference Document.
The Hague, April 1, 2004,

Amsterdam, April 1, 2004,

KPMG
Accountants N.V.

Ernst & Young Accountants(limited to financial statements
financial statements for theyear ended December 31,
2003 and 2002).

Specific statement related to the translation of thefinancial information
In the context of the preparation of the Reference Document, wehave read the French language translation of the financial
information relating to the statutory financial statements of EADS
for the years ended December 31, 2003, 2002 and 2001
(including the consolidated financial statements), contained in thepresent Reference Document, all documents being originallyprepared in English.
Based on our reading, the financial information relating to thestatutory financial statements of EADS for the years ended
December 31, 2003, 2002 and 2001, the Statement of the
Auditors and the audit report of the auditors in the statutoryfinancial statements for the year ended December 31, 2003,
should enable a French reader to understand the financial
position of the EADS Group as of December 31 2003.
Paris, April 1, 2004,
KPMG Audit
Department of KPMG SA

Barbier Frinault & Associés

Michel Piette
Partner

Jean-François Ginies
Partner

EADS 2003 Chapter 5 Persons Responsible for the Reference Document and Persons Responsible for the Audit of the Financial Statements 75

BOOK3-791-76

29 MARCH 2004

5.4 Information Policy
Details of the person responsible for information:
Mr. Pierre de Bausset
Senior Vice-President Investor Relations and Financial
Communication
EADS
81663 Munich
Germany
Telephone: + 49 89 607 34113
Fax: + 49 89 607 34110
E-mail: ir@eads.net
A web site, www.eads.net, provides a wide range of informationon the Company. Special toll-free hotlines are available toshareholders in France (0 800 01 2001), Germany (00 800 00 02
2002) and Spain (00 800 00 02 2002). An email box isdedicated to shareholders’ messages: ir@eads.net.
5.5 Undertakings of the Company Regarding Information
Given the fact that the shares of the Company are listed on thePremier Marché of Euronext Paris SA (the “Paris Stock
Exchange”), in amtlicher Markt (in the sub-segment Prime
Standard ) on the Frankfurter Wertpapierbörse (the “Frankfurt
Stock Exchange”) and on the Madrid, Bilbao, Barcelona andValencia Stock Exchanges (the “Spanish Stock Exchanges”),
the Company is subject to certain laws and regulations
applicable in France, Germany and Spain in relation to
information, the main ones of which are summarized in “3.1.3
General Description of the Company – Governing Law – Dutch
Regulations”.

76 EADS 2003 Chapter 5 Persons Responsible for the Reference Document and Persons Responsible for the Audit of the Financial Statements

BOOK3-791-77

29 MARCH 2004

Reference Document Thematic Index

In order to simplify the reading of this document which is filed as part of the EADS Reference Document for the financial year 2003,
the following thematic index permits the identification of the main information required by the Autorité des Marchés Financierswithin the framework of its regulation.
Statements of Responsible Persons• Statement of the Persons Responsible for the Reference Document• Statement of the Persons Responsible for the Financial Statements• Information Policy

Part 2

SECTIONS
5.2
5.3.2
5.4

General Information on EADS and its Share Capital
Governing Law and Regulations Applicable to EADS
Share Capital• Modification of Share Capital or Rights Attaching to the Shares• Issued Share Capital• Authorised Share Capital• Table Showing Changes in the Share Capital over the Last Five Years
Stock Exchange Information• Table Showing Changes in Prices and Volume Since July 2000
• Dividends
Share Capital, Voting Rights• Shareholding Structure and Voting Rights• Changes in the Shareholding of the Company since its Incorporation• Relationships with Principal Shareholders

Part 2

SECTIONS
3.1.3 - 3.1.11 - 3.1.12

Information Concerning EADS’s Business Activities• Presentation of the EADS Group (relationships between EADS and its subsidiaries)• Key Figures for the EADS Group• Information by Divisions• EADS’ Markets and Competitive Positioning• Investment Policy

Part 2

SECTIONS
1.1.1
1.1.1
1.1.1 to 1.1.6
1.1.2 to 1.1.6
1.1.7

Analysis of EADS Risk Factors• Risk Factors– Market Risks– Specific Risks Linked to EADS Business– Legal Risks– Industrial and Environmental Risks• Insurance and Risks CoverPart 2

SECTIONS

Net Assets, Financial Position and Results• Consolidated Financial Statements and Related Notes• Off Balance Sheet Commitments• Statutory Auditors’ Fees
• Statutory Financial Statements and Related Notes

Part 1SECTIONS
1.2.1
1.1.6
1.3
1.2.2

Corporate GovernancePart 1• Composition and Functioning of the Board of Directors, Chairmen and Chief Executive Officers• Composition and Functioning of the Board Committees• Compensation Granted to Directors and Principal Executive Officers• The Ten Highest Granted Options Employees that are not Corporate Officers• Related Party Transactions

SECTIONS
2.1.1
2.1.2 - 2.1.3
2.2.1 - 2.3.3
2.3.3
2.2.3

3.2.1
3.2.2
3.2.3
3.2.5
3.4
3.5
3.3.1
3.3.4
3.3.2

1.5.1 and Part 1/1.1.7
1.5.2
1.5.3
1.5.4
1.5.5

Recent Developments

Part 2

SECTION
2.1

OutlookPart 1SECTION
3.1

EADS 2003 Reference Document Thematic Index 77

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

European Aeronautic Defence
and Space Company – EADS N.V.
Le Carré
Beechavenue 130 – 132
1119 PR Schiphol-Rijk
The Netherlands
www.eads.net